Not surprisingly, the topic of the new Obamacare state insurance exchanges—called Health Insurance Marketplaces by the feds—came up at a panel discussion during the recent annual meeting of the Association of Health Care Journalists. The exchanges—how will they work? Will they work?—are a huge story, and reporters have questions: How do we cover this animal at the state level? How do we make sense of health insurance, which is not exactly the easiest beast to tame?

If healthcare insurance is hard for healthcare reporters, think of what ordinary folks will face when they venture into their exchange’s insurance jungle to buy a policy. They’ll appreciate journalistic guidance. So as part of our ongoing Exchange Watch series—see here, here, and here—we offer this Exchange Watch primer for reporters (and anyone else who is interested). These basic questions and suggestions should apply across all three categories of the new state exchanges—whether they are run by the state, the federal government, or by one of several emerging state/federal partnership arrangements.

For starters, look beyond the easy sources—those academics and think tank experts always eager to dish out a quote. In fact, don’t even worry about quotes at this point. The trick is to understand what’s going on, who are the players and their special interests, what are the nuts and bolts of how these exchanges work. And then: What big questions need to be addressed. Therein lie your stories.

The exchanges are a local, ongoing story, and the best sources will be the ones on the ground in your state. That means advocacy groups, local foundations, local stakeholders like insurance brokers and agents, medical societies, hospital associations, the head of the local exchange board, the staff at the exchange board, insurance regulators, consulting actuaries, and insurance companies (whose websites can be helpful even when their PR folks are not). In other words, good coverage of the biggest health story in decades requires old-fashioned reporting—schmoozing, cultivating sources, reading reports and testimony, even attending meetings of your local exchange board. That’s how you’ll find the dots to connect.

For now, your task is to learn as much as you can about the exchange in your state and its potential for success or failure. Here are five big questions:

Will policies be affordable?

Perhaps this is the most crucial question of all. Each state selects a “benchmark” or model plan that sets requirements around which other plans sold in the exchange will be based. If that plan is not affordable, people are unlikely to buy it. They may find it cheaper to take the penalty than sink money they believe they don’t have into an insurance policy. (While subsidies will help some families—in particular those with low and moderate incomes—some in the middle and above who are now uninsured may still face hefty out-of-pocket premiums to get insurance.)

If many people end up not buying insurance, for whatever reason, and taking the penalty instead, the insurers won’t get their desired mix of healthy and sick people. If only the sick and the very sick, who will generate lots of claims, apply, insurers—which must turn a profit—will simply raise rates higher, causing even fewer people to join the exchange. That’s called a death spiral.

The exchange can make its policies more affordable by requiring consumers to pay more in the form of higher deductibles, coinsurance, or copayments. That’s what Connecticut has just done, after the state discovered its benchmark policy was unaffordable. The exchange board raised copays for maternity care visits and increased the annual deductible from $2,500 to $3,000 for the “silver” plan, which is designed to cover 70 percent of medical costs.

Obamacare’s subsidies to help people buy insurance will be calculated based on the silver plan. That means they won’t go as far if people choose a richer plan, such as the “Gold” variety, which covers 80 percent of a person’s medical costs, or the “Platinum” version, which covers 90 percent. Policyholders pay a price for affordability, and there is an inherent tension between good, comprehensive benefits and affordability. How the exchange resolves that tension is a BIG story, one that thousands of people in your state who are eligible for exchange coverage may want to know about.

Key Question: What trade-offs is your exchange making to squeeze the policies into the affordability zone?

Who influences the exchange boards?

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?

Maybe they will; maybe they won’t. That depends on what steps the exchange is taking to make sure there are sufficient doctors and hospitals for the newly insured. If people find their doctors are not in the plan, or a hospital covered by the plan is too far away, they won’t buy a policy, and that, too, can affect the mix of the risk pool.

And there’s the fear that insurers will omit providers in certain areas where there are clusters of patients with diseases they’d rather not insure. New York’s experience with AIDS is an example. In a fight with insurers over the availability of an out-of-network rider for insurance coverage, the Center for the Independence of the Disabled found that many HIV specialists were not in any provider networks. Matching up provider networks with diseases common to certain populations is a good enterprise project for an eager reporter.

Will the exchanges become like Medicaid? That is, will some doctors refuse to take patients with exchange coverage, because insurers selling through the exchanges offer lower reimbursement? This question zooms right in on the insurers’ fears that only sick people will buy coverage. Lower reimbursements might be one way they could cope with the high costs of insuring the sick, but if providers balk, people could have a problem. (Remember, insurers can no longer refuse coverage to those who are sick and need to make up their losses somehow.)

Key Question: What is your exchange doing to insure network adequacy?

How will the exchange sell its policies?

The trick, says one exchange expert, is “how to convince people to enroll in this unaffordable thing.” The answer, of course, depends on the outreach and the sales job. When Massachusetts beefed up promotion of its pioneer exchange, called The Connector, it bombarded fans at Red Sox games with advertising aimed at getting young men to sign up for insurance. It worked. But the Bay State has a culture of insurance. Whether the Illinois exchange will have similar success with White Sox fans or whether the Mississippi exchange hawking insurance at Ole Miss football games will reel in the sales is not known.

Some exchanges, like Connecticut’s, have gone out to listen to the people who will soon be their customers. Given the fact that the Kaiser Family Foundation just found that two-thirds of the uninsured population and more than half of the entire population don’t understand how the health reform law will impact them, such listening tours seem essential.

Obamacare provides for helpers—called “navigators”—to help people enroll in coverage through the exchanges. It also providers for “assisters” to aid people who need additional help. (Assisters are supposed to have training and meet conflict-of-interest guidelines.) Whether these new helpers will do a better job than some of the counselors at state health insurance programs (SHIP) for Medicare beneficiaries remains to be seen. I have found SHIP counselors who were outstanding and some who were very unhelpful. If there are too many of the latter, people may not sign up. All this means the press needs to keep tabs on them, perhaps by sitting in on counseling sessions with consumers seeking insurance in the exchanges, or finding a candidate for coverage and observing what he or she goes through to get insurance.

Key Question: How serious is your exchange about outreach and education?

The Kaiser poll out last week came with a warning: Americans’ expectations of how the law will affect healthcare costs, quality, and consumer protections are more negative than positive, and often off-base. False information still pervades peoples’ thinking. Fifty-seven percent of the public believes the health law includes a public option. Almost half think it gives illegal immigrants money to buy insurance. And 40 percent still thinks that death panels will make decisions about end-of-life care for Medicare seniors.

We have our work cut out for us.

Follow @USProjectCJR for more posts from this author and the rest of the United States Project team.

Related stories:

Exchange Watch: Growing pains in Connecticut: Is the state’s model insurance plan unaffordable?

Exchange Watch: Half a Story in Connecticut: On insurance affordability, the Hartford Courant falls short


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Trudy Lieberman is a fellow at the Center for Advancing Health and a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR’s healthcare desk, which is part of our United States Project on the coverage of politics and policy. Follow her on Twitter @Trudy_Lieberman.