Health Insurance and You!

Imagine being in the peanut butter aisle at the grocery store. You’ve got creamy, chunky, honey-enhanced, and natural varieties, each of which is sold by several different brands and in several different sizes. If all you need is the ingredients for a lunchtime PB&J sandwich, the number of choices can be a little overwhelming. You may even decide to scrap it all and go with a soup and salad instead.

When state-based online health insurance exchanges debut in 2014, customers could have that same reaction if too many plans are available, according to an analysis published in this month’s Health Affairs and summarized in an article by Sam Baker of The Hill. Instead of allowing any plan that meets state standards to participate in the online exchange, the analysts argue, states should take an active role in narrowing down the choices to a manageable number.

Rosemarie Day and Pamela Nadash, the health policy experts who authored the analysis, based their findings on data from Massachusetts, where a state health insurance exchange was established in 2006. Customers in Massachusetts preferred to choose from a small number of plans that had been approved by the state and were described in detail online. Ideally, they would want four to six options with high, medium, and low levels of coverage, Mr. Baker explains. This allows the state to become more of an adviser to the customer, rather than simply regulating and managing the exchange.

In the United States, Medigap and Medicare Advantage follow this general approach, as do the Dutch and Swiss programs internationally, write Day and Nadash. In contrast, Utah’s exchange allows any plan to join the exchange as long as it meets certain minimum requirements.

Readers, if it were up to you, how many plan options would you like to have? At what point would you start to feel overwhelmed by the number of choices?

Related posts:

• Nov. 18, 2011: Doctors Support an Open Marketplace for Health Insurance
• June 20, 2011: Debating the Role of Health Insurance Exchanges

Online health insurance exchanges are one of the most highly anticipated pieces of health reform. The convenience of shopping for health insurance at home and being able to directly compare premiums and plans from different companies has been widely praised. But, even with all that information available, the fact remains that health insurance is a very different product to shop for from, say, clothing or books. It’s complex, not always easy to understand, and making a mistake could have severe financial consequences.

What this means is that shoppers are likely to have questions, and a robust customer service system will be an essential part of a successful exchange. But what features should such a system have? As states work toward building these exchanges, three organizations in Colorado decided to ask that question in a series of focus groups, writes Katie Kerwin McCrimmon of Health Policy Solutions. They found that live help from a knowledgeable but impartial ‘navigator’ was key. Consumers also wanted to be able to search for and filter plans by cost, plan network members, and covered benefits. Finally, they wanted exchanges to be a one-stop shop for all types of insurance, including governmental programs they may be eligible for.

Fortunately, these results align with the most recent federal guidance to states creating their own exchanges, which we blogged about last week. The rules require states to coordinate the online health exchange application with state programs such as Medicaid as much as possible. They also provide states with funding to establish health exchange navigator organizations that will help consumers through the shopping process.

Readers, do you agree with these focus group results? Are there other features that that would make your online health insurance shopping experience better or easier?

Yesterday, the federal government released a 644-page document comprising its final regulations on the health insurance exchanges created by health reform, a key part of the law that would allow consumers to buy health insurance coverage online much like any other consumer product. The exchanges, which are scheduled to launch in 2014, will be run at the state level, either by the states themselves or using a framework developed by federal agencies.

According to an article by Julie Appleby of Kaiser Health News, yesterday’s regulations pertain only to state-developed exchanges. Similar guidance for states that choose to use the federal framework will be published soon.

The rules were developed with input from individuals, organizations, companies, and providers who submitted formal comments or attended meetings across the country, explains a fact sheet posted at Healthcare.gov. They leave states considerable freedom to develop an exchange that meets their residents’ needs. For example, states can choose whether the exchange is operated privately or by a government agency, the number and type of health plans offered, the minimum standards for a health plan to qualify, and how to determine customers’ eligibility. States may choose to partner with their neighbors to create regional exchanges, and may also operate multiple exchanges within their own borders. Each exchange will be governed by a board that includes insurers and at least one consumer advocate, writes Ms. Appleby.

The goal is to make enrollment as easy as possible for consumers. To that end, the rules state that there must be one standardized application for enrollment, regardless of which plans an applicant may qualify for. In order to reduce paperwork and minimize duplication of efforts, states must use electronic resources as much as possible and manage coordination with other programs such as Medicaid. The shopping process must be simple, impartial, and in plain language, allowing consumers to directly compare the plans they may be interested in. The rules provide for funding to establish health insurance ‘navigators,’ organizations that help consumers manage the shopping process.

Finally, state exchanges must include a Small Business Health Options Program (SHOP) with specialized information and processes tailored to small businesses. States may choose how the SHOP is structured, what plans to offer, and how small a business must be to participate.

