Health Insurers Pressuring Government To Transfrom Exchanges Into An Automated Yellow Pages

Health insurers are weighing in on the Department of Health and Human Services’ new exchange regulations and pressuring the government to provide states with maximum flexibility in allowing private insurers to participate in the new marketplaces:

The association representing the nation’s health insurers said health insurance exchanges should be true marketplaces where competition can thrive, while at least one market analyst said exchanges still represent a “promising opportunity” for the sector. [...]

America’s Health Insurance Plans, in a statement, applauded this approach but cautioned that the exchanges should supplement current avenues for purchasing health coverage, not supplant them. AHIP also said it is still reviewing the proposed rule.

“All health plans offering coverage in the new exchanges will be required to meet new quality and performance standards,” AHIP President and CEO Karen Ignagni said in a statement. “To enhance competition and preserve consumer choice, all health plans that meet these new standards should be allowed to offer coverage through the exchanges.”

Allowing every insurer into the new marketplaces may do wonders for the industry’s bottom line, but it can’t be the best solution for enrollees. As former Massachusetts exchange head Jon Kingsdale often observes, letting every payer in “would be like telling your grocery store they have to offer every single kind of bread baked by every single bakery,” and “the Exchanges would be nothing more than an automated Yellow Pages.” Exchanges wouldn’t be able to aggressively select plans and set rules that translate the costliness of their networks into a price that the consumer understands.

Indeed, studies conducted by the Massachusetts Connector — the state’s exchange — revealed that consumers felt that too much choice was “confusing” and “overwhelming.” “Participants expressed a desire a for manageable numbers of plans (e.g. three to four) offered by four to six carriers. In addition, consumers expressed difficulty making plan comparisons under the existing model.” “Instead, consumers preferred for information to be presented in a simple and standardized format that clearly distinguished between different benefit design options.”

Not all states have the luxury of denying entrance to inefficient providers, however. States “that sit in highly concentrated insurance markets are limited in how selective they can be,” and states in which the exchange represents a small part of the commercial market will also have little leverage, as will states with a sicker risk pool. Still, as a recent National Academy of Social Insurance and Georgetown University concluded, the states can still take steps to ensure that the exchanges provide meaningful — rather than overwhelming — choices.