Strategies for Long Term Success in Company Health Care: Following the Lead of the “Best Performers”
May 23, 2013
With national health care costs rising 5.1% in 2013, double the rate of inflation, how can anyone keep up?
It’s a hot topic that leaders of organizations nationwide are addressing with growing urgency. Keeping costs low, maintaining a healthy workforce, and avoiding the looming 2018 excise tax are all on the agenda for the employer.
In the Towers Watson 2013 survey on employer purchasing health care, one thing is clear, some companies save, others are on their way, and still others miss the mark entirely. But not all hope is lost, as 25% of organizations have managed to keep their health care costs roughly in line with inflation (growth of 2.2% annually). So, what separates this 25% (the best performers) from the rest? Well, a handful of things:
They’re Already Working on Avoiding the Excise Tax: It comes into effect in a mere five years, so the best performers have started thinking about the implications of maintaining, discarding, or transforming their high cost plans.
They Pay Attention to Public Exchanges: They pay close attention to the role public exchanges might play in coverings pre-65 retirees, part-timers who work 30 or more hours a week, and lower paid employees eligible for subsidies. The public exchanges that open in 2014 may provide benefits to both employers and employees alike, with guaranteed coverage at a likely lower cost.
They are Considering Total Replacement ABHP: An ABHP (Account Based Health Plan) is a plan with a deductible offered alongside a personal account that can be used to pay a portion of the medical expenses not paid by the plan. They often include decision making tools and provider transparency that better help employees manage their care. The best performers have highly effective ABHPs that align with a comprehensive health management strategy that lead to total replacement.
They Implement Employee Engagement, Education, and Communication Tools: They improve employee health with approaches like games, classes, competitions, discussion, social media activities, and better information on health care and cost that are useful in promoting healthy lifestyles.
They Utilize Biometric and Achievement Standards Initiatives: Financial incentives for employees maintaining healthy BMI and cholesterol levels have proven effective for organizations with low health care costs. They extend the incentive program to spouses to encourage healthy living in all facets of life.
They Require Accountability and Vendor Partnerships: They obligate vendors to share information about care and costs with their employees and implement performance based contracts with vendors that set goals.
They Understand Pharmacy Drug Costs: Specialty drugs often have a hefty impact on the overall health expenses of an organization, and specialty drug costs are expected to double in the next three to five years. Best performers understand their total pharmacy cost and explore new methods of addressing this rapidly growing area such as utilization management, site-of-care optimization, specialty pharmacy networks and formulary management.
They Implement New Delivery Models and Treatment Settings: They use on site health care clinics that provide a cheaper alternative to expensive emergency room and doctor visits. Telemedicine allows their employees to receive health care from remote locations using mobile technologies and are especially cost effective for non-urgent matters.
They View Their Health Plans in the Context of Total Rewards: Rising health care costs can stand in the way of bonuses, higher base salaries, and total rewards. Best performers provide transparency that engages their employees and helps them understand the impact of high health costs in relation to their total rewards package.
Under the burden of rising costs and the transformations of health care reform, it’s all about change, communication, education, transparency, and the implementation of new programs for companies looking to save.
Don’t Take an Exchange at Face Value – Kick the Tires
April 1, 2013
The national conversation on exchanges has reached a new milestone this year – It just got real for a lot of employers.
And while the news is focused on public exchanges and whether employers will drop coverage, inside companies there are a lot of open-ended questions, starting with,
The answers employers are looking for are different than what consumers need. Employers have to get under the hood and kick the tires. They can’t afford to find out down the road that their employees and businesses have a need that their exchange is not equipped to deal with.
For most large, high-performing employers who provide health benefits today, the exchange option does not mean letting their employees seek coverage solo on the public exchanges. It involves moving to a new model of managing health benefits – one where employees take a more active role for themselves and one where the employer’s role is also evolving.
