Private health insurance exchanges will thrive no matter what action the Supreme Court takes on the matter of the Patient Protection and Affordable Care Act,. That's the collective opinion three panelists offered during a Wednesday session at the annual conference for America's Health Insurance Plans in Salt Lake City.
The future doesn't look quite as rosy for government-run exchanges, which could lose their funding mechanisms if the Supreme Court's decision results in significant changes to the Obama administration's healthcare reform law.
Private exchanges are commercial health insurance marketplaces typically run by insurers and employee benefit consulting firms. While government-run exchangess are very prescribed, private exchanges have more freedom to define the benefits and services they offer.
The panel looked at three potential Supreme Court outcomes and offered scenarios depicting how private exchanges would likely be affected:
Scenario #1: The ACA is struck down
"Private exchanges will have a future with or without national healthcare reform," says John Rich, CEO of NPH Health, which operates a private exchange with 150,000 lives in Massachusetts, New Hampshire, and Rhode Island. NFP Health was in business before national healthcare reform was enacted.
Rich explained that there's a strong push in the health insurance market to provide self service tools that enable consumers to access and manage their healthcare benefit functions and purchases. He says private exchanges are freer to meet those needs than government-based health insurance exchanges.
He noted that wellness programs are being weaved into private HIE and offer individuals and small groups access to a service they normally wouldn't receive. Also the private exchange platform can provide data about providers and hospital networks. Educational programs that are normally the purview of large companies with human resource departments can be scaled for small companies and individuals on a private exchange platform.
Chris Condeluci, an attorney with law firm Venable, with experience on Capitol Hill, notes that private HIE like NFP Health, existed before the healthcare law, so "obviously there's a market for them." He says private exchanges will survive even if the ACA is struck down because the exchange mechanism itself has bipartisan support in Congress. Condeluci served as tax counsel for the Senate Finance Committee when the healthcare reform law was being crafted.
If the law is overturned, he says policymakers who like the exchange concept will encourage its private market development over the more regulated model now in place.
Scenario #2: Individual mandate is struck down but the ACA stands
This is a worrisome option for insurers. Rich predicts that if the individual mandate were to disappear and guaranteed issue were to remain, then "health insurance prices will sky rocket."
If both the mandate and guaranteed issue disappear, he expects that consumers will need more help in making their healthcare purchases. He sees private exchanges as filling that gap. Consumers, he says, would be open to different shopping experiences and insurance carriers will be in a position to be more creative in their product offerings such as bundling and offering discounts to keep consumers engaged in the HIE over the long term.
Condeluci notes that one of the goals of healthcare reform is to make the individual market more functional. If the mandate is struck but guaranteed issue and community ratings remain, he contends that private HIEs could become something of a "safe harbor" for consumers and small groups to navigate the market, especially if the exchanges include education tools and decision support systems.
Condeluci doesn't expect the group market to be affected if the individual mandate is struck down. If prices increase, then private exchanges could be "an appealing option" for employers who want to move from a "one-size-fits-all insurance benefit model" to a defined-contribution model, which allows employers to simply subsidize coverage. The exchanges would take on everything else associated with the coverage.
Scenario #3: The ACA is upheld
This scenario would be the green light for private exchanges to accelerate development, says Sanjay Singh, CEO of hCentive, a healthcare technology provider. "I see hundreds of these exchanges developing. The floodgates will open."
When he was with the Senate Finance Committee, Condeluci says he worked with Sen. Grassley (R-Iowa) and Sen. Baucus (D-MT) to develop a model for the exchanges. "We wanted to model the exchanges after private exchanges with private market solutions as opposed to what became part of the law."
If the Affordable Care Act is upheld, he says there may be some concern that the private exchanges will compete with public ones. Condeluci says it's more likely that states will view the private exchanges as an additional distribution channel and develop partnerships with the private exchanges. "They can tap into those exchanges in order to get more people covered by health insurance."
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Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
