Setting Up Exchanges

The Economist noting that the clock is ticking toward the time when states will be required to have operational health insurance exchanges (market places) in which consumers can shop for and purchase insurance. Or if states do not set one up, then the federal government will do so. There are a host of practical questions that states must answer as the Economist notes:

Who should govern the exchange? Should they join a multi-state exchange? How should states facilitate enrolment, as required by law? What sort of people will buy insurance on the exchange? How should the exchange be structured to serve them?

And states are waiting on final rules about benefit packages from the federal government and many want clarity on existing rules. Lots of details. However, what caught my eye was this:

PricewaterhouseCoopers, a consultancy, estimates that 97% of those enrolled in exchanges will be buying insurance for the first time.

That is the point, you might correctly say. However, for all the bluster about the heavy hand of government, the most radical and untested aspect of the ACA is that individuals will shop for their own health insurance, with CBO estimating that 24 Million persons will purchase coverage in exchanges by 2019. In 2010, there were only 14 Million persons with individually purchased health insurance policies nationally according to Kaiser, so the implementation of the ACA will bring about a huge increase in those buying their own coverage (with income based premium support, of course). By comparison, there are now 155-160 Million covered by employer sponsored coverage, and around 110 Million covered by Medicare and Medicaid.

It is important to realize how little we know about how good consumers will be at buying their own health insurance.  That the number of individuals doing so will nearly double in eight years time is the most radical departure from the status quo in the ACA.

Health Insurance Exchange Resources

The Robert Wood Johnson Foundation funded the National Academy of Social Insurance to develop a tool kit for states contemplating setting up a health insurance exchange under the Affordable Care Act. Here are summary slides of the project guidance.

The  draft legislation in the toolkit is laid out in a way that makes clear how and where the NASI/RWJF project recommends expansions or modifications of the draft legislation put out by the National Association of Insurance Commissioners. For example, the NASI/RWJF materials suggest further stipulations about transparency of financial arrangements, and provide extra detail for how to deal with Medicaid/CHIP eligibility in exchanges.

In my state of North Carolina, developing the governance structure for an exchange has been a key sticking point; especially the makeup of any board membership. The NASI/RWJF materials outlines three potential governance structures:

  • Cabinet-level executive branch agency
  • Independent executive branch agency
  • Private, Non-Profit board

Each state has particular issues of focus, struggle and controversy, including whether to seek to block the law, move to implement it, or both at the same time (like in North Carolina). The NASI/RWJF tool kit provides great information about many topics for all states.

update: added Insurance to the title of the post.