Tomorrow, the doors will open for consumers to enroll in health insurance exchanges in all fifty states and the District of Columbia. With the opening of exchanges, the burning question on everyone’s mind is this: Will health insurance exchanges work? To help answer this question, we need to have a better understanding of what makes an exchange work and what some of the metrics are that will be used to measure how an exchange is performing.
The establishment of health insurance exchanges is one of the most complex information technology (IT) projects ever initiated by the federal government. (See figure 1 at the end of this post.) This is true in part because insurance exchanges have to integrate disparate data sources at the state and federal levels and share data with each carrier participating on a health exchange. As the former Director of Technology of Avenue H (formally the Utah Health Exchange), I can tell you from first-hand experience that building a health exchange is a very complex process and requires clear lines of communication and collaboration from both state and federal stakeholders.
The primary goals of a health exchange as specified in the Patient Protection and Affordable Care Act (PPACA) are to provide consumers with a sufficient choice of affordable health insurance products while also providing them with intuitive decision support tools. To assist consumers with obtaining affordable coverage, exchanges will provide some consumers with an Advanced Premium Tax Credit (APTC), commonly referred to as a premium subsidy. Premium subsidies are available to consumers whose income level falls between 133 percent and 400 percent of the federal poverty level (FPL) and are available to these consumers to help offset the cost of an insurance plan. However, in order to accomplish this, many complex processes, calculations, and verifications have to take place behind the scenes.
Difficult Tasks Coupled With Tight Timetables
Technological challenges. One of the more complex requirements of an exchange is facilitating the eligibility determination for the premium subsidy. Individuals must complete either an electronic or paper application providing the necessary information (income, family size, residency, etc.) to facilitate this determination. Adding to the complexity is the requirement that each individual must complete an assessment or determination for Medicaid prior to an eligibility determination for a premium subsidy. This will require the state or federal exchanges to efficiently communicate with the state’s Medicaid eligibility systems.
Tight implementation timelines and informational delays have also left states with inadequate time to test their systems before exchanges open for enrollment, which means the functional capabilities of exchanges remain largely unproven. For example, while most state-based exchanges are leveraging private-sector technologies for their exchange architecture and functionality, integrating these technologies with existing Medicaid and other state systems is proving to be a significant challenge. Some states are currently in the process of implementing a comprehensive Medicaid modernization project, which means they have to test and integrate two new systems, while other states are dealing with the connectivity and integration challenges associated with older legacy systems. Integration challenges will slow the enrollment process, delay eligibility determinations, and increase the potential for unintentional errors, fraud, and abuse.
The stark reality of these integration challenges recently came to light this week when the DC Health Link announced that it “is not currently deploying the function that makes new Medicaid eligibility determinations and calculates tax credits for purchase of private insurance due to a high error rate discovered through extensive systems testing. People seeking Medicaid coverage or tax credits will be able to use DC Health Link to create an account and submit an on-line application. Their initial eligibility determination will be completed off-line by experts.”
Inadequate resources for outreach and customer service. Another challenge is that, because of the compressed timeline, states have not been able to devote the necessary resources to outreach, education, and customer service. While several states are in the process of developing comprehensive outreach campaigns, recent surveys show that many Americans still do not understand the law, exchanges, or what options are available to them in 2014. It is expected that most states will have a difficult time engaging eligible populations and raising awareness of available subsidies, increased Medicaid eligibility, and other ACA provisions.
There is also a growing concern about the Navigator program — specifically, if there will be enough sufficiently trained Navigators and in-person assistors available to assist consumers throughout the enrollment process. In a recent board meeting, Covered California announced they would delay implementation of their Navigator program. Tens of thousands of consumers will have had no prior exposure to health coverage options and will need comprehensive assistance. A lack of information, and a high potential for misinformation, will increase the likelihood for error, increase the possibility consumers will select sub-optimal products, or delay enrollment.
Measuring Whether Exchanges Are Succeeding
So, we have explored what makes an exchange work and some of the complexities; let’s now look at some of the metrics that will be used to gauge the performance and success of an exchange. Some of those metrics are affordability, choice, quality, and the consumer experience.
As I mentioned earlier, one of the goals of an insurance exchange is to provide consumers with a variety of affordable coverage options. What we have seen so far is that all exchanges will be providing consumers with a variety of health products that will meet the needs of most if not all consumers. Additionally, premiums in exchanges across the country in most cases will be less expensive than the traditional non-exchange market. Combine these affordable rates with the premium subsidies and it looks like consumers will have a good variety of affordable health products to choose from. However, future rates will be based on the costs to provide health care to everyone who has health coverage in 2014.
Just as important as affordability is the quality of the coverage being offered on the exchanges. The benefit design of each health product on an exchange will meet the requirements of the essential health benefits (EHBs). The EHBs provide a robust level of coverage for all plans available on an exchange. However, quality cannot be effectively measured until consumers have had sufficient time to evaluate the health plans they have chosen and take the opportunity to provide feedback about the quality of the product. Realistically, it will take about a year to collect and analyze this data before relevant quality data will be available to consumers.
The consumer experience will be a significant factor in determining the success of any exchange. One of the most critical components of an exchange that will impact the consumer experience will be the effectiveness of consumer decision-support tools, which are intended to help consumers choose a plan that best fits their needs or the needs of their family. The sophistication and usability of these tools will vary state by state, as most state-based exchanges are utilizing different technology vendors to provide these tools. Fortunately, many of these decision support tools already exist in the private sector and have been tested and improved upon over many years.
Will The Exchanges Work? Yes, But The Enrollment Process Will Initially Be Rocky
Now that we have a better sense of how an exchange works and some of the potential challenges it is time to answer the question: Will exchanges work? As you most likely suspected, the answer is not a simple yes or no. Exchanges will work, but there will be significant challenges that consumers will encounter during the enrollment process. Let’s take a look at what some of these challenges will be.
Many consumers will experience delays with enrollment based on their specific eligibility scenarios. For some consumers, these delays could be as long as a couple of days to a couple of weeks — the more complex the eligibility scenario the longer the enrollment process will take. Part of the delay will be due to technical issues at both the state and federal levels. However, it is anticipated that many of these issues will be resolved relatively quickly.
The lack of robust outreach, education, and customer service is a concern and could result in consumers waiting for an available navigator, in-person assistor, or call center customer service representative, thus increasing the time it takes for a consumer to complete the enrollment process. Additionally, if Navigators or in-person assistors lack the necessary training this, too, could delay enrollment as consumers wait to get their questions answered.
So while all exchanges will open on October 1st, it is highly anticipated that enrollment will initially be rocky and slow for most consumers. I believe that baseline functionality of state-based exchanges will be up and running, but it can be expected that due to the challenges outlined above, very few states will have comprehensive working exchanges on October 1st.