Exploring Human Potential

Why Insurance Exchange Glitches Are A Good Sign and Have Obamacare Opponents Worried.

Posted on | October 2, 2013 | No Comments

Mike Magee

Glitches in health insurance exchange sites were widely reported yesterday, the first day of a 6 month open enrollment period for new insurance programs offered under the Affordable Care Act.

While this was undoubtedly a source of stress for HHS Secretary Kathleen Sebelius, it was a nice problem to have. It was mainly the result of an overload of the systems with millions more seeking online and telephone contact than had been predicted. And it was a stark rebuke to those who claim that Americans in large majority want to see the law dismantled, disabled, and discarded.

What experts on the legislation realize is that this is only the beginning, and that the new Insurance Exchanges will becone increasingly transformative within a relatively short period of time.

Henry Aaron and Kevin Lucia stated it well in a New England Journal of Medicine article last week: “… the exchanges are an instrument of enormous potential power. Political resistance may inhibit the use of this instrument. But over time, as the initial administrative glitches are ironed out, we believe that the exchanges will be seen as a means for promoting a competitive insurance market in which consumers can make rational decisions and that they will become an instrument that can reshape the health care delivery system.”

Why and how will the new insurance exchanges transform health delivery in the United States?

The Job of Health Exchanges:
Their are four major functions: 1) eligibility determination and enrollment, 2)consumer support and outreach, 3) insurance plan management, and 4) financial management.

New Rules For Insurers:
1) Participating insurers are required to sell to all willing buyers, regardless of health status. 2) They cannot cancel coverage regardless of the size of an insurance claim. 3) Age-based variations in premiums are limited. Premium price is no longer tied to health status. 4) Plans available to individuals and small employees must cover a minimum set of medical benefits. 5) The five types of plans available (by metal names), based on the levels of co-pays and deductibles are otherwise standardized. This conformity allows meaningful price comparisons for the first time.

Additional Powers:
1) Exchanges can cap the number of plans insurers can offer. 2)They can require standardization to facilitate comparison of price and service. 3) They can set additional standards for the quality of care. 4) They can exclude plans that do not meet quality or price standards. 5) They can selectively contract with plans that exhibit the highest performance. 6) States may require insurers to offer the same plans outside the exchanges as they offer inside the exchanges.

Future Actions Predicted:
1) The Scope of Exchange Coverage Will Grow to include employers with 51 to 100 employers, and to larger employers including state and local governments. 2) States will increasingly demand that insurers participate in the exchanges if they wish to sell policies outside the exchanges within state boundaries. 3) Hospital and physician pricing will become more standardized and transparent to all. 4) Of the many pilot projects currently being tested, some will succeed, some fail. The winning models will spread rapidly, and become the new standard for health delivery. 5) If too many choices undermine consumer understanding and confident plan selection, states will limit choices to a reasonable number of insurance providers. 6) Federally facilitated plans in the current non-participating states are a huge backstop, offering citizens in these states with options destined to become as popular as Medicare.

Considering the above, it is understandable that the opposition (both political and industry based) is as engaged and enraged as it is. Yesterdays glitches made them very nervous.

For Health Commentary, i’m Mike Magee.


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