Greenbeard
Gold Member
The centerpiece of the insurance-related portion of the new reform law is the creation of state-level health insurance exchanges ("American Health Benefit Exchanges"). Sounds like a pretty importance concept but what is it, why have both Republican and Democratic reform bills called for their creation, and what are they supposed to do?
GWU and Robert Woods Johnson are working together to create Health Reform GPS, a very well put together resource for navigating the implementation of reform. The other day they released a brief on health insurance exchanges that some of you may find helpful.
I'm going to quote some of the background here but if you want more information about what they are, what they're going to be doing and what they're required under the new law to be doing, follow that link. Lots of information.
GWU and Robert Woods Johnson are working together to create Health Reform GPS, a very well put together resource for navigating the implementation of reform. The other day they released a brief on health insurance exchanges that some of you may find helpful.
I'm going to quote some of the background here but if you want more information about what they are, what they're going to be doing and what they're required under the new law to be doing, follow that link. Lots of information.
One of the great challenges in buying health insurance has been a highly fragmented market. Individuals and group purchasers lack a reliable means for seeing their choices in one place and in a manner that allows them to compare what the plans cover, which providers are in various plans practice networks, how cost-sharing might differ, and how numerous competing plans might compare on key measures of quality performance. Nor has there been an active, consumer-oriented system for assuring that insurance plans that are offered in the individual and small group markets provide comparable coverage, cover the benefits that are considered essential to any health insurance plan, have accessible provider networks, and are accountable for specific measures of health care quality. State insurance departments play a different role in most states, overseeing health insurers solvency and marketing and business practices. But typically insurance departments do not, as part of their work, organize the health insurance market to make it accountable and user-friendly to individual and group consumers.
Health insurance exchanges are designed to help individuals and small employer groups be better positioned to purchase high quality health insurance by creating organized markets[1] that simplify the job of selecting and enrolling in coverage and securing performance information about available products. Health insurance exchanges have been a key element of numerous health reform proposals; indeed, the concept of an exchange lies at the core of systems that turn on the competitive selection of health insurance products in the individual and group markets.[2] Massachusetts Commonwealth Health Insurance Connector Authority, established as part of the states 2006 health reform legislation, is probably the best known example of a health insurance exchange.[3] The Medicare Part D prescription drug benefit also utilizes an exchange concept as the means by which beneficiaries select their prescription drug plans. At the same time, there are several issues that can derail the development and functionality of exchanges, including adverse selection, a low number of participants, over-complexity, transparency and disclosure, and competition, among other things.[4]
A health insurance exchange might carry out numerous functions: helping individual and group purchasers calculate and compare (e.g., individuals versus families; older versus younger individuals; small versus larger employer groups); providing information about the plans and negotiating prices; helping purchasers gain access to available subsidies; and assuring that premium payments to plans are adjusted to reflect the level of health risk among enrollees (a practice known as risk adjustment) in order to assure payment fairness depending on the specifics of their products. For example, health plans may differ on the level of pharmacy benefits covered or may offer provider networks that are broader or narrower. Health plans provider networks may also perform differently on key measures of health care quality. Depending on these variations, plans may attract sicker versus healthier populations.[5]
Health insurance exchanges are designed to overcome a basic problem, namely the lack of a robust, organized market for the purchase of health insurance by individuals and small business. In the absence of an organized market, the price of coverage rises because of the additional costs incurred in marketing to and supporting thousands of small customers. In addition, the lack of an exchange means the absence of an organized group of individuals and small business purchasers across whom the cost of coverage can be spread.