Why Private Health Exchanges are going to Set Trends for the Future

In the months after the October 1 launch, almost all of the media attention has been focused on the Obamacare marketplaces. I have personally seen the ruckus created around the launch and launch errors, the bad publicity, and the negative reviews gracefully accepted by the government. However, in this fiasco, one thing has gone completely ignored – the stupendous success of private health exchanges.

In the months that Obamacare was suffering, private health insurance exchanges slowly built their reputation, and are now completely in sync to tap the attention moving towards it. It is widely estimated by industry experts that private health exchanges are going to grab a huge chunk of enrollments in the first half of 2014. In fact, traction has already started happening in favor of these private health insurance exchanges. Several companies are already moving their retirees to these exchanges, and plan to move their current employees to private health exchanges in the years to come.

Naturally, organizations are viewing these exchanges as a cost and effort friendly means to provide an improved healthcare service to Americans. If I were to list down the major factors that are motivating large organizations, such as Time Warner, to move their retirees to private exchanges, my vote would go to

1) Cost reductions – private health exchanges are proving to be a cost efficient method of providing health insurance to employees. Generally, the more the number of employees in the organization, the better the costs savings would be.

2) Administrative overhead reductions – through a private benefits exchange, organizations do not have to worry about the challenges of complying with the system for providing health benefits to employees.

3) Improved healthcare offerings – it has been observed that private health insurance exchanges generally offer a better set of health insurance plans to employees. Due to more options and a better kitty, employees feel more satisfied while choosing their health insurance plan.

Naturally, these reasons are way too strong for any organization to ignore. Although several organizations feel that these facts are mere predictions as of now, which is true to some extent, the industry is predisposed towards these private exchanges, and it won’t be long before more players jump onto the wagon and provide better private health exchanges with more benefits and more health plans. It seems true that private health insurance exchange is going to dominate the American healthcare system in the coming years.

Small Business Exchanges & Risk Adjustment at Online Marketplaces

This discussion is about two aspects of the new healthcare sector that is arising in America—the Reforms and Exchanges like the Shop Exchange.

Small Businesses have Reason to Cheer with Shop Exchanges

Small businesses are among one of the most targeted segments at the healthcare exchanges that are due to surface in October 2013. Exchanges are likely to engage thousands of small business employers; typically, those with less than 50 employees. Exchanges are due to provide an even playing field for smaller businesses who have traditionally suffered because of their larger counterparts and have usually been underinsured as the payers have been reluctant to offer them the same level of service as that offered to the bigger employers. Federal regulations will ensure that this kind of inequality is removed. The shop exchange framework will further offer tax credits for smaller businesses as long as they are honest in providing details about their employee strength, annual earnings and the kind of coverage they want to purchase. SHOP Exchanges will also offer options as to how smaller employers can provide coverage opportunities to their employees and have access to an easier system of employee benefit management.

Risk Adjustment under ACA Norms

Federal rules have placed emphasis on how the payers handle their risk pool. Risk adjustment should be done in such a manner that a payer cannot manipulate into signing upon only the low-risk individuals. Those with pre-existing conditions or job-related health hazards too need to be covered as well as those with a genetic disposition towards developing a medical condition. The idea is to spread the risk pool across the payers in such a manner that all people, irrespective of the amount of risk they pose, have access to healthcare enrollment. Health plans have to take upon a minimum pool of high-risk individuals and depending upon the kind of health claims they settle, they will get contributions from the state and federal governments for offsetting the resulting costs of higher coverage. Considering these changes, insurers are now asked to present diagnostic, prescription, demographic and other relevant data that defines their risk pool. This is applicable to the small group market and individual market, in and outside the exchanges.

State Exchanges: Decoding What Lies Beneath

It has now been established that nearly half the states will be operating healthcare Exchanges individually or in partnership with the federal government. These can be interpreted as state and state-federal Exchanges respectively. This article will help you understand why ACA Exchanges are engaging so much attention and what you should always remember about them.

