>As A Matter Of Fact…A fair exchange: Consumer driven health insurance

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May 9th, 2011 | Published in NJPP Blog: As a Matter of Fact …

One of the most important provisions of the Patient Protection and Affordable Care Act (ACA) is the establishment in every state of a health insurance market place, called an “exchange.”

These exchanges will allow individuals and small businesses to easily find and compare options for high quality, comprehensive health insurance. If done properly, the exchanges will increase competition in the insurance market and, in turn, lower the cost of insurance for nearly 800,000 uninsured New Jerseyans who must find coverage under the terms of the Affordable Care Act. The exchanges will also make available information about services and subsidies available to low and moderate income families.

While the federal government has set certain standards for exchanges, the Affordable Care Act offers each state broad flexibility to design its own exchange. The federal government will provide funding to operate exchanges until January 2015, when all of the exchanges must become self-sustaining. If the state has not established an exchange by then, the federal government will establish one for the state.

That process of creating an exchange has already begun in New Jersey.

The state, through its Working Group on the Patient Protection & Affordable Care Act and under a federal grant, has contracted with the Rutgers University Center for State Health Policy to seek input on priorities the state should consider for the implementation of key provisions of the ACA. As part of its information gathering effort, CSHP is asking interested parties to participate in a web-based survey on the design of an exchange for New Jersey by May 11. The CHSP’s report is expected to be made public later this year.

The Legislature has also set to work. The state Senate held an informational hearing last month and three bills have been introduced to establish the basic structure of an exchange (S2553, S1288 and S2597). Much of the public discussion of the details of the final legislation will take place in the Legislature’s health and insurance committees.

One of the key issues up for discussion is the extent to which the exchanges represent the interests of consumers.

For example, the exchange can be a wide-open marketplace where all insurers may participate, regardless of how much they charge or whether they meet minimal standards to protect consumers. Because the Affordable Care Act requires everyone who is uninsured to purchase insurance, that unregulated approach might leave consumers vulnerable. Alternately, the exchange could operate as an “active purchaser.” In that role, the exchange would only allow insurers to participate if they could demonstrate that their rates are reasonable and they meet other standards aimed at protecting consumers. A similar issue involves the requirements for members of the board that will ultimately oversee the exchange. Most boards are expected to be small, so decision-making will be more manageable. That makes the composition of the board a key point. Some states are establishing very strong requirements to prohibit conflicts of interest for members of the board while others go further and ban insurers, brokers and other representatives of the health care industry. Because of the importance of the exchange to consumers, the NJ for Health Care Coalition developed a set of principles recently that should be used as a guide in finalizing any legislation on exchanges. The coalition represents a broad alliance of 68 health care, consumer and social justice organizations (including NJPP) with more than two million members. It believes the public should understand the choices being made and should actively support the principles as established by the coalition to ensure that the health care exchange in New Jersey represents consumers over special interests.

Following are the principles as adopted by the coalition:

Public Interest Mission – The New Jersey Exchange should be established in the public interest, for the benefit of the people and businesses who obtain health insurance coverage for themselves, their families and their employees. It should empower consumers by giving them the information and tools they need to make sound insurance choices. The Exchange should work to reduce the number of uninsured, improve health care quality, eliminate health disparities, control costs, and ensure access to affordable, quality, accountable care across the state.

Independent Public Exchange – The Exchange should be a distinct legal public entity that is independent of other units of state government. It should be able to perform inherently governmental functions like determining income eligibility, coordinating with other state agencies and programs, and adopt rules and policies governing health insurance plan participation. The Exchange must be transparent and subject to open meetings and public disclosure laws.

Qualified, Pro-Consumer Governing Board – Consumer representatives should comprise a majority of the board. All board members must have expertise in one or more of the following areas: consumer advocacy, individual health care coverage, small employer health care coverage, health benefits plan administration and health care finance. The governing board may not include members who are affiliated with the health care industry.

Negotiate on Behalf of Consumers – The exchange must be given the authority to act as an “active purchaser.” This means the Exchange should use its large pool of consumers to negotiate, as large groups do, for the best premiums and plans. The Exchange must use this leverage to demand quality, responsiveness to consumer concerns, reasonable rates, efficient plan designs, robust provider networks and comprehensive benefits.

Full Integration with Medicaid and NJ FamilyCare – To promote seamlessness in the application process and continuity in coverage, the Exchange plans must be fully coordinated and integrated with Medicaid and NJ FamilyCare. Plans that are available in Medicaid and NJ FamilyCare must also be available in the Exchange.

Consumer Friendly – The Exchange must be easily accessible to all consumers and small businesses, use plain, easy-to-understand language and meet established standards for language, literacy and cultural competency. The Exchange must adopt a “no wrong door” approach, meaning people can access insurance through the exchange no matter how they come to seek assistance. It must reduce paperwork for individuals and small businesses, and provide in-person, telephone and online assistance and access.

