Experience with the health insurance exchanges in Massachusetts and Utah suggest these reform mechanisms will retain a strong need for brokers to provide buyers with market education and guidance.
The Massachusetts and Utah exchanges are widely viewed as precursors of the PPACA-mandated state health exchanges slated to launch in 2014. But brokers and others are not the only ones eyeing these two states closely. A study by Georgetown University researchers found evidence the exchanges are successfully harnessing free-market principles to help present coverage options and boost availability, though results have been uneven.
One Utah official has described the Massachusetts Connector and the Utah exchange as “bookends for other states.” Georgetown researches, meanwhile, observe that the two exchanges were launched with different visions, and conclude that states developing their own exchanges may end up with blended models.
The study vividly shows the differences between the two exchanges. For example, the Connector program, which currently has a $30 million budget, covers 220,000 individuals, 4,500 of whom are enrolled through small businesses. The latter number alone is double Utah’s entire group of enrollees.
In contrast, Utah’s exchange program operates on an annual appropriation just under $600,000. The program charges $6 per employee per month to support operations and a $37 monthly fee to brokers who enroll participants.
The two states have achieved very different results in achieving the goal of reducing the number of uninsured residents, the study found. For example, in 2006 when Massachusetts implemented its exchange, the uninsured percentage declined from 10.6% in 2006 to 4.4% in 2009. However, in 2008 when Utah implemented its exchange the percentage of uninsured rose from 13.2% in 2008 to 14.8% in 2009, the study found. Since Utah exchange accepts any plan that wants to participate and meets the minimum requirements residents revealed the complexity of choosing a plan was the main reason they did not enroll.
In order to be successful, exchanges must attract a critical mass of enrollees in the beginning to be sustainable and continue to work at keeping customers happy, the researchers recommend. In Massachusetts, one problem that affects customers is the Connector’s web-based decision tools. Consumers may find the “Seal of Approval” stamps peppered throughout the Connector website confusing and misleading, some analysts say.
Georgetown analyst Joe Touschner explains that “education and making the process simple for enrollees” is key. Customers will look to brokers for the guidance and expertise when deciding what works best to protect themselves and family members.
David Shore, vice president and employee benefits practice leader of Borislow Insurance in Massachusetts, agrees. “It would be naïve to assume that you could make a purchasing decision like this online – the products are complicated and they are going to be increasingly complicated,” Shore says.
Shore, who brings real-world experience to a broker advisory board, says one of the Connector’s limitations is that Massachusetts residents who log on to the web site should be able to identify every single item they are eligible for, not just be able to buy insurance.
And while confusion about which plan to buy may fog the minds of enrollees, so does the cost of health insurance.
“We are screaming from the mountaintop to allow the consumer to understand what things cost,” Shore says.
“Health insurance is expensive because health care is expensive,” he notes. The Georgetown study reviews quality and choice, but not pricing, he adds. “Yes, [the Connector] provides quality and choice, but those products are legislated … Affordability of coverage? The Connector has done nothing to change what insurance costs,” Shore says.
The ease of enrollment may also cause problems, Shore points out. “I think from an individual perspective it’s easy to enroll, though you might not like what you bought because you bought it uninformed,” Shore says.
Shore believes that small group enrollment has been slow to expand because small employers are loyal and trust their insurance brokers to help them, even when they are off the clock, to guide them through a tough process or answer their questions. Touschner agrees. “We found that brokers are an important part of the market,” he asserts. “Brokers should continue to play a strong part.”
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