Terry McCorvie, president of Alegeus WealthCare Marketplace Solutions understands the complexity of health insurance exchanges. Alegeus provides private insurance exchange platforms, after which public health insurance exchanges are modeled.
McCorvie’s team continuously researches the possible impact of insurance exchanges on the healthcare industry, and in a conversation with Healthcare Finance News, he outlined the top 10 things providers should know about them.
- Not all exchanges are the same – Health insurance exchanges are being rolled out from state to state, some built by individual states and others by the federal government. There’s also a robust movement toward adoption of exchanges within the private sector, McCorvie said. “The government is officially calling them ‘marketplaces,’ but – whatever they are called – insurance exchanges will experience significant growth in coming months and years in both the public and private sectors.” While both public and private markets use the same basic platform, McCorvie said, they have different value propositions and will play different roles moving forward.
- A significant education gap still exists – Despite all the talk of HIXs before the Oct. 1 rollout, the general public, employers and providers are still relatively unaware of what they’re dealing with. McCorvie points to a recent study commissioned by Alegeus of more than 500 employee benefit decision makers. It cited that 55 percent are familiar with private insurance exchanges. However, the research findings reinforced that a significant education gap still exists. “Many of those individuals that claimed familiarity were unable to correctly answer basic questions about what they are, how they function, who they are best suited for, and the benefits they offer,” said McCorvie.
- Not everybody must have insurance – Gone are the days of pre-existing conditions affecting coverage or not having access to employer-based healthcare. However, some parties are exempt from the Affordable Care Act’s insurance requirement. “There’s a belief the health insurance mandate applies to all consumers, however, there are many who are exempt,” McCorvie said. For example, those who work for Congress, unions (illegal to make any changes outside the pre-defined negotiating window), Native Americans and the Amish, are all exempt.
- Healthcare is finally becoming a retail experience – Health insurance exchanges were set up to be virtual marketplaces and McCorvie says it’s working. “The consumer is in the driver’s seat more so than ever before,” he said. In an exchange model, he added, consumers gain enhanced plan shopping experience, increased transparency – especially as relates to price – and greater decision support tools and resources, among others.
- Health insurance exchanges are educating people – Despite most consumers being completely unaware of how exchanges work, those who are participating are becoming more knowledgeable about their healthcare coverage. “Using a single online portal, participants can retrieve the appropriate forms they need, manage consumer-directed healthcare accounts, see where their dollars are being spent and process the desired changes,” McCorvie said.
- Consumers choose differently in an exchange model – According to McCorvie, those who are participating in exchanges are changing their coverage significantly. For instance, nationwide, 60 percent of employees select lower premium plans when given the option. “These stats speak to the fact that, when choosing benefit plans with full visibility into cost, participants choose differently than what their employers have historically chosen for them or how they’ve chosen when given limited plan options or cost disclosure,” said McCorvie.
- Health plans are feeling the positive effects of the exchange – The public and private marketplaces allow health plans to gain exposure while being a part of the recommended mix for participants. “The exchange model will create efficiencies for health plans around enrollment, premium collection and overall benefit administration costs,” said McCorvie.
- Price transparency will drive down costs overall – With an exchange model, participants have complete transparency on price of health plans. Participants see all the plans that meet their individual criteria and what they cost. “This can be beneficial as this model will breed price competition, which often drives down costs,” McCorvie said.
- Consumers can be eligible for subsidies but those can end up costing them more – There are many options for participants to determine if they can receive a subsidy from the state or federal public marketplace. However, this is the only place they are eligible and the “bronze plans” can be substantially more expensive in some states than a more enhanced plan that is available on the open market. According to McCorvie, smart consumers will shop around and make sure they fully understand their options – just like in any other major purchase.
- Health insurance exchanges are not new – Contrary to the common belief that health insurance exchanges were a result of the Affordable Care Act, they’ve actually been around for about 15 years. “Until now, exchanges have been used in states where the market has been highly deposited, meaning if the participant is 25 or 60 years old, the price they pay for insurance is the same,” McCorvie said. Example states include Massachusetts, New York and Minnesota.