When are Healthcare Exchanges a good idea?

Politicians and bureaucrats seem to love them but the product the ACA delivered failed universally across the country. So, let’s take a look at how Exchanges could be a solution.

The basic idea behind the notion of a healthcare exchange can be summarized in the name often used to describe them;  “healthcare marketplace”. But, it’s as though the ACA  believed that if you named something a “marketplace” that by definition it would become an open, free-market competitive solution delivering more choice and less cost. Using that logic if I called a duck a swan it would make it so? Doesn’t work that way, does it?

The concept of a marketplace for healthcare is not new and one can point to numerous success stories around the country. Is it by coincidence that none of the healthcare exchange success stories are government run? Nope!

The purpose of this post is not to criticize the failed government run exchanges. Anyone can do that. Government run exchanges have a disadvantage. For one, they don’t start by considering what the market (consumer) wants and for which they would be willing to pay premium.

Government exchanges begin with the attitude of control. That attitude thinks the public will be forced to like what the government exchange produces because it has no choice. Honestly, if the shirt you need to buy comes in only four colors then you will learn to love the color you select. At least that appears to be the attitude since the ACA gave us only four colors.

Government run Exchanges are laden down with fees and expenses that drive prices up before the first person even uses the plan. They also force rules and controls on the market that also drive out competition and choices while driving up premium. Government run Exchanges have too many obstacles to overcome to be successful.
That is  without forced internment, of course.
So they mandated Pay or Play.

But in a free market and certainly in the United States, where people have gotten use to the idea of many choices, if a vendor does not deliver a good product to compete for your business then that vendor will fail. It will fail because other vendors will fill the void and give the market the choices it demands and for which it is willing to pay hard earned dollars. That is also known as providing “value”.

The new version of healthcare reform should include more room for Healthcare Exchanges but they must be private. The government needs only set a few rules for everyone to follow then American business will deliver solutions. Not all private Exchanges will work but when one does not, there will be another to replace it and the new Exchange will have learned from the mistakes made by others. Or it may simply analyze the market more correctly and will see a specific desire from the public. Our recent Presidential election demonstrated how easy it can be to misjudge your customers.

One idea that may come is the vision of an exchange consisting only of high deductible plans in which the employer can implement an HRA to take advantage of the premium savings and the appeal of various carriers and plan options. Or the employer may select a single HDHP then implement HRAs with various reimbursement options. It’s available today, in fact, and being administered by a TPA in California.

But let’s return to the basics of why the concept of an Exchange makes sense. What do we know about our citizens and healthcare:

*One size does not fit all
*Needs are different based on age, gender and even location
*Risk tolerance varies among people
*Out of Pocket tolerance varies among people
*Sicker folks want richer benefits
*Healthier folks don’t want to pay for richer benefits
*Young people think they’re bulletproof
*Financial means & goals vary among people
*Attention to details (understanding) varies
*Value is always appreciated
*We’re Americans so of course we want more choices.

A Healthcare Exchange created with the goal of being market driven or Employer Driven will begin with flexibility in mind. Not only flexible with many choices but also for continually monitoring the product and making modifications as the public makes it choices known. These Exchanges will be created in a market driven by competition so plans too expensive fail, plans with dopey benefit designs fail, and as time goes on the right mixture of benefit and price is created. Again, that’s called value and that’s what people are willing to buy!

Have you seen a private exchange in your state that has proven itself and stood the test that “time” delivers to every health plan? Of course you have and you will see more if the next effort at Healthcare Reform does not stand in the way of innovation driven by a market free to deliver thoughtful properly priced benefit designs.

If the new administration frees up the insurance markets and America’s entrepreneurs then we will see many new options to consider. We will watch as benefits increase again and we’ll see premiums stabilize, and be lower with better overall value. Americans will demand value.

I am confident in this and I know that if we give the small employer a chance she/he will present benefits to employees that are richer, encourage good health, and cost less.

What do you think?

Remember, we are all in this together!

Mark Reynolds, RHU
mark@reynolds.wtf
559-250-2000

 

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2 Responses to “When are Healthcare Exchanges a good idea?”

  1. Mark Rogerson Says:

    Once again, right on!

  2. Robert Lehrer Says:

    Mark, I agree with most of your points. You have more faith than I do however, that prices will stabilize/decrease and that plans will yield better value for buyers. We have short memories and have forgotten that one of the principal reasons for ACA to begin with was skyrocketing premiums and weak benefits. Just because ACA didn’t solve those problems doesn’t mean they didn’t exist before the legislation was passed.

    There will have to be serious changes in our health care delivery system–the kinds that nobody in Washington or in the insurance industry has proposed yet, before real inroads are made into making healthcare more affordable for most people.

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