bswift Publishes White Paper Explaining Emerging Health Insurance Exchange Models & Market Forces Behind Them
CHICAGO, IL — Wednesday, February 29th, 2012
Garlitz illuminates the significant opportunity to create private exchanges as a complement to the public American Health Benefit Exchanges (AHBE) and Small Business Health Options Program (SHOP) exchanges required under the Affordable Care Act (ACA). The paper also analyzes the practical impact of numerous policy decisions and identifies several key provisions of the ACA likely to have a dramatic effect on the insurance markets in 2014 and beyond.
In the past six months, numerous insurance carriers have announced single carrier Exchanges, dubbed by Garlitz as “roadside stands,” many with a defined contribution approach for employers to offer health insurance and ancillary insurance to their employees. Garlitz contrasts these “roadside stands” to “farmers’ markets,” in which multiple insurance carriers participate, as found in the Utah Health Exchange and other private exchanges. Both models appeal to employers and consumers and therefore will likely have a place in the market.
The most successful models for Exchanges will depend largely on state policy decisions and also on the positions and strategic commitments made by insurers and brokers. But the success of a particular Exchange will be driven significantly by the products, innovative features, and value included in the overall offering.
As Garlitz writes, “the success of these new distribution models will depend largely on the ability to deliver meaningful and improved value to employers and consumers.”
Highlights of the paper include the following insights from Garlitz:
- The AHBE will attract many low wage individuals with the promise of federal dollars in the form of premium tax credits and cost-sharing subsidies. Higher-paid consumers who do not qualify for AHBE tax credits/subsidies and who seek individual products may choose to buy them outside the public AHBE because AHBE plan premiums are not permitted pre-tax status.
- Many low-income wage earners will find that family insurance coverage is significantly more affordable in the AHBE than in the group plan of the low-wage employer.
- The continued appeal of small group products will depend heavily on pricing differentials between community-rated individual plans and community-rated small group plans. State-based decisions to either merge or segregate the individual and small group markets will determine the long-term appeal of group insurance for smaller employers in those states.
- The viability of large and small employer health plan strategies involving the use of individual products rather than group products will depend on each state’s decision to merge or segregate the individual and small group markets, complicating the option for multi-state employers.
- Low-wage workers with dependents may intentionally seek part-time positions or employment with companies that offer no group health plan in order to remain eligible for federally subsidized family coverage in the AHBE.
“The market is deeply engaged in understanding health insurance options and creating alternatives, and bswift is in the midst of the conversation on all levels,” said bswift CEO Rich Gallun. “Our unique perspective both as an experienced benefits administrator and the technical expert behind the Utah Health Exchange gives us a distinct advantage in understanding the dynamics of market makers, employers and consumers. We bring an important point of view into this vital discussion.”
bswift is changing the world of benefits administration by combining deep expertise and a passion for technological innovation with a unique consumer-driven approach. Partnering with enterprises nationwide and serving millions of employees, bswift offers cloud-based technology and services for online enrollment, interactive decision support, ACA compliance reporting and employee engagement. bswift also provides access to consumerism, product and consulting solutions needed to build a benefits program specialized for both employers and employees alike. For more information about bswift, an Aetna company, visit www.bswift.com.
MEDIA CONTACTLaura Field