Health insurance carriers that participate in public exchanges will face three major challenges, according to a recent
He describes them as:
1. Confronting "an actuarial 'blind-spot' as it relates to estimating the underlying cost structure of new members and setting rates for the ... 2014 open enrollment season."
2. "Identifying, stratifying and managing the ris of individual members as they enroll through the exchanges."
3. Developing ways to "identify and address the medical needs of their members in a proactive and cost-effective manner."
The chief obstacle for health insurance carriers is essentially a lack of insight into whos enrolling in their HIX plans. They dont know who these members are and what their claim history is, and if theyre high-risk or low-risk individuals, observes Scott Donahue, a TripleTree director who leads much of the firms work on exchanges. Chances are that those who are persistent enough to stick around to try to get through an exchange enrollment right now are likely to be very high-risk individuals, he adds.
But time may not be on the side of carriers in their quest to set appropriate rates for 2015
Donahue says premium
He says the upshot may be for carriers to conservatively set their rates higher than they were in 2014 in order to play it safe.
HIX insiders, no doubt, will be watching for some creative approaches in the marketplace as consumers expect a more retail experience in health care, Donahue believes. Among his suggestions is that carriers need to develop stronger ties to their customers, become better at profiling through data analytics tools, promote greater cost transparency and be more proactive about employee wellness programs in a post-health care reform climate.
Carriers havent done this historically, he adds. They relied on employers for a large part and maybe even brokers to a lesser extent.
A longer-term question for HIX observers to ponder is whether the public or private exchanges will serve as a catalyst for, or hindrance to, improved outcomes and cost management in the employer-provided health insurance market.
While that remains to be seen, Donahue believes both public and private exchanges will alter the relationship between carriers and consumers as well as enhance consumer intimacy with their doctors and overall health care experience.
He adds: This is an industry under transformation both because of and in spite of the Affordable Care Act. Whichever way the tide breaks, especially around some of these short-term, very public challenges right now, this is an industry that is changing and needs to change, regardless of what the ultimate driver of that change, which is a good thing.