Managed Care - June 2010 - (Page 40)
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and is transparent about the value of its offerings.” In an analysis of the experience of the Massachusetts Connector published in the May 12, 2010, issue of New England Journal of Medicine, Kingsdale notes that in the fiscal year starting this July 1, the Connector’s administrative budget — including non-exchange functions such as adjudicating appeals of tax penalties for failure to comply with the individual mandate and explaining health care reform to the public — will amount to 3 percent of total premiums. This compares with administrative budgets of 5 percent to 20 percent of premiums in the private sector for distributing nongroup and small-group insurance through conventional channels, according to Kingsdale.
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Broad risk pool PPACA charges exchanges with the administrative burden — such as negotiating with several plans — that often places health insurance outside the financial grasp of small businesses, while creating a broad enough risk pool to help manage premium costs. The law requires the exchanges to offer a choice of health plans based on quality, access, and premiums. Another value of exchanges is that they “make comparison shopping easy: the average time consumers take to shop on the Health Connector’s Web site is 30 minutes, and it provides far more information than does half a day spent telephoning plans directly,” according to Kingsdale’s analysis. Exchanges also create transparency. PPACA specifies a list of information on health plans that exchanges must provide. And PPACA requires that exchanges determine members’ eligibility for federal tax credits and other subsidies. To what degree health plans will choose to participate in exchanges remains an open question, Kingsdale and others say — but in a market that prohibits exclusion based on pre-existing conditions and the rescission of benefits based on utilization, exchanges offer access to a new pool of consumers and the possibility of new product lines, Curtis says. “Policymakers do not support spending significant public funds simply to make exchanges viable insurance venues,” he says. “But if the goal is to cover the uninsured low-income populations, subsidized exchanges are a highly acceptable approach.”
Reach the author, Martin Sipkoff, about this and other articles that he writes for MANAGED CARE at MSipkoff@ManagedCareMag.com.
MANAGED CARE / JUNE 2010
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