Insurance Exchanges Followup

By John Ballard

Via Digby we find this gem from Kaiser Health News:

It happened on Thursday night, just before midnight, when John Kerry put forward an amendment. It was amendment C-8: "Empowering State Exchanges to be Prudent Purchasers." The title may sound innocuous, if a bit arcane. But if you've followed the health care reform debate, then you know (or should know) that anything involving the insurance exchanges is important.

And Kerry's amendment is very important.

The idea of an insurance exchange is relatively straightforward. If you work for a big company or, say, the federal government, every year you choose from among a set of insurance plans--all of them conforming to some minimal standard, all of them available to you regardless of pre-existing medical condition. They've been chosen by your human resources or benefit department, who--ideally--have some clue about what they're doing, more at least than you do.

(Damn. She must read everything.)

Insurance exchanges have been an integral part of all the reform plans from the jump, They are not sexy enough to make good reading. About as interesting as the mouseprint we click past when installing new software. But a day comes when all that stuff can come back to bite us if it's not done right.

Massachusetts is among the latest states to dive into the mandatory universal coverage pool. It has been tried and failed in other states (Oregon, Tennessee) but every failure has contributed something to what we know works and what won't. Check this...

The concept has been around for a while, although it's gone under different names. The reform plan that Bill Clinton put forward in 1993 proposed to create health "alliances" that would serve roughly the same purpose. And while that vision never came to fruition, one state, Massachusetts, managed to create such an institution three years ago, when--as part of a more comprehensive health reform plan--it started a pair of insurance pools for small businesses and individuals who couldn't get coverage through employers.

The results, so far, are encouraging. People once unable to penetrate the private insurance market because of income or medical condition can now go online and select from a menu of insurance options--all of them covering essential services and providing solid financial protection, for rates not previously available. And although overall medical costs in Massachusetts have continued to rise, as they have across the country, premiums for what's known as the Commonwealth Care plans--the insurance option that the exchange manages most closely--have risen at a far slower rate.

[Remember. All this flap is about "bending the cost curve" more than good health. As far as I can tell most people are more or less "covered" and don't give a shit about anyone else. Without runaway health care inflation the Republican model that Grayson so eloquently described as 'Don't get sick... and if you do then die quickly' would remain the alternative for uninsured and underinsured people.JB]

Washington has taken notice. The bills moving through Congress all set up exchanges modeled more or less on what Massachusetts has done. But there are a few critical differences. Among the most important is a difference in how the exchanges would select which plans to offer people.

In the bills that passed three House committees and the Senate Health, Education, Labor, and Pensions (HELP) Committee, the exchange would be a "prudent purchaser." In other words, it would have a staff that bargained with insurers to bring down premiums--and that made sure all plans lived up to strict guidelines for coverage and customer service. In effect, any insurer that wants to offer coverage through the exchanges has to get the equivalent of a "Good Housekeeping Seal of Approval" from the administrators. This is precisely how it works in Massachusetts.

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...when Kerry introduced his plan last week, he couldn't get the votes to pass it. The reason, several sources on Capitol Hill say, was opposition from Olympia Snowe, the Maine Republican who also sits on Senate Finance. Snowe seems to be concerned that a more aggressive exchange would amount to more government--which, in fact, it would be. But, as Massachusetts has shown, sometimes more government is exactly what health care needs.

Chances are reasonably good that Kerry's vision of reform will prevail, if not during the Senate floor debate then afterwards, when a conference committee merges whatever passes from the two congressional chambers. But it's not a sure thing, which is why this seemingly narrow question deserves a lot more attention.

Exchange design doesn't get the attention of controversies like the public option, abortion, or supposed death panels. In the long run, though, it could be far more decisive in whether reform works.

Not by accident, I'm sure, this morning's post at Dr. Halamka's blog mentions his retreat for the New England Healthcare Exchange Network (NEHEN) Board of Managers. John D. Halamka, MD, MS, is Chief Information Officer of Beth Israel
Deaconess Medical Center, Chief Information Officer at Harvard Medical
School, Chairman of the New England Healthcare Exchange Network
(NEHEN), Chair of the US Healthcare Information Technology Standards
Panel (HITSP)/Co-Chair of the HIT Standards Committee, and a practicing
Emergency Physician.