ideas about the design of health care exchanges

March 7, 2012 in health care costs, Health Insurance, Insurance Bills

There are some good ideas and resources related to designing health care insurance exchanges at

2 responses to ideas about the design of health care exchanges

  1. Hey Duke – I’m very interested in the growth of private exchanges, especially if a move away from employer based insurance really takes off anytime soon. What are you watching in this area?

  2. I’m a subscriber, and they sent me a note about their work about the exchanges. They are a “consumer reports” kind of organization, focusing on services like home maintenance mostly, with some coverage of health, dental, and eyecare. I was just surprised by how deeply they seem to be getting involved with the Healthcare Exchanges – their ideas for making them usable for actual average consumers seemed to make sense.

    Here is a quote of the email they sent me describing their project about exchanges:

    Will Consumers Be Able to Make Easy Health Insurance Choices?

    The Federal health reform law, the Patient Protection and Affordable Care Act, requires every state to set up a Health Insurance Exchange, or requires the Federal Government to provide an Exchange for any state that does not offer its own.

    These Exchanges are required, in the language of the law, to assist “consumers in making easy health insurance choices.” They are supposed to create a marketplace where individuals and small businesses can conveniently shop for health insurance among multiple health plans. The hope is that creating this marketplace not only will help consumers find plans that best meet their needs and preferences but also will apply collective leverage for high-quality, efficient health insurance. And the hope is that insurers, in turn, will create pressure on hospitals, doctors, and other providers to provide high-quality, efficient care.

    If you have insurance from a large employer, an Exchange will not be for you. The Exchanges are initially only for individuals and families buying on their own or for employees of participating employers that have 50 or fewer employees (or possibly up to 100 employees if states decide to expand the net). If you qualify, however, an Exchange might be very helpful. But a key to serving your needs is for the Exchange actually to help you make a good plan choice by giving you good information on the relative cost and quality of plans.

    As you know, CHECKBOOK’s mission is to make sure consumers have cost and quality information on all services they want to buy—including doctors, hospitals, and other health care services and including auto, homeowners, and other types of insurance. As you may know, we have for 33 years produced CHECKBOOK’s Guide to Health Plans for Federal Employees to help the eight million consumers nationwide insured by the 200-plus plans in the Federal Employees Health Benefits Program (the largest existing “exchange” in the country) choose the best plans for their needs.

    Given that mission and experience, we have been actively speaking out on what is needed by way of a health plan comparison tool for Exchanges. We have been writing recommendations and meeting with officials in various states around the country, and we have developed our own plan comparison tool that states can use if they wish.

    Unfortunately, the track record in this field is not good. When it comes to comparing costs, for example, the Massachusetts Connector “exchange,” which is often referred to as a precursor to Exchanges under the Federal reform law, just gives the consumer a description of the premium and the deductibles, co-payments, and other coverage terms under each plan. So is a $200 deductible with a $10,000 out-of-pocket limit better for me than a $1,000 deductible with a $4,000 out-of-pocket limit? How about differences in co-payment and coinsurance levels? And is the answer different for a 59 year-old than for a 29 year-old?

    Most “exchanges” currently offered by private and public employers, the Massachusetts Connector, the Federal website, the Utah Health Exchange, and others leave consumers to deal with these mind-boggling cost questions. Yet research by Consumer Reports has found that consumers “dread” shopping for health insurance, and that the “difficulties are so profound that the vast majority of consumers are essentially being asked to buy a very expensive product—critical to their health—while blindfolded.”

    And it is not just the challenges of comparing plans’ costs. Most existing “exchanges” do not make it easy for consumers to find out which plans have their preferred doctors—or to identify good doctors and other providers. Most provide only limited help for consumers to evaluate the quality of care and service they can expect with each plan.

    As state and Federal officials rush, with the help of large IT contractors, to get the many components of Exchanges in place by the mid-2013 start date, many are seeking input from consumers and employers. We give some recommendations here.

    Not surprisingly, what consumers are generally most interested in is cost. A plan comparison tool should give each consumer using the tool a dollar-amount estimate for each plan of the average total cost (premium plus what you have to pay for services out-of-pocket) for individuals or families with age, family size, and other characteristics similar to those of the user. This should take into account what the consumer will have to pay out of pocket not only for planned health care usage but also for care for diseases and accidents the user can’t predict—based on available data on the probabilities of various types of expenses in similar populations.

    The tool should also give an estimate of bad-year risks under each plan—an estimate of the out-of-pocket cost for the user in a very high usage year and the probability of having such a year—and an estimate of maximum possible out-of-pocket cost.

    In addition, the tool should show how each available plan stacks up on standardized quality measures: (1) what surveyed members say about the quality and accessibility of providers, customer service and claims handling, and other aspects of their experience; (2) the quality and impact of plan-provided programs to help members improve diet and fitness, manage chronic diseases, coordinate care among different providers, and stay healthy in other ways; (3) the frequency of claims disputes; and (4) the quality and breadth of the network of doctors and other providers.

    The comparison tool should provide an exchange-wide provider directory that lets the user immediately see which of the user’s preferred doctors currently participate in each plan’s provider network. And it should give users information to help them identify high-quality, efficient doctors and other providers.

    The tool needs to get consumers to an excellent plan choice quickly. Our research shows that, if getting to a good answer takes more than a few minutes, many consumers will drop out and choose plans based only on premium, deductible, or some other criterion that will not lead to a plan that protects them best financially or gives them the best available care and service quality.

    But the tool must enable users, if they wish, to drill down to see many quality and cost measures for each plan—whether it has a particularly strong program for diabetics, for example, or excellent dental benefits. It must enable the user to filter and/or sort plans based on any measure, and assign personalized weights to produce a personalized overall quality score.

    Finally, the tool must have features that help family members, brokers, community-based advisors, and other intermediaries assist consumers who need help.

    If you want to see how all this can work and learn more about the standards we are hoping state and Federal Exchanges will meet, you can see the model health plan comparison tool we have developed for Exchanges, at Please let us know (by e-mail to your reactions to what we are recommending, and give us your views, over time, on how the new consumer resources for health plan selection are progressing.

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