When employers interact with exchanges, they need everything consumers need – and a lot more:
- A proven, end-to-end technology foundation - There’s a lot of new code being written right now. Most large, sophisticated employers do not want their employees to be quality assurance testers for a new system. An exchange with a history of sound technology and a track-record of success stands out from the crowd.
- Reports for managing health benefits, population by population - When working with an exchange, employers need to be able to track their employee populations, active and retired. Exchanges must offer a sophisticated suite of business intelligence tools to let employers see how their people are faring so they can continue to execute proactive health benefit strategies.
- Data to manage and workforce health and wellness - High-performing wellness programs are getting more and more recognition as ways to influence population health and contain costs. Employers who have group plans or who self-insure need to manage their health benefits strategically.
- Benefit advisors to manage the questions their in-house HR departments cannot - An exchange needs enough expertise on staff and a sophisticated customer management system to answer the questions that HR cannot. Without an adequate advisory component – including knowledgeable, licensed benefit advisors – employers could risk a flood of questions and concerns from worried employees.
- Individual tracking capabilities that synch with eligibility for federal subsidies - Access to subsidies is a very important to evaluating how employees will fare. It’s not an easy metric to track, as it could depend on criteria like household income, which can vary week to week.
- Funds and claims management tools - Most large employers are looking to exchanges to let them fund greater choice and value for employees – not to end funding but to make it sustainable.
- A great interface - Last but not least, an exchange should have a great user interface that helps consumers crunch a lot of data into practical chunks and provides effective decision support tools.
We put the web element last because that’s the first place people tend to go, and it really is the tip of the iceberg: As you can see, an exchange is a lot more than a website.
We advise employers to get under the hood of an exchange. Kick the tires by checking out analytics, service features and management tools.
An exchange needs to be a lot more than a pretty interface, because there’s no latitude for buyers’ remorse down the road.
Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.
We’re kicking of a series of seminars in eight cities this week, starting in Falls Church, VA. The purpose of this road show is to help employers get ready for 2014, when some of the most important provisions of the health care reform law go into effect.
The events will feature high-level discussions of potential health care benefit strategies in light of health care reform. They will also introduce employers to OneExchange, a strategic health benefit solution that helps employers leverage health care reform to their advantage using proven, end-to-end, integrated, private and public exchange-based solutions for full-time, active employees; part-time employees; and both pre-Medicare and Medicare-eligible retirees.
Confirmed events are as follows:
- Falls Church, Virginia — March 6
- Atlanta — March 19
- Houston — March 28
- Minneapolis — March 28
- Cincinnati — April 4
- Dallas — April 11
- San Francisco — April 18
- Chicago — April 24
Employers interested in attending may contact Alissa Federspiel, alissa.federspiel@extendhealth.com for more information.
Reform Storm: The Coming Seismic Shift in Health Care
January 30, 2013
The disruptive force of health care reform has garnered comparisons to natural disasters since the Patient Protection and Affordable Care Act (ACA) was signed into law in 2010. With potential show-stoppers behind us, there are still more notable milestones to pass before 2014’s seismic shift.
What’s at stake for health care market players
Health care as we know it evolved organically, giving us a market that covers people who are employed full-time but leaves millions un- or under-covered in a system imploding under the strain of its costs. Before the tipping point of 1/1/2014, there’s much to be done:
- The law continues to shape the market and some key elements for employers are yet to be clarified, such as the final regs on essential health benefits and whether health reimbursement arrangements (HRAs) can be counted as meeting employers’ obligation to provide health care benefits.
- Insurers are building new plan designs to meet qualified health plan requirements and trying to figure out how they must adapt to serve an enormous new consumer-focused market.
- Health care providers are partnering with insurers to implement new models of assessment, patient care and remuneration designed stem the pace of cost increases.
- Employers, who provide health coverage to most of the nation, must determine how to make the most of the law for employees and their businesses.
- People – the consumers of care – whether they’ve had the benefit of employer-sponsored health benefits or little to no coverage – will be able to get more involved in selecting coverage and managing their needs than ever before.
These diverse players will all meet up in the new private and public insurance marketplaces – health care exchanges.
