State to work with feds on health insurance exchange


SPRINGFIELD -- An online marketplace that eventually could help more than 1 million Illinoisans obtain affordable insurance as part of the federal health-care law will operate as a state-federal partnership in its first year, aides to Gov. Pat Quinn said Wednesday.

Supporters of the Affordable Care Act in Illinois had wanted President Barack Obama’s home state to operate its own health-insurance exchange, beginning in 2014. That way, a state-appointed board of directors would determine how the exchange works.

The exchange will offer private insurance, with federal subsidies to make premiums and other out-of-pocket costs affordable. Illinois residents are scheduled to start enrolling in late 2013 for coverage that begins in January 2014

But logistical challenges facing an exclusively state-operated exchange appear insurmountable, aides to the governor told The State Journal-Register.

“Our decision, I think, is partly based on the fact that we want to make sure Illinois residents have access to high-quality, affordable health insurance through the exchange,” said Michael Gelder, the governor’s senior health-care policy adviser. “At this point in time, in the situation we’re in, a state-federal partnership is the best way of assuring access to an exchange.”

Cristal Thomas, Quinn’s deputy governor for public policy, said the inability thus far of the Democrat-controlled General Assembly to pass legislation setting up an exchange isn’t necessarily the reason Quinn is pursuing a state-federal partnership.

“It’s difficult to look back,” Thomas said. “We’re really focused on looking forward.”

There’s not enough time for Illinois to meet a Nov. 16 deadline to submit a plan for a state-operated exchange to the federal government, she said.

Quinn, who supports Obama and the ACA, plans to continue working with the General Assembly on legislation to set up a governing board and funding source so a state exchange can begin in January 2015, Thomas said.

Sept. 30 deadline

State-based exchanges are a key component of the ACA, but many states are having a hard time getting all of the information-technology work done on time, Gelder said.

For Illinois, the partnership will mean that the federal government sets up and operates the online component of the exchange, he said.

The state still will have a role, with the Quinn administration determining most of the basic list of medical services that must be covered by insurance plans sold through the exchange, Gelder said.

Quinn aides have a Sept. 30 deadline to develop that list, Gelder said.

Not all details of the partnership have been spelled out by federal officials, though Thomas said the Illinois Department of Insurance will certify insurance plans and “do some of the in-person consumer assistance.”

An exchange operated as a state-federal partnership won’t be able to negotiate rates with insurance companies through the “active purchaser” model advocated by the Campaign for Better Health Care and other groups.

Jim Duffett, executive director of the Champaign-based campaign, said he was disappointed that Quinn opted for a partnership. He said the not-for-profit campaign will work with the Quinn administration “to make sure we have a state exchange by 2015.”

Regardless how the exchange is operated in 2014, Duffett said, “This is another success of the Affordable Care Act. We are positive about the idea of moving forward with the ACA and the exchange.”

The campaign had encouraged Quinn to bypass the legislature and issue an executive order setting up the basics of a state-operated exchange.

“An executive order is something that the governor might consider down the road,” Gelder said, “but … we have all the things that we need at the moment to keep moving this ahead.”

Costly undertaking

State Sen. Bill Brady, R-Bloomington, said he hopes Republicans gain control of Congress and Obama is thrown out of office in the Nov. 6 election so the ACA, which withstood a U.S. Supreme Court challenge, can be repealed.

Brady said he wasn’t surprised by Quinn’s decision, but he said a state-federal partnership raises “a whole lot of questions.”

State Rep. Greg Harris, D-Chicago, said he hopes a state-operated exchange eventually can be established “in the mode that gives the most protection for consumers. The giant corporations are very good at taking care of themselves.”

Illinois so far has received $39 million in federal startup funds for an exchange and eventually could qualify for more than $90 million.

Most of the $39 million will be spent on a contract with a private vendor to develop the computer infrastructure for a state-based exchange, Gelder said.

The state will request proposals in the next few days, he said.

“That’s why we’re confident we’re going to have our own exchange,” Gelder said. “That builds our ability to operate the exchange.”

A consultant’s report estimated a state-based exchange would cost $92.3 million to develop, an amount that would be covered entirely by the federal government. The report also said the exchange would employ about 50 people and cost Illinois between $57 million and $89 million a year to operate.

Under the state-federal partnership, the state won’’t hire a staff for the exchange, and the exchange won’t have a separate bricks-and-mortar presence in Illinois, Thomas said.

Dean Olsen can be reached at (217) 788-1543. Follow him at

Illinois health-insurance exchange

*The exchange would enroll about 486,000 people in private health plans in 2014, the first year of operation.

*Enrollees would include people who previously were among Illinois’ 1.9 million uninsured, as well as people who previously had more-expensive individual or family policies and 149,000 people working for employers of 50 people or fewer that decide to buy coverage through the exchange.

*About 247,000 individuals would qualify for federal subsidies for premiums and co-payments in 2014.

*By 2016, the exchange is projected to serve more than 1 million customers.

*The exchange also would serve as a portal for 500,000 people the state expects to join the Medicaid program. The state would receive 100 percent federal reimbursement, for the first three years and never less than a 90 percent federal reimbursement after that, for covering a new group of Medicaid recipients — childless adults with incomes below 138 percent of the federal poverty level, or less than $15,415 for an individual and $31,800 for a family of four.

Source: Wakely Consulting Group, Health Management Associates and Illinois Department of Healthcare and Family Services.