As private health insurance exchanges continue to gain steam--albeit possibly slower than expected--they still struggle with a fundamental flaw, writes Forbes contributor John C. Goodman.
The good news is that private exchanges, in which an employer sets a standard contribution rate and allows consumers to shop for their own health insurance, tend to offer more customer-support tools than their public counterparts, Goodman notes.
But the bad news is that in both types of exchanges, health plans "don't add to their bottom line by becoming good at cancer care, diabetic care or at any other expensive-to-treat disease."
So to change the status quo, Goodman offers the following ideas:
- Manage aggressively. Take a cue from the Office of Personnel Management, which "prevents the worst abuses" of insurers acting in their own self-interest with its oversight of the Federal Employee Health Benefits Program, Goodman suggests.
- Choose only one insurer. This is risky, as it can rob consumers of the benefits of competition. But the strategy can also keep insurers from gaining financially by shifting its most costly patients onto another plan.
- Rethink risk adjustment. Private exchange operators can look to Medicare Advantage for an example of a successful, sophisticated risk adjustment system that delivers health plans a total premium that is actuarially fair, according to Goodman. Another option, though, is to allow the health plans themselves to administer risk adjustment, he notes.
Employers can also improve the efficiency of their private exchanges by including centers of excellence, telemedicine and wellness programs, notes a July report from the firm Leavitt Partners.
Private exchange enrollment reached 6 million in 2015, and is expected to reach 40 million by 2018, FierceHealthPayer has reported.
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