Why Virginia's health insurance marketplace is off to a strong start with some hiccups, but with plenty of participation?

Susan Sipolt of Blacksburg knows more about the bureaucratic world of health insurance than most. She retired early as an X-ray technician and has been using the federal insurance marketplace to find and enroll in health insurance since January 2020. But this year, she began navigating Virginia's own insurance marketplace.

This year is the first year of the statewide marketplace, and leaders of the new program say its implementation has been smooth compared to other states. So far, more people have enrolled in the state marketplace than last year, when the only enrollment option was the federal marketplace.

For Sipolt, however, the process has not been as easy, and she fears that others less savvy may not realize what has changed in their plans.

The insurance marketplace, or exchange, is an element of the Affordable Care Act passed by Congress in 2010. This tool allows people to compare and enroll in health insurance outside of plans offered by employers. It also gives people access to health insurance if they don't qualify for Medicare or Medicaid, like Cipolt.

In the early years of the ACA, it was assumed that most states would establish their own marketplaces and could enlist the help of a federal marketplace if necessary. However, the transition period was marked by political pressure in some states to oppose the law. According to the Center on Budget Policies and Priorities, a nonpartisan think tank that conducts research on a range of state policies and programs, massive technological failures followed in other states that did launch.

Now, 13 years later, only 18 states have their own exchanges. The rest rely on the federal Healthcare.gov marketplace to provide affordable health insurance options for their residents.

Three years ago, the Virginia General Assembly passed legislation to create a Web site that would help create its own marketplace in the state.

According to Holly Mortlock, deputy director of the Health Benefit Exchange, which was created specifically to develop a statewide marketplace, transitioning to the new standards is a huge undertaking, and leaders working to create a marketplace in Virginia wanted to set an appropriate timeline, taking into account lessons learned from other states.

To make this transition, the Virginia legislature first created a new unit within the state Corporation Commission called the Virginia Health Benefit Exchange. Over the past several years, this new unit has been hiring staff and engaging vendors to operate the Exchange, and this fall received approval from the federal Centers for Medicare and Medicaid Services to transition from using the federal site to the new site in 2024.

For state markets, the new tool must be able to exchange information with Medicaid and other federal programs and transfer data from the federal system to the new state system.

When Sipolt began selecting insurance for 2024, she discovered that her data had been successfully transferred into the state system, but she was automatically enrolled in an Optima Health plan that had not been accepted by her primary care physician. By the time she realized this, Sipolt had already paid her $750 insurance premium for December.

As a breast cancer survivor, Sipolt chooses her doctors carefully, looking for one who will provide informed referrals to specialists and tell her what she should expect when she meets with them.

"It's very important. And a lot of primary care doctors aren't accepting new patients," says Sipolt, including her own doctor.

After hours of research and calls to her local help desk, insurance companies and her doctor's office, Sipolt found out that she may not find out what insurance plans her doctors will accept until the new year. Someone who decides to wait until the new year will likely go a whole month without health insurance.

To have health insurance on Jan. 1, consumers had to make their choices by Dec. 15. Open enrollment will continue into January, but insurance will not begin until February 1.

"I could have an accident on New Year's Eve," says Cipolt. "What should I do?"

She decided to switch to Anthem's plan, which incurred another $820 fee, but she still wasn't sure if her regular doctor would be covered by the new insurer.

Deepak Madala, director of Enroll Virginia, a program that educates about health insurance in the state, recommends that people look at provider networks on health insurance company websites rather than the Virginia Insurance Marketplace, and then contact their preferred providers to make sure they participate in a particular carrier's program.

There is known to be a problem with the state's provider search tool on its website that causes providers to be flagged as out-of-network, according to an email sent to Cipolt by Optima Health.

When asked about the obstacles people face in enrolling, Madala said only that the rollout of the state's marketplace coincided with the rollout of the Medicaid program - a nationwide redesign of all Medicaid recipients after the COVID-19 public health emergency - which made the process confusing for consumers.

Advantages of state exchanges

In 2020, the federal government cut funding for outreach and customer assistance grants that funded call centers and shortened the open enrollment period. Since then, more states have opted for local insurance exchanges.

State-based exchanges offer more flexibility, such as extended annual open enrollment periods and simplified special enrollment periods for those facing qualifying events.

"There were a lot of one-stop solutions through the federal exchange," Madala says.

Madala said the federal insurance exchange also handles support requests for customers from 32 states that rely on its marketplace, making it difficult to get answers to questions. Virginia now has staff to answer all support calls.

Operating through a federal exchange also involves additional fees for insurance companies. By establishing a state-based exchange, local insurance companies can avoid these fees, resulting in lower premiums in the future.

So far, 390,000 Virginia residents have enrolled in the health insurance marketplace, up 12% from last year, says Mortlock of the health exchange. More than 90% of enrollees are eligible for financial assistance from the federal government.

Eventually, when open enrollment ends, Mortlock will have data on where Virginia residents are buying health insurance and will be able to identify places where the exchange is underutilized.

"Having proprietary data is really great. We'll be able to better support consumers," says Mortlock.