While many states are dragging their feet on setting up their state health insurance exchanges and their specific structures remain unknown, health plans can nonetheless start work now to address operational and strategic changes they will need to make in order to participate in this new distribution channel.
"Even though there are a lot of unknowns and open questions, there are several smart first steps you can be undertaking today," said Dhan Shapurji, director with Deloitte Consulting LLP. "Any time you bring 30 million people, at the low end, into the system you know it is going to be disruptive. Being prepared for the disruption is important. There are some tactical things health insurers can do, but they will vary by plan and geography. Understanding what your options are will make you better prepared."
This is the message Sharpurji and his Deloitte colleagues Gregory Scott and Patrick Howard hope to instill in their general session presentation "Key Operational Challenges and Potential Solutions" Tuesday afternoon as part of AHIP's Preparing for Exchanges educational conference preceding AHIP Institute 2011 this week at San Francisco's Moscone Center.
Shapurji said that health insurers don't need to wait for the states to develop the specific structures of their exchanges for insurers to take action. Instead, companies should educate themselves on what he said will be the four basic structures he anticipates most exchanges will pursue.
These four basic exchange models are:
- Information Aggregator. This structure will meet all the requirements of the Affordable Care Act but with a fairly competitive and fairly open structure designed to allow the market to work within itself without as much state regulation or restrictions – it is the least regulated model.
- Retail-Oriented Exchange. This format is similar to the information aggregator in its structure, which is designed to encourage competition, but it will also have a lot of capabilities built in to make the consumer experience very rich. Shapurji mentions eBay or Amazon as similar current online products, whose interactive tools and techniques make the shopping experiences rich and interactive.
- Guided Exchange. This model is more rigorously regulated by the state with the products offered, both adhering to specific standards and restricting the number and types of plans offered. Like the Information Aggregator it will not have many tools available initially, either because of lack of time to set it up or a lack of state funding.
- Market Curator. This model contains the features of the Guided Exchange in terms of its adherence to state restrictions and regulations, but also incorporates the same rich online tools as the Retail-Oriented Exchange to allow for searching and filtering.
"We think perhaps the Information Aggregator will be more prevalent at first, but we also anticipate many of the exchanges gravitation from there into one of the others over time," said Shapurji.
Using this information, health plans can at the very least begin to assess how their operation may be affected by participating in a state exchange. And while only eight of the 48 states without exchanges have adopted legislation to create them, insurance executives can nonetheless make a reasonable guess as to what kind of exchange will be established in their market based on the politics of the state. In general, more conservative states are likely to opt for one of the two less-regulated models, while states with more liberal politics are likely to gravitate toward the last two potential models.
"The exchanges will all have variations and be different, but knowing what model a state may pursue will allow payers to begin the work to take part in the exchanges, even if the states aren't working on it yet," Shapurji said.