4 Factors to keep in mind while designing SHOP exchanges

  4 factors to keep in mind while designing SHOP exchanges

While all eyes are set upon the Supreme Court, the deadline for setting up health insurance exchanges and Small Business Health Options Program (SHOP) exchanges is approaching steadily. While most states have put their health insurance exchange plans on hold, there are some states that are charging ahead with their HIX and SHOP implementation plans.

While the underlying principle between the SHOP exchanges and HIX is similar, the SHOP exchanges would require some infrastructural and strategic adjustments. The state of California has had some experience in selling insurance in small business market spaces and Pacific business group on health released a report that discusses the chief concerns and important points that need to be taken into account while setting up SHOP health exchanges.

1) The SHOP exchange administrators need to ensure that the exchange provides significant number of health plan options to small employers. The choices need to be just enough to help employers easily compare and choose among different plans.

2) SHOP exchanges need to closely monitor and track self-insurance and other market trends in order to plan against adverse selection. Exchanges would need to maintain flexibility in their exchange specific rules, plan choices etc., to maintain a strong foothold in the market.

3) The SHOP exchanges need to introduce a structure that encourages a healthy and symbiotic relationship between the exchange and participating plans in order to increase health carriers participation in the exchange. The participating plans would need to be protected against adverse selection and other problems through a strong risk adjustment structure.

4) SHOP exchanges need to design a setup where all entities associated with healthcare such as brokers and agents, non profits etc., enjoy a relationship of trust with the health insurance exchange. Availing the services of health insurance delivery conduits such as brokers would help exchanges in quickly increase their different insurance markets penetration.

Keeping in mind the above factors while designing SHOP exchange, administrators can design smart health insurance exchange models.