shandra's  Instablog

Under the aegis of Affordable Care Act, states are mandated to set up health insurance exchanges - online marketplaces for buying and selling health insurance and auxiliary products. Considering the cultural and demographic differences among various US states, the federal government has extended states with an option to design their local state health insurance exchanges based on their local residents insurance needs, health profiles and local insurance market designs. This 'flexibility' for states has however increased design and administrative complexities for insurers.

Most US states are still deliberating about whether they should set up a state exchange in the first place. While most are awaiting the Supreme Court verdict on the ACA constitutionality that can free states of their obligation to set up exchanges, other states such as Maryland, Oregon, Washington, California, Colorado are aggressively working towards setting up a functional health exchange model before the January 1, 2014 deadline. Even among the states actively working towards their health insurance exchanges, the level of health insurance exchange implementation readiness, vastly differs.

Payers and health carriers seems to be caught up in the uncertainties surrounded around these health insurance exchanges and how the payers should align their health products and business structures to quickly and effectively realign themselves with the different state health insurance exchanges. Payers operating in multiple US states face further design and administrative complexities as they need to create flexible systems that can easily be tweaked as per the exchange participation criteria for a particular state.

Before the health insurance exchanges become fully operational, health insurance payers would need to have their business models, market strategies, IT systems and technologies, operational designs etc., well in place in order to easily integrate with the exchanges and fully capitalize on the exchanges' million strong client pool. With approaching deadlines and looming ambiguities on health insurance exchanges, the competition for insurers is likely to heighten that would in turn impact established cost estimates and market strategies for insurers.

To top it all, states have limited or no perception on how payers conduct their businesses. There is obvious variations in the modus-operandi of US payers and states clearly are unaware of these parameters. One cause for worry is therefore that the states may design exchanges based on incorrect assumptions about payers' working models. As per a recent study by Accenture, out of 30 surveyed US states, 18 states consider that it is too early for states to talk to payers on structural and integration concerns, despite the looming January 1, 2013 deadline for submitting exchange model plans to the federal government for approval.

It is highly imperative that payers are engaged in active discussions during states exchange design and implementation plans as the payers form a necessary section of the health insurance exchange models. State exchange administrators need to adopt an active approach and hold engaging interactions with insurers right from the exchange development stage, in order to formulate a holistic and structurally sound health insurance exchange model - in line with the insurers operational models and structural differences.

Author is a well known authority on health insurance Exchange in the US. He is currently looking to expand his expertise in Health Exchange and health insurance exchange available.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Under the aegis of Affordable Care Act, states are mandated to set up health insurance exchanges – online marketplaces for buying and selling health insurance and auxiliary products

Private health insurance exchanges though principally similar to public health insurance exchanges, differ from public health insurance exchanges on some key characteristics. One such distinguishing factor is the implementation time. There are several private exchanges already operational in the health insurance market, with many others scheduled to launch over the next few months. Public exchanges on the other hand are not scheduled to open until January 1, 2014, by which time, the existing private exchanges would have a couple of years under their belt. Thus, by the time the public exchanges roll out, insurers and commercial payers would be able to collect two years worth of operational results and insights through private exchanges and would be able to get some clarity on the best exchange operation practices and methods.

There is a lot of doubt and ambiguities associated with public health insurance exchange with the ACA awaiting Supreme Court ruling and most of the US states reluctant to proceed ahead with their exchanges. To top it all, there is a lack of consistency in various states health insurance exchange implementation efforts. Even if some health insurance exchanges roll out by the January 2014 deadline, there is likely to be administrative and operational complexities after the initial roll out.

Private exchanges are also free from most health reform mandates that provide them greater flexibility in choosing their health products and potential insurance markets. For instance public exchanges are allowed to offer insurance to small businesses with 100 or less than 100 employees, at least for the first couple of years until January 2016. Private insurance exchanges are not obligated by any such reform mandate and can offer insurance to small and large businesses irrespective of their organizational setup.

The defined contribution plan model has gained much traction among the private exchange implementers as it allows them to attract small and large businesses looking for a pre-defined defined contribution health package. Insurer designed CDHP packages frees employers from the complex task of defining employer and employee contribution for health plans. Employers can utilize the exchanges and offer their employees the option to choose from an array of health plans from the options available at the private insurance exchanges. Facilities such as this further reduce the administrative complexities for businesses as exchanges facilitate and assist employees in enrolling and managing their health coverage. Employers just need to decide on the subsidy values that they want to offer their employees.

All healthcare entities are looking for smarter ways to reduce their administrative and health associated costs. Many employers offering insurance coverage to their employees have shown an inclination to exploring health insurance exchanges for administering coverage to their employees. At present as less as 4% of the employers are using the exchange based model to offer coverage to their employees.

Private exchanges stand to benefit a lot from their present market standing as the state exchanges plans for most states are in limbo and employers are looking for new and smarter ways to reduce healthcare costs, increase employees access and choices to various plans and improve the wellness quotient of their employees.

Author is a well known authority on health insurance Exchange in the US. He is currently looking to expand his expertise in private health exchange and health insurance exchange available.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Reduce healthcare administration costs while maintaining the same high quality of dispensed healthcare. This is the complex challenge that is giving sleepless nights to US healthcare insurers and healthcare providers. The challenge is indeed daunting but with careful planning and devising a smart business strategy, insurers can easily meet these federal mandates and business challenges.

There are many ways insurers can cut down on fringe costs. For example, automation of numerous health insurance processes and activities can not only save time and limit resource consumption, but is likely to improve efficiency in application processing and management processes. Similarly adoption of a paperless culture and capitalizing on the internet to share and distribute plan proposals, facilitating online financial payments, online certificates and approvals etc., can not only speed up the insurance processing but can also help insurers save on unnecessary costs.

Healthcare IT companies offer a lot of healthcare insurance applications suite to insurers - applications that can automate various administrative and insurance processing related functions such as automated employee compensation, automated claims processing, distribution of plan proposals, underwriting etc. Insurers that are already partnering with healthcare software companies and using some of these automated processes have managed to contain some of their healthcare expenses.

A smart organization is one that adapts itself to changing market demands and evolving consumer trends. With Internet redefining and restructuring the way people interact and purchase products, for insurers the need of the hour is to quickly adapt to these changing market expectations. Partnering with an efficient healthcare IT company has been helping insurers build a strong presence on the internet and effortlessly switch to online portals for adding, updating or deleting health or finance related data.

Some leading healthcare IT companies promise a seamless system integration phase where businesses can shift their work from one network to another without affecting or impacting the business continuity for their clients. With 24/7 application monitoring and robust systems in place, healthcare software companies are facilitating secure online transfer of data between insurance consumers and health payers. To ensure no loss in data integrity while transferring data through online media, healthcare software companies are following and implementing latest online security standards and protocols such as HIPAA etc.

2014 is going to be a significant year for the US healthcare landscape. The ACA proposed health insurance exchanges are expected to launch and health plans and carriers would feel the need to establish secure channels between the health plans and state exchanges to allow transfer of data between the plans and exchanges. Healthcare IT companies would be in demand more than ever before if the ACA together with its Individual Mandate clause is declared constitutional by the US Supreme Court that is presently mulling over the case.

Insurers stand to benefit greatly if they swiftly adopt online media for selling insurance to their clients as the trend is catching up fast among all insurance companies. To stay ahead of the market competition curve, insurers need to have an efficient IT infrastructure in place.

Author is a well known authority on health care software in the US. He is currently looking to expand his expertise in health care software and healthcare software solutions available.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.