California leaders have signaled their intention to move full speed ahead with building a state health insurance exchange that has the potential to provide coverage to millions of Californians beginning in 2014. But if the California Health Benefit Exchange simply becomes another website where Californians can go to purchase health insurance, we will have missed a colossal opportunity to improve health care in the Golden State.
In the current market, individuals and small businesses are not getting good value for their health care dollars. Too often, insurance premiums are unaffordable and the quality of service and medical care is inconsistent. The Health Benefit Exchange can change this dynamic, but only if its designers put the right standards and systems in place.
By looking at the best practices of large employers, we can get a good idea of what the right approaches are, and why they have already proved effective.
Small businesses in California support the exchange. Opinion polling by Small Business Majority and Kaiser Permanente released June 12 found that only 32 percent of small employers in the state offer insurance, but when they learn about the exchange opening in 2014, the number of small business owners who say they're likely to offer insurance jumps to 44 percent.
The exchange will offer individuals and small business employees a choice of health plans, similar to the way most large employers offer their employees a choice today. But most large employers don't offer their employees an unlimited number of options. They carefully examine the options and typically offer health plans that meet certain standards.
Like large employers, the exchange should vet health plans to ensure each meets specific standards when it comes to quality and care management. They should encourage health plans to seek innovations such as primary care medical homes, and they should facilitate the use of health information technology to improve both efficiency and the patient experience.
In addition to only offering plans that meet specific quality standards, the Health Benefit Exchange should offer Californians decision-making tools so they can pick the right plan for their individual health needs and financial situation.
Choosing the right health plan or provider is a challenging task for anyone; it's not easy to estimate the cost of care or to evaluate quality. To help consumers navigate this, the exchange will need to gather information from health plans and present the information in a way that facilitates meaningful comparison among plan options. Many large employers already offer such tools to assist their employees in selecting the plan that is right for them.
Finally, the exchange should borrow large employers' common practice of empowering consumers with useful information on the cost and quality of medical treatments and services. In the current health care system, consumers often lack useful data on the price or quality of the services they receive. The exchange can address this by collecting and sharing information to help users understand and compare quality, cost and efficiency. For example, some large employers provide their employees with online tools that allow them to compare the cost and quality of various treatments, such as MRIs.
Some have argued that exchanges lack the capability to put in place standards and measures for health plans, and their affiliated providers, or to generate robust consumer-friendly tools. They claim it is enough for the exchange to be a passive clearinghouse, so long as IT systems and business processes for eligibility and enrollment run smoothly. They also argue that consumers and small employers should simply be given the widest possible choice of health plans and left to their own devices.
It is hard to contradict the fact that simply "turning on the lights" will be a monumental task for the exchange, but installing standards and tools that give consumers value does not need to be overwhelming if proven tools are used. If these are not put in place at the beginning, it will be much more difficult to install them later.
Furthermore, offering Californians a choice among all licensed health plans can overwhelm them with too many choices. It would also cost a fortune to administer.
Large employers have years of experience developing the systems and tools needed to improve quality and affordability in the health care market so their employees get a better value for the dollars they spend. The exchange can learn from their experience, and in doing so can help ensure that individuals and small business employees also have access to better value care.