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Challenges Await State Insurance Exchanges

August 2, 2010
by David Raths
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States shouldn't rush the process of developing exchanges, according to expert

On July 29 the Department of Health and Human Services (HHS) announced the availability of up to $1 million in grants per state to help states begin work to establish health insurance exchanges. The Patient Protection and Affordable Care Act, federal healthcare reform legislation passed in March, authorized grants to the states to help them design and establish exchanges in time for Americans to choose coverage for 2014.

In a recent interview, DawnLynne Kacer, public sector national healthcare practice lead for the Boston-based IT services firm Keane, talked about the challenges states will face in getting the exchanges up and running. Some states, such as Tennessee and Utah, which are further along in healthcare reform, have a head start on portals around Medicaid, she said. In its experience with expanded insurance coverage, Massachusetts learned that it had to bolster education and outreach to the younger set of individuals who are not covered.

Kacer said states shouldn’t rush the process of developing the exchanges. “One of the things we have learned from state health IT efforts is that planning is key. Some states have made progress on portals for Medicaid, Children's Health Insurance Program (CHIP), and high-risk pools,” Kacer said. “But when you add in the small group market and the commercial insurance market, the sheer volume of information is daunting.”

Kacer stressed that insurers often strive to prevent apples-to-apples comparisons of what they offer in terms of deductibles, co-pays and co-insurance. One question is how a state is going to present that information so consumers and small-business owners aren’t comparing apples to oranges. “It’s going to be very challenging,” she said.

Kacer believes that states have to make sure they do a good job of engaging consumers. She suggested having a call center staffed by insurance experts so that individuals and small-business owners can get help. “When residents back what the state is doing, then hospitals and businesses will realize they need to support the state effort as well,” she added. “So you have to understand the flows in the whole ecosystem.”

Each state can operate its own exchange or partner with another state on a regional effort. If a state decides not to create an exchange for its residents, HHS said it would establish one on its behalf. The first round of grants will help pay for research and planning.