Jan. 28--Imagine you're buying health insurance. You type in an Internet address, fill out a basic form, and up pops a list of options, each with benefits and costs outlined. If you have a question while you're "comparison-shopping" for the best policy for your needs, you call a customer-service center, where a trained individual can walk you through the process -- including whether you're eligible for a tax credit in the form of an upfront discount on your premiums.
This is what the health care insurance marketplace is supposed to look like next year, according to standards set by the Affordable Care Act, passed in 2010. A small part of the far-reaching health care reform act deals with so-called "exchanges," new ways to simplify buying health insurance and make it affordable for more people.
All about exchanges
Under the ACA, each state will have its own exchange, sometimes referred to as the "health insurance marketplace," with several health plans available from various private and nonprofit companies. Though the coverage won't take effect until Jan. 1, 2014, the plans will be for sale as early as October of this year. And use of this "marketplace" isn't mandated -- you can still buy insurance on your own, directly from an insurance company or through an agent. But members of Congress will buy their insurance through the exchanges in 2014.
The federal government gave states three options for setting up the exchanges. States could choose to implement their own exchanges, making all decisions on coverage and administration within certain federal guidelines. Or they could forfeit this right and let the federal government run its "default" exchange in the state, charging the state a percentage of premiums. Or states could "partner" with the federal government, using the standard federal exchange but administering some parts of it through state government.
Yet at the federal government's Dec. 14 deadline for states to make decisions on exchanges, the regulations states would have to follow in setting up exchanges were still being developed. Tennessee Gov. Bill Haslam, who has said he was initially inclined toward a state exchange, instead chose the federal option.
"There would be significant risk involved with taking on an exchange while your department is still developing the rules of the game or if the federal government is ultimately going to control the more important levers," Haslam said in a letter informing U.S. Secretary of Health and Human Services Kathleen Sebelius of his decision. "We still do not have enough information about each of the three options -- state, federal and partnership models -- to weigh them against each other to make a truly informed decision."
And while several groups have speculated that a state-federal hybrid exchange isn't completely off the table, Haslam's office declined to address that specifically. Spokesman Dave Smith would say only that the administration "continues to be aggressive" in pushing to make sure the state has some say in who is eligible for Medicaid, and to "minimize the impact to our individual and small-group markets." Haslam could decide anytime up to Feb. 15.
The different types of exchanges work basically the same way. But states that establish their own exchanges can decide which insurers can participate, while the federal exchange will accept any plans that meet guidelines. State-established exchanges also could put more emphasis on certain benefits.
Who will use the exchanges?
At first, only individuals and employees of companies with 100 or fewer workers can buy insurance on the exchanges. Most people will be eligible for subsidies to help them pay their premiums. Most Americans will still get insurance through their employers. Undocumented immigrants cannot buy insurance through the exchanges, nor would they qualify for Medicaid. Basically, exchanges will serve the middle class.
What products will be on the exchanges?
Plans will be offered by different insurers at four standardized "levels": bronze, silver, gold and platinum. The coverage for all plans at a given level will be the same, but costs and providers could differ. Bronze plans have the lowest premiums and cover 60 percent of bills; platinum plans have the highest premiums and cover 90 percent of bills. Silver and gold fall in between.
The federal government will require all plans to cover "essential benefits," which will include hospital, emergency, maternity, pediatric, prescription drug and lab services, among others. Out-of-pocket expenses will be capped. Insurers will have to take all comers and can't charge more based on gender or pre-existing conditions. (Older customers can be charged up to three times more than young ones.)
It's expected most of the same players from the commercial insurance market will compete on the exchange: for-profit insurers like United Healthcare and Humana, along with nonprofit BlueCross BlueShield, which now enjoys more than half the market in Tennessee.
"At this point, it's safe to say we plan to put multiple products at each level," said Henry Smith, senior vice president of operations and chief marketing officer for BCBS of Tennessee, who said there's still a lot of uncertainty among insurers about exactly how the exchange will work, despite conversing with the state for at least a year.
But there will be one new player on the exchange: Each state can have (though not all states do) a private, nonprofit Consumer Operated and Oriented Plan, commonly called a CO-OP. Tennessee's, the Community Health Alliance Mutual Insurance Co., is sponsored by Healthcare 21 Business Coalition and headed by its founder and former president, Jerry Burgess, who started a similar coalition and a CO-OP in South Carolina as well.
In August, the federal government approved Tennessee's CO-OP and loaned it $73,306,700. By October, Community Health Alliance plans to be ready to offer multiple products for 2014, both on the exchange and in the private market, Burgess said.
The CO-OPs differ from traditional cooperatives in that they're not member-owned but are "community assets," Burgess said. They differ from insurance companies in that they're not accountable to investors and are governed by a board of directors made up of consumers who are elected to the position by customers. They're akin to health cooperatives like Health Partners in Minneapolis and Group Health in Seattle and will operate in much the same way, per standards laid out in the ACA. They must answer to customers, keep premiums low and reinvest profits in quality care or lowering premiums.