Experts were divided on whether all that flexibility was a good thing, according to a blog post by Jason Kane of PBS NewsHour. Those who support it say it empowers consumers, while critics say it provides states with too little guidance and fails to answer key questions.

These regulations come at a pivotal time for the health overhaul – just as the Supreme Court is preparing to debate its constitutionality. But until a decision is made, the Obama administration is proceeding as usual with its original plan to fully implement the law by 2014.

Assuming the Supreme Court upholds the law and the creation of exchanges, the next step will be for states to finalize their exchange plans and have them approved by the federal government by January 2013. States that can’t meet this deadline must apply for an extension to delay the launch of their exchange. However, federal funding will run out by the end of 2014.

We’ve written extensively on this blog about the government-run health insurance exchanges created by health reform, which are currently being developed. States vary in the progress they’ve made toward setting up the exchanges, which are slated to launch in 2014. Given that the Supreme Court’s arguments on the health law are scheduled for later this month, some states have chosen to wait until the Court makes a firm decision on the law’s constitutionality before planning the exchanges in detail.

Now, two state-level policymakers in Minnesota have proposed an alternative to health insurance exchanges: allowing people to open personal accounts to pay premiums for private insurance outside of the exchange. The two legislators, Republican Sen. David Hann and Rep. Steve Gottwalt, do not support online exchanges. According to a post by Jim Ragsdale of the Star Tribune’s Hot Dish Politics blog, they don’t think the federal plan is financially sustainable, and expect that eventually, states will have to contribute to its costs.

In contrast, they say, their proposal would not increase costs for the state. Instead, individuals, employers, family members, charities, and other organizations could contribute to a person’s health account. Employers would not be required to contribute.

Readers, what do you think of this plan? Do you think personal health accounts could coexist with an online exchange, or must the state choose one or the other?

Two years from now, states and the federal government will begin operating their health insurance exchanges, online marketplaces where customers can compare the plans, prices, and networks offered by insurers in the state and enroll in the coverage of their choice. Online exchanges aren’t completely new – in fact, GetInsured.com is one of several private exchanges – but they have gained traction recently as an important part of health reform.

Now, notes Elizabeth Stawicki of Minnesota Public Radio, there is a new trend among health insurance companies: ahead of the 2014 launch of the government-run exchanges, several insurers are starting their own exchanges. Unlike the public exchanges, these sites may offer plans from only one insurer, allowing some comparison-shopping but only between the plans offered by that insurer.

But why? According to Ron Rowe of Blue Cross Blue Shield Kansas City, quoted by Ms. Stawicki, the aim is to get customers used to the format of an online exchange and familiarize them with the coverage a given company offers before the public exchanges force insurers to compete directly. Because switching plans often requires finding new doctors and hospitals, which can be unpredictable and a hassle, insurers hope that customers will develop loyalty to their plan by the time 2014 rolls around, rather than shop around for something new.

Readers, what do you think of this approach? We often suggest that you evaluate your coverage every year to make sure it’s still the best value and package for you (here and here, for example), but having to switch providers is a very real barrier to that. When you read about the plans that are out there, what factors would make you consider a switch?

The Supreme Court case pitting 26 states against the health reform law has received a lot of attention in recent weeks. But in the meantime, many of the same states have been making progress in building online health insurance exchanges, a key component of the 2010 overhaul. In fact, the Department of Health and Human Services (HHS) announced on Wednesday that 28 states and the District of Columbia have moved toward creating the exchanges, in spite of the legal challenges to the law and political opposition to it in many states.

According to an article by David Morgan of Reuters, 14 states have established their authority to set up exchanges, whether by a new law or one that previously existed, and 14 have taken steps to show that exchanges are useful. The health reform law set a deadline of January 1, 2013 for states to either move toward a state-based exchange or agree to participate in a national one, with the option of later establishing a state-based system. The exchanges must be up and running by the beginning of 2014. But given the uncertainties and Supreme Court hearings scheduled for this spring, some states have decided to wait and see what happens.

However, all states have made some changes since the law was passed. For example, writes Meghan McCarthy of the National Journal, 44 states have strengthened their review of increases to health insurance premiums. In addition, most states have accepted federal grants to help them plan for the exchanges, says Louise Radnofsky of the Wall Street Journal’s Washington Wire blog. According to Julie Appleby of Kaiser Health News, those grants total more than $729 million in 49 states and D.C. (only Alaska has not sought funding). Some states, however, do not plan to use their grants and will return the money.

As you’ve probably noticed on this blog, 2011 has been a big year for health policy developments at the national, state, and local levels. In the health insurance world, we saw progress by the states in crafting online health insurance exchanges and steps toward implementation of last year’s health care overhaul. Journalist Ezra Klein, in his Washington Post blog Wonkblog, posted a good roundup yesterday of 2011’s health policy highlights, which we supplement below with milestones that we’ve blogged about.

