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Regulation and Compliance > State Regulation

Exchange pioneer wants stability

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Ron Goldstein – an executive who’s been running a private exchange before most had even heard about the exchange concept – says the public exchanges could look better at the end of next year.

A little stability in public exchange regulations could help, Goldstein said in a telephone interview Friday.

“I don’t want to see more government regulation,” Goldstein said.

Goldstein said he thinks rapidly changing state and federal rules contributed to the problems that plagued the public exchange enrollment and administration systems.

Before the first private exchange plan open enrollment period started on Oct. 1, “there was very rarely a time when there was a lockdown on regulations,” Goldstein said. “The regulations were too fluid. They’re still moving today.”

Goldstein is the president of CHOICE Administrators, the administrator that runs California’s CaliforniaChoice exchange.

The exchange came to life in 1996 and now has about 10,000 employers with about 150,000 employees. The participating employers have two to 50 employees.

Most other exchanges organized in the 1980s and 1990s – often known as “health insurance purchasing cooperatives” – died when employers with better risk profiles left to cut better details and left the HIPCs with sicker, older risk pools.

CaliforniaChoice helped a lead vendor set up a state-based exchange in Nevada, which faced startup headaches. In its home state, CaliforniaChoice continues to focus on running a private exchange.

Goldstein said CaliforniaChoice avoided a death spiral by running a small, internal risk-adjustment program, to protect member insurers against adverse problems, and by using benefit design practices and other practices to hold down adverse selection.

This year, to deal with new Patient Protection and Affordable Care Act pricing and underwriting restrictions, CaliforniaChoice has tried to control  adverse selection by limiting employers to offering a choice of two adjacent “metal levels” of coverage, such as a silver plan and a gold plan, rather than letting employers offer bronze plan-platinum plan combinations, or bronze-gold combinations.

So far, PPACA and the public exchanges have had little obvious effects on the price of the coverage CaliforniaChoice sells, or the supply of health care available to the plan enrollees, Goldstein said.

PPACA has imposed new fees, but CaliforniaChoice plan price fell slightly over the past year, Goldstein said.

He has seen commissions for groups fall to 6.5 percent, from 7 percent.

Individual commissions dropped to 5 percent, from 10 percent.

“Some brokers have definitely departed the market,” Goldstein said.

Other brokers attracted enough new business to make up for the drop in commissions and report having a great year, Goldstein said.

One concern Goldstein has is reports of a big expansion in the private exchange market.

Goldstein argues that many “private exchange” providers are simply slapping the private exchange label on the kind of plan menu program they might have offered a few years ago, without adding any special online enrollment or billing systems.

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