Health insurance exchanges: Let’s do them right

Regardless of the ongoing debate, healthcare reform is now the law of the land, and we need to begin the process of developing meaningful consumer-oriented products and solutions. After all of the political wrangling and “cleanup” changes to the 2010 law, the critical issue will remain:

How well prepared are we to execute on expanding health insurance to add tens of millions more people?

In 2014, the most significant changes of the health care overhaul are scheduled to take effect, including: federal coverage mandates, premium subsidies for income-qualifying consumers (133 to 400 percent of the federal poverty level) and new platforms to help individuals and small businesses buy health insurance.

Creation of state health insurance exchanges in 2014 — expected to bring some 30 million uninsured Americans under the umbrella of privately provided health insurance — is one of the keys to determining the direction health benefits will take in the future.

Quality of implementation will drive success or failure of the exchanges. If the exchanges fail to satisfy a broad range of consumers and employers, disappointment could propel the nation toward a single-payer government system. If the exchanges succeed, tens of millions of newly-covered individuals will have access to health care, and we may all come to embrace the concept.

We urge all stakeholders including business leaders, regulators and consumer groups to join the planning and implementation, to ensure success when the health insurance exchanges go “live.”

Designing exchanges for success

A major theme of health insurance exchanges is that they are market oriented. The goal is for consumers to enter an open marketplace, see their health insurance options and make purchases. Sounds simple. However, for an exchange to be successful, the design must generate enough competition and choice to drive significant participation. This would thereby mitigate adverse selection and reduce administrative costs —critical factors for achieving long-term sustainability.

To date, much of the attention on exchange design has focused on the regulatory requirements. But states and the industry need to provide equal emphasis on how well the exchanges will work for users. Attracting and retaining a large number of enrollees is the ultimate determinant for success.

Based on extensive experience serving health plans and consumers, we encourage policy makers to focus on these four success factors for the exchanges:

• One-stop centralized marketplaces with transparent  information on all aspects of health insurance
• High-quality consumer experience with emphasis on simplicity and ease of use
• Array of competitive choices to meet diverse needs of consumers, small employers and brokers
• Integration of core competencies to ensure a cost-effective, seamless flow of eligibility, enrollment and payments

Creating centralized marketplaces

Concepts for the state exchanges range from minimalist websites listing hyperlinks for eligible insurance plans to one-stop shopping places that enable consumers to compare, select, enroll and pay for their health plans, all on one platform.

We believe centralized markets are the way to go. Each state or region’s exchange should offer one-stop service for consumers, employers and insurance brokers. An exchange should be integrated—not a shallow, fragmented portal sending consumers off in all directions to gather information from insurers.

Emphasizing consumer experience

Much of the insurance exchange discussion so far has been about regulatory issues. While fairness and other concerns are important, we believe consumers should be the focal point in designing exchanges.

We urge policy makers to select robust technologies that support seamless end-to-end processes. Non-subsidized individuals and small employers will be more likely to embrace exchanges that include these characteristics:

• Simplicity and ease of use
• Plain English rather than legalese
• Broad range of products with design and price variations
• Clear navigation path from shopping to payment to service

Providing competitive choices

Much as a retail store attracts customers by offering a broad line of merchandise, health insurance exchanges should provide a diverse range of health benefit plans and ancillary products to meet the needs of consumers, small employers and brokers.

If states take an overly controlling position that limits options, users will find the exchanges unattractive. Consumers or employers are not all alike, so the new marketplaces should enable choices among an array of options, such as traditional insurance, managed care plans and consumer-directed options.

Consumer-Directed Health Care (CDHC) plans should have a presence in these exchanges. This category includes Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs), which are generally paired with higher deductible policies.

Consumer-directed plans, with their emphasis on individual decision making, demonstrably improve health care costs, efficiency and wellness. These important outcomes should be addressed among the options offered in the new exchanges.

Integrating core competencies

Given the complexity of health insurance decisions, it is critical to incorporate all core competencies to make each exchange a fully functioning system.

States should design exchanges in partnership with industry to draw upon relevant systems expertise in the various fields, including:

• Insurance companies—risk, claim and provider management systems
• Administration and  technology firms—robust, easy-to-use presentation, transactional and customer service platforms
• Financial institutions—payment systems, best practices and efficient disbursements

Doing health insurance exchanges right will come from investing time and energy to design them well. Success will require drawing upon all of the skills in industry to design an exchange that will attract large pool of participants into a competitive marketplace that is simple to use, provides a wide array of choices and is in one integrated service delivery model.

About The Author

Dennis Triplett is Chief Executive Officer of UMB Healthcare Services, a division of UMB Financial Corporation, headquartered in Kansas City, MO.  Dennis has responsibility for UMB’s strategic direction in health care banking and manages the sales and marketing activities as well as product development and relationship management.  He developed UMB’s Medical Savings Account product in the late 1990s and grew that into their multipurpose card product supporting a variety of spending accounts including HSAs, FSAs and HRAs.