Health exchanges are coming to Texas, whether
Gov. Rick Perry approves or not.
Perry says the state won’t implement a public exchange
for individuals and small businesses to buy health insurance, as permitted
under the Affordable Care Act. If that position holds (a Perry spokeswoman said
there had been no change), the feds will step forward and create one for Texas
by 2014.
Well, the marketplace isn’t waiting that long.
Some private exchanges are debuting early next year, organized by companies,
rather than the government. If Tuesday’s election wasn’t a referendum on
Obamacare per se, the private sector is endorsing a key part of the law —
creating an online marketplace that has more choices and clearer prices.
Exchanges could revolutionize the way most people
get health insurance, similar to how 401(k)s supplanted private pensions and
changed retirement planning almost 25 years ago. In fact, they’re often called
defined-contribution health plans, because as with a 401(k), employers
typically contribute a fixed amount, and employees decide how to spend those
dollars on health insurance.
Early adopters are Sears and Darden Restaurants,
whose eateries include Olive Garden, Red Lobster and Eddie V’s. In open
enrollment, beginning Monday, full-time Darden employees will choose from
several insurance carriers and decide the level of coverage for 2013.
The company will contribute a fixed amount — the
same as last year, plus a bump for inflation, a spokesman said. And employees
will pay the difference. Those who want lower deductibles, lower co-pays and
richer pharmacy benefits will have to contribute more.
“It’s a grand experiment, but it’s time for grand
experiments,” said Ken Sperling, leader of the health exchange strategy for Aon
Hewitt, which designed the system adopted by Sears and Darden and targeted at
companies with 5,000-plus employees.
The trend is just starting.
In an Aon survey of 562 companies, 4 percent said
they offered an exchange model, and 44 percent predicted it would be the
preferred approach in three to five years. The number of employers providing
traditional health plans was projected to decline by more than half.
Aon Hewitt says that more than 100,000 people are
enrolling through the exchange for next year, including 6,000 workers in Texas.
“I can see these exchanges becoming mainstream,”
said Paul Fronstin, senior research associate with the Employee Benefit
Research Institute in Washington. “It’s a fundamental change, but it’s also a
baby step.”
The big change is in the fixed funding and
decision-making, which shifts so much control to workers. The baby step, he
said, is that employers will remain involved in the process, choosing the
universe of offerings and collecting premiums through payroll deduction.
Most 401(k)s are run in a similar way. Employers
usually select a mutual fund company and a list of investment options, and make
a fixed contribution. Workers decide how much money to add and which funds to
invest in.
Private-sector health exchanges aren’t directly
affected by public exchanges, except that the long debate on health reform
raised awareness and interest. Advocates talked about health exchanges as the Travelocity
of insurance, empowering buyers to mix and match.
Even small businesses, which have worried about
complying with the health law, have been enthusiastic about exchanges.
Companies with more than 100 employees won’t be permitted to join the public
exchanges until at least 2017, and some big employers want to get in the game
sooner.
Employers are drawn to the system in the hope
that competition among insurers will slow the rise in health costs. While
exchanges don’t address chronic illnesses or fee-for service medicine, they do
offer a more predictable expense and offload much of the management burden.
The most frequent criticism is that companies
will shift more health care costs to employees. That trend has been under way
for 15 years. Employers and workers are both contributing almost twice as much
for premiums as a decade ago. And many companies have shifted costs by
increasing deductibles and co-pays, and shaving some coverage.
Aon Hewitt signed up nine insurers, including
UnitedHealthcare, Cigna and several Blue Cross and Blue Shield plans. It offers
bronze, gold and platinum coverage tