SoftCare Blog

Private Markets/State Exchanges – What the Health Insurance Market Really Needs

There have been ongoing discussions on the value of the ACA and the proposed AHCA and the strengths and benefits of both approaches.  The most important point that must be driven home is that to have an effective and viable healthcare system using the private model, you must have a way to control cost and risks for everyone involved as there must be an incentive for everyone to create a viable health care system.

David Blumenthal and Sara Collins wrote an excellent article on where the ACA and AHCA Fall short and what the Health Insurance Market really needs. The link to the Harvard Business Review article is below.

The key recommendations can be summarized:

  • Creation of balanced risk pools that include both healthy and less healthy persons in individual insurance markets. The pools must include incentives to allow healthy young people to join the risk pool. Their approach is to make the penalty for not signing up the same as having insurance. Controversial, perhaps but logical as the pool of enrollees must be balanced or insurance carriers will opt out (see https://www.nytimes.com/2017/04/03/health/iowa-healthcare-wellmark-blue-cross-blue-shield-obamacare.html?_r=1). 
  • Another concept is toextend subsides higher up the income scale to purchase insurance. It’s a sad fact that health insurance has become so expensive that without assistance from employers or through subsides; middle class homes can’t afford insurance. This is a massive issue as these middle class families represent precisely the right persons to add to the risk pool as they tend to be lower cost and risk individuals.
  • To ensure private insurers will participate, the business of selling this type of product must be viable. This means managing the inherent uncertainties associated with selling insurance in comparatively unpredictable individual markets through the use of reinsurance and risk corridors. Risk corridors protect plans that accumulate unexpectedly high risks by giving them access to funds collected from insurers that experience unexpectedly low risks.
  • Public and private stakeholders must accelerate efforts to control the costs of health care services. If every other industrialized nation finds it easier to insure their entire populations at half the cost, there are lessons to be learned (an excellent article on this was published by the Commonwealth Fund in October 2015 – http://www.commonwealthfund.org/publications/issue-briefs/2015/oct/us-health-care-from-a-global-perspective).

If you are interested in the future of health care, I would strongly recommend that you read the article at:

https://hbr.org/2017/03/where-both-the-aca-and-ahca-fall-short-and-what-the-health-insurance-market-really-needs

No matter what the changes to ACA and the insurance marketplace, SoftCare’s EnrollmentPlus was designed by an Advisory Council of industry enrollment experts to facilitate the easy implementation of electronic enrollments from Employer Groups through Enrollment Vendors to Insurance Carriers. Call us for more details on click on http://www.softcare.com/insurance-plans/ on how EnrollmentPlus can fit into your electronic enrollment architecture

Mike Cobban

Mike.cobban@softcare.com

Director of Operations and Support

SoftCare Solutions | A Division of MTBC

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