As much as the news is filled with incremental announcements in the development of public exchanges (the state and the federal marketplaces), 2013 may well be the eye of the storm for employers who are figuring out what it all means for them as the health care insurance market gathers definition.
See the Watch This blog “Insights for 2014 from Today’s Most Successful Exchanges” for insights from Bryce Williams – Extend Health CEO and Towers Watson Managing Director of Exchange Solutions – on what industry and business leaders are facing this year.
Read more
- Health Reform: The Political Storms are Far From Over, Brookings Institute
- Experts question employees’ readiness for consumer-driven health care, EBN
- Employer-sponsored health insurance coverage continues to decline in a new decade, Economic Policy Institute
In this second installment of our two part series on rate review, we’ll take a closer look at transparency, requirements for an “effective” state program, and how the rate review grants program is helping states improve their review processes.
Transparency is an important element of the Affordable Care Act (ACA). The rate review provision of the ACA provides an “unprecedented level of scrutiny and transparency to health insurance rate increases” to protect consumers from unjustified premium increases. Consumers in all 50 states will have access to the proposed rate increases, an explanation from the insurer as to why it believes an increase is necessary, and, for the first time, be able to comment on the proposed rate increase. After analysis and public comment the final determination, and the reasoning behind it, are made public.
Rate review information is available on HealthCare.gov at: http://companyprofiles.healthcare.gov/. You can look up proposed rate increases by insurance company or overall by state.
The transparency that the rate review program provides not only protects consumers from unjustified rate increases, it promotes competition and encourages insurers to keep costs down. It builds on other provisions (such as the Medical Loss Ratio 80/20 rule) and aligns with the ACA’s goal to make health care more affordable.
Every state must have an “effective” rate review program. If it doesn’t, HHS will review rates for the state. The Center for Consumer Information & Insurance Oversight defines “An effective rate review system” as follows:
- Must receive sufficient data and documentation concerning rate increases to conduct an examination of the reasonableness of the proposed increases.
- Must consider the factors below as they apply to the review:
- Medical cost trend changes by major service categories
- Changes in utilization of services (i.e., hospital care, pharmaceuticals, doctors’ office visits) by major service categories
- Cost-sharing changes by major service categories
- Changes in benefits
- Changes in enrollee risk profile
- Impact of over- or under-estimate of medical trend in previous years on the current rate
- Reserve needs
- Administrative costs related to programs that improve health care quality
- Other administrative costs
- Applicable taxes and licensing or regulatory fees
- Medical loss ratio
- The issuer’s capital and surplus
- Must make a determination of the reasonableness of the rate increase under a standard set forth in State statute or regulation.
- Must post either rate filings under review or preliminary justifications on their websites or post a link to the preliminary justifications that appear on the CMS website.
- Must provide a mechanism for receiving public comments on proposed rate increases.
- Must report results of rate reviews to CMS for rate increases subject to review.
Source: CCIIO http://cciio.cms.gov/resources/factsheets/rate_review_fact_sheet.html
Forty-four states and the District of Columbia have rate review programs that the HHS has deemed “effective.” Some states have the power to deny or modify the proposed rate increase if it is deemed unreasonable. Other states can determine the rate is unreasonable, but don’t have the authority to stop the insurer from implementing the increase. HHS will review proposed rate increases for states that do not have an “effective” review program, but it lacks the authority to deny rate increases.
The $250 million Rate Review Grants Program is designed to provide states with funding to improve their rate review programs. These funds have made it possible for states to build and improve the quality and efficiency of their rate review programs and provide consumers with greater transparency and protection from unjustified rate hikes. HHS anticipates awarding additional funds in 2012 and 2013 to help states further improve their ability to protect consumers.
According to the 2012 Annual Rate Review Report: Rate Review Saves Estimated $1 Billion for consumers, the rate review grants program has helped 21 states expanded the scope of their rate review efforts, 41 states have improved the quality and efficiency of their rate review process, and 42 states have increased consumer transparency. In addition, it has helped states empower consumers with information that was previously not available.
