PWC on Health Insurance Exchanges
Health insurance exchanges used to be a fairly bipartisan approach to improving health insurance markets until they became a major part of the reform law. Now they are more controversial than they should be, although there is good reason to be dubious about anything the government purports to operate, given the history of poor performance of government agencies in health care. A new report from PriceWaterhouseCooper examines the current status of the health insurance exchanges mandated by the reform law, as well as private exchange efforts and elucidates challenges facing various affected parties. (PWC Report) So far only 13 states are saying they will operate the exchange; the rest are leaving it up to federal government alone and a few are going to partner with the feds. Many are behind in being ready by 2014. By 2021 as many as 29 million people may be covered through exchanges. Many are young, most are white and have lower educational status. Almost 90% are projected to be eligible for subsidies.
For health plans, there is a pricing challenge, since many of these people will likely gravitate toward the lowest cost plan; and there is a marketing challenge in persuading these newly-insured persons to select their coverage. This new population may overall be in worse health and need more care management. Since they have less education on average, it may be more difficult to help them understand the plan, their health care and how to make good health decisions. The exchanges are complicated and not many federal or state government agencies have any experience with them, so expect many significant screwups, not to mention much higher costs than projected. The need for gathering and sharing information is high across multiple participants and the systems are not currently in place to do that well. If, and right now it might be a big if, the exchanges go into operation as contemplated by the reform law, it will be a huge change for insurers and regulators and the possibility for unintended consequences, not all good, is very high.