Should PPACA exchanges work with the first exchanges?

The heart of the new Patient Protection and Affordable Care Act (PPACA) health insurance exchange system will be sales systems that resemble current Web broker sales systems.

Should states ask the Web brokers to help them enroll consumers in health plans?

Frank Kolb, policy director at the Maryland Health Benefit Exchange board, said many people who wrote to the board to comment about the idea of exchange relationships with “Web-based entities” (WBEs) are skeptical about the idea.

The board is setting up Maryland’s Maryland Health Connection PPACA exchange.

Kolb talked about Maryland Health Connection-Web broker relations in a memo he prepared for the Maryland exchange board and a second document, a written  WBE presentation.

Many states and members of Congress have talked about making the PPACA exchanges, or Web-based health insurance supermarkets, tools that can do for health insurance what Travelocity and Orbitz have done from airline tickets, by forcing health insurers to compete harder for consumers’ business.

Companies like eHealth Inc. (Nasdaq:EHTH) and Extend Health already operate private Web-based health insurance supermarkets, and those companies have been trying to persuade states to view them as business partners who can help them get the most out of tight marketing, enrollment and administration budgets.

Almost all of the 37 exchange-WBE relations commenters agreed that the state should license and regulate WBEs, Kolb said.

Many commenters were nervous about WBEs, “some were completely against allowing WBEs to  partner with the exchange,” and many want the state to wait at least a year or two before they start working with WBEs, Kolb said.

Some said they thought the state would have a hard time regulating out-of-state WBEs, and some questioned whether WBEs could provide personalized service, Kolb said.

Some commenters said exchange-WBE relationships would disrupt the market, create consumer confusion and dilute the Maryland Health Connection brand, Kolb added.

Kolb said members of the Maryland exchange staff are asking how they should manage any WBE relationships that the exchange does have. 

“Should the [Maryland exchange] choose a restricted number of WBE partnerships or set minimum criteria for partners and allow all  to participate?” Kolb asked. “If a restricted number, how should the [exchange] fairly choose WBEs for partnership?”

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