Some states require insurers bid for exchange participation

Insurers planning to sell policies in California's health insurance exchange will have to bid for the opportunity and other states are considering requiring some conditions be met before letting insurers do business through their online marketplaces, Bloomberg reported.

California's exchange, Covered California, said 33 insurers already indicated they want to sell plans on the marketplace, FierceHealthPayer previously reported. But interest doesn't guarantee admittance. "They will not all be in," Peter Lee, executive director of Covered California, said during a Feb. 13 conference call with reporters. "We will select the plans that will be best for California's consumers."

And in Massachusetts, exchange officials are considering holding an auction to determine which five insurers can sell policies to low-income consumers. "Competitive bidding obviously is an attractive concept because it pushes price points down and everyone benefits," Jean Yang, executive director of the Massachusetts Health Connector, told Bloomberg.

But other states fear that already limited market competition combined with the unpredictable number of consumers enrolling make it too challenging to impose restrictions upon which insurers can participate in exchanges. "It's kind of like saying, 'I'm going to negotiate with the car dealer but I don't know what model I want, what features I want, I don't know if I want automatic or stick shift--but I'd like to negotiate price with you,'" Kevin Counihan, executive director of the Connecticut exchange, told Bloomberg. "It's hard to negotiate with no market share."

Insurers, on the other hand, prefer open exchanges, saying they will help ensure premiums are affordable and choices are plenty. "We've always believed that exchanges need to maximize choice and competition," Robert Zirkelbach, spokesman for America's Health Insurance Plans, told Bloomberg. "Efforts to exclude plans from participating in exchanges would have the opposite effect."

The federally-facilitated exchange, which will be implemented in 33 states, won't require insurers to bid for entrance in the marketplaces. Officials within the U.S. Department of Health & Human Services say they believe if an insurer sells an unreasonable or inappropriate policy, the marketplaces will exclude that plan on its own, Bloomberg noted.

To learn more:
- read the Bloomberg article