Preparing for Health Reform: State-Based Health Insurance Exchanges Bob Carey RLCarey Consulting...
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Preparing for Health Reform: State-Based Health Insurance Exchanges Bob Carey RLCarey Consulting January 22, 2010
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Transcript of Preparing for Health Reform: State-Based Health Insurance Exchanges Bob Carey RLCarey Consulting...
Preparing for Health Reform:State-Based Health Insurance
Exchanges
Bob CareyRLCarey ConsultingJanuary 22, 2010
Assumptions
State-based exchanges
Federal guidance, but (some) state flexibility
Oversight/enforcement handled (initially) by the states
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Developing a Baseline
Uninsured
Current publicly-subsidized health coverage programs
Insured
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Uninsured
Size of the population Demographics Geographic/regional variations Family income Employment status and availability of
ESI Eligibility for publicly-subsidized
health coverage programs4
Public Health Coverage Programs
Types of programs available Eligibility criteria Take-up rates Distribution methods Capacity Potential impact of exchange on
existing programs Particular focus on premium subsidy
programs for “non-traditional” groups5
Insured
Demographics Geographic/regional variations Employment status Types of coverage Distribution methods Carriers and market share ESI premiums and % paid by employees Take up rate of ESI Role of brokers/intermediaries, by
market segment
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Why the Baseline?
Identify potential for program consolidation or elimination
Highlight areas to focus “crowd out” efforts
Leverage the market and existing infrastructure
Optimize capacity and avoid duplication Inform outreach and marketing strategy
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What Type of Exchange?
Three basic models
Weak Strong(Range of Government Involvement in Market)
Ultimate Goal – shift the individual and small group markets from competition based on avoiding risk into competition based on price and quality.
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Market Organizer & Distribution Channel Offers all plans and all carriers Serves as impartial source of information Facilitates plan/carrier comparisons Brokers insurance Streamlines administration and simplifies
enrollment process Promotes defined contribution approach
to ESI (?)
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Selective Contracting Agent Offers “structured choice” of health plans
and carriers Promotes competition among insurers,
but does not “negotiate” premiums Serves as impartial source of information Facilitates plan/carrier comparison Brokers insurance Streamlines administration and simplifies
enrollment process Potential for defined contribution ESI
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Active Purchaser
Sets benefits package and procures health insurance on behalf of enrollees
Negotiates premiums with carriers Limits choice of plans/carriers Attempts to act like large employer
Viability contingent on covering large – and “risk neutral” or better – pool of members
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Funding and Operating an Exchange
Model selected will impact: Roles and responsibilities Administrative structure/governance Staffing
Initial investment of resources influenced by model selected AND capabilities/capacity of existing public and private entities
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Building or Renting Administrative Capacity
Medicaid agency to process eligibility for premium subsidy?
Private sector intermediaries (third party administrators) to provide administrative services? Quoting Enrollment Customer service Premium billing, collection, remittance Account management, etc…
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Revenues to Support Operations Retention of a portion of the
premiums Typically 3% - 5% of premium
Add-on fee to premiums
Annual Appropriation
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Subsidized Health Insurance
Two main options
Stand-alone Medicaid-like health coverageo Commonwealth Careo Texas’ CHIP and Medicaid Buy-In programs
Premium subsidies for commercial insuranceo Maryland’s Health Insurance Partnershipo Insure Oklahoma
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Outreach and Enrollment
O&E likely determines success/sustainability of the exchange
Impacts risk selection and potential for administrative efficiencies
Use of health insurance brokers may be key, particularly for small group market
Need to leverage multiple sources of information
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Mitigating Risk of Adverse Selection Learn from past mistakes Rating rules and carriers’
underwriting guidelines must be comparable inside and outside the exchange
Don’t separate risk pools Brokers have significant influence
with employers17
Conclusion
“First do no harm”
Each market – and each state – is different
Recognize and leverage existing infrastructure
Focus on end goal – shifting competition from one based on avoiding risk into one based on price and quality
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