Monday, September 09, 2013

But Will You Like The [Private Exchange] Insurance You Keep?

I recall hearing Obama say a couple of different things about "keeping your insurance" - -

    --"if you like your insurance plan you can keep it".  That's true if your plan claimed grandfathered status so that essentially current coverage is locked into place  until the end of time.  And it's only true after including the additional coverage (and cost) that ACA requires all health plans to include - even those claiming grandfathered status. So the law does not in fact grant an unfettered choice to "keep" the plan you like.  My opinion: Obama's  statement was carefully crafted to misdirect people about the intended effects of the law.
    --"nothing in the law will require you to change your insurance".   I think narrowly and technically that may also be true.  What Obama left unsaid is that the law does place requirements on insurance companies and other plan sponsors that may oblige them - or incentivize them, or permit them the latitude - to alter offerings or policy terms that WILL result in losing your current coverage, even if you like it.  My opinion: Obama's remark was another carefully crafted statement designed to misdirect people about the intended effects of the law.

Those are some of the reasons I think few people will be able to keep their existing insurance for long, even if they like it. 

So what will eventually replace your insurance?  Today Federal and State Exchanges are getting all the attention.  But will they replace group insurance?  That is, will they replace the coverage most people have now?  Maybe not.  Maybe new entities, the so-called private exchanges, will become major players. 

Recently IBM announced that it intends to adopt Towers-Watson's private exchange "ExtendHealth" for some of its retirees.  GE, Time-Warner and other large employers are doing, or considering doing, the same thing.

 At the same time a number of insurance companies have announced they intend to form their own private, proprietary insurance exchanges.  How might these private exchanges transform group insurance for employees and retirees ?

For example, Aetna "[President Mark]Bertolini is pushing Aetna down the ice to where he believes the company and the industry are headed. Employers may eventually stop providing insurance, he predicts, and Americans, whether they like it or not, will have to shop for, buy, and manage their own health policies"

The consulting firm Accenture predicts that

"Private health insurance exchanges will rapidly upend insurance purchasing for many of the 170 million people who receive benefits through their employer. "

For private exchanges to become major players, private businesses, Taft-Hartley plans, and other group insurance sponsors would have to transfer their benefits administrative duties to the private exchanges.  Based on reports so far, it appears a safe bet that many, if not most would be willing to do just that.  I think it's likely that the private exchanges will become major players.  

So it seems to me the game may already be in the late innings while most people are still milling around buying their popcorn and scorecards, and looking for their seats. 
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