In just a few short months, new state and federally run Health Insurance Exchanges (now called Marketplaces) will open for business and significantly change how millions of Americans buy health insurance. Driven by provisions of the Affordable Care Act taking effect in 2014, this new marketplace will offer a broad range of coverage requirements such as guaranteed insurance regardless of pre-existing medical conditions, coverage for more preventive services and the expansion of Medicaid. Millions of previously underinsured or uninsured Americans will benefit. However, as access to more health care services increases we will face some challenges in maintaining affordability for everyone.
Government subsidies will be available to people who qualify and will be funded through new taxes and fees levied on health plans, pharmaceutical and medical device companies. There is no doubt that government subsidies are essential if we are to increase coverage for people with lower incomes. But we must recognize that by applying new taxes only to the health sector, we are in essence making health insurance more affordable for the subsidized population by making health insurance more expensive for the unsubsidized insured population, as these additional costs will be passed on through higher premiums.
Setting the health sector taxes aside, the distribution of premium payments between the old and or unhealthy, and young and or healthy is also changing. The good news is that older, less healthy people may find their premiums reduced from what they pay today. However, to help maintain these reduced premiums, younger, healthy adults will most likely see their costs increase, which may in turn incent them to opt out of insurance.
We have to find a way to make the expansion of coverage to the uninsured, and reduction in premium costs to the older population sustainable. Two important actions should be taken: 1.) Repeal the health sector tax so the currently insured do not carry this additional cost burden. Congress has begun to understand the impact of these taxes but there is more to be done and 2.) Increase the participation rates of young adults. While there are many groups working on this effort, the fundamental lesson of health insurance – one that every experienced insurance executive understands – is that those who need coverage the most will quickly sign up for it, and those who will use the coverage the least must be aggressively sold on the benefits of buying coverage. Failure to heed these lessons will jeopardize the long-term viability of the Health Insurance Exchange program.
So what are we to do? The simple answer is to keep working the problem from all sides. All stakeholders, including health plans, hospitals and doctors, and employers must continue to push for repeal of the health sector taxes and increased enrollment of young adults in the Exchange. To that end, Insurance regulators and Exchange administrators should resist the desire to set rates in such a way that are more attractive to one age group over another. To avoid the potential for unintended consequences, all plans should be reasonably priced based on rates that are actuarially sound and competitive.
And finally, as health care consumers, we must step up to a new, more active role in the health care system. Starting next year, we will be at the center of this new health care marketplace. To effectively participate we need to take the time to become more informed about our choices, and figure out how to get the greatest value from our health plans. We must learn how to better navigate the system, and take advantage of the health and wellness tools, programs and services offered to us. We owe it to ourselves and to our families to seize this new opportunity to take charge of our health and financial well-being. We also owe it to our country to do our part and help make the system work better for everyone.