Consider the underlying potential of exchanges

May 1, 2011

The political landscape, the local economy, population demographics and state-level regulations will influence exchanges

Your crystal ball has probably gotten a workout lately. Making strategic decisions related to the upcoming health insurance exchanges has most of you feeling more like prophets than prognosticators.

All things considered, we have very little experience with exchanges. Within the first few years, expect ongoing chaos as the details work themselves out. Once you decide to participate, also define the parameters that might prompt your exit.

On the positive side, highly subsidized people will shop in the exchanges, and they're probably going to be eager to buy. Federal officials predict approximately 20 million of the 24 million shoppers will arrive with premium support.

Another positive: The exchange operation itself will do a bit of administrative work for you, such as enrollment and eligibility. In the individual and small group space today, administration is such a burden it's often not worth the low volume of business. Those issues should quickly improve.

Also consider the much longer term implications of the exchange market. They offer the combination of coverage and free market principles that both sides of the political aisle can generally agree on. Whatever should happen to the Patient Protection and Affordable Care Act, expect the exchanges to survive in some form. If you don't participate right away, you might have to work a lot harder to bore your way in later. Consider at least putting a stake in the ground.

In fact, if the exchanges are perceived to be a success, future policies will open them up to other populations beyond individuals and small groups. Recent budget discussions have explored the idea of moving Medicare to an exchange model. It's not hard to imagine the new CMS Innovation Center advocating the model.

TECHNOLOGY COMES TOGETHER

States have at least $1 million in federal funds to get their exchanges off the ground, and some of the cash is earmarked for technology. Take a long hard look at the systems required to operate an exchange and consider how they might be leveraged to the healthcare system at large. While the enrollment and eligibility function is a starting point-and no easy feat-consider the underlying opportunities to piggyback other tech tools, such as personal health records (PHRs), for example.

An exchange might offer payers and providers the opportunity to offload the PHR cost as well as the administrative task of maintaining the systems. It would also offer patients a degree of assurance that their privacy will be protected, which could encourage adoption. Exchanges might actually be the perfect host for PHRs.

Elsewhere in the technology space are health-information exchanges that share clinical and claims data among participating stakeholders. Insurance exchanges would be suitable partners for that platform, too. Someone needs to get these governing boards in a room together to discuss.

Julie Miller is editor-in-chief of MANAGED HEALTHCARE EXECUTIVE. She can be reached at julie.miller@advanstar.com