Effective Outreach and Assistance – The Exchange should contract with independent organizations that will help consumers and small groups “navigate” the various health insurance plans and services offered through the Exchange. Contractors providing these navigator programs should be free of insurer conflicts of interest and have a history of working with diverse communities. The exchange must also provide customer service that understands diverse populations, such as people with disabilities, mental health needs or low-income.

One Insurance Pool – Health insurance markets work best when risk is shared across large numbers of people. The Exchange should explore how best to transition toward a unified insurance pool that combines both the individual and small employer markets. Other opportunities to expand the pool of insured people should be explored.

Improve Health Care Quality & Promote Prevention – The Exchange should only offer plans that provide a comprehensive and high-quality package of health care services. Every plan should prioritize prevention and work to reduce health disparities. Dental and mental health benefits should be included. Health care delivery networks should include essential community providers. Patients should have access to providers who speak their native language.

Community Health – The Exchange itself should promote community health by fostering collaborations between the Exchange insurers and community organizations, such as local public health departments, mental health associations, maternal and child health consortia and disease-specific nonprofits. This will ensure the efficient delivery of health information, health promotion and disease prevention and screening services.

Ensuring Exchange Stability– The State must guard against the segregation of people by their health status. Premiums in the exchange could become very expensive if insurers and brokers have the power to steer less-healthy patients into the Exchange, keeping for themselves only healthier, more profitable enrollees. The same rules must apply to plans both inside and outside of the Exchange. The Exchange must set market protections to prevent insurers and brokers from cherry-picking healthy enrollees or steering them into or out the exchange.

4 Comments

Filed under As a Matter of Fact, Consumer Driven Health Insurance(CDHI), health insurance, Insurance exchange, New Jersey Policy Perspective, NJ FamilyCare, Rutgers University, The Affordable Care Act

4 responses to “>As A Matter Of Fact…A fair exchange: Consumer driven health insurance

  1. >Mike -All this scares me.Great ideas, but how will I ever be able to afford the "wonderful, beneficent" coverage that the state mandates must be made available to me?I would love to be able to buy insurance that would cover me against true catastrophe. Something that would, at a reasonable price, make me responsible for 5,10, or 20 thousand dollars of expense?Granted, a big amount, but as things stand now, I pay $18,000 a year for a plan that requires me to pay a $40 copay per primary visit, then has a $2,500 deductible for specialist care, then a 50% copay up to a $5,000 out-of-pocket.Believe me, I'm not dumb. This is the best I can get.Please ask me why my sympathy for asking public service union members to pay 1.5% of salary towards health insurance is limited.If you doubt my numbers on cost for individual coverage, please check out this page:http://www.state.nj.us/dobi/division_insurance/ihcseh/ihcratepage_sp.pdfI don't want a state mandated pre-paid health plan.That, I'm afraid, is all I can buy.If you think them current mandated program is successful, why has participation dropped from a high of 220,384 "lives" covered at yearend 1995, to 127,999 at yearend 2000.Help.I can't keep paying this, and I don't believe that anything under current consideration will help.

  2. >Peter,I don't doubt what you say, having to shop for health care is frightening. You pay a lot of money out of pocket then need to worry that you don't get sick and have to us it.I'm somewhat fortunate that I have decant coverage through work. I pay 12% of the cost out of pocket with varying costs for co-pays and deductibles. And over the past few years, in order to keep costs down, my company has chosen to lower plan benefits instead of passing along higher premiums to us (which has lead to higher costs on my end). One day I fully expect the company will switch it's health coverage of employees to a CDHI type plan. I hope that when that time comes all the kinks and growing pains of these health exchanges will be worked out.In theory these health exchanges should help consumers by pooling insurance companies together so that they directly compete against each other for our dollars. In theory that will drive down costs and provide better coverage and with tax subsidies make it affordable for the average worker. I hope that that is the case, time will tell. How it ultimately works out in the end will be the key to whether or not people can afford to enter a hospital to receive treatments or have babies.I think that the one thing that needs to be remembered in all this, is that the new system set-up by the federal government, ObamaCare if you chose to call it that, will continue to evolve to meet the needs of the people. It is not set in stone as many believe. in the first 10 years there will be a lot of trial and errors until it works itself out. But I believe in the long run, it will be more beneficial to peoples lives than the current system.Thankfully there are still a few more years before everyone needs to opt into these plans, yourself included.

  3. >I pay no premiums and the first $5,000 in expenses comes out of my pocket. This is far less than paying $18,000 and then having to pay co-pays or anything else. Better shopping must be done.

  4. >The first $5000 in expenses also comes out of my and my husband's pockets, and his company has forced a $540 per month employee contribution on him. What this means is he's working one week a month for free. The single employees at his company only have to contribute $80 a month. This is about the most unfair display of corporate greed I've ever seen. It's a really sad state of affairs.

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