The Affordable Care Act had two major goals – increase coverage and lower costs. The new healthcare exchanges (which are simply health insurance marketplaces) were created by the new law. More than 12 million people have purchased individual policies, and many receive subsidies to help afford them. Enrollment growth in the marketplaces accounts for more than half of the increase in people with health insurance. So, the new markets clearly reduced the roles of the uninsured.
Lately we’re reading that the exchanges are having problems. United Healthcare, the biggest insurer in the country, has just announced plans to exit the marketplaces after losing close to $1 billion. Perhaps it’s now time to think more clearly about costs.
When people comparison shop for insurance, they focus on price. In many markets, United is a high-priced player, offering plans with broad networks that appeal to the corporate market but that most individual consumers cannot afford. And it would appear that United cannot afford either in the new marketplace.
Yet some insurers are doing just fine on the exchanges. Quite a few of them are Blue Cross Blue Shield plans, which have a historic commitment to serving all comers. Additionally, other companies have prospered as well, including some that you may have never heard of.
One example of winners are Medicaid managed care companies, like Centene, that have already taken a tougher line on reducing costs. They offer narrow provider networks and pay doctors and hospitals at lower rates or based on performance. They tweaked their Medicaid offerings to compete for exchange business, and so far it’s working.
United and others will make noise, raise premiums, or even exit. But in most states there are other plans willing to come in and keep premiums down. In Iowa, for example, as United leaves, Wellmark Blue Cross Blue Shield is entering (in 2017).
For many providers and plans, the exchange market feels a bit like a race to the bottom, where whoever squeezes providers the hardest wins. But it doesn’t have to be this way. The new exchange competition provides an opportunity to fundamentally reshape the delivery of care to lower costs and improve outcomes. I see plans collaborating with providers and benefits consultants in completely new ways.
Some examples of opportunities include:
- Shifting care out of the hospital to urgent care clinics, physician offices or the home
- Building a “Center of Excellence” approach to care at home
- Encouraging specialists to follow best practices for medical and surgical care
- Embracing modern technologies, including telehealth, that can empower family caregivers
We are nearing the end of the first wave of exchange competition, where high-priced incumbents are being ousted by scrappy, low-cost competitors. There’s now an opportunity for all plans to devise innovative and efficient approaches that hold down premiums and reform healthcare delivery.