The establishment of the State Health Exchanges by 2014 may prove to be one of the more radical steps taken towards re-organizing the scattered and chaotic U.S healthcare industry. The state exchanges will serve as a central health care marketplace with the primary aim to empower small employers and individuals, to access, search, compare and purchase health insurance.
The purported efficacy of the state exchanges has inspired many health industry players like Walgreens with presence in many U.S states, to consider setting up their own private exchanges. Built on similar lines as state exchanges, these private health exchanges will serve as a one stop healthcare marketplace for their clients spread across different U.S states. Once set up, such reform in private exchanges will help these private healthcare giants market and sell all their available health insurance plans at a single location, thus facilitating easy comparison and selection from a multitude of available options.
Beginning 2014, individuals belonging to the low and middle income bands will become eligible for government tax subsidies, which will provide them with health coverage at discounted rates, from the state based health exchanges. The subsidies being offered will be applicable, only if, a low or middle income employee picks a health plan, off the state exchanges (Reuters). Also, if small businesses shop for health insurance off a state exchange, they can save on administrative costs. These underlined factors may lead to small businesses encouraging employees to buy their insurance from state exchanges.
So, are the private health exchanges doomed to failure? Not really! On the contrary, private health exchanges may further aid in stabilizing the U.S healthcare landscape. These exchanges will increase the health insurance purchase options for individuals and small businesses and will provide them with another alternative (apart from state exchanges) to low-premium group health plans.
Once these state exchanges are up and running, individuals and business owners may be initially wary of them and may prefer going to their trusted health care providers directly, to select a plan. If an easy to understand and consumer friendly private exchange is already in existence for these providers, it may help pull in new customers and retain old patrons.
Health plans are aware of this opportunity and are already exploring options to counter state exchanges and offer their customers an easy and intuitive interface to purchase health insurance from them.
Another reason why private exchanges may flourish despite the presence of state exchanges is the ‘employer mandate’. The employer mandate of the PPACA requires businesses with more than 50 workers to provide health insurance or pay a tax penalty, if an employee applies for federal insurance subsidies. This mandate has incited many such small employers to risk paying tax penalty in place of providing costly insurance to their workers, a concept widely referred as ‘employer dumping.’ Launching of these private health exchanges may put a check on the ‘employer dumping’ stratagem (Read related blog here).
With reform in private exchanges, instead of incurring a hefty tax penalty per employee, an employer can opt for a Consumer-Driven Healthcare Plan (CDHP). A 2010 national survey conducted by Mercer deduced that CDHP plans help in reducing the overall costs for employers. Private health exchanges offering plans at competitive prices may prove to be a viable option for these small businesses.
Recognizing this need, hCentive Inc. successfully launched its WebInsure Private Exchange solution recently. This affordable and scalable system has tailored portals for insurance providers, employers, employees and brokers. The portals aid a user in efficiently tracking, managing and organizing their healthcare insurance information. The product can be easily customized to cater to the needs of a single health insurance vendor or multiple insurance providers.