Members of Congress created the Patient Protection and Affordable Care Act (PPACA) public exchange system partly because they hoped setting up a Travelocity for health insurance would be a great way to cut distribution costs.
In the real world, public exchange managers are finding that setting up and running a health insurance exchange takes a considerable amount of time and money.
The U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) — the HHS arm in charge of the HHS-run exchanges — release little information about how their exchanges work, but the boards of many state-based exchanges include detailed operational reports in meeting documents.
In some cases, the challenges the exchange runners face may be due to the difficulties involved with getting any big, complicated, controversial project off the ground, but, in some cases, the challenges may be due to what agents and brokers were saying all along: That servicing health plan enrollees is more complicated than servicing consumers who buy airline tickets from Travelocity.
Here’s a look at some of what the exchange runners have been talking about in recent board meeting documents.
1. Exchange QHP users may be shopping more than exchange managers had originally expected, and asking more questions
Federal and state program managers have seesawed back and forth between wanting to auto-enroll as many 2014 exchange qualified health plan (QHP) users, to make sure people keep their coverage and reduce wear-and-tear on exchange systems and workers, and wanting to encourage QHP users to shop as much as possible, to maximize the power of exchange systems to improve the quality of coverage and cut the cost.
Meanwhile, in some states, the percentage of QHP users who have stuck with their coverage has been higher than exchange runners expected.
In Colorado, for example, Connect for Health Colorado managers expected to have a 30 percent QHP attrition rate. The actual attrition rate was only about 12 percent to 15 percent.
Meanwhile, a reduction in the cost of the exchange program’s “second lowest cost silver plan” — the plan used in federal premium subsidy calculations — has actually reduced subsidy levels throughout the state. The reduction in the subsidy level will probably increase the level of active shopping and calls to the exchange call center through the 2015 open enrollment period, officials said.
2. Exchange shoppers may want to talk to live humans
3. Insurer assessment or user fee payments may arrive in big, inconvenient clumps of cash
Connect for Health Colorado is one of the exchanges that has been making a serious effort to earn its own keep by having carriers pay fees. The exchange collected $1.8 million in individual fees in 2014, and it started accruing the fees in June. But, because of billing and reconciliation issues, none of the cash actually came in until December.