Initially, Community Health Alliance will sell in Knoxville, Nashville and Memphis, later expanding to Chattanooga and the Tri-Cities.
Like traditional insurers, the CO-OP will have to manage risk, making sure the premiums it takes in are enough to cover the services it pays for, though in the CO-OP's case, the federal government is sharing in some of the risk. The loan is intended to help mitigate the administrative costs associated with starting a new company, which is likely to start with 100 or fewer members, compared to several hundred thousand at a well-known company like BCBS.
"I think people will come to look more locally for insurance," Burgess said. "We think we're going to be more innovative, more flexible, more consumer-oriented" than larger, established companies.
How will people use the exchanges?
Burgess has visited a co-op program in another state and compares it to Travelocity, the "one-stop shopping" online travel agency. The government has made a model that shows what an exchange Internet site should look like, with side-by-side comparisons of products generated from a basic form that will direct people to their options, including subsidies or Medicaid, if applicable. But it has yet to build the engines to run the site, or the complex infrastructure that would link CMS, Homeland Security, Social Security and multiple other databases.
And as easy as that system might sound to someone who's used Travelocity or similar sites, a substantial portion of customers might never have done so -- or even had insurance. A heavy customer service component, with "helpers" walking new customers through the process, is expected, at least on the front end.
Beginning in 2010, states could receive grants to build or expand programs that would provide such help. Tennessee so far has not, although there are state agencies that do help with insurance issues, depending on what the issues are and who is involved.
But states, aided by federal funds, will be required to establish specific "navigator" help programs by the time the exchange begins, contracting with at least one nonprofit agency. Navigators must be able to understand culture and language of different groups of state residents. Details are still being outlined.
Brad Palmertree, executive director of the advocacy group Tennessee Health Care Coalition, hopes to get one of those contracts. He thinks the fact that Tennessee will initially have a federal exchange may work in THCC's favor, given that it's sometimes been at odds with the state in the past, a relationship that's smoothed out more recently.
It's already working on a plan that would connect grass-roots nonprofits that already are helping Tennessee residents navigate health care, using their experience and relationships rather than "reinventing the wheel," Palmertree said. Since enrollment begins in October, the window of time for training and outreach is shrinking.
"We're talking about people who maybe never carried insurance before and don't know what all those terms mean," he said. "We're talking about hundreds of thousands of people who will need help."
Because the population using the exchanges isn't necessarily stable -- it includes people who go in and out of Medicaid eligibility as they gain or lose jobs -- "you end up with a lot of customer service," Burgess said, for people who don't know what they're eligible for or how to apply for it.
At the same time, it will include self-employed customers or small-business owners who simply have never before been able to find affordable insurance. Now, Burgess said, they will have multiple options.
How will things change in the insurance world?
The ACA lays out a host of new requirements insurers must meet. They must provide certain preventive services with no co-pays. They can't deny coverage based on pre-existing conditions, rescind payment based on a technical error on an insuree's application, limit the amount of some benefits in a year or a lifetime, or charge more based on gender or health conditions. They must reinvest large profits into maintaining quality services or lowering premiums; if they don't, they must provide their customers a rebate. Insurance paperwork will become standardized and easier to understand.
But the biggest change has to do with customers more than insurers. Because of the way people will buy insurance under the new regulations, they'll become more savvy, said Tim Young, CEO of Summit Medical Care, which operates 60 primary-care practices, three express-care clinics and nine other health providers in East Tennessee.
Young said health care costs historically have been so "buried," consumers with insurance policies haven't known how to uncover them and therefore haven't comparison-shopped for treatment.
"Suddenly, customers ... are going to requesting more information" about procedures and billing, Young said. "They're going to want to ensure that they're getting their money's worth. ... They're going to be online, looking up their test results -- a lot of things."
Summit has already adopted some "best practices": an online "patient portal," for example, that lets patients look up medical records, and the "medical home" concept, in which primary-care doctors and specialists take a team approach in care, sharing information and working together on a single plan for the patient's health.
"We are preparing for a future that's much more quality- and outcomes-driven with a consumer behavior, as opposed to what we're doing today," Young said.
And that requires a "culture change" for providers, he added, changes from leadership and management all the way down the line -- always a challenge.
"It's a tough industry right now," he said.
Young and Burgess both expect patients to be more proactive in managing their own health, in behaviors they can adopt or change to reduce their risk for expensive, complex medical problems. Both insurers and providers will step up the education they're already doing, they predict, and insurers will offer incentives for healthy choices. Some already are doing so.
"People don't realize this yet, but there's going to be a much great emphasis ... on having better health," Burgess said. "They're going to be much more aware of the price (of health care) and how their lack of taking care of themselves impacts that."
Timeline on the ACA
Health Reform explained
Who Health Reform hits
Health care reform: How does the Affordable Care Act affect you?
Health care reform: Exchanges to offer marketplace for health care
Health care reform: Timeline for Affordable Care Act
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