Tuesday, June 12, 2012

Health Insurance Benefit Exchanges? More Bureaucracy, at What Expense?


A new paper published by the Galen Institute warns that states which fall into lockstep with Obama Care's health insurance exchanges will end up in a bureaucratic morass with exchanges that won’t work, won’t increase access to affordable health care, and…Rita E. Numerof, Ph.D., writes in “What’s Wrong with Health Insurance Exchanges…” that the solution to affordable coverage won’t be found in cookie-cutter compliance with Obama Care's bureaucracies, but rather in removing regulations that make coverage unaffordable today and in reducing barriers to competition and consumer choice.

If the Supreme Court declares the health law unconstitutional, the Obama Care exchanges will be void.  But that will not obviate the need for states to tackle the very real problems that drive out competition and drive up the costs of health coverage.

“Rather than focusing on compliance with PPACA, legislators should take inventory of the problems plaguing the health insurance markets in their states. Then they can confront the most critical issues of insurance coverage, care delivery, and payment reform to ensure that residents have access to affordable care and enjoy better health outcomes at lower cost,” Numerof concludes.

Some states already have started the process of studying the changes needed in their individual and small group health insurance markets, and some also have begun putting in place the cornerstones for web portals and marketplaces to help consumers select from a range of health insurance choices.  They are working to reduce barriers to competition and consumer choice and untangle the bureaucracy and regulations that make coverage unaffordable today.

Many states also are working to  inoculate themselves against the threat that the federal government would swoop in to create exchanges if they don’t take action on their own. These states are assessing their own needs and resources and not allowing the federal government to dictate how they proceed.

States will play a major role in the next phase of health reform.  Those states that are working now on assessing their own challenges and resources will be better prepared to take the lead in the future.

The Federal Government has mandated that HBE’s be formed by states and will underwrite initial organization, however there will be no prolonged funding of HBE’s. The PAPCA also mandates that if states do not accept grants and/or form their own HBE’s the federal government is mandated to step in to do so.

Many health policy experts consider the health insurance exchanges, where most of the 32 million Americans expected to gain coverage will compare and purchase health insurance, to be the backbone of the Affordable Care Act.

The exchanges also have become a battleground in the fight over President Obama’s signature legislative achievement. Each state must have a marketplace in which consumers can compare coverage, learn whether they qualify for subsidies, and ultimately purchase a plan. If a state does not have a framework in place by 2013, the Department of Health and Human Services will come in and do the job itself.

Many Republican-governed states have slowed or halted work on implementing a health insurance exchange, saying that it is prudent to wait until the Supreme Court rules on the law’s constitutionality. That decision is expected by the end of this month.

But many officials acknowledge that if the law is upheld, their states will want to run their own exchanges. This collaborative is more evidence that states across the political spectrum are still planning to meet the health overhaul’s deadlines.

The California Healthcare Foundation thought up the idea of working with states on health insurance exchanges in early 2011. Eleven states initially participated; that number grew to 17 as work got underway and the word got out.

The collaborative, officially Enroll UX2014, includes New York and Washington, which have embraced the Affordable Care Act, and Republican-governed states such as Kansas, New Mexico, Alabama, and Tennessee.

The states worked with the design firm Ideo to come up with a consumer interface that determines how many options consumers should see at one time, for example, and the order in which those options should be presented.

Dr. Numerof is co-founder and president of Numerof & Associates, Inc., a strategic management consulting firm.  The Galen Institute is a non-profit research organization based in Alexandria, VA, that focuses on free-market ideas for health reform.

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