Health insurance exchanges start operating Tuesday. Some states built their own exchanges (14), some states partnered with the federal government (17), and some — including Georgia — decided to let the feds build their exchanges (19).
We are entering a confusing world of insurance exchanges, also called insurance marketplaces. There are state, federal, and private insurance exchanges. There are single- and multiple-carrier exchanges. There are exchanges run by consultants, agents, associations and insurance carriers. What is a consumer to do?
The development of marketplaces, both government and private, will change the way insurance is bought and sold. It is a new way of connecting products with customers.
Looking for lower premiums? The “Affordable Care Act,” or ACA, has few features that will actually make insurance more affordable. Studies have indicated that mandates, premium restrictions, added benefits, single-risk pools and price compression will raise premiums more rapidly than if ACA had never passed. The ACA requires insurers to “community rate” their products. Individuals and small groups will not get premium reductions for healthy behaviors.
Government exchanges are for individuals and fully insured small groups; larger employers may be included after 2017. Government exchanges are likely to be used mainly by those qualifying for federal subsidies and are expected to attract poor risks and high-cost claimants. Government exchanges will use government-paid “navigators” rather than licensed insurance agents, and they will not offer supplemental products, life insurance or other insurance products and services.
Private marketplaces have been around for many years, but have expanded as an alternative to government exchanges. Private marketplaces are free-market solutions for access to coverage and affordable premiums. Private marketplaces will offer individual and group products that emphasize wellness and treatment compliance for those under medical care. Emphasis on patient compliance and personal responsibility are more likely to emerge from products offered through private marketplaces.
Private marketplaces provide a transition from employer-based insurance to consumer-centered insurance. Both large and small employers will be able to purchase health insurance through private marketplaces. Private marketplaces will serve fully insured, self-insured plans, early retirees and retirees. Employees will be able to choose individual plans from participating insurers.
We are in the beginning stages of a major market revolution. Government exchanges face a daunting task: connecting insurance carriers for premiums and coverage with IRS tax records for subsidies while meeting the needs of customers, and providing services for those eligible for other government insurance programs — Medicaid, CHIP (children’s health coverage) and Medicare. Expectations are high, and delivery dates have been delayed. Technology links have been questionable. Privacy, data security, and accuracy at each stage will be critical to public acceptance of government exchanges.
As private marketplaces become available, each will offer varying types of products and services. Ultimately, the success and failure of each marketplace will lead to consolidation, with winners offering better products, services, convenience, help and information for the consumer. In the end, more product competition and price transparency will lead to more people being insured, and lower insurance costs will prevail. This is the way free markets create affordable products and services that consumers want to buy.
So, what are we to do? For those who want ACA to succeed, the results to date are not promising. For those wanting the failure and repeal of ObamaCare, be careful of what you ask for. Government failures usually result in more government solutions to fix the problems. For those already pointing political fingers at who is to blame, remember the old saying – “Every system is perfectly designed for the outcomes achieved.” The country voted, the courts ruled, and now we may have to literally live and die with the results. Welcome to confusion.
Ron Bachman writes about health care issues for the Georgia Public Policy Foundation.