In an article in the February issue of Health Affairs journal, William Kramer, executive director for national health policy at the Pacific Business Group on Health in San Francisco, discusses the potential long-term role the public health insurance exchanges could play in helping larger companies manage their health care benefits. In the first part of the interview, Business Finance asks Kramer about the potential impact of the public health insurance exchanges. In a future post, we will discuss some of the key issues Kramer raises in his Health Affairs article.
Business Finance: The state health insurance exchanges created by the health care reform law are slated to be up and running on January 1, 2014. Initially, the exchanges will be open only to small businesses and individuals purchasing health insurance. However, starting in 2017, these exchanges could be open to larger employers. Could this be a game changer for large companies looking to manage their benefits more effectively?
William Kramer: There are two ways that the exchanges could be a game changer. First, if the exchanges are able to align with the purchasing strategies of large employers, they might provide a critical mass and send a consistent signal to healthcare providers about what needs to be done to improve the quality and affordability of our healthcare system. Regardless of whether employers actually use the exchanges, the exchanges, by working in alignment with large employer purchasers, could help drive quality and affordability.
Second, if the exchanges provide an alternative way for people to access health benefits even if employers continue to provide financial support for coverage, employers could offload some of the administrative hassle involved in managing health benefits onto the exchanges. In addition, employers could also offer a wider range of choice to their employees through the exchanges, while employees gain the benefit of greater portability of their coverage.
BF: Although there is still some time before the exchanges come online, are employers analyzing and discussing the issues the exchanges might raise and the opportunities they might provide?
Kramer: I think companies are seriously considering all of their options, but they are waiting before taking any action because there is simply too much uncertainty -- in the labor market, about whether the exchanges themselves will be a viable option, and so on. Health care reform in general could be a dramatic game changer that presents both problems and opportunities with regard to current employee benefit strategies. So companies are taking this very seriously and recognize that it could create an opportunity for some major changes.
BF: Are there possibilities for employers to leverage the exchanges to provide employee benefits starting in 2014?
Kramer: There is a possibility that some employers will use exchanges for their pre-age-65 retirees and part-time workers. However, before they make any move in that direction, employers will want to make sure that the exchanges are working well. I think that most employers would prefer that someone else test out the exchanges first. Then, if the exchanges work well for that employer, others will follow suit. If things go well using the exchanges for pre-age-65 retirees and part-time workers in the short term, then those employers could potentially use the exchanges for all of their employees in the longer term. However, many large employers don't want to be the first ones to try something like this. If someone else tests the waters and if it seems to work, then others will follow.