Health insurance exchanges have been the source of much debate, but largely among governors and statehouses trying to figure out how they plan to implement one. In practice, these exchanges are supposed to work like Orbitz but for health insurance. They were included as part of the Affordable Care Act (ACA) and states can choose to run their own, partner with the federal government, or let the federal government run a generic one on their behalf. No matter what they choose, health insurance exchanges will have a dramatic impact on how health insurance is regulated and provided in the US. According to a new study on health insurance exchanges from Accenture, by 2017 1 in 5 Americans will buy their health insurance coverage through an exchange.
Not only will states have their own public exchange, private insurers are also setting up health exchanges. CivSource has previously reported on one in the works from WellPoint one of the country’s largest insurers. According to the same Accenture study, even though a majority of Americans (83%) are unfamiliar with the private exchanges, their total enrollment will ultimately surpass state and federally funded public exchanges, as early as 2018. How is this possible? If an individual plans to remain on their employer-provided benefits, those purchases will most likely happen on a private exchange managed by the providers for a given employer.
“The issue right now is a lack of consumer readiness for exchanges, in general, but in particular for private exchanges,” said Rich Birhanzel, managing director of Accenture Health Administration Services. “While private exchange providers have been largely focused on educating employers on the benefits they offer, almost no education has been provided to the employees who are considering enrolling in these health plans.”
Based on implementation deadlines included in the Affordable Care Act, state exchanges are supposed to be largely operational by October of this year, and fully operational by January 2014. Private exchanges don’t fall under the same requirements, although private insurers are planning to roll out the option on a similar timeline.
While Accenture estimates that only one million individuals are expected to enroll in private exchanges by the end of 2013, that number is expected to reach 40 million individuals by 2018, surpassing the 31 million individuals likely to enroll in state-funded public exchanges. In addition, Accenture estimates that private health insurance exchanges will account for 56% of the total exchange market in just five years.
Accenture research indicates that roughly one-in-four consumers (27%), who have health benefits through their employer today, will receive their benefits through a private health insurance exchange by 2018.
No one knows exactly how all of this is going to play out yet. Final rules and guidelines for state compliance with ACA are still being worked through at the federal level. State exchanges were meant to serve as a means of driving insurance policy costs down through transparency while also showing citizens if they potentially qualified for subsidized health care. However, private exchanges remove some of that transparency and may potentially confound any attempts to drive costs down. Employers too may alter how they contribute to company health care policies, which means individuals may have to look over options on both exchanges before making a decision, raising questions about whether any of this actually makes understanding and saving money on health insurance any easier.
“Private exchanges represent a significant shift for consumers, by allowing employees to ‘shop’ for their insurance products while employers change the way they contribute to benefits,” said Birhanzel. “Consumers will need to fully understand their options and the impact of their decisions, requiring consistent engagement from providers and insurers to support informed decision making.”