The government's Affordable Care Act aims to make health insurance more accessible and affordable to millions of individual Americans and employees of small businesses. State-run health insurance exchanges are a vital tool in achieving that goal. At their best, exchanges are efficient marketplaces that give buyers more choice, provide health insurers with an opportunity to reach more consumers and, through transparency and competition (two elements lacking in today’s private health insurance industry) keep costs down.
But the Federal government and some states have dangerously underestimated the complexity and technical challenges of building public health insurance exchanges. This view was reinforced last week when Health and Human Services (HHS) Secretary Kathleen Sebelius released draft proposals for minimum requirements for state-run exchanges.
In seven years of building the nation’s largest private Medicare exchange, which processes millions of health plan-related exchange transactions annually, I’ve learned that becoming effective takes time. Business and compliance processes, foundational technology, back-end processing, consumer-facing decision support tools, and licensed and trained support personnel must all come together into a finely-tuned package. Once operating, an exchange needs continual refinement based on evolving needs.
The HHS draft proposals released last week would require state-run exchanges to fulfill certain basic functions and oversight responsibilities. In a July 10 op-ed in the Huffington Post, Secretary Sebelius wrote that state-run exchanges will share three features: They will be "one-stop shops" for consumers seeking private health insurance; they will set conditions that insurers compete only on price and quality; and they will ensure a basic level of coverage. Based on our experience, there are four essential principles that must be applied to meet these minimum standards.
1. Build for change.
Exchanges must be built with a flexible underlying architecture on a technology platform that allows for the inevitable changes that they will need to make.
2. Generate a seamless exchange of data.
Data exchange standards are essential for efficient interactions and communications between all the players in a state exchanges--consumers, health insurers, and state and federal agencies.
3. Be ready to scale.
Exchanges must be designed to grow to handle the millions of consumers and the hundreds of millions of transactions and interactions expected of a robust exchange--without a loss in performance or functionality.
4. Create a satisfying consumer experience.
Exchanges must provide powerful yet easy-to-use tools for consumers to determine eligibility, make informed choices, purchase and enroll in health plans, pay premiums, and manage coverage, including reimbursements.
States must start with the clear understanding that exchanges are more than just interactive websites. While they share some of the characteristics of the consumer websites we have come to trust--sites such as Amazon and Expedia--health insurance is a much more sophisticated purchase than books, electronics or plane tickets. And the stakes are much higher if exchanges fail to perform.
Anything less than flexible, dynamic, and technologically savvy exchanges that are open for self-service business 24 hours a day (with licensed advisors available by phone during daytime hours), simply will not cut it. Without the enthusiastic participation of health insurers and consumers, exchanges will languish. And as a nation, we will have missed the once-in-a-lifetime opportunity to apply a market-driven solution to the problem of providing affordable health care coverage to all Americans.
Giving states the latitude to build their own exchanges is essential. At the same time, having each state design its own exchange from scratch is an unnecessary waste of effort, time, and money. Instead, states should work together--either regionally or based on commonalities such as size, demographics and needs--to leverage basic design and technology, and to share best practices. With minimum HHS standards met through a shared design, states can then customize other aspects of their exchanges as they see fit.
Building, operating, and evolving an effective exchange is not trivial. Creating even one in the next 30 months and working out all the kinks is a monumental task--let alone building several dozen. I speak from experience.
[Image: Flickr user tanakawho]