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Broker options in health care exchanges

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Posted April 16, 2012 by Samuel H. Fleet at 09:32AM. Comments (4)

The final ruling for the insurance exchange portion of the Patient Protection and Affordable Care Act is out. The 644-page rule mandates that all 50 states must be ready with an exchange by October 2013. “So far, there are only about 20 states making measurable progress toward the deadline,” says Bob Laszewiski of Health Policy Strategy Associates, LLC. “Most conservative states — 29 states have Republican governors — are sitting on the sidelines waiting to see the outcome of the Supreme Court case, as well as the November elections.”

PPACA requires that states that elect to develop their own exchanges be complete and available by 2014, with the federal government stepping in to run exchanges that are not ready. Additionally, for 2014 and 2015, state exchanges will have the ability to choose whether to include businesses with 100 or fewer, or 50 or fewer, employees in their exchange — possibly leaving small businesses to fend for themselves. Not until 2016 will all employers be guaranteed the option of purchasing insurance through these exchanges.

Uncertainty about how the states — and small businesses — will fare has people talking, but regardless of how the public programs turn out, private exchanges are where brokers will find real opportunity in health care reform. The increasing focus on consumer-driven health care, plus the opportunity to emerge as a hero for small businesses, leads us to believe that private exchanges could have the largest reach and incredible opportunities for benefits professionals in 2013 and beyond.

Private exchanges are particularly attractive in conjunction with defined-contribution plans, a trend we see as increasing in popularity in the coming months. When employers provide an annual stipend to their employees and release them into public insurance exchanges, the result is often confusion for employees — and a complete loss of business for the broker. A private exchange connects the employees with plan options that the employer stands behind, supporting employees while still protecting the bottom line.

Brokers can guide the selection of options in the private exchange and retain business by building their own private exchanges, bringing together the right partners to make the exchange a valuable offering to employees.

Government funded exchanges will simply not have the depth and breadth in employee benefits that certain employers will want, nor are they intended to. Private exchanges are where brokers can lead with product and service innovation.

According to a survey conducted by Aon Hewitt in late 2011, 94% of employers are committed to offering and supporting financially health benefit coverage for their workforce in some form. Now is the time for brokers to save their clients from the chaos occurring in the public sector and introduce private exchanges as a dependable alternative. In addition to offering some shelter from the political storm health care reform will face in the years ahead, private exchanges can be custom built with appropriate products and pricing, and offer better customer service and administration for the employer. Not to mention, private exchanges can keep benefits brokers and agents in the business of providing innovative solutions to their clients and their employees

The January 2013 deadline is bearing down on us and while it’s not yet clear if the state exchanges will be ready or not, we don’t have to wait and see. Now is the time for brokers, carriers and administrators to work together, providing customized solutions for the employers of all sizes.  

If you’re a broker with tough questions, I’m here to provide unbiased answers and feedback to help you take the next step in adapting your business. Feel free to leave your question in the comments.

Fleet is president of AmWINS Group Benefits, a wholesale broker of comprehensive group insurance programs and administrative services. He can be reached at asksam@amwins.com.

 

4 Comments

Posted by: Elena M | April 21, 2012 10:29 AM

Paula/Todd, you are both right on. I think the subsidies are unsustainable because the subsidies were set to cover over 1/2 of the U.S. population. Further Obamacare only hint of doing something to control the underlying costs of health care is the rationing board which Americans will not stand for. The exchanges will become another layer of bloated bureacracies that will be on a tight leash by the federal government so they will be unable to set forth policies and procedures to become or stay efficient and effective. Hence private exchanges will win. Though I think the subsidies will largely fizzle it appears that they will be eligible for the initial subsidies. Here is an article on this. http://www.bloomberg.com/news/2012-04-16/ehealth-led-exchanges-eye-4-billion-market-in-health-law.html?goback=.gde_2037299_member_108615183#fadetoblack

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Posted by: Todd P | April 16, 2012 3:08 PM

Paula, you are spot on. The vast majority of individuals in my area, central/south Texas, will qualify for a subsidy @ 400% of FPL, which equates to roughly 44k for an individual and 92K for a family of 4. Here are the income statistics by state from the DOJ for 2010:http://www.justice.gov/ust/eo/bapcpa/20100315/bci_data/median_income_table.htmThe magnitude will certainly be impossible to comprehend, compete against in the short term, or sustain in the long term.

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Posted by: Paula W | April 16, 2012 1:37 PM

The rub here is the massive government subsidy provided to those who purchase within the exchange. Why on earth would an individual or small group purchase insurance on the private market at full price when most rank and file employees will qualify for a 60% to 80% premium subsidy of their family premium when purchased through the exchange?I think the larger question for the small group market is how the carriers will create new carve out programs for those employers seeking private market options for those whose incomes exceed 400% FPL.If PPACA proceeds in it's current form, the individual and small group agent can be as creative as they wish, but competing on Health Insurance with subsidies of this magnitude will be nearly impossible to overcome.

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Posted by: Raymond L | April 16, 2012 1:33 PM

Appreciate the information Sam. Health care benefits needs transformation. It is not working for the consumer, business, and our wellness.I have my hypothsis -- the consumer and business are in disconnect and complacement. Premiums are rising, consumption for health services and medication increases, fewer people are insured, people believe they have a relationship with their physicians, they do not. Whether the ACA is agreeable or not -- the consumer is mislead that not have ACA is better then changing the present health care system.How much economic pain are people willing to accept before becoming conscious -- There are solutions, we have to change -- if you do not like it "Get over it" or offer ideas.

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