Before the ACA most consumers were left in the dark regarding premium rate increases. Many experts believe this lead to insurance company abuses and unnecessarily high premiums. The Rate Review Program and the Rate Review Grants Program have helped states provide consumer protection by analyzing and disclosing proposed double digit rate increases to consumers.
Read: Rate Review – Protecting Consumers from Unjustified Premium Increases: Part One
Resources:
2012 Annual Rate Review Report: Rate Review Saves Estimated $1 Billion for Consumers
http://www.healthcare.gov/law/resources/reports/rate-review09112012a.html
Quantifying the Effects of Health Insurance Rate Review
http://www.kff.org/healthreform/8376.cfm
http://www.kff.org/healthreform/upload/8376.pdf
CCIIO http://cciio.cms.gov/resources/factsheets/rate_review_fact_sheet.html
Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.
Health insurance premiums have grown rapidly over the past decade, and, in most cases, insurance companies were not legally required to justify rate increases to consumers. Now, to comply with the rate review provision of the Affordable Care Act (ACA), insurers must submit proposed double-digit premium increases for review by the state or the U.S. Department of Health and Human Services (HHS).
Rate review helps ensure that premium increases are based on realistic costs. Insurance companies in small group and individual markets that want to raise premiums 10 percent or higher are required to submit justification for the increase for review. The state Department of Insurance (DoI) reviews each proposed rate increases to verify that it is reasonable, and make the information about the review available to the public. If the DoI does not have an “effective” rate review program, HHS will review the proposed increase. This scrutiny and transparency promotes competition, motivates insurers to keep health care costs down, and protects consumers from unjustified rate increases.
Overview of results
Fifty percent of the rate review determinations made so far have resulted in either a lower increase than originally proposed or no increase at all. On average, rate increases implemented were 2.8% lower than the proposed increase. To date, rate review has saved consumers in the individual and small group markets an estimated $1 billion, and resulted in lower premium increases for nearly 800,000 people.
| Market | National average rate increase implemented | Savings to consumers |
| Individual market | 1.4% lower than originally requested | $425 million |
| Small group market | 0.8% lower than originally requested | $600 million |
Source: 2012 Annual Rate Review Report: Rate Review Saves Estimated $1 Billion for Consumers by HHS/Healthcare.gov
In its October 2012 report Quantifying the effects of Health Insurance Rate Review The Kaiser Family Foundation analyzed rate review data from 32 states and the District of Columbia. Kaiser found that 20 percent or the rate filings “resulted in lower premium increase than the insurer initially requested.” The KFF study also found that rates varied by market (individual or small group) and by state.
| Average Rate Change Requested | Average Rate Change Implemented | |
| Individual | 8.9% | 6.3% |
| Small Group | 5.2% | 4.7% |
| States | 6.8% | 5.4% |
Source: Quantifying the effects of Health Insurance Rate Review, by Kaiser Family Foundation.
The rate review program has had a positive impact on keeping insurance rate increases in check, not only by rejecting unjustified increases, but by motivating insurers to withdraw or modify their proposed rate increases due to the scrutiny and public exposure the rate review program provides. Of the rate increases submitted for review:
- 26% were deemed unreasonable or rejected
- 12% were withdrawn prior to determination
- 26% modified the proposed rate
- 36% no reduction to requested increase was made
While review programs were in effect in many states prior to the ACA, rate hikes often faced little or no scrutiny. The rate review program under the ACA provides much greater scrutiny and transparency, and helps to protect consumers from unjustified premium increases.
In part two of this series on rate review we’ll take a closer look at transparency, requirements for an “effective” state program, and how the rate review grants program is helping states improve their review processes.
Resources:
2012 Annual Rate Review Report: Rate Review Saves Estimated $1 Billion for Consumers
Quantifying the Effects of Health Insurance Rate Review (PDF)
Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.
