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Trading up: New health care exchanges

February 5, 2011 - Mary Ann Heath
Washington Post blogger Ezra Klein called exchanges “the most important, undernoticed part of health reform.”

“...The concept itself is the bridge between the health system we have and the health system we want,” Klein said.

I agree. 

The establishment of “American Health Benefit Exchanges” will do much to clean up the ridiculous mess of a health care system we have now. And the best part is that if you like the insurance you have, no one will make you switch.

Exchanges are basically competitive insurance marketplaces that will offer health plans to individuals and businesses.

Exchanges, contrary to what I bet most people believe, will not be run federally. Rather they will operate through individual states. Under the new legislation, exchanges must meet specific requirements related to cost and the benefits offered. In addition, they also offer transparency to consumers. The exchanges will start in 2014; by 2015 they must be self-sustaining. So, although grants have been awarded to individual states to help set up these new exchanges, they have one year until they are cut off from federal funding.

What are the requirements of an exchange?

At a minimum, exchanges must:

• Develop procedures to certify (recertify and decertify) qualified health plans. Health plans are also required to meet basic requirements. This way, individuals shopping in the exchange are guaranteed a certain level of quality. Can’t really argue with this…unless you want the option of getting ripped off, or paying for less-than-stellar health care. Want a high-cost plan with high deductibles you’re not likely to use anyway? You may just want to stick with the system as it is.

• Maintain an Internet website so that enrollees may compare information between plans. This is just one of the ways exchanges will offer more transparency to its consumers, in an easy-to-understand fashion. Shoppers will be able to select the health care plan that fits them.

• Assign ratings to every qualified health plan offered in the exchange. This aspect fascinates me. Every plan offered through an exchange will receive a rating based on quality of care and price. As individuals, or employers, shop the exchange they will be able see how each plan rates. Somewhat like when you check out a hotel, or restaurant, or even a movie…you know going in whether you’re getting something low-rate.

• Provide a toll-free hotline number, so that consumers may get assistance when they need it.

• Utilize a standard format for presenting health plan options. Each plan will be presented in the same manner. There won’t be any fancy or false advertising, or any way to skew (or hide) the facts. It will make it easy to compare plans with each other. This increases transparency, and ultimately, competition. It helps place control back into the consumer’s hands.

• Establish and make available a calculator to determine the actual cost of coverage once premium tax credits, or cost-sharing reductions are taken into consideration. These calculators must also be available online.

So, what makes a health plan, a “qualified” health plan?

• It must meet certain marketing requirements. It cannot discourage enrollment for enrollees with some sort of significant health need. Why should there be a slew of plans in the new exchange that only tailor to “ideal candidates” or “healthy” individuals? That is where health care is at now.

• They must offer a sufficient choice of providers, as well as provide information on both in-network and out-of-network providers.

• Must provide information on those health care providers that offer service to low-income or medically-underserved individuals.

• Be accredited on clinical quality measures like health care effectiveness and patient experience ratings. Just another step to ensure the health care provided is quality.

Exchanges make the process of getting insurance on your own, without an employer to do the negotiating for you, a lot less scary. Large employers normally take care of enrollment, as well as the cost of premiums. Exchanges will offer the same thing to people who don’t have the option of getting insurance through a large employer. 

They will also introduce competition. If the exchanges work right, they should help lower costs and maintain a specific level of quality. If you are happy with the insurance you already have, you won’t be forced to buy it through an exchange, unless, of course, you are a member of Congress (The law dictates they must get their insurance through the exchange starting in 2014).

As Klein said, the real question is, how do you go about fixing a system as messed up as health care when so many people rely on it?

“The answer, put simply, is that you don't institute rapid change,” he writes. “You don't take what people have. But you give them the option to trade up to something better.”

And that is exactly what these new exchanges will do.


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