4 ways Obamacare insurance exchanges could change healthcare

September 5, 2013

After they're implemented, health insurance exchanges will have the option to adopt policies that could reshape the financing and delivery of healthcare for years to come. Here's how.

Oct. 1 looms as the official kick-off date for the Affordable Care Act (ACA), popularly known as Obamacare.

On that date, consumers may begin shopping for insurance via one of ObamaCare's key components - health insurance exchanges. The exchanges will be open to individuals, families, and businesses with 50 or fewer employees.

As of early September, 16 states and Washington, D.C., are planning to run their own exchanges, 7 states are planning partnership exchanges with the federal government and 27 states will default to federally run exchanges, according to the Kaiser Family Foundation.

Health insurance exchanges - and more broadly the ACA - will bring big changes for consumers and insurers, according to a recent viewpoint in theNew England Journal of Medicine written by Henry Aaron, PhD, of the Brookings Institution, and Kevin Lucia, JD, of Georgetown University.

For individuals, the ACA will result in millions more Americans gaining access to insurance coverage. For insurers, the ACA "changes the rules" in that they must sell to all willing buyers, and that policies must provide a specified minimum level of coverage, Aaron and Lucia write.

But exchanges have the potential to do much more in subsequent years once the initial kinks are worked out. After they're implemented, exchanges may be forced - or have the option - to adopt policies that could reshape the financing and delivery of healthcare, according to Aaron and Lucia. Here are four ways that could happen:

Exchanges' scope of coverage will grow: In 2016, exchanges will be required to offer insurance to businesses with 51 to 100 employees. Further, exchanges have the option of allowing larger employers like state and local governments to contract with them for insurance beginning in 2017.

Exchanges can bar insurance sales to individual and small businesses outside the exchanges: So far only Vermont and Washington, D.C., have exercised this option. The idea behind this provision of the legislation is that by barring sales outside the exchanges, states will create a "single, unified market" and discourage insurers from trying to siphon younger, healthier individuals out of the exchanges. If Vermont and Washington, D.C., have success with this, expect other states to follow suit.

Exchanges could improve price transparency: There are numerous efforts underway to improve the availability of information on the priceshospitals and physicians charge, and exchanges could help further this effort by advertising this information and making it more widely available. Exchanges could get even more aggressive by offering incentives for insurers to encourage or require providers to apply research findings from analyses of comparative effectiveness.

Some exchanges can selectively contract with insurers: Currently, only six exchanges are requiring insurers to offer standardized plans, and some of the minority of states that are limiting the number of plan offerings have set the cap so high that consumers are likely to experience information overload, Aaron and Lucia say. But in the future, exchanges could begin to embrace these types of regulatory tools, such as restricting the number of plans for sale if consumers become overwhelmed with lots of options.

Exchanges are likely to focus on "mundane administrative tasks" in the first year or two after implementation, but after those glitches are ironed out, exchanges "will become an instrument that can reshape the healthcare delivery system," according to Aaron and Lucia.

 

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