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Next Step for Kentucky's Health Insurance Exchange: Picking a Model Plan

The confusing process of setting up Kentucky’s health insurance exchange should get clearer later this month.The Affordable Care Act requires states to set up exchanges in which residents can compare and purchase health plans. Governor Steve Beshear choose to set up the state exchange earlier this year, rather than let the federal government operate the system.So far, Beshear has created a new state office to house the exchange and he's named an executive director. And by the end of this month, the state must choose an existing health plan that will be the benchmark for the exchange. To be listed on the exchange, all other health plans will have to provide similar or better service than the benchmark.Each plan must cover essential care items including:

  • Ambulance service
  • Emergency service
  • Maternity/newborn care
  • Mental health and behavioral health treatment
  • Substance abuse
  • Rehab services and devices
  • Laboratory and testing services (i.e. blood work)
  • Preventive, wellness
  • Chronic disease management
  • Pediatric care, including dental and vision

Federal regulations mandating the relative size of the plan give the state ten options for the benchmark:

  • Any of the three largest Kentucky Employee Health Plans, which are offered to state employees and are run by the state. The state currently offers four levels of KEHP and the Humana Vitality plan
  • Any of the three largest federal employee health plans
  • Any of the three largest "small group" plans offered to employees in the private sector
  • The most popular HMO plan in Kentucky. HMOs require patients to visit specific doctors or risk playing all costs for care.

If the state doesn't choose a plan, the federal government will step in and make one of the small group plans the benchmark. The three largest in that category are:

  • Anthem's LUNEMOS plan, which is a health savings account (HSA). That plan features a high deductible and almost all health care costs have to be paid from the HSA or out of pocket until the limit is reached. 
  • Anthem's BlueCross BlueShield HMO.
  • A Point of Service (POS) hybrid plan from United Healthcare of Kentucky. This plan is a cross between an HMO and a Preferred Provider Organization style plan (PPO). In the United Healthcare plan, patients are given a set of doctors and hospitals that are in their network. Going to an out of network provider under the plan would mean higher costs, though unlike in an HMO, the insurance company would still play part of the bill. 

Once the model plan is picked, other insurance plans will have to offer comparable or superior care in the eyes of the state government in order to be listed in the exchange. Medicaid and KCHIP will also be provided in the insurance exchange.

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