Health Reform and Nationwide Changes. The Affordable Care Act included several provisions scheduled to take place between 2010 and 2014, many of which began this year.

• In January, Republicans in the U.S. House voted to repeal the health reform law (Washington Post, Jan. 19).
• In February, the Department of Health and Human Services (HHS) ruled that college health insurance plans had to comply with health reform’s requirements. Previously, they were exempt (GetInsured.com blog, Feb. 15).
• To commemorate Mother’s Day in May, HHS secretary Kathleen Sibelius highlighted four parts of the overhaul that aim to improve women’s health (May 13). In August, health insurers were required to begin covering women’s preventive care, such as contraception and screenings, by the following August (Aug. 1).
• Also in May, HHS decreased premiums and eased enrollment processes for federally-administered preexisting condition health insurance plans (June 6).
• In June, HHS moved toward phasing out ‘mini-med’ health insurance plans, which are inexpensive but have very limited benefits, by setting a September deadline for waiver applications (June 21).
• In July, HHS awarded low-interest loans to non-governmental groups to help them introduce Consumer Oriented and Operated Plans, also known as co-ops (July 20).
• Health reform originally included a long-term care insurance program known as CLASS. In October, however, officials deemed the program financially unviable, and decided to drop it (Oct. 21).
• Courts and experts continued to debate the constitutionality of the individual health insurance mandate. In November, a D.C. appeals court ruled in favor of the mandate (Nov. 12) and the Supreme Court announced that it will rule on the case in early 2012 (Nov. 14).

Health Insurance Exchanges. The federal government and states came closer to shaping online health insurance exchanges in 2011. The exchanges are set to launch in 2014.

• In August, HHS unveiled standardized health insurance forms to simplify the insurance shopping and selection process (Aug. 17).
• The Institute of Medicine and HHS worked to define what health benefits are considered ‘essential’ (Oct. 11), but ultimately, HHS decided to leave that decision to the states (@GetInsuredCom, Dec. 29)
• In December, Minnesota launched demos of several health insurance exchange modules for public comment (including one developed by us!) (Dec. 12).
• States voted on whether to use the federal exchange or establish their own, set up exchange committees, and took other steps forward during the past year. Many of these are noted on our Twitter feed.

Medicare and Medicaid. These programs for the elderly and poor were often threatened due to a tough economic climate, but they made some innovative and interesting changes.

• In April, Medicaid announced a new grant program for states to incentivize healthy behaviors, like losing weight and quitting smoking, that reduce health costs (Apr. 13).
• In December, Rep. Paul Ryan and Sen. Ron Wyden proposed a Medicare reform plan that would provide seniors with subsidies to enroll in a public or private insurance plan (Washington Post, Dec. 14).

State Changes. At the state level, lawmakers enacted a variety of policies designed to improve health, including many related to health insurance.

• In January, Michigan voted to provide health benefits to domestic partners of its state employees (Feb. 9).
• During the first few months of the year, states established open enrollment periods for child-only health insurance plans (Mar. 8).
• In April, Massachusetts proposed a method of dealing with the rising cost of healthcare by replacing the traditional fee-for-service model with integrated care (Apr. 19).
• States began implementing the medical loss ratio rule, which required insurers to spend at least 80% of premiums on care or quality improvement. In July, five states got more time to put this new rule into effect (July 25). In December, despite lobbying by insurance brokers, HHS defined broker fees as an administrative cost, not falling under that 80% (Dec. 5).
• In September, after several months of debate, California voted against state regulation of health insurance premium increases (Sep. 1).
• Also in California, in October, lawmakers passed a bill to require individual-market plans to cover maternity care starting in July 2012 (Oct. 7).
• In November, New York mandated health insurance coverage of autism screening, diagnosis, and treatment starting in November 2012 (Nov. 2).
• Health insurance companies continued to propose premium increases, many of which were met with criticism. In November, HHS ruled for the first time that one Pennsylvania insurer’s proposed increase was unreasonable and asked the company to justify the increase (Nov. 22).

Mr. Klein writes that “in health policy, 2011 might be best viewed as the year of getting ready.” Looking at the policy topics we’ve covered during the past year, he may be right: several bills were passed and committees convened, but their implementation and action won’t get rolling until 2012 and later.

Readers, as 2011 draws to a close, what are your thoughts on this year in health? Did we make the kind of progress you hoped to see?

Online health insurance exchanges run by the states and federal government are a key part of health reform. But how will these exchanges work? Will an online interface make it easier to enroll, manage your account, and find providers?

Here’s your chance to find out. GetInsured.com, along with several other companies, has developed sample modules for Minnesota’s state-based exchange, designed to give you a sense of what the exchange will look like and an opportunity to offer feedback. As the Minnesota Department of Commerce mentions on its module testing website, the exchanges will allow you to:

• For individuals – determine eligibility and enroll
• For small businesses – determine eligibility and enroll
• View the options and costs of various health plans
• View a list of certified brokers and navigators
• Find information on doctors and hospitals
• Aggregate and pay premiums
• Administer your account

We’ve developed sample modules for individual and small business eligibility, broker and navigator lists, and information on providers. Our demo isn’t fully functional, so you can’t use it to actually enroll in coverage, but we hope you’ll get a good taste of what we’re planning.

So, readers, we urge you to try it out. And please let us know what you think, either in the comments below or through the demo’s survey. Our goal was to create an exchange that is comprehensive, easy and quick to use, and maybe even educational and fun. Did we succeed?

More on the online demos, from Elizabeth Stawicki of Minnesota Public Radio:

• 12/5/11: Minnesotans can test drive health care exchanges starting Monday [text]
• 12/5/11: Health exchange demonstrations online for public review [audio and text]

In July, we blogged about two major approaches that states are taking to online health insurance exchanges: active purchasing, where exchanges negotiate contracts with health plans to get the best prices and values for their consumers, and passive or “open” purchasing, where the exchange serves as a centralized source of information on health plans but offers no special deals and allows all insurers to participate. Both approaches have their good and bad sides; while active purchasing may result in better prices, it requires the state to put in much more work, a difficult task in these times of fiscal austerity.

Now, the American Medical Association (AMA) has joined health insurance companies in endorsing the open marketplace approach, according to a new resolution described by Alina Selyukh of Reuters. According to Ms. Selyukh, the AMA delegates voted in favor of exchanges “with strong patient and physician protections in place, to increase competition and maximize patient choice of health plans.” The association worries that an active purchasing strategy could lead to overly concentrated markets in some states (which many states already have). This, they say, could limit negotiations between doctors and insurance companies as well as free competition between health plans.

The resolution is not surprising. In fact, it comes on the heels of a news piece by Emily Berry of the American Medical News, published by the AMA, which describes the low levels of competition in many states’ insurance markets and the AMA’s hope that health insurance exchanges will change that. “The AMA envisions that health insurance exchanges created by the health reform law will have a critical role in expanding insurer competition. Millions of currently uninsured Americans will benefit from having a patient-friendly market with more health insurance choices tailored to meet their needs,” AMA President Peter W. Carmel is quoted as saying. Similar to the KFF study we blogged about last month, the AMA recently found that 83% of the metropolitan areas it studied, and 39 out of 47 states, are highly concentrated.

Readers, which approach do you support, active or passive (open) purchasing? Whose needs matter most as states make this decision: patients, doctors, state governments, insurance companies, others?

Earlier this year, we blogged about the role of health insurance exchanges, a product of health reform, and the varied approaches states and their policymakers are taking toward defining their role. In particular, we focused on the debate between active and passive purchasing strategies, and explained some of the related issues and challenges.

Among those issues was the amount of competition in the state’s health insurance market, which matters because users will use online exchanges to directly compare plans. As you may imagine, consumers in some states have more insurance options than in others. To shed some light on this issue, the Kaiser Family Foundation (KFF) recently published a brief describing the competitiveness of state health insurance markets for individuals and small businesses.

KFF measured competitiveness in multiple ways and analyzed their results for the individual and small group markets. Individual consumers will make up a large portion of the online exchange market; in fact, the Congressional Budget Office estimates that by 2016, 22 million people will be buying individual coverage through the exchanges.

According to KFF’s analysis, many states currently have highly concentrated individual health insurance markets, meaning that they are dominated by a single insurer. In 30 states and the District of Columbia, the most popular insurer had a market share of more than 50%. Generally, states in the West had a more competitive market than those in the upper Midwest, South, and mid-Atlantic.

Another way to measure competitiveness is to count the number of insurers with a significant share of the market, in this case 5%. States varied quite a bit on this measure. 13 states had five or more major carriers, while the remaining 38 had four or fewer.  Interestingly, the analysts found that some states with highly concentrated markets had additional major carriers with a small market share, suggesting that they may one day become more competitive.

So, what does this mean for you, consumers who may one day be using online exchanges to buy insurance? Unfortunately, it’s hard to say. The advent of exchanges may urge insurers to open up practice in new states, reduce their role in states where they already operate, or specialize in certain types of insurance, changing the market between now and 2014. The competition that exchanges allow could also shift market shares around, changing the picture presented in the KFF analysis.