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Opinion: How states could fumble insurance exchanges
, Guest Columnist
Monday, May 21, 2012 11:27 AM
Regardless of the ongoing debate, health care reform is now the law of the land, and we need to begin the process of developing meaningful consumer-oriented products and solutions.
After all the political wrangling and cleanup changes to the 2010 law, a critical question remains: How well prepared are we to expand health insurance to add tens of millions more people?
In 2014, the most significant changes of the health care overhaul are scheduled to take effect, including: federal coverage mandates, premium subsidies for income-qualifying consumers (133 percent to 400 percent of the federal poverty level), and new platforms to help individuals and small businesses buy health insurance.
Creation of state health insurance exchanges in 2014 – expected to bring some 30 million uninsured Americans under the umbrella of private health insurance – is one of the keys to determining the direction health benefits will take in the future.
Quality of implementation will drive success or failure of the exchanges. If the exchanges fail to satisfy a broad range of consumers and employers, disappointment could propel the nation toward a single-payer government system. If the exchanges succeed, tens of millions of newly covered individuals will have access to health care, and we may all come to embrace the concept.
Design for success
A major theme of health insurance exchanges is that they are market-oriented. The goal is for consumers to enter an open marketplace, see their health insurance options and make purchases. For an exchange to be successful, the design must generate enough competition and choice to drive significant participation.
To date, much of the attention on exchange design has focused on regulatory requirements. But states and the industry need to provide equal emphasis on how well the exchanges will work for users, as success hinges on attracting and retaining a large number of enrollees. Policy makers should focus on these four factors:
one-stop centralized marketplaces with transparent information on all aspects of health insurance;
high-quality consumer experience with emphasis on simplicity and ease of use;
array of competitive choices to meet diverse needs of consumers, small employers and brokers; and
integration of core competencies to ensure a cost-effective, seamless flow of eligibility, enrollment and payments.
Concepts for the state exchanges range from minimalist Web sites listing hyperlinks for eligible insurance plans to one-stop shopping places that enable consumers to compare, select, enroll and pay for their health plans on one platform.
Each state’s or region’s exchange should offer integrated, one-stop service for consumers, employers and insurance brokers.
Policy makers should select robust technologies that support seamless end-to-end processes. Nonsubsidized individuals and small employers will be more likely to embrace exchanges that are simple and easy to use; communicate in plain English rather than “legalese”; offer a broad range of products with design and price variations; and have a clear navigation path from shopping to payment to service.
Much as a retail store attracts customers by offering a broad line of merchandise, health insurance exchanges should provide a diverse range of health benefit plans and ancillary products to meet the needs of consumers, small employers and brokers.
If states take an overly controlling position that limits options, users will find the exchanges unattractive.
Consumers and employers are not all alike, so the new marketplaces should include choices such as traditional insurance, managed care plans and consumer-directed health care.
The consumer-directed category encompasses health savings accounts and health reimbursement arrangements, which are generally paired with higher-deductible policies. Consumer-directed plans, with their emphasis on individual decisions, have been shown to improve health care costs, efficiency and wellness. These important outcomes should be addressed among the options offered in the new exchanges.
Integrating core competencies
Given the complexity of health insurance decisions, it is critical to incorporate core competencies to make each exchange fully functional.
States should design exchanges in partnership with several industries to draw on a wide spectrum of expertise. These industries should include insurance companies, to focus on risk, claim and provider management systems; administration and technology firms, for focus on easy-to-use presentation as well as transactional and customer service platforms; and financial institutions, for focus on payment systems, best practices and efficient disbursements.
Doing health insurance exchanges right will come from investing time and energy to design them well. Success will require drawing upon all industry skills to design exchanges that will attract large pools of participants into a competitive marketplace that is simple to use, provides a wide array of choices and is in one integrated service delivery model.
Dennis Triplett is CEO of Kansas City-based UMB Healthcare Services, a division of UMB Bank. He may be reached at
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