Texas refuses to launch health insurance exchange

Gov. Rick Perry, a staunch opponent of the reform law, threatened to veto any legislation that implemented a state insurance marketplace.

By Doug Trapp — Posted July 15, 2011

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Texas declined to create a health insurance exchange during the legislative session that ended June 30, but the state did advance its own version of accountable care organizations.

Gov. Rick Perry strongly opposes the health system reform law and threatened to veto any legislation that would help implement the law's health insurance exchanges. The exchanges will serve as one-stop marketplaces for qualifying health coverage beginning in 2014. Perry did not want to be seen as aiding the implementation of the health reform law in any way, said Texas Rep. John Zerwas, MD, sponsor of the leading bill to create an exchange, and Texas Medical Assn. President Bruce Malone, MD, in separate interviews.

"They definitely were just very entrenched on this idea," Dr. Zerwas said. At least one other governor, Bobby Jindal of Louisiana, opposes creating a locally controlled exchange in his state.

The Texas Medical Assn. supported Dr. Zerwas' measure to authorize a state insurance exchange. However, Dr. Malone called the national reform law's subsidies to help buy health insurance through the exchanges a "middle-class welfare entitlement." The subsidies will be available on a sliding scale to people earning up to 400% of the federal poverty level, or $43,560 for an individual.

Perry opposed Dr. Zerwas' bill even though inaction on the issue could force the Dept. of Health and Human Services to operate a federal exchange in Texas. HHS will do so in states that decline to create their own insurance exchanges.

Perry spokeswoman Lucy Nashed said the governor is hoping that the U.S. Supreme Court will uphold lower-court rulings that part or all of the health reform law is unconstitutional. "The governor is committed to working with lawmakers and state health and insurance officials to address Texas' health care needs, and we are looking at all of our options to determine what's in the best interest of Texans."

Texas could enact its own exchange at a later date, HHS officials said during a July 11 call with reporters about new proposed rules to create health insurance exchanges. HHS in January 2013 will certify whether state-created health insurance exchanges are on track to operate by January 2014. After 2014, a state that did not create an exchange could still do so if the state provides 12 months' notice, said Steve Larsen, director of the HHS Center for Consumer Information and Insurance Oversight.

Drs. Zerwas and Malone said Perry told them he can create a state insurance exchange administratively without consulting the Legislature. Nashed did not explain what legal authority Perry might have to do so.

Perry approved a measure passed by the Legislature to create "health care collaboratives," Texas' version of accountable care organizations. The bill clarified that health care organizations that assume financial risk for treating patient populations will be classified and regulated as health insurance. It also requires collaboratives to have physicians on their governing boards. Individual doctors will be able to participate in more than one collaborative.

However, many details about the collaboratives need to be spelled out, Dr. Malone said. Texas physicians are likely to be skeptical about collaboratives. "I can't imagine a scenario in which doctors would be anxious to participate in this," he said.

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