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Ron Goldstein, exchange pioneer: Group vs. individual

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Ron Goldstein is thinking he may be talking more about accountable care organizations (ACOs) over the next few years.

Goldstein, the president of CHOICE Administrators, a unit of Word & Brown Companies, has been selling health insurance since 1981. He’s been running private health insurance exchange programs since 1996.

Goldstein is based in Orange, California. Managers of the state-based Patient Protection and Affordable Care Act (PPACA) exchange in his state, Covered California, took Goldstein’s advice about the need to work with agents and brokers seriously, and it ended up with a large, relatively healthy population of enrollees.

Goldstein, meanwhile, has been continuing to run private exchange programs for small groups right alongside Covered California. 

See also: Exchange pioneer wants stability

For a look at how Goldstein sees the California market, and why ACOs are catching his eye, read on.

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Individual market

Covered California has focused most of its attention on individual consumers, and the agents and brokers who serve them. Goldstein says that, unless the current rules and climate undergo major changes, the current setup may be pretty stable.

In California, carriers have been doing well in the individual market, and they like what Covered California has done to lower their distribution costs, Goldstein said.  

But, on the other hand, the current PPACA exchange plan subsidy application process is too complicated to make the market attractive to any competing exchange, and continuing pressure on carriers to squeeze distribution costs could make the idea of going up against Covered California in the individual market even less attractive, Goldstein said.

“I think the market will continue to cut individual commissions,” he said. 

Even if the rules changed enough that a private company could buy Covered California, the same barriers that make competing with Covered California daunting could make owning and running it difficult, Goldstein said.

See also: NAHU 2012: Health Insurance Exchanges Are Coming 


Employee benefits market

Covered California talked early on about making a major effort in the small group market, but it never gave its Small Business Health Options Program (SHOP) much attention, and SHOP division service has been weak, Goldstein said.

An insurer can sell SHOP coverage without the exchange marketing costs hurting its PPACA medical loss ratio (MLR) numbers, but, up till now, that edge has not led to much sales activity, Goldstein said.

From the perspective of CHOICE Administrators, which needs brokers to help get small employers interested in using the company’s private exchange program, shrinking commissions in the individual market have been helpful.

For CHOICE, “the small group market has never been more robust,” Goldstein said. “It’s the most competitive it’s ever been.”

The carriers’ performance in California’s off-exchange small group market varies from carrier to carrier and seems to depend heavily on each carrier’s strategy, Goldstein said.

Today, Goldstein said, CHOICE is seeing especially strong interest in its small-group ancillary benefits exchange, which sells dental insurance, vision plans and chiropractic plans.

Some companies have talked about launching major efforts to offer private exchange services to employers. At this point, Goldstein said, most of the successful private exchange programs he sees focus on larger employers. He said he has not noticed facing much competition from any private exchange programs with a strong focus on the small group market.

In the next few years, he said, PPACA and market constraints on carriers’ strategy choices could make ACOs a hot topic.

The hospitals, clinics, physicians and other health care providers that participate in an ACO are supposed to share responsibility for managing and coordinating care for a patient and holding down costs. In California, many have picked traditional, highly regarded carriers to serve as their administrators.

Service has been good, and “they’re very aggressive with their pricing,” Goldstein said.

It’s not yet clear how well the ACO movement will work in the long run, but their current low rates and the constraints on traditional carriers’ ability to innovate should give the ACOs enough buzz to make them interesting to watch over the next three to five years, Goldstein said. 

See also:

The Health Insurance Exchange Opportunity

Word & Brown Promotes Goldstein


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