April 28, 2011: These recent reports address strategies for state implementation of health insurance exchanges, looking at what strategies have been tried, what alternatives are available, and the advantages and disadvantages of various options.
Massachusetts and Utah: Lessons Learned
In “The Massachusetts and Utah Health Insurance Exchanges: Lessons Learned,” researchers at Georgetown University Health Policy Institute evaluate the insurance exchanges in Massachusetts and Utah to identify key lessons for other states. Looking at questions of plan quality and choice, affordability of coverage, and ease of enrollment, the authors identify several lessons for other states, including (among others):
- Policymakers must consider the broader insurance market rules within which a state’s exchange will operate.
- Exchanges must attract the participation of both consumers and health plans in order to be effective.
- The success of an exchange is a reflection of is budget and staffing.
- Without subsidies, exchanges themselves can do little to make insurance more affordable.
New York: Recommendations
The Manhattan Institute, with support from New York State Health Foundation, has released its recommendations for an insurance exchange in New York. In the report “Building a Market –Based Health-Insurance Exchange in New York,”author Paul Howard envisions a quasi-independent exchange (i.e., housed outside existing state agencies) that functions as a clearinghouse for all qualified health plans. Howard recommends that the exchange allow a wide range of cost-sharing designs, that the state expand its current age-banding rules to encourage the participation of younger and healthier enrollees in the exchange, and that the small group market be provided with a defined contribution option. The report identifies several barriers to implementing these recommendations, including the need for legislative action at the state level, medical loss ratio requirements under the Affordable Care Act, and questions surrounding the calculation of actuarial value by the federal government.
Multi-state Exchanges: A Good Idea?
In a new report titled “Multi-state Health Insurance Exchanges,” Urban Institute author Linda Blumberg identifies and discusses the potential advantages of multi-state insurance exchanges. Blumberg observes that multi-state exchanges could offer significant administrative economies of scale; might make logistical sense in large metropolitan areas that cross state lines; could promote risk-pooling across state boundaries; and could stabilize risk pools in low-population states. However, such exchanges are more likely to focus on administrative economies of scale rather than risk-pooling, says Blumberg, since inter-state risk-sharing would lead to one state subsidizing another and would complicate political decision-making in the participating states.