Just about every decision an exchange board makes is political, so it matters who is on the board and who they represent. Does a representative who works for an insurance company or who works for a hospital represent their business interests or that of the public? There’s plenty of room for conflict of interest. In Connecticut, for example, exchange rules prevent people who work in the insurance industry from serving on the board; yet three people who previously worked for the industry serve on the board. And are there public members on the board? In Connecticut, aside from a state employee who is the official healthcare advocate, there are no consumer reps on the board.
The composition of these boards may matter a great deal as operations begin. The Colorado exchange, for example, is considering allowing insurance companies to sell ads on the exchange website to help fund its work—a cost estimated at $22 to $24 million annually, to insure an estimated 136,300 this year and perhaps as many as 300,000 in 2017. How tough will the exchange be at policing those ads? Weak policing or no policing could expose consumers to all kinds of deceptive selling tactics. Three insurance executives—from Anthem, United Healthcare, and Rocky Mountain Health Plans, a small local insurer—sit on the board. How tough will they be on ads from their own companies?
According to a report by Colorado Public Radio, these three board members did not participate in a meeting, or they abstained from voting, on a fee that will be tacked onto the policies sold in the exchange. The measure passed anyway, with the board chairwoman proclaiming: “Plans also get a new customer base.” Yes, they will, and the press needs to keep tabs on how the decisions of the exchange boards may or may not help them acquire those new customers.
Key Questions: Each state’s exchange must come up with its own business plan to fund its operations, and many states forbid the exchanges from using state money. How are exchanges going to pay their bills, and who bears most of the burden? Will they levy a fee or a tax on policies sold inside the exchange? And will it be levied on policies sold outside the exchange as well?
Which policies can be sold?
This is a dicey one. Governing boards have the potential for making the in-crowd’s policies available to shoppers and keeping the out-crowd’s policies off the market. Where does the balance of political power fall in a potential marketing war between the insiders and the outsiders of the insurance world? Decisions about who gets to sell what, of course, impact how much choice consumers will actually get. But is a wide choice what’s really necessary? Or is a well-chosen group of policies that offer good value and are easy to understand what people really need?
Arguably, we have seen what too much choice means—in the Medicare Advantage market. (Medicare Advantage plans are private insurance arrangements meant to take the place of Medicare.) When faced with hundreds of choices in some markets, seniors throw up their hands, and let some marketing agent from a big or well-known insurer make the decision for them. No one can possibly study that many options.
An exchange that offers a similar smorgasbord would probably be no different. Looking carefully at how your exchange will deal with the “too much choice” problem is important. How it limits the choices—if it does—reveals much about the exchange’s philosophy and how much it wants to satisfy insurance sellers, as opposed to helping buyers. Four or five different plans in each of the four tiers—bronze, silver, gold, and platinum plans—might be more useful than three dozen in each one that, in reality, offer only the smallest variations and complicate the shopping process for even the most competent customer.
Some exchanges, like California’s, will be known as “active purchasers.” That means they will negotiate with insurers, decide who can offer plans through the exchange, and set the rules for those insurers who participate. In other words, they will be hands on. Most exchanges probably won’t be, though, and will let any carrier participate. These will rely on the state insurance department to do the policing—and that could be problematic, given the history of weak state insurance regulation. It might mean insurers operating in those kinds of exchanges will have little oversight.
Key Question: How tough will your exchange be on insurance companies?
Do the networks have enough doctors and hospitals?