On Friday (10/12/12) the U.S. Department of Health & Human Services released the 2013 quality ratings for Medicare Advantage and Part D prescription drug plans. These star ratings summarize how well the plans performed on well-established measures of quality such as access to care, responsiveness, and beneficiary satisfaction. Plans can earn up to 5 stars, from one star for poor performance to 5 stars for excellent performance. Star ratings are reviewed each year and the results are published by CMS in the fall.
HHS Secretary Kathleen Sibelius said, “People with Medicare have more high quality choices and the performance of Medicare Advantage plans is improving,” and there are “more four and five star plans than ever before.”
| Four & Five Star Plans | ||
| Plans | 2012 | 2013 |
| Medicare Advantage | 106 | 127 |
| Part D | 13 | 26 |
To encourage people to enroll in higher quality plans, CMS is notifying people who have been enrolled in low performing plans (plans that received less than 3 stars for the past three years) that they can enroll in a new plan if they want to. Star ratings, in addition to cost and coverage, help consumers compare plans and choose the right one for their needs and budget.
5-star plans are allowed to market and enroll people throughout the year, and thousands of people “took advantage of this opportunity to join a top performing plan,” according to Sibelius. People can switch to a 5-star plan at any time during the year, but they can only do so once each year.
In addition to better quality, HHS announced that Medicare Advantage benefits are increasing and premiums are holding steady. According to HHS data, average premiums fell 10% and enrollment increased 28%. Premiums for Part D prescription drug plans are expected to remain steady with last year at about $30 on average for 2013.
Related Stores:
Health plans “score” with Medicare’s 5-star rating system
New MA star ratings released by CMS
Preliminary CMS 2013 Medicare Advantage payment and policy guidelines
Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.
Medicare Part D and Medicare Advantage Changes for 2013
October 16, 2012
The Centers for Medicare and Medicaid Services (CMS) has announced that 2013 will bring changes aimed at continuing to improve the quality of Medicare Advantage and Part D plans while helping seniors afford their prescription medications.
The Affordable Care Act Changes to Part D Prescription Drug Plans in 2013
The Affordable Care Act includes provisions that, over time, are reducing the cost of prescription drugs for people who fall into the coverage gap, or “donut hole.” In 2011 and 2012, the discount for brand name drugs was 50%; in 2013 and 2014, it will increase to 52.5%, and will grow after that until it reaches 75% in 2020.
The discount for generic drugs is increasing too; in 2013, it will be 21% so that you will pay 79% of the cost of your generic prescription medications. The generic drug discounts will also continue to increase, until they reach 75% in 2020, with the remaining 25% to be paid by you.
Other changes to Part D plans in 2013 include:
- The standard Part D plan initial deductible will increase to $325 (up from $320 in 2012). Your deductible may differ.
- Premium costs in 2013 are expected to remain at 2012 levels, around $30.00 per month on average. If you see a large increase in your Part D premium, you can make changes during the Open Enrollment Period.
Special Enrollment Period to switch to 5-star rated Medicare Part D or Medicare Advantage plans
CMS developed its quality rating system for Medicare Advantage and Medicare Part D plans a few years ago, basing it on well-established measures of health care delivery quality such as access to care, responsiveness, and beneficiary satisfaction. Plans can earn from 1 to 5 stars.
Although 5 star plans were few in 2012, forecasters are predicting they will be more widely available in 2013 as more insurance companies achieve the service levels necessary to earn the rating.
If you want to switch to a 5-star rated plan in your area, you can do so at almost any time during the year. The Medicare Advantage and Medicare Part D 5-star plan Special Enrollment Period this year runs from December 8, 2012 through November 30, 2013.
Special Enrollment Period to leave a consistently low rated Part D or Medicare Advantage plan
If either your Medicare Advantage or Part D plan has failed to achieve at least a 3 star rating from CMS over the last three years, you should expect to receive a letter from CMS offering you a Special Enrollment Period to leave your plan and choose a new one.
Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.
