What It Takes To Create A Pro-Consumer Health Exchange

Democrats and Republicans are working to implement the health insurance exchanges in the Affordable Care Act, but are looking to different states for guidance in how to best structure a marketplace that would allow consumers to compare and purchase comprehensive insurance beginning in 2014. Red states are typically guided by Utah’s flea-market type approach, in which almost any insurer can offer coverage in the exchange and is held to few standards or regulations, while blue states are following the Massachusetts model of prudent purchasing and price negotiation.

Today, the U.S. Pirg has published a blueprint “for creating a strong, pro-consumer exchange that lives up to its promise of a better marketplace” that could offer a more comprehensive guide to the states:

It should be run and overseen by representatives drawn from the consumer and small business communities that the exchange is designed to serve, not insurers or providers who could benefit financially from the exchange’s decisions.

— That means it must have the authority to exclude plans that fail to deliver robust consumer protections, quality care, and reasonable costs, particularly if the plan has a history of unreasonable rate increases. And because the bigger the exchange, the greater its negotiating power, the state should plan to open the exchange to employees of large businesses as soon as possible, and work to enroll as many eligible consumers as possible.

— The exchange should provide a special “seal of approval” for the plans that do the best job at providing high quality care, and provide consumers with easily understandable information about what these reforms mean and how consumers can best make use of them.

— The state should prohibit insurers or brokers from steering people either onto or off of the exchange, through setting different broker commissions, adopting targeted marketing strategies, or by any other method. And because a larger exchange will have more stability, states should conduct strong outreach and enrollment and widen the eligibility rules for the exchange.

— The state’s system should obtain updated information from enrollees in both public programs and the exchange each year, and if the enrollee’s eligibility has not changed, their coverage should be automatically renewed.

As the CBPP’s Dave Chandra has pointed out, “virtually every state has made at least some progress toward setting up [the] health insurance marketplaces,” including states like Indiana, Mississippi, and Alabama — which are also challenging the the constitutionality of the health law. In total, 16 states have “passed exchange-related legislation,” 39 states have introduced exchange legislation this year, and “48 states (all except Louisiana and Florida) plus the District of Columbia are engaged in some level of exchange planning.” So far, “only Louisiana has publicly announced that it won’t set up an exchange.”

The Department of Health and Human Services is expected to release its exchange regulations sometime around July 7.