Wednesday, February 11, 2015

What the Obamacare Health Insurance Exchanges Can - and Can't - Do

It looked so easy, didn't it? 

So says Massachusetts Connector architect John Kingsdale.  Writing in the prestigious New England Journal, the Obamacare insurance exchange was supposed to list health insurance options in a user-friendly fashion while simultaneously determining eligibility for exemptions and subsidies. 

What happened instead was the mother of all procurement debacles. What's worse, it was all predictable because it turns out that less than 10% of government's IT development contracts are successful.

So, if you like your government's version of insurance Expedia, you can't keep it because it was never really there.

But, says Dr. Kingsdale, assuming Uncle Sam gets its act together, there are four big reasons to like a functioning health insurance exchange:

1. User-friendly insurance shopping: transparent and easy-to-understand choices involving a core set of trade-offs can save time and fulfill conservatives' demands for market-based solutions.

2. Paperless technology: An on-line automated and scalable distribution system should eliminate much of the commercial insurers' marketing and enrollment costs.  Those savings should go to the consumer.

3. Competition: while its unlikely that plans with narrow networks and high out-of-pocket costs will ever go away, exchanges lower their barriers to market entry by other insurers, which should lead to more options for consumers.

4. Quality: as insurers collaborate with health systems, exchanges can lead users to select coverage options that are linked to particular provider entities, like ACOs.

The Disease Management Care Blog has a skeptical take to Dr. Kingsdale's vision.  Here's the downside arguments to why it may not work and why the DMCB will reserve judgment:

1. When it comes to "shopping" for the current versions health insurance, you get what you pay for, which is currently a highly regulated and rich basket of coverage mandates. Thirty year olds must now have any cancer screening they don't want, just so long as they're at least fifty years old.  All insurers are offering the same thing.

2. Outmoded paperless technology will soon be followed by outmoded desktop PC technology.  By the time the on-line bugs are worked out, iPhone enabled consumers will be wondering where's the app for handheldhealthcare.com.  And, by the way, since when do health insurers pass any savings to consumers?

3. If the Massachusetts Connector fosters "competition," why does Boston lead the nation in physician wait times?  The answer is complicated but has more to do with the nature of commercial monopsonies and government price controls, neither of which will ever be helped by IT.

4. The movement of risk from insurers to providers could eventually lead those providers to use the same tricks as insurers, including utilization management and closed walled-garden networks that are ultimately designed to protect their capitation. Insurer-provider collaboration has more to do with who is monetizing and minimizing risk and consumers won't ultimately see any difference when it comes to the "what" of bad behavior. Quality has little to do with it.

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