Health industry consultants at PricewaterhouseCoopers have hinted at some of the difficulties national and regional commercial health insurers might face as they adapt to the world of Patient Protection and Affordable Care Act (2010) exchanges.

For health insurers, the world of the state PPACA exchange programs and the U.S. Department of Health and Human Services’ PPACA exchange program might start out looking like a benefits market chessboard.

Insurers might have to struggle to decide how much effort to put into getting into each exchange program, and when to try to get into it, the consultants say.

“Participation in all 50 public exchange markets may not be realistic—or worthwhile—for all but a few players,” the consultants say. “Insurer participation will depend on how each state exchange is run, the parameters that are set around a qualified health plan and the structure of essential health benefits, including how similar those standards are across states.”

PPACA opponents are still trying to kill PPACA or block implementation of the law, but many health insurance industry benefits players are predicting that the PPACA exchange program will come to life in some form no matter what happens to the rest of PPACA.

The PPACA exchange provision calls for state and federal agencies to set up a system of exchanges, or Web-based health insurance supermarkets, that will help individuals and small employers use new PPACA tax credit subsidies to buy high-quality health coverage. The exchanges are supposed to be available for an open enrollment season starting in late 2013 and to make coverage available Jan. 1, 2014.

States can build their own exchanges, let the U.S. Department of Health and Human Services (HHS) provide exchanges for their residents, or share responsibility with HHS. HHS is supposed to provide exchange services for residents of states that do not provide their own exchange services programs.

States are supposed to tell HHS what they want to do about setting up, or not setting up, an exchange by Nov. 16.

PPACA watchers have been speculating about which states will meet the deadline, which will refuse to cooperate on principle, and which will want to meet the deadline but be unable to do so for technical, budgetary or political reasons.

PPACA requires states to begin signing insurers up for their exchange programs this month, but “no state is ready,” the PricewaterhouseCoopers consultants say.

Even California, New York and other states that have been quick to get their exchange programs running will probably wait until early 2013 to begin certifying health plans, the consultants say.

Whether insurers will compete through the exchange programs or stay out, they will have to think about how the existence of the exchanges might affect the riskiness of their enrollees, the consultants say.

On the exchanges, large, national players might have an advantage in some situations, but regional insurers or the new “accountable care organizations” could be tough competitors, the consultants say.

PPACA is supposed to create a new “multi-state plan” MSP program that will give large insurers a chance to sell the same plan through more than one exchange, but HHS has not yet said how the MSP program will work. 

Whether or not insurers participate in the PPACA exchange programs, they may have to make decisions about whether to participate in the new commercial exchange programs that are cropping up outside the PPACA exchange system, the consultants say.

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