Why exchanges matter for those with coverage through jobs, too

Connecticut’s health insurance exchange is intended to offer coverage to the uninsured, people who buy their own health plans and small businesses. But CEO Kevin Counihan said broader changes in the health insurance market mean that exchanges will soon become relevant for people who get coverage through their jobs, too.

“I think we’re witnessing the 401K-ing of health insurance,” Counihan told a group of health care industry officials Thursday.

Just as companies have shifted from offering pensions with defined benefits to giving employees a fixed amount of money to invest for retirement, companies will begin to take a similar approach to health benefits, he said, giving their workers a fixed amount of money and saying, “Go on an exchange, buy what you want.”

Key to that change is the existence of health insurance exchanges, which offer a variety of health plans from private carriers, allowing customers to comparison-shop. While publicly run marketplaces, created as part of the federal health law, have gotten the most attention, there are also privately run exchanges that offer a choice of plans. Some large companies, including IBM, have already begun shifting their early retirees to private exchanges, and many health care experts expect that type of shift to continue.

But people aren’t well-prepared to make decisions about buying health insurance, Counihan said. And that, he said, could be an important role for the exchange in the coming years, helping educate people about how to make coverage decisions and providing data on health care cost and quality.

Counihan discussed the exchange’s potential future during a meeting of the Connecticut Health Council, a recently formed group aimed at promoting the state’s health care sector. He also offered a critical take on the federal government’s handling of the rollout of the federal health law and spoke of the need to rein in health care costs. While exchanges exist to distribute health insurance, he said, the product they’re offering is, for many people, increasingly unaffordable.

Frustration with the feds

For now, Connecticut’s exchange is still in the middle of its more basic mission, enrolling people in coverage offered as part of the federal health law commonly known as Obamacare. About 22,000 people have signed up so far, 60 percent for private insurance plans and 40 percent for the state’s Medicaid program, which is expanding Jan. 1 to cover more people.

Unlike the federal system used by exchanges in 36 states, Connecticut’s exchange has functioned relatively well, with a stable site.

Counihan spoke of frustration with the federal government’s handling of the health law’s rollout, including the frequent changes in regulations in the months leading up to the exchanges’ Oct. 1 launch. Because of the complexity of the systems that power exchanges, changing one piece has a ripple effect on the rest of their systems.

In March, Counihan said, he called a senior official at the U.S. Department of Health and Human Services and said, “With all due respect…we are not implementing any new law, regulation, change, policy that you adopt between now and 10-1.”

“We couldn’t take it anymore,” he said.

But Counihan said Connecticut deserved credit for getting two questions taken off the federal application for coverage, which initially was designed to ask applicants for their zodiac sign and about their monthly car payments, with no option for those who don’t have car payments. They had been included because the federal government contracts with the credit reporting agency Experian, which uses those questions to verify identities.

Looking ahead

Even though the state’s exchange is functioning better than most, lawmakers and other critics have questioned whether the enrollment will meet targets, particularly in attracting younger members who are expected to balance out the cost of older customers. The open enrollment period runs through March 31, although people who want coverage that takes effect Jan. 1 must sign up by Dec. 23.

Counihan predicted that in 18 months, much of the “noise” surrounding the rollout of the health law will have died down, leading to another question: What will the exchanges do?

“I think that role of education, providing means for preparing people for this new world of taking true responsibility for their health care costs and decisions is a logical role for firms like ourselves,” he said.

Part of that is by educating people about how to consider factors like costs and provider networks in selecting coverage.

It’s also by providing data to help people understand what care costs at what facilities and how to buy based on value, Counihan said.

“I don’t know if any of you have ever asked your own physician how much a procedure costs,” Counihan said. “I’ve tried about four or five times. I’ve never had them know.”

Access Health, Connecticut’s exchange, is developing a tool known as an All-Payer Claims Database, aimed at helping consumers learn about health care costs and quality. It’s intended to be available in late 2014 with data from medical claims paid by private and public insurers in the state. The idea is that people could go on a website, pick a procedure like an MRI, enter a ZIP code and radius, and find out how much that procedure would cost at each facility in the area.

Although the databases have drawn concerns about privacy, proponents of them say it’s important for consumers to know more about what care costs and to see how prices vary by provider, particularly as plans with deductibles that leave patients footing much of the bill become increasingly common.

That kind of information will also be important as the trend Counihan described, the “401K-ing of health care,” continues. He said companies’ chief financial officers have longed for the ability to change the way benefits are handled, because it’s difficult to budget when they have little control over the growth in health insurance premiums. Having the ability to instead give workers a fixed amount of money to buy coverage gives them more control.

“This is going to be a mega-trend,” he said. “It’s not something that’s going to occur overnight, but more and more I think we’re going to see that type of role.”