Online Health Insurance Exchange Will Help Small Businesses

In an attempt to drive down costs and make the purchasing of health insurance more “value based,” California is currently in the process of creating an Internet-based health insurance exchange that will help consumers here in the San Fernando Valley and around the rest of the state comparison shop for affordable health coverage. For business owners, the concept of an exchange is welcome news as they battle rising health insurance premiums that statewide increased 7.5 percent in 2009 (as compared to a 0.6 percent decrease in overall consumer prices). Since 2002 premiums have increased by 117.5 percent, more than four times the 23.1 percent increase in California’s overall inflation rate. The impetus for this is the 2010 Patient Protection and Affordable Care Act, which mandates that every state establish a health insurance exchange by January 1, 2014, or default to a federal “fallback” program. Regardless of what may or may not happen in the 112th Congress as a result of November’s mid-term elections, health insurance exchanges make good sense. And while they may not yet have captured the public imagination or spotlight to the extent other healthcare issues have, the impact exchanges may have will be felt throughout the country; and they could, in fact, end up a bellwether for how healthcare reform is judged for generations to come. Online mall Health insurance exchanges promote choice and make health insurance purchasing more value based by creating a sort of online shopping mall where consumers, employers and brokers can visit to see health insurance plans side by side and compare benefits, costs and other features. Each of the health plans offered in an exchange will include an essential set of benefits that provide healthcare services with different levels of cost sharing. Multiple benefit categories will exist, so purchasers can choose the one that best meets their needs and pocketbook. Individuals who cannot afford to purchase a plan in an exchange may be eligible for a subsidy from the government based on income and family size … just one of the ways exchanges hope to create more efficient markets and extend coverage to many of the more than 45 million currently uninsured. And, for the first time that we’re aware of, exchanges will give consumers and employers similar health insurance options as are available to members of Congress. For San Fernando Valley-based small business owners looking for financial relief for their health insurance expenditures, exchanges are a logical path to travel. The first thing local employers will need to do is convert their funding of their employee health benefits program from the traditional defined-benefit approach to a defined-contribution model. Here employers provide employees a set voucher-like premium contribution, and employees are then free to select from multiple health plan options at various price points and benefit levels offered within the exchange. To help them make an informed decision, these employees must be provided with such decision-making tools as comparative provider and formulary directories, information on special disease management programs and provider quality measurements. Employees who wish to “buy up” to costlier coverage may do so by increasing their premium contribution, generally through payroll deduction. California model Perhaps the best news of all is that we already know that health insurance exchanges work, as Southern California is home to America’s most successful and mature health insurance exchange. Locally-based CaliforniaChoice, has been successfully operating for 15 years and currently serves close to 12,000 employers and in excess of 150,000 members. CaliforniaChoice’s topping of 20 million member months in 2010 (the first exchange in the nation to do so) demonstrates that if properly established and managed exchanges have the capacity to help us move to a more rational and affordable method of purchasing health coverage. And in this era of political rhetoric and dueling parties, isn’t that something we can all embrace? Ron Goldstein is president of Southern California-based CHOICE Administrators which develops and administers health insurance exchanges.