State exchanges learn how to get down to business

Now that two open enrollment periods have come and gone, states and insurers have their sights set on the future. But before they can discuss 'nice-to-haves,' exchanges need to get their business models down in order to become sustainable.

During the America's Health Insurance Plans Exchanges Forum in the District of Columbia Thursday, two panelists discussed their respective state's ups and downs since open enrollment kicked off in 2013.

Gary Drews, interim CEO at Connect for Health Colorado, started on a high note. During the first open enrollment period, the state exchange signed up 123,000 consumers, dropping Colorado's uninsured rate to 11 percent. For the 2015 enrollment period, the state enrolled 141,000 residents and offered 176 health plans.

That gave consumers many choices and increased competition in the marketplace--but offering so many plans, in turn, ended up overwhelming Connect for Health Colorado.

"This was the first year for renewals, and the experience was mixed," Drews said. "Our budget was $30 million, and we have 45 staff members who transact hundreds of millions of dollars in premiums and tax credits. We renewed 93,000 individuals--but we have to hit a certain volume to become sustainable."

Then there was market disruption. One of the state's carriers dropped prices 15 percent to 20 percent mere weeks before enrollment began. The state had to scramble and drop prices statewide. "Combined with renewals, we thought a crash would happen," Drews said. "If someone was set up to auto-renew, then their costs would go up 77 percent--some cases as high as 200 percent. It's a good head's up for other states: It only takes one carrier to cause a disruption."

Carolyn Quattrocki, executive director at Maryland Health Connection, noted that the state's first open enrollment period was anything but smooth. Plagued with technical issues, insurers in Maryland were unable to directly handle payments, while consumers had trouble choosing plans.

"We knew a change needed to be made, so we adopted Connecticut's exchange's technology and platform, which proved to be successful," Quattrocki said. "We've realized the marketplace is more than a website. Ultimately, it's a business. We're still figuring out ways to become more sustainable and retain consumers by meeting their expectations."

As Drews put it: "Sometimes you've got to wade through the muck to see the other side."