Insurance Market Reforms

VII. Key Issues: Regulation & Reform >> C. Health Reform >> Insurance Market Reforms

 

Topic Outline

1. Managed competition
2. Health insurance exchanges
3. Public health plan
4. Interstate commerce in health insurance
5. Association health plans
6. High risk pools
7. Public reinsurance

 

Managed Competition

Association Health Plans

Insurance industry expert Robert Laszewski is skeptical that association health plans would offer much savings:

• Marketing and Renewal Costs. A large association of businesses still requires the same amount of marketing costs (broker/agent costs, telemarketing, web sales) since each individual business has to decide annually whether to renew their plan; it won’t suffice to simply persuade the association itself to keep a plan(s) going.
• Policy and Enrollment Costs. These likewise won’t be any different if each small business is buying completely on its own or through an association. Each company will need a copy of the policy, enrollment cards, and booklets for each employee.
• Billing and Eligibility Costs. Each business still has to be billed monthly and any changes in eligibility reconciled as employees/dependents move into and out of the firm.
• Claim Processing Costs. These are identical regardless of whether the business buys solo or through a group.
• Provider Discounts.  It’s not clear an association of 10,000 small business is ever going to get better discounts than a large local player such as Blue Cross Blue Shield covering millions of subscribers in many states.
• Association Overhead. Any association is going to have an executive director needing to get paid and companion office overhead expenses. Since its cheapest option will be simply to work with the most cost efficient plans in the market, such as Blue Cross, the result will be that association plans generally will cost more than if the businesses simply purchased their coverage directly from these very same cost efficient plans.

 

High Risk Pools

 

Public Reinsurance