With the opening of the health insurance exchanges created by the Affordable Care Act (ACA), administrators must be prepared to serve millions of individuals and employees of small businesses who are ready to buy insurance. Once the exchanges are operating, they will be able to make decisions that will shape the organization, quality, and financing of health care in the United States. Their 4 broad functional areas are eligibility determination and enrollment, consumer assistance and outreach, plan management, and financial management.
The ACA establishes income-based categories of eligibility for coverage and financial assistance. The overall system is complex and may be confusing to consumers who are inexperienced in insurance matters. Exchanges must develop, debug, and maintain software and educate the public about the basic specialized language of insurance and the benefits for which they are or are not eligible. They must train people to answer applicants’ questions, staff call centers, and help applicants complete required forms. Successful implementation depends on efficient and accurate performance of all administrative tasks. Those decisions will shape health care payment and delivery.
The ACA also changes rules for insurers. They must sell to all willing buyers, regardless of health status, and they cannot cancel coverage for people who make large claims. The ACA limits age-based variations in premiums and bans ratings based on health status. Exchanges can cap the number of plans insurers can offer, require insurers to offer certain standardized plans, can set other standards for the quality of care to be paid for, and bar plans that fail to meet quality or price standards. States may bar the sale of insurance to individuals and small businesses outside the exchanges or require that the same plans be sold inside and outside them. To date, few exchange administrators have used many of these powers because the concentration has been on getting the basic administrative details correct.
When the exchanges are operational, more of them will be forced or have the option to adopt policies that can reshape financing and delivery of care. The scope of exchange coverage will grow by authorizing the exchanges to allow larger employers. States now have the authority to create a single, unified market for insurance by barring insurance sales to individuals and small businesses outside the exchange. The quantity and quality of information on the prices charged by different hospitals, physicians, and other providers and the availability of data on the quality of care are improving. Exchanges could advertise such information to help consumers make more informed choices or require plans to offer incentives for people to use high-quality, low-cost health care services and providers. Many pilot programs, experiments, and demonstration projects have been created and involve new methods of paying for care and organizing providers. If these innovations succeed, exchanges will be able to encourage or require their adoption. Even with these possible transformations, the mundane administrative tasks will occupy the exchanges for the first year or two. As the initial administrative glitches are corrected, the exchanges will be a means for promoting a competitive insurance market in which consumers can make rational decisions and the health care delivery system will be reframed.
Brookings Institution, Center on Health Insurance Reforms, Georgetown University, and DC Health Benefit Exchange Authority, Washington, DC