Will Exchanges Empower Health Insurance Consumers?

As it stands right now, consumers have no guarantees regarding rate hikes. If we are serious about controlling health insurance costs in America, we need more than a regulatory watchdog; we need to empower American consumers. And to do that, we need a viable individual health plan market with guaranteed issue and standardized plan design – both key provisions of the Patient Protection and Affordable Care Act (ACA). This act, a mechanism for helping consumers find and enroll in these plans, also includes a provision for state-run health insurance exchanges.

With guaranteed issue, consumers cannot be denied health insurance based on the status of their current health or preexisting conditions. With standardized plan design, they can compare plans from different carriers. With exchanges, they can quickly and easily identify and chose a plan that meets both their health care needs and their budgets.

I know this from our own experience operating the nation’s largest private Medicare exchange for the past six years. In fact, because Medicare-eligible seniors today are the only group in America with guaranteed issue and standardized plan design, they are the most empowered, and relevant individual consumers of health insurance in the nation.

What’s the end result? Carriers have to compete against each other for their share of this robust and profitable market, and there is nothing like a little competition to keep costs down.

Don’t believe me? The average premium increase in the individual health insurance market over the past three years was 9 percent to 12 percent. In the Medicare supplement market, it was 2 percent to 3 percent.

With guaranteed issue, of course, seniors cannot be declined coverage. And with standardized plan designs, it’s possible to compare different plans from different carriers on an apples-to-apples basis.

One carrier’s “Plan F” Medicare supplement (Medigap) plan is pretty much identical to another’s in terms of benefits – but plan prices can vary dramatically. Seniors can compare plans on the exchange, arming themselves with benefit and price information, to be well equipped to make an informed and confident enrollment decision.

Since seniors today are the only group in America with guaranteed issue and standardized plan design, they are in fact the most empowered individual consumers of health care insurance in the nation. They are also the largest group in terms of direct plan ownership; more than 28 million Americans own their own Medicare Advantage, Medigap and/or Part D drug coverage plans.

Contrast this with the individual major medical market, where only 14 million Americans are currently enrolled in a plan, and where virtually all of the plans do not offer guaranteed issue and have vastly dissimilar co-pays, out of pocket costs and deductibles.

The recent 11^th Circuit Court of Appeals decision, declaring the individual mandate unconstitutional, highlights the importance of consumer empowerment in a guaranteed-issue market. Under Medicare, no one is required to purchase supplemental insurance but a majority of Medicare-eligible individuals do.

In lieu of an individual mandate, one compelling idea circulating now would be to have a Medicare-style, strict enrollment period for individual plan purchases of 30 days before and 15 days after an individual enrollee’s birthday. Within this period of time, Americans seeking individual coverage would have to ask themselves, “Do I risk my assets if I get sick in the coming year or do I choose to be covered?” Premium assistance from the federal government if the individual’s income falls below certain levels will help make the decision easier.

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