Health Insurance Exchanges
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Date
2011-06
Authors
Fracchia, Elena
Hall, Tiffany
Remer, Matthew
Saxe, Karen
Wu, Wei-Ting
Journal Title
Journal ISSN
Volume Title
Publisher
Department of Planning, Public Policy & Management, University of Oregon
Abstract
The United States’ health care sector is increasingly overwhelmed by the high number of
uninsured Americans combined with the ever-rising cost of service provision. Over the
last thirty years both federal and state budgets have felt the strain, forcing policymakers
and legislators to develop new methods to address the market failure. The Patient
Protection and Affordable Care Act (PPACA) of 2010 is one such method. As a
groundbreaking piece of health care reform, PPACA strives to increase health care
affordability and accessibility for all Americans in both the short and long-term. PPACA
has enabled the federal government to institute regulations for states, insurance carriers,
businesses and the uninsured as way to increase coverage and control costs.
PPACA includes a program for insurance provision called a health insurance exchange
(HIX), which all states are required to implement by 2014. The purpose of an HIX is to
create an insurance market for individuals and small businesses by grouping them into
combined risk pools, and to increase accessibility and coverage to the uninsured
population. Given these reforms, the Congressional Budget Office and the Joint
Committee on Taxation predict that nearly 32 million people will gain coverage in the
non-group market by 2016. Of those, they expect that 23 million will obtain insurance
through an HIX (Congressional Budget Office, 2010).
Health care reform is not a new phenomenon; in fact, it gained considerable national
attention in the early 1990s. Eight states created and implemented health purchasing
cooperatives (HPC), the predecessors to current day HIXs, in an attempt to control for the
same problems faced today. While deemed largely unsuccessful when evaluated on
factors such as market share, new products, price, competitive effect on the market and
reduction in the uninsured, HPCs did increase price competition and coverage options for
small businesses. However, little research exists that highlights the necessary
components for state success based on historical and current reform programs; even less
exists on the strategies states should undertake to ensure long-term sustainability and
participation.
This report analyzes the structural design and methods of implementing an HIX on
Oregon’s small business health insurance market from the perspective of insurance
carriers. To do so, this research conducts an in-depth study of five state health insurance
pooling programs to identify best practices and better understand important features and
characteristics that should be considered in the development of Oregon’s HIX. The
historical case studies of HPCs in California, Connecticut and Florida are compared with
current examples of health insurance exchanges in Massachusetts and Utah. The
successes and challenges of HPCs, and the preliminary outcomes of current HIXs,
provide valuable lessons for design and implementation strategies.
Six indicators for carrier participation guided the analysis: risk adjustment; affordability;
accessibility; implementation and administration; agent and broker participation; and
marketing strategies. State-specific findings are filtered through the six indicators and
then compared with PPACA regulations that mitigate many of the hurdles they faced.
The report concludes with practical recommendations for Oregon as it continues planning
the implementation of an HIX. Special consideration is given to demographic and market
trends in Oregon such as recent unemployment rates and coverage demographics.
Additionally, Oregon’s health care reform history as well as Senate Bill 99, which
outlines the state’s first steps in HIX development, help inform the likelihood of
implementation and political feasibility.
After a careful analysis of existing literature, historic and current case studies, and
pertinent legislation the authors recommend that Oregon: 1) Establish standard measures
for risk assessment amongst insurance carriers inside and outside the HIX; 2) Limit the
authorization of young adult plans to the HIX only; 3) Define the role of agents and
brokers; and 4) Establish a marketing plan for HIX implementation.
This report contributes to the discussion of HIX development by analyzing case studies
using an insurance carrier lens and identifying features of success and failure to support
effective implementation. Should policymakers utilize this report in the development of
organizational structures and strategies for implementation, the authors expect greater
long-run sustainability and carrier participation.
Description
Examining committee: Colleen Chrisinger
Keywords
Health insurance