Exchanges Part 2: What to look for and what to look out for
September 13, 2012
Why have exchanges? … What’s an exchange? What isn’t?: A Two-Part Blog Series on Health Care Insurance Exchanges
By Brian Bohlig, chief marketing officer
Extend Health – A Towers Watson company
We’ve seen dramatic paradigm shifts for our employer clients and their retirees that come out of combining the power of health reimbursement arrangements and the individual Medicare market through an exchange. Here are some basics tenets that we have found to be differentiators in the value exchanges can offer:
- An exchange is not just a website. There’s a lot more to it. On the back-end, an exchange should seamlessly parse compliant enrollment data to carriers and the state exchanges accurately and laser fast. An exchange should offer robust customer service to help your employees identify the best plans for them.
- An exchange is not just a call center. A lot of the technological advantages of the online environment, like electronically filing enrollments within 24 hours, are lost to your group if your exchange is still working largely by fax or mail.
- Real-time reporting is crucial to making the transition from a group plan to an exchange. If an exchange can’t give you real-time reporting during enrollment, you’re driving blind. Worse yet, your only reporting channel could be hearing from your own group that things aren’t going well.
- A one-carrier exchange is like the sound of one hand clapping. A carrier website that offers only its own plans denies consumers competitive value, denies consumers options if that carrier raises rates and denies consumers a consumer advocacy partner.
At Extend Health, we built our exchange on the pillars of a web interface, back-end support systems and benefit advisors. Unlike many other online shopping experiences, buying health care coverage is one of the most complex and costly ventures people have to deal with in their lives and the quality of what’s picked relative to your health needs is critical. So it’s really important to consider more than just the lowest cost premium.
Despite having invested many millions in our technology platform, we’ve found that there’s no substitute for a knowledgeable helping hand when choosing the best health plan. Extend Health employs hundreds of knowledgeable, licensed professionals who spend time on the phone with our consumers to make sure they’ve considered the important elements of their medical needs, prescription drug needs and lifestyle needs when choosing a plan. Our technical systems set the high bar in the private Medicare exchange marketplace, but our benefit advisors are our secret sauce. They bridge the gap between the technology side and the real-life decision points that go into picking the best health coverage for each individual.
Health insurance exchange checklist
Based on this deep well of experience and development, here’s what you should look for when evaluating a health insurance exchange.
|
Multiple health insurance carriers |
• Provides true choice, price comparison and competition |
|
Intuitive user |
• Empowers people with robust benefit and price information • Collects key info on medical, prescription and lifestyle needs • Matches key info to the best set of health plans available by ZIP code |
|
Robust back- |
• Submits a complete, compliant enrollment application online and fast • Seamlessly transmits data to and from state exchanges |
|
Strong customer |
• Provides a helping hand matching key info to the best plans • Advocates for consumers with carriers on the exchange |
|
Nimble reporting capabilities |
• Allows insight into the application process • Gives insight into communications uptake, plan choices and exchange performance |
Caveat emptor: If the exchange you’re looking at is missing one or more of these, there are some more serious questions you should be asking.
Keep this list of questions and answers handy when you’re evaluating an exchange partner. See full list: Questions To Ask An Exchange
- Has an employer ever pulled out of your exchange during open enrollment?
- What percent of enrollment applications are you still submitting on paper, either by fax or mail?
- Do you offer real-time reporting on call wait times or during the enrollment application process?
At Extend Health, we have set and raised the bar on end-to-end exchange technology, from our user interface to our back-end and call management systems to our real-time, interactive reporting interface. The first goal of our exchange model and technology infrastructure has always been to make the user experience as smooth as possible – for consumers to choose health plans and for employers who want to increase options their employees’ options while managing health benefit costs.
There’s a world of uncertainty out there and you don’t want your employees or retirees to be the beta testers of a fledgling exchange. Arm yourself with these questions and know what you’re walking into.
For regular commentary on developments and trends in health care, insurance, and technology, follow @brycewatch and @ExtendHealth on Twitter and check out https://www.extendhealth.com.
