Federal Government Exchanges

It has become pretty obvious now that the majority of states will allow the federal government to run the healthcare exchanges in their states.  The attached article in the New York Times clearly discusses the issues.  Health insurance exchanges, simply defined, are organized market places where people can shop for different insurance plans in their local states.  This market, like all efficient markets, will be set up to allow easy comparison shopping that should drive costs down.  If a state prefers not to set up the exchange for their state the federal government by law will do it for them.  It is through these exchanges that many of the 25 million uninsured who will come into the system because of the Affordable Care Act will attain their insurance.

There has been a lot of political maneuvering and even practical considerations around state insurance exchanges since the Supreme Court ruled on the constitutionality of the ACA this past summer.  For most of the summer, states that were against the new healthcare plan basically refused to move forward as this looked like a way they would be concurring with the act.  But, there appears to be even bigger issues such as a lack of timely guidance on what needs to be included in the exchange and how the long-term costs would be covered.  When stepping back, this does look like a political football that seems to be going back and forth between Washington and the states.  All experts do agree that there will be an exchange in every state up and running before the October 2013 deadline so that people can enroll for their 2014 insurance, mainly because this is such an important part of the Obama legacy.

It does seem a little odd that states that are so against federal government interference would turn over this critical part of healthcare reform to Washington.  From an efficiency standpoint it does make a lot of sense to have only one national healthcare exchange rather than having each of the fifty states set up their own.  When Washington says it will set up the exchanges in each state it remains to be seen how much local adaptation there will really be or if the exchanges will look very similar across the country.  Washington has already built the legal framework for how the exchanges need to look and the minimum requirements that are needed to comply with the law have been outlined and now it seems they will have a much broader role in implementation as well.

As with all new programs there will be a certain degree of complexity and confusion.  If you want to dig a little deeper into the exchanges and even the Medicaid expansion pieces of the ACA take a look at these FAQs for some clarification.  Part of the complexity of the system has to do with the desire to allow this to be a completely private program with each state maintaining control for the insurance landscape in their states.

This could have been much simpler if the uninsured, and anyone else for that matter, was just allowed to buy into Medicare as it currently exists.  The system is already in place and people would just have had to pay their share of the cost for the insurance at what might have even been a lower rate than what we will see in the exchanges.  But for a variety of political reasons a “public option” was left off the table.  With states turning the exchanges over to the federal government and their inability to engage in the process it is just taking us one step closer to a federally controlled and run healthcare system for the entire country.  Instead of giving up local autonomy states and regional insurance plans should be embracing every possible way to maintain local control.

For those of us in healthcare this is much more than a political spectator sport.  For some of us we may want to utilize the exchanges to upgrade our insurance.  For many in the industry the exchanges are the ticket to entrepreneurship.  For all of us we have to recognize the huge number of people who will be insured via the exchanges.  How can we gain competitive advantage by more fully understanding the intricacies of the exchanges and those companies that will participate?  There is opportunity in all this chaos.

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