Lt. Gov. Matt Michels and Eric Matt, an aide to the governor, met this morning with the state Senate health and human services committee to talk about the health insurance exchange that will be established under the Affordable Care Act (aka Obamacare) passed by Congress in 2010. Michels said people will see on their W-2 forms this year whether they are covered by health insurance. That information will eventually be used by the IRS to determine whether people face a penalty for failing to have health insurance. The individual mandate takes effect in 2014. Insurance companies also will have a reporting requirement. Michels said self-employed people will self-report. He said one flaw is that some people don’t file taxes. Michels said the exchange is a tool that people can use for obtaining health insurance. “There’s a marketplace choice here,” he said. “It’s a portal to look and see what’s available.” He said it will be an eBay-like environment in South Dakota.
Matt said nationwide there will be heavy use of the exchanges, because people up to 400 percent of the federal poverty level will qualify for federal subsidies if they go through an exchange. Health plans will have to meet 10 sets of standards to participate in an exchange. Each individual who seeks to participate through an exchange needs to be screened for possible Medicaid eligibility. The federal law requires a health insurance exchange to be established for enrollment in every state by Oct. 1, 2013. States can establish their own exchanges or allow the federal government to do it. A third option is a blend or partnership: There is a federal exchange and state government handles some functions such as consumer assistance and insurance regulation. In last September, Gov. Dennis Daugaard announced South Dakota won’t operate its own exchange. The estimated annual cost for operating the exchange is $6 million to $7 million annually, which Matt said the governor thought didn’t make financial sense. However the governor wants to continue state regulation of insurance companies. Matt said negotiations are under way with federal officials.