Related articles
- 2011 Global Brand Simplicity Index, Siegel+Gale
- How-health-care-exchanges-will-work , Gerald Kominski, UCLA’s health policy research director explains the market aspects of how health insurance exchanges could function
- Private Health Insurance Exchanges and Defined Contribution Health Plans: Is It Déjà Vu All Over Again?, Paul Fronstin, Ph.D., Employee Benefit Research Institute
- Sebelius Releases Proposals for Minimum Requirements for State-Run Health Insurance Exchanges; Extend Health CEO Bryce Williams Offers “Four Keys To Building An Effective Health Insurance Exchange,” Extend Health
Read part one in this two part series: Exchanges Part 1: Everyone wants in
Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.
Exchanges Part 1: Everyone wants in
September 4, 2012
Why have exchanges? … What is an exchange? What isn’t?: A Two-Part Blog Series on Health Care Insurance Exchanges
By Brian Bohlig, chief marketing officer
Extend Health – A Towers Watson company
You wouldn’t call it a stock exchange if only one company was selling shares on it, right? It’s easy to see how that kind of a market would benefit the company selling on it – buy my product and forget the rest.
But how does that help consumers?
As a corporate or government employer or professional/trade association, you should be asking this question if you want to offer employees /members – present or retired – health care coverage through an exchange.
What you find when you look under the hood of some of exchanges might surprise you, because some models aren’t set to drive all the value and savings organizations and consumers aspire to when making the transition from a group health insurance plan to the individual market.
Why an exchange?
The reason for exchanges in the first place is to help get a handle on an industry known for its complexity and high costs. A nimble exchange has the potential to slice through health care and insurance industry complexity and costs with:
- Apples to apples comparisons – Putting comparable plans from different carriers beside one another so consumers can make sense of the benefit differences.
- Transparency – Showing pricing, not just of medical plans but also helping assess out-of-pocket costs consumers could see down the road based on prescription medication needs, the kinds of doctors they see and where.
- Objectivity – A system that doesn’t promote certain plans for non-consumer-oriented reasons, like commissions, or for the administrative ease of the exchange itself.
- Cost-savings – By making it easy to compare plans side by side, it creates a competitive environment where consumers can pick the least expensive plan that meets their needs best.
Extend Health has been running an exchange for eight years. In 2005, when the Medicare Modernization Act did for Medicare insurance plans what health care reform is doing for everyone else now, we set up the first real private Medicare exchange – an exchange that gave retired employees of our employer clients access to the individual Medicare plan market – an exchange that moved beyond the one-size fits all structure of employer group plans. We enrolled retirees from our first employer, Chrysler, in 2006.
Today we offer the largest number of carriers – over 75 and counting, serve the largest number of employer clients – over 175 (40+ Fortune 500s) and counting, and the largest number of consumers who have selected individual Medicare plans through our exchange – over 200,000 and counting.
Since Extend Health became a Towers Watson company back in May and the Supreme Court ruling upholding health care reform, many clients, retiree, reporters and others in the health care industry have been asking us about exchanges and what to expect.
At this pivotal point in the evolution of health care in our nation, Extend Health is in a unique position. Features of the Medicare environment, like guaranteed issue and standardized plans, are being applied to the rest of the U.S. health care environment. And we have deep, long-standing measures and knowledge about how consumers, employers and carriers have fared on the Extend Health exchange.
In the next post of this series, I share what experience has taught us about what to look for and what to ask when you’re considering an exchange.
For regular commentary on developments and trends in health care, insurance, and technology, follow @brycewatch and @ExtendHealth on Twitter and check out http://www.extendhealth.com.
Related articles
- 2011 Global Brand Simplicity Index, Siegel+Gale
- How-health-care-exchanges-will-work , Gerald Kominski, UCLA’s health policy research director explains the market aspects of how health insurance exchanges could function
- Private Health Insurance Exchanges and Defined Contribution Health Plans: Is It Déjà Vu All Over Again?, Paul Fronstin, Ph.D., Employee Benefit Research Institute
Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.