It should be understand that irrespective of the manner in which an Exchange is run—by the federal or state government, every Exchange will have to take care of some critical functions, such as:

• Eligibility
• Enrollment
• Plan management
• Consumer assistance
• Financial management

All types of Exchanges will essentially be portals powered by the latest in healthcare software solutions. The idea is to create a website so comprehensive that every aspect of healthcare enrolment, from mere queries to actually buying a health plan, is eased. Thus, consumers can expect every query they have regarding healthcare insurance or a particular health plan answered at the Exchanges. For instance, some people might not actually buy from the Exchanges but merely need information about the Medicare application process while some might require guidance about how costs will be shared between their employer-sponsored insurance and CHIP.

Consumers will have the advantage of being offered a wide variety of health plans putting forth varying degree of out-of-pocket expenses. For example, Platinum-category plans will offer the maximum degree of coverage benefits albeit with the highest premiums and lowest copays or deductibles. While Gold and Silver plans represent a descending range of coverage benefits and premiums, Bronze plans just about manage to cover the Essential Health Benefits for very basic premium pricing. The Exchanges are also expected to retail add-on health plans that can be clubbed with a main, primary health plan for a small, one-time fee. Exchanges will be continuously monitored by state and federal authorities apart from stakeholders from the state, including community members and other representative bodies that will ensure that the integrity of an Exchange’s operations are maintained.

PPACA Marketplaces: Preparing to Buy Health Insurance from Exchanges

The exchanges are just a few months away and soon you will be treated to an entirely new way of buying health insurance. The health exchanges shouldn’t be confused with private health exchanges. The latter are online entities run by private insurers who will follow the ACA norms but won’t offer health coverage as discounted as on the state exchanges. Usually, the word “exchanges” refers to online marketplaces run by the state government according to mandates of the federal government.

Starting October 1, you can expect your state to launch an online health exchange. Here, you will be able to browse through all sorts of health plans, from the most basic ones to the most comprehensive coverage options. Some plans will just about cover the EHB to ensure that you have minimum essential coverage to escape federal penalization. Some health plans, like those listed in the platinum category, will offer the most exhaustive coverage albeit with the highest amount of premiums.

Your state’s health exchange should look like a health insurance search engine where you should be able to find health plans across different categories and parameters with a few clicks. This applies even if you are an employer searching for health plan for your employees. In fact, a specialized space within the state exchange domain is expected to be dedicated to employer-sponsored coverage, called shop exchanges.

The exchanges will often assistance even if you don’t want to purchase insurance, i.e. you are merely seeking guidance or information. This will be made possible via online tools like a Medicare quote engine that will instantly tell you about your out-of-pocket expenses for your type of Medicare plan. If you want to find out about cost sharing across CHIP or Medicaid, the navigators on the exchanges will be available on call or email to help you.

Finding out your cost for coverage would be rather easy with a host of free tools like an insurance quote engine. Here, you would need to provide the most details such as age, gender, employment status, area of residence, household income, etc. to get a very precise quote on how much a health plan will cost you in terms of premiums or out-of-pocket expenses. 

The exchange’s calculator will also tell whether you are eligible for a subsidy or a tax credit. The subsidies will be paid towards the health insurance premium payments and not routed to your bank account. The entire process would be regulated by the exchange itself, meaning you would merely need to provide honest details and make a choice of health plan.

Pre-existing Conditions, ACA & the Exchange Coverage

The issue of preexisting medical conditions has long been a subject of debate in the health insurance niche. It has been noticed that insurers tend to avoid selling health insurance to people who have a history of physical or mental illnesses or those with genetic disposition towards developing medical conditions. These folks are regarded as high-risk individuals by insurers who tend to shun them outright or demand extremely high premiums on the pretext that they are undertaking a greater risk offering coverage to such people.

ACA reforms seek to correct this flaw in health care coverage and thus, from now on, insurers can no longer deny health coverage to people with preexisting conditions. This applies to people across the nation irrespective of their age, location and current health condition. This is applicable to health plans that will be sold on the state or private health exchanges. 

PCIP or the Preexisting Condition Insurance Plan was created to offer immediate coverage to people who have been denied coverage because of a preexisting condition until the state exchanges take shape. This is because such people continue to suffer in the absence of affordable health insurance and the health exchanges are still a few months away. To bridge this gap, the PCIP was created. This is essentially a state-federal coverage that is offered to folks who have been uninsured for six months or more due to a preexisting condition.

