Will N.C. Implement Obamacare-II What is an Exchange?

This is the second post in my series Will North Carolina Implement Obamacare? Here is the introductory post. This post addresses the question, “what is an insurance exchange?”

The big idea is to set up a market place where consumers can shop for private health insurance policies. A health insurance exchange is a website through which individuals or small businesses can purchase health insurance with subsidies from the federal government that are based on your income. Typically, paper and phone enrollment options are also available. In Massachusetts, the health insurance market available to individuals and small businesses created by Romneycare is called The Connector.

The goal of an exchange is to provide information about insurance choices (premiums, deductibles, physicians in a network, extra benefits, etc.) to consumers in a way that helps them make the best coverage choice for them. If you have picked an employer based health insurance plan, then you may have used a similar web interface that guides your choice (here is Duke University’s). An exchange will provide a place where an heretofore uninsured North Carolinian can purchase the plan of their choice without having to worry about being denied coverage because they are sick.

N.C. could decide to develop its own version of an exchange, in much the same way Massachusetts built its Connector,and California is well down the road to creating one. However, we also can decide to let the federal government create an exchange in our state. A federal exchange will piggy back on the infrastructure that is now used by Medicare beneficiaries living in N.C. who decide to enroll in one of Medicare’s private insurance-based options (known as Medicare Advantage).  Below is a example of two Medicare Advantage plans available in zip code 27705 (Durham NC), shown just to give a sense of the type of information that must be communicated in an exchange (there are many plans available in 27705; this is just to give you a taste).

The first plan requires no premium beyond what is paid by Medicare to the private insurance company, while the second requires an individual to pay a $29/month additional premium. The consumer has to decide whether the extra premium is worth it. And so it will be in an exchange that is created by the implementation of the ACA. The point is to provide information to to consumers so that they can pick the plan that is best for them.

North Carolina could decide to set up our own exchange, in which case North Carolinians will be making the myriad choices and decisions required to operationalize an exchange for our State. My next post in this series will delve more deeply into the pros and cons of a state v. a federal exchange.

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

5 Responses to Will N.C. Implement Obamacare-II What is an Exchange?

  1. Pingback: Will North Carolina implement Obamacare? « freeforall

  2. Dennis Byron says:

    Don

    The actual screen shot you are showing is a web page of the AARP insurance company, not — as is implied — the government web site that we seniors use if we want to see choices among Medicare plans.

    Perhaps you have personal knowlege that both the AARP insurance company and medicare.gov (the site seniors use to see their choices) use the same information-technology “infrastructure,” either literally or in terms of the same brand hardware and software. I don’t know one way or the other but maybe that is why you worded the paragraph above the visual to include the word “infrastructure.”

    If that’s the case, the sites certainly did not share the same web-page designer. Perhaps you showed AARP’s site because you think the government’s Medicare web site is not as appealing and user intuitive. (It certainly doesn’t give the opportunity to “Chat Now” with a person who appears to be dressed to look like a medical professional. It does however use reference numbers to allow seniors to save drug lists.)

    Whichever is the case, I think your showing the private company’s (AARP) site rather than the government’s is telling, particularly in relation to your one-sentence aside reference to the Massachusetts Connector Authority. If anyone followed the link you provided they know that the Massachusetts Connector Authority web site is a travesty of web design and intuitive use. For people like me who had to use it (before I reached Medicare age), it is even worse than one might think just looking at it and comparing it to the AARP site shown in this blog post. You cannot purchase a policy without contacting a customer service representative (which would be a big problem if the Connector was successful but see below) and you cannot pay a bill without going to another web site. (And — and I have no objection to this — you cannot buy insurance any old time but only during open enrollment except for special situations, so the site sits somewhat unused most of the time.)

    But more important, it is critical to North Carolina’s understanding of what to do next vis a vis exchanges to know what happened here in Massachusetts. Massachusetts paid a Texas company tens of millions to set up and run the RomneyCare web site and yet very few people actually use it to buy insurance. The last report was that about 20,000 policies covering well under 1% — 42,000 (November 16, 2012) — of the 6,500,000 people living in Massachusetts were bought through the Massachusetts exchange.

    — Of those 42,000 people covered, only about 4,000 were from small groups whereas over 600,000 people buy insurance in the Bay State through small groups with no need for an exchange.
    — About half of the 70,000 people that buy insurance individually in Massacuhsetts do buy it through the Connector web site but that’s primarily because their insurance companies saw a good deal when the exchange was debuted and stopped selling to individuals directly, offloading their marketing costs on to the state (and the insured of course).

    The Massachusetts exchange web site and the bureaucracy that goes with it is a huge duplicative waste of money and North Carolina should do all it can to avoid the expense.

  3. Will Cline says:

    Don, thanks for the valuable information. I have been trying to find out some practical information about North Carolina’s plans for the Affordable Care Act. I am most interested in what options will be available for those like myself that are not eligible for Medicare or Medicaid. I am interested in several topics especially; what the premiums might be, and how many doctors will actually accept patients covered by these policies. It seems unlikely that the projected provider reimbursement rates are reduced as have been proposed, however if they are implemented I wonder how many providers will actually accept these policy holders.

  4. Pingback: North Carolina Republican’s Intro bill to block Medicaid expansion and exchange « freeforall

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