Exchanges 3.0? How health insurance marketplaces are evolving

Consumers are buying health insurance in new ways these days, while still turning to in-person help for making a choice — even in the age of the online economy.

The end of January brought the end of open enrollment for the third year of the exchanges, a key part of the Affordable Care Act. It’s been a rocky trip for all involved, especially consumers, many of whom were digital-savvy purchasers of all kinds of goods and services before the ACA.

Exchanges 3.0

From the start, most of the state and federally-run exchanges struggled to provide a good e-commerce experience, and some were left processing enrollment through paper.’s rollout became the butt of jokes on The Daily Show and head smacking in the tech community — “externalized strings be buggin yo,” wrote one Reddit observer during open enrollment in the fall of 2013. and some state exchanges have improved their website platforms since then, although they’re still left with the challenge of funding their technology and consumer support services after the federal start-up grants have ended. Now mostly dependent on health plan fees for operating revenue, the exchanges are attracting millions of insurance customers. More than 12.7 million Americans enrolled in subsidized exchange health plans in 2016 and millions more used the exchanges to enroll in Medicaid, the program for people under the poverty level, about $12,000 for a single person.

There have been improvements to the exchanges, which are run by the Department of Health and Human Services, the states and a number of technology contractors. In the 2016 open enrollment featured a basic cost calculator allowing consumers to estimate their deductibles, copayments, and coinsurance. In December, the site also deployed two new features that could really help many consumers — the option search for health plans by their physician, hospitals and providers, and the option to search for health plans based on their prescription drug coverage.

From the beginning of the exchanges, dating back to just after the ACA, smart technology advocates were hoping the government would tap into open source and other affordable web development models such as shared services to make the exchanges work. Some states are now considering sharing technology services to run what will be a platform for both individual insurance and Medicaid.

Meanwhile, there is another part of the exchange story going on outside of the ACA — private exchanges where people buy individual health plans or make a selection of coverage at their job.

Private health insurance exchanges are part of a play by large multi-state corporations to offer more choice to their workers while also keeping cost inflation in check — two goals in American healthcare that have many miles to go.

While enrollment in private workplace-based exchanges has not yet reached the levels predicted, as many as 8 million are estimated by Accenture to have gotten coverage via private exchanges in 2015.

For example, Accenture last year predicted a spike in exchange enrollment in 2017 as the Cadillac Tax’s original 2018 effective date as it approached.

While Accenture last year projected private exchange enrollment would hit 12 million in 2016 and 22 million in 2017, it reported last month that only about 8 million people enrolled in private exchanges this year.

Partly, this has come as health insurance brokers have remained an integral part of the health insurance sector — predictions of their demise have not come to pass. And actually some of the most prolific health insurance broker agencies are selling in both the employer and individual markets, including subsidized health plans, with both brick-and-mortar and online web-presence.

There’s also the complexity of picking health insurance that makes having an adviser — or a really smart, engaging website — much needed. People who take a certain medicine can ask a broker if the drug is available at an affordable rate, for instance. And it’s possible that the people buying individual insurance, on or off exchanges are more comfortable making such an important decision in-person. This is why the health reform law required funding for state governments or nonprofits to staff certified navigators, to steer consumers through the process of enrolling in a subsidized health plan or Medicaid, while also allowing brokers to act as navigators as well.

But there are big technology potentials in selling health insurance online and letting consumers make the best choices. It’s only likely to grow as more Millennials enter the workforce and as more Americans of older generations spend more time online.

Depending on how health reform evolves, insurance exchanges could serve as marketplaces and enrollment hubs for all kinds of subsidized and unsubsidized health plans — individual health plans, defined-contribution workplace plans, Medicaid and the Medicare Advantage plans that have some 17 million seniors subscribers.

Online marketplaces that serve many health insurance consumers conveniently on their own terms would be good not only for individuals but the healthcare system as a whole, as many companies and stakeholders work to modernize and improve many aspects of health and medicine, from EHR interoperability to price transparency. It’s going to take the same smart approaches to technology.

Do you have some other predictions and ideas about the exchanges 3.0? Or, if you want to chat more about it, email us or visit our social media profiles.

Author: Digital Health Team
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