PCIP insurance has a deadline to it and as the exchanges start offering greater coverage, it will be taken back, lasting until the end of 2013. After December 2013, insurance companies too won’t be allowed to reject health insurance applications based upon the presence of preexisting conditions. In its current format, the PCIP plan offers all the essential health benefits, including coverage for prescription drugs. The PCIP coverage amount might vary by state but it is usually much lower than private health marketplace. 

Private Health Exchange: Satisfaction Comes from Greater Choices

With the much awaited arrival of public health exchanges, private health exchanges are being developed by private insurers. These are online entities that seek to challenge the appeal of state healthcare exchanges with their own set of unique features.

Many experts believe that private health exchanges might perform better than public health exchanges. For starters, they would offer a greater number of choices by showcasing multiple carriers. Even insurers listed on state exchanges would be allowed to sell on private health exchanges.

Just like state exchanges, private health exchanges would be run by medical insurance software solutions. Secondly, private health exchanges are most likely to offer more privileges than the shop exchanges that will be run by public exchanges. They will provide an online platform to full time employees for purchasing employer-contributed coverage, allowing employees to choose a health plan best suited for themselves and dependents.

Private exchanges are also being referred to as corporate exchanges. These exchanges will feature multi-insurer online platforms that will be open to public rather soon. By 2014, most of the bigger carriers and agents are likely to have their own private health exchanges.

Unlike public exchanges, private exchanges don’t need to offer highly subsidized policies for the low-income individuals. On private exchanges, insurers can sell plans that meet ACA guidelines but price them according to their own preferences. This means private exchanges are more likely to engage employers from the high-income groups as long as they maintain compliance with state regulators.

Further, the defined contribution model is getting more popular as compared to defined benefits model. This means that the small group market will see entry of millions of employees who will seek to combine an affordable health plan where the employer can contribute a fixed amount. This means people will be more demanding in terms of information and calculations. Private health exchanges are likely to cater to such requirements by launching insurance quote engines and offering a plethora of plan choices.

During 2013 some employee enrollments private health exchanges has already been seen. By offering health insurance coverage through private exchanges, employers are stepping back from their employee benefit management responsibilities, passing on a greater range of responsibilities to the online capabilities of the exchange. This is akin to outsourcing operations of an organization and creating more time for handling core employer functions. Private exchanges ensure that employers can maintain compliance with the ACA mandates.

Shopping for Health Insurance at the Exchanges

With the onset of the Exchange marketplace people will have a bigger range of choices when shopping for health insurance. It should be noted that purchasing insurance from the Exchanges is not mandatory. People have the option of shopping outside the realm of state or federal Exchanges as per their preferences. In fact, during the first round of health care enrollment at the Exchanges, the emphasis would be on insuring people who don’t have access to insurance and have traditionally not been insured. This would include the poorest of people and the minorities who have been discriminated against by the highly-privatized insurance system that has been at work for the past, few decades and those who just cannot afford the most basic form of insurance.

This choice of insurance purchase is also available within the Exchange environment. Here, people are not limited to buying a typical kind of plan. Firstly, an Exchange will make ensure that certain number of benefits is deemed essential and listed across all the health plans that are listed on the Exchange showcase these minimum, basic benefits. After this, different health plans from different insurers, offering a different range of out-of-pocket expenses and coverage limitations are also on offer. People can shop for group insurance too at the Shop Exchange that is essentially like a specialist kind of Exchange that will exist as a part of the Exchange website.

There are some rules towards availing benefits at the time of buying health insurance from the state Exchanges. For starters, there is nothing like free insurance. The Exchange marketplace has not been conceived to offer free coverage. It is primarily targeted at providing insurance in the most transparent and more affordable manner. Thus, people can expect tax credits and subsidies but expecting free health insurance just doesn’t make sense.

There are certain guidelines regarding what kind of people qualify for tax credits. For instance, people need to disclose their income so that their ability to purchase the MEC or minimum essential coverage can be calculated. Based upon such calculations, personal tax credits are offered. Employers who want to purchase insurance for their employees can hope to avail the tax credits. These benefits won’t be available in the cash or check format, i.e. they will be directly credited towards the health insurance issuer. You will see the benefits reflected in the cost sharing and adjustment of your premiums.