How do we shutdown the failing health insurance exchanges? For-profit health plans, small health insurance pools, restrictive formularies, limited Exchange reimbursement compared to Medicare, and narrow networks are these the reasons for sub-standard healthcare? The abundance of excuses makes justifying unaffordable healthcare insurance palatable – almost. To shutdown of Obamacare’s failed health insurance exchanges the process will touch three areas consumers, operational, and technical elements. Shutting down the Obamacare marketplaces is not overly complicated.
Over $1.207 trillion. This is the estimated total cost of Obamacare by 2025. Comprehending the magnitude of that amount of money is difficult. Let’s make this more tangible with a product we all can understand. The base price of a 2016 Honda Accord Sedan is $22,205. The cost of Obamacare to the US taxpayer is the equivalent of buying a brand-new Honda Accord Sedan for every person in Virginia, Washington, Maryland, South Carolina, Connecticut, Utah, Nevada, New Hampshire, Maine, Rhode Island, and Vermont. It’s a lot of money.
The Inauguration Day in the United States occurs in the USA once every four years on January 20. Obamacare and the failed health insurance exchanges won’t be repealed within the first few months of the 2017 – if it happens here’s what is required.
It isn’t as complicated as one might think to unplug the healthcare insurance exchange marketplaces. This article will focus on totally dismantling the Exchanges and demystifying the complexity. A future article will address the scenario of state-based and partnership marketplaces migrated to healthcare.gov.
The best experience for consumers
If your local car dealer goes out of business, can you still buy a car? Yes, and similarly citizens will not lose healthcare coverage. Instead of logging into website A (the Exchange marketplace) website, consumers log into website B (an insurer marketplace) website. Consumers can obtain coverage through both channels with the same experience.
Consumers would be able to enroll, disenroll, or process changes of circumstance (life events e.g. birth, marriage) in the same manner as before. In fact, instead of the Exchange marketplace having to record and then submit this event to the health plan, this health event would be processed by a single entity. Removing Exchanges, the go-between, between consumers and health plans would consolidate the healthcare supply chain and save costs. Additionally, consumers would not have to ping-pong back and forth between two call centers (the Exchange call center and the insurer call center). One call, one answer.
Advanced premium tax credits (subsidy on monthly premiums), and cost-sharing reductions (a discount that lowers the amount consumers’ pay for deductibles, copayments, and coinsurance) would still be options for consumers that qualify. In 2016, 85 percent of consumers on the Exchange marketplaces receive advanced premium tax credit subsidies, and 57 percent received a cost-sharing reduction. What’s the projected impact on consumer behavior? Nothing. An advanced premium tax credit comes off the bill before the consumer pays it. Likewise, the cost-sharing reduction would work the same as it does today. This discount is additional savings off deductibles (what’s paid typically at the time of visit), copayments (payment made by a consumer in addition to the insurer’s payment), and coinsurance (consumers’ pay a share of the payment made against a claim). The consumers are required to make no behavior changes.
Consumers will apply, enroll, and receive the advantage of better coordination of benefits due to the single entity providing the services. A similar process with better results.
Carving down operating costs
The operational focus considers the day-to-date activities that consume the majority (80 percent) of marketplace budgets. The most significant expense are the contact centers or call centers. While it may seem like a massive undertaking to transition call centers with 200 of 300 staff. Staffing allocation adjustments are performed quarterly in most large insurer contact centers. The insurer’s contact centers already field calls for enrollment, disenrollment, and change of circumstances today. No new workflows are needed. Health plans will require additional staffing capacity – introducing more cost savings through economies of scale – cost saving is passed onto consumers.
State health insurance marketplaces support plan management functions. Plan management addresses the health plan certification, recertification, and decertification. Carrier setup, loading, validating and publishing plans also fall under their scope of responsibilities. The staff spends a lot of time handling multiple (12+) spreadsheets using templates that are not efficient and poorly maintained. Another interesting fact: health plans already do these functions. The plan management Exchange process are completely redundant. Health plans already must certify with their state department of insurance (DOI) or equivalent. The DOI validates that the rates and benefits match off-Exchange plans.
Duplicate efforts, duplicate costs
Operations staff are not removing friction from the consumer experience. They aren’t helping you as a customer enroll faster next year either. Why not? They are busy handing hundreds and thousands of issues created by having two separate systems; one system for the marketplaces and one system for the health plan. Directing consumers to a single contact site avoids enrollment challenges (reconciling 834s), multiple applications, and missing verifications. Disparate contact centers confuse consumers and increase the complexity of obtaining and maintaining health insurance. Shifting to true one stops shopping for enrollment saves consumers time and money as a tax payer.
The last piece of operations is financial management, how the consumer pays for their health plan. Billing, collections, and remittance from health plans all fall into this category. Billing is complicated, and there are various workflows to take into consideration. Right? Health plans already have the systems, processes, and structures in place to bill consumers. The United States health insurance market started in 1939. Blue Cross plans can be mapped back to an experiment with Baylor University Hospital in Texas, in 1929. Group coverage kicked off around 1935, under group hospital expense contracts. By 1963 a total of 903 insurance companies offered health policies. Insurers have been in place for over 50 years, figuring how they get paid was the first challenge they solved.
Health insurance exchange websites
Unloading technology is straightforward. If you’ve sold a car before, you already have an idea of what’s involved. When you sell a car or any asset, you initially think it is worth $X and inevitable you get $X-1 for the asset. Data center asset recovery, liquidations, and disposals follow a similar process. We could talk about batch processing for enrollments, or identity and access management for single sign-on. However, despite the seemingly complex technical framework all these functions are just to support a website.
The primary question when an exchange closed is what happens to the data? Is the data transferred to the new platform (e.g. healthcare.gov or health plans) or is that data destroyed? My recommendation would be to destroy the data. Through October 2016 there have been 293 breaches in healthcare, accounting for 36.2 percent of all breaches. A total loss of 14.4 million records and 48.4 percent of all records breached in 2016. Why add additional risk for consumers and how will the customers’ data be addressed? Data generated over the last four years is only being used for federal and state reporting. Consumers receive zero value from this data. When Obamacare was enacted in 2010 and launched October 1, 2013, Exchanges started with no data. The hard truth is that Exchange data is not used to gather intelligence that helps consumers.
Failing exchanges with financial troubles
Shutting down an exchange is less complicated than imagined. Individual health insurance marketplaces realize that closing the Exchange in the best interested of consumers. For example, Hawaii (failed 2015), Kentucky (scheduled to be shut down), Nevada failed 2014, New Mexico (failed in 2015), Oregon (failed in 2014), Colorado (considering shut-down) and Rhode Island (considering shut-down).
Exchanges that appear to not be on the brink of the shutdown have significant solvency and financial troubles according to the US Health Policy Gateway: California (financially troubled), Minnesota (financially troubled), Vermont (financially troubled), and Washington (financially troubled).
As Exchanges consider their fiscal responsibility to taxpayers and internally assess their capabilities, shutting down may be a logical option. An option that benefits consumers.
Peter B. Nichol, empowers organizations to think different for different results. You can follow Peter on Twitter or his personal blog Leaders Need Pancakes or CIO.com. Peter can be reached at pnichol [dot] spamarrest.com.