The Patient Protection and Affordable Care Act creates state-based health insurance exchanges to make insurance more affordable and easier to purchase for individuals and small businesses. According to the health reform bill, small businesses with up to 100 employees can purchase health coverage for their employees in an exchange. Beginning in 2017, the states may allow businesses with more than 100 employees to purchase coverage in the exchange.
Although the exchanges were created to address the problems in the individual and small group insurance market, large employers have a significant stake in the success of exchanges. In mid-January PBGH members met with HHS leaders at our office in San Francisco to discuss our shared destiny.
The good news is that the exchanges have the potential to become influential purchasers and help to drive improvements in the health care system. In other words, they can become allies of large employers by developing common purchasing strategies. In the future, large employers may want to consider using the exchanges for some employee segments such as part-time or seasonal workers, new hires or early retirees.
Large employers, however, have some legitimate concerns about the exchanges, and we explored these during our meeting. Most importantly, will they be able to contain costs effectively without simply shifting the costs to large employers? In addition, will the exchanges perform at a high level and be responsive to their primary customers—individuals, employers and their employees? And will they last, or will they succumb to the adverse risk selection “death spiral” as most exchanges have in the past?
In order to be successful and fulfill their potential, exchanges must address these concerns; PBGH and our members shared three in particular. First, they should set high standards for participating health plans and use value-based purchasing strategies to drive improved quality, service and affordability. Second, they must meet the needs of their customers by being user-friendly and developing easy-to-use decision support tools for employees and their families. This will depend on having useful and transparent information regarding cost, customer service and the quality of physicians and hospitals. The exchanges will also need strong tools to protect itself from adverse selection. Finally, exchanges should operate consistently across state lines to make it easier for multi-state employers to participate in the future. If these expectations are met, the exchanges can fulfill their potential to help drive improvements in our health care system. We look forward to continuing to work with HHS to help create exchanges that work.
Bill Kramer is Executive Director for National Health Policy at PBGH
