State-Based Health Insurance Exchanges
By Jason Deck
I was invited recently to join a forum at Northwestern University to discuss the state-based health insurance exchanges (HIX). It included leaders of the state exchanges, legislators, consultants, insurance industry executives, and physicians. Topics included policy discussion, pricing and transparency issues, and growth plans.
I came away with one resounding thought: there are an awful lot of very smart people working tirelessly on the challenge of ensuring that all Americans have affordable access to healthcare. It is inspiring to witness.
Christine Ferguson, director of the Rhode Island exchange, made a powerful statement: “Nothing like this has ever been attempted before. Ever.” She was referring to the task of overhauling the extremely complicated incumbent system of healthcare delivery by bringing together public and private sector interests, policy making, technology, and care providers. It is a daunting task.
How they did it depends on the state, all of which had to have some version of a working exchange in place and functional by October 1, 2013. Some states chose to build their own, while others partnered with the federal government’s Healthcare.gov. That was not a perfect process, but given the complexities and the timeframe under which these states were operating, I will posit that the result was a success.
Much of the discussion in our forum revolved around the way forward. Three key themes emerged:
- Integrated eligibility platforms
- Consumer outreach and education
- Financial viability
A key tenet of the Affordable Care Act is the insurance subsidy offered to individuals and families below 400 percent of the poverty limit. When individuals go to their state’s HIX to shop for and purchase an insurance policy, one of the early and important steps is to determine whether they qualify for a subsidy. Their eligibility is determined in part by first confirming the individual is not eligible for Medicaid.
The insurance exchanges and Medicaid applications are not integrated except in a few states, so applicants must register themselves with the HIX, then go to Medicaid and apply specifically to be denied. They then receive a denial number to bring back to the HIX to continue their eligibility application.
Confused? Everyone is. Integrating these systems will deliver a quantum leap in the end user experience and ease of registration.
Which brings us to the second key initiative: consumer outreach and education.
The HIX executives who spoke at the forum agreed they had an early wave of low-hanging fruit their exchanges would enroll, but that they were quickly (and happily) working their way through that population. The next frontier is more difficult — small business owners and individuals with some resistance to buying health insurance.
To that end, the exchanges invest heavily in community outreach with sophisticated marketing programs, local offices, advertising, branding campaigns, etc. The results are promising. There was a productive conversation about which techniques are delivering the best results in new enrollment. Without exception, every HIX executive to whom I spoke named education and outreach as a top-of-mind concern.
On a related note, I was pleasantly surprised at the general tone the HIX leadership uses with regard to their constituents. They talk about improving the quality of the products and service, ensuring that call center wait times are kept short, and agents are trained to educate the customer. Many of these exchanges are organized under a government agency, but their leadership sure talks like private sector business leaders.
The federal government invested funds to build these exchanges, but not for their ongoing operations (there were more than a few jokes about the feds serving as the VC investor to the exchanges.) Jokes aside, the need to become financially solvent is a real issue and the audience proved creative in their approaches.
Many great ideas were exchanged, ranging from implementation of user fees, advertising strategies, use of insurer assessments, and excise taxes. While each state will ultimately land on its own model for its P&L management, the normal issues of operating costs, well-forecasted growth, and disciplined budgeting will be increasingly important to the HIX executives as they move from their launch phase into steady state.
The forum provided a great opportunity for many stakeholders in the development of state-based health insurance exchanges to discuss their progress, lessons learned, and ideas for the future. There will be bumps in the road to be sure, but we all have much to be excited about as the evolution to a more efficient and transparent health insurance ecosystem continues.
Jason Deck is vice president of strategic development of Logicworks.