One thing that I find strange about covering the Patient Protection and Affordable Care Act (PPACA) is that everyone, including me, ends up thinking about PPACA as “the health insurance exchange law.”
For the past few months, for example, other reporters and I reported breathlessly on any sign that the exchange enrollment systems had coughed, enrolled someone in health coverage, etc. Some people who say they hate PPACA seem to be mainly thinking about the exchange program.
PPACA is huge and does many things that don’t have all that much to do with commercial health insurance. It contains, for example, a provision that’s supposed to pay for research comparing whether various medical treatments are worth the money spent on them. It contains a tax on tanning salon, and all kinds of provisions about Medicaid.
For commercial health insurance, it contains plan decision appeal standards, standardized benefits summary requirements (basically: nutrition labels for health insurance), rules forbidding insurers from using health information other than age in decisions about issuing and pricing individual health insurance, and lots of other provisions.
Those commercial health insurance provisions apply to major medical plans sold both inside and outside the PPACA exchange system. In theory, the PPACA public exchange system could be a great way for the government to create a mechanism for everyone to see what consumers want in health coverage, and what health insurance really costs.
If, however, you — purely for the sake of argument — assume that the goals of PPACA are reasonable and that some government intervention in the health insurance market is reasonable — there’s no special reason why a PPACA exchange has to be a government agency. PPACA doesn’t even require that. There’s no reason why a PPACA exchange has to be the entity that achieves the goals set forth in PPACA.
The drafters of PPACA wanted to create a mechanism that health insurance buyers and sellers could use to do business in a fair, standardized, efficient, open fashion.
The drafters created the PPACA exchange system to meet those goals mainly because there were many practical barriers to private companies setting up big exchanges and getting enough carriers and consumers to participate to make the exchanges a fair test of the exchange concept.
In theory, if the goals of PPACA are valid and its underwriting and pricing rules are reasonable, having ordinary insurance agents and insurers sell PPACA-compliant policies could be as effective a way of achieving PPACA’s goals as having exchanges sell the policies.
PPACA itself sets up a competition between the traditional health insurance distribution system, the public exchange system, and nontraditional distributors other than the public exchanges. The nontraditional distributors could include anything from Web-based health insurance brokers, to Amazon.com, to Starbucks.
Off-exchange distribution of PPACA-compliant major medical coverage is as much a part of PPACA as exchange sales of PPACA plans.
But even the Center for Consumer Information and Insurance Oversight (CCIIO) — the federal agency in charge of implementing PPACA’s commercial health insurance provisions for the U.S. Department of Health and Human Services (HHS) — seems to be caught up in the idea that the exchange market is the real PPACA market.