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5 HIX Challenges for Health Insurers

Margaret Dick Tocknell, for HealthLeaders Media, July 13, 2011

Here are some of the highlights:

1. Health insurers want to participate in exchanges but they're worried. More than 52% of the healthcare executives said their companies plan to participate in exchanges. PwC estimates that HIX will generate $60 billion in premiums in 2014 and that number could more than triple by 2019. So what's not to like? Adverse selection is a big worry. "It's critical that insurers understand the risk adjustment process," said Gitlin. That means developing analytics on the enrollment population, learning about their medical status and understanding how to deliver cost-efficient, evidence-based care to them.

2. Insurers will need to shift from risk selection to risk management. Insurers will need to manage the risk they receive rather than rely on choosing the risk they will manage. Health plans are notorious for rejecting coverage for individuals who don't fit their risk profile. That will no longer be an option. Insurers will be required to cover a minimum level of services identified by the HHS as the "essential health benefits" and no applicant can be denied coverage. Each state will conduct its own actuarial analysis.

3. Insurers prefer the open exchange to the active purchaser exchange but they don't have a say in the design. The open model allows any health plan that meets state and federal criteria to participate in the exchange. This is the model used by Utah and is the exchange of choice for 44% of the survey participants. The active purchaser model, which is used by Massachusetts, requires insurers to compete to be selected to participate in the exchange. Only 10% of insurers like this model.

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