New Health Insurance Marketplace

Health Insurance is inaccessible to many Americans because of cost or previous medical history. As a result, many health reform proposals would create a new health insurance marketplace or "exchange" that would ensure that health coverage is accessible and affordable for all.

How would such an exchange be organized? Who would it serve? How would it be governed? What roles would insurers, employers, consumers, and governments play in the new marketplace?

To answer these questions, the New America's Health Policy Program gathered experts on this issue for a policy forum, moderated by Julie Barnes, Deputy Director of the Health Policy Program at New America. 

Rick Curtis, president of the Institute for Health Policy Solutions, began the discussion by laying out the goals and purposes of an exchange. He said that the basic purpose of an exchange was to organize the health insurance market so people can get access to coverage and make an informed choice, without having to deal with all of the complexities and rules of today's system. Curtis said that an exchange should not be governed by people who also managed plans in the market to avoid a conflict of interest. The ultimate goal of an exchange, he said, was to maximize the amount of competition and choice among plans based on value and cost effectiveness while minimizing competition based on risk selection--as is often the case in today's individual market.

DeAnn Friedholm of Consumers Union followed Curtis with a discussion of the current insurance market from the perspective of individual consumers. Noting how overwhelming the individual market for insurance can be, she argued the goal of an exchange should be to provide consumers with "structured choice" and reduce "frivolous variation" between health plans that provided no added value. Friedholm had several suggestions on how to reach this goal:

• Common definition of plan terms: Terms like "medical necessity" should mean the same thing regardless of what insurance you have.
• More standardized benefit plans: Friedholm offered the Massachusetts reform efforts as an example of how a new marketplace could create better choices for consumers without becoming overly restrictive in terms of what benefits and plans were offered.
• Information about plans must be publicly available: Again, the Massachusetts reform provided a good example of what efforts could be taken to better inform consumers.
• More information should be published in a format that's easier to understand: Friedholm suggested a sort of "nutrition label" could be created that would provide consumers with vital information--premiums, deductibles, co-pays, maybe even expected out-of-pocket costs for certain illness.
• Stronger disclosure rules to prohibit bad, limited plans: Right now, Friedholm argued too many plans have so many loopholes and exclusions that it makes it impossible for consumers to make an informed choice.

Sara Horowitz, is the executive director of the Freelancers Union, an organization which represents over 100,000 independent workers. She spoke about the need for a new insurance marketplace that could provide continuous, stable coverage for workers who move frequently from job to job. Horowitz emphasized the role that associations like hers could play as "trusted advisors," helping their members navigate an exchange. Currently, the Freelancers Union operates like a mini-exchange offering health insurance plans to its membership of independent and self-employed workers.

Helen Darling is the president of the National Business Group on Health an organization of large employers that provides 55 million individuals with health benefits. Darling asserted that one thing that was absolutely essential to making an exchange work was an individual requirement to purchase insurance. Darling made clear, however, that if you were going to require individuals to purchase insurance, you must make sure it is affordable, understandable and delivers the highest value care. She suggested an exchange might be built on a combination of state and regional options, operating in a federal framework. National standards or rules would be necessary so that large employers would not be trying to comply with 50 different sets of regulations.

However, Alissa Fox, a senior vice president at the Blue Cross Blue Shield Association, argued that if some type of organization was needed to help organize the insurance market, it should build on existing state infrastructure to prevent overlap and duplication that raise costs. She agreed with Darling that for insurance markets to work all individuals must participate, but said that simply creating bigger risk pools wouldn't necessarily lead to savings unless reformers specifically address the problems of cost.

Finally, Len Nichols, the director of New America's Health Policy Program, addressed the question of whether private health plans should be forced to compete with a "public" health insurance option. Nichols described the debate over the public plan option as follows:

Proponents of a public plan support the idea for a variety of reasons. Some see it as a backdoor to a single-payer health care system. Others question the financial incentives of managers in private plans to deny care. Still others see the purchasing power of a public plan as a way to set prices and control health care costs.

Opponents of the public plan worry it will lead to single-payer health care. Others are concerned that because it is essential for most providers to participate in Medicare for financial reasons, the public plan could capitalize on this and force providers to concede lower rates by leveraging their participation in Medicare. As a result, providers would shift costs to other private payers to make up for the underpayments by the public plan.

Finally, as Nichols noted, there are some who are philosophically opposed to the expansion of government, but that was more a question of ideology than policy.

The solution, Nichols suggested, was a public plan based on two principles:

• the rules of the insurance marketplace (or exchange) apply to all plans, and
• the governance structure is designed to isolate the public plan from unfair advantages and perverse incentives

The goal was to create a public plan that satisfied the concerns of both sides. However, as Nichols noted, more must be done to control costs by building an information system through which best practice information can flow and by incentivizing payments so we pay people for doing the right thing and not just doing more of something.

Participants

Featured Speakers
Rick Curtis
President
Institute for Health Policy Solutions

Helen Darling
President
National Business Group on Health

Alissa Fox
Senior Vice President, Office of Policy and Representation
Blue Cross Blue Shield Association

DeAnn Friedholm
Director, Health Reform
Consumers Union

Sara Horowitz
Founder and Executive Director
Freelancers Union

Len Nichols, Ph.D.
Director, Health Policy Program
New America Foundation

Moderator
Julie Barnes
Deputy Director, Health Policy Program
New America Foundation