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February 28, 2012

THE COMMON MAN'S EXCHANGE

The very mention of the word "Exchange" today, in the United States is associated with Health reform and the PPACA act which was implemented by President Obama in March 2010 and why not? It is probably one of the most discussed topics today.  The Exchange which is supposed to make insurance purchase a simple yet effective tool for the majority of uninsured population, has long been in controversy, sometimes due to actual reasons and concerns; like the cost of implementing an exchange or how to actually make the Exchange self-sufficient by 2015, both at the state level or sometimes only because of political conflict. The general public for a very long has been in a dilemma about what is in it, for them.

The act mandates that every individual needs to be insured by Jan 2014. In such a scenario the common man is confused - 'Should I purchase insurance right away from an existing agency or a private exchange? 'Or 'should I wait for the reform which claims to provide subsidies?'. Something else that can trouble any consumer majorly can be the confusing status of release of such exchanges. Every other State has its own confusions and conflicts with the federal government weather to set up an Exchange or not.

  • What will happen to these Exchanges if and when there is a change in the government?
  • What will happen if a plan is discontinued in an Exchange due to non-conformance to federal standards and  will the Exchange be able to provide an equivalent plan in such a case?
  • If and at all I have certain benefits from an insurance company due to loyalty to a certain plan even  though I might be underinsured is the switch to a new Exchange worth it?
  • Would I rather pay the fine than pay the big premium for my entire family?

I am very sure that there is more than this that can come into consideration when an actual purchase has to be made. As a consumer what would interest me should be the priority of every Exchange and every platform associated with it.

The people responsible for designing such platforms should be able to resolve such issues with as much simplicity as possible and make the process an easy, seamless one which will ensure that no Exchange will wear a deserted look.

Every Exchange should be able to:

  • Tell me why I need insurance and what would be the benefits of buying insurance early.
  • Also explain why paying is not a preferred solution
  • The Exchanges should also try to contract with payer partners to continue the "no- claims bonus" or any  other benefits of loyalty, if the same payer exists within the Exchange.
  • The Exchange should look, feel user friendly, and also make the process of insurance purchase as trouble  free, stress free and non-chaotic as possible.
  • It should be simple and transparent and state facts clearly.

Most of the private exchanges look jazzy and give an impression of being quite pricy and give the feel of extravagance which comes with a huge set of fine print which is invisible to a common naked eye. The Exchange should target this very aspect and omit the fine-print which helps them:

  • Choose suitable cover which does not have any hidden clauses and conditions
  • Choose a payer who would not hike rates unreasonably once the plan is purchased
  • Choose plans according to the quality of care the payer promises to provide

Since it is a federal government initiative the population should be able to easily trust the Exchange and have faith in the choice and benefits it provides, after all it's meant to Exchange good healthcare for the premium the citizens pay.

February 22, 2012

Basic Health Program vs. Health Benefit Exchange

The Health Care Reform was launched with the idea of transforming the healthcare scenario in the entire United States, but how far will it actually serve the main purpose is the doubt I have in mind.

The main agenda of the much talked about Health Reform legislation is being able to make healthcare affordable for all the citizens of US as the act typically says "Affordable Care Act". But in the struggle for fulfilling the Reform's motive of care for all the policy makers are making provisions that in a way  contradict each other. The irony is that PPACA's act 1331 talks about establishing Basic Health Program, the implementation of which might lead to be a threat to the its own state established exchanges. BHP and Exchange can cut lines for each other. The ultimate decision with the BHP still awaits but it has the potential of affecting the successful running of Health Benefit Exchange, though both have their own pros and con's.

The Number plays the game here too. The Fundamental concept of Health benefit Exchange's ability to sustain and provide affordable care to consumers is the huge number of enrolees expected to purchase coverage through the Exchange. The entire issue of Basic health program option revolves around the low income exchange eligible population. The target group for BHP being individuals with income between 133% to 200% of FPL, or immigrants not eligible for Medicaid, the enrolees for exchange would fall. According to American Academy of Actuaries, every state has almost 25%-30% of the uninsured with incomes between 100-200% of FPL. Risk pooling in the exchange's individual market might change as its lowest - income members depart, thus affecting the entire concept of the Exchange and questioning its self -sustenance due to smaller risk pool and higher administrative costs.

  • States shall consider opting for the Basic Health Program based on the following:
    BHP dwells on the concept of 'States bargaining power vs Individual buying coverage'  by promising  to offer lower premiums and co-pays compared to exchange and  creating the much needed consumer appeal. It permits the states to provide "Medicaid look-like "or "CHIP " for adults, at lower costs  than exchange.
  • More comprehensive coverage, continuity of care, the concept of 'health homes' for families are some features that might drive the success of BHP. Building BHP on the existing Medicaid /CHIP infrastructure will reduce the administrative costs resulting in potential savings for the state. It also comes with built in public accountability -a feature may or may not exist in Exchange.

On the other hand BHPs' could translate into limited consumer choice due to narrower provider network and less plan options as compared to exchange an can be have capacity issues. Insurance risk profile remains an uncertainty, if all the BHP enrollees are less healthy than the individual markets it comes as a positive implication on the exchange risk pool, higher costs for BHP plan, less attractive market for BHP plan and providers.

Coexistence of both HBE and BHP....

But as a coin has two sides and I too believe that every aspect will have its own move and say.  One perspective is that BHP can be implemented without any affect on the exchange's viability if the approach is well defined.

  • In some states the combined small group and individual markets in Exchange might reach a size that would be less affected by BHP enrollee migration.
  • Joint Exchange with another state can increase the size of the risk pool thus supporting BHP and Exchange Co-existence and reduce the uninsured population in the state.
  • Another option is that the state can offer certain basic health plans within the Exchange, at a slightly lower premium than other commercial plans offered in the exchange. This way it could retain the 133-200% FPL enrollees and can spread the costs over a larger group.  This approach will also ensure continuity of care ensuring no coverage gaps resulting from the income fluctuations. Consumers may also have choice of enrollment into plans based on their priority of either a broader provider network in exchange plans or more affordable coverage through the other basic plans.

Now, when states are facing tremendous budget and administrative constraints to set up exchanges  by 2014, BHP could come up as a more lucrative cost effective option and reduce the number of low income uninsured population. But at the same time Implementation effects of BHP will differ from state to state depending upon the state demographics thus a generalised statement cannot be made against it.

Thus at this phase I feel the Federal government should take a deep note on what should be the way forward for the states. In view of all the perspectives the dilemma: should the states go for BHP or HBE or both -still remains as an important question to ponder upon.