OAKLAND, CA – A new report from the nonprofit California HealthCare Foundation focuses on the concept of a national health insurance exchange and whether California's experience can inform the national debate.
The report notes that, among the current federal proposals to expand health coverage, virtually all incorporate the idea of an insurance exchange – an entity from which individuals can select a health plan from a broad range of offerings.
Over the past 15 years, California has gained extensive experience in designing and operating such an exchange, though the effort ultimately proved unsustainable.
The report, "Building a National Insurance Exchange: Lessons from California," draws on interviews with eight individuals who played key roles in the California exchange. Written by Elliot K. Wicks of Health Management Associates, the CHCF hopes the lessons California learned will prove useful to federal policymakers as they construct a viable plan for national reform.
Key findings in the report include:
- Any exchange that seeks to be an active purchaser (one in which large employers negotiate and selectively contract with insurers that offer a high-value product in exchange for a large volume of enrollees) will have a difficult time achieving its objectives if there is competition for the same customers outside the exchange.
- The exchange will be unable to offer lower prices on a sustained basis for at least four reasons: some health plans may refuse to participate, economies of scale in administration are hard to achieve, participating health plans will not give the exchange a lower price, and the exchange is likely to attract higher-risk enrollees.
- Without sufficient numbers of health plans, the exchange cannot offer meaningful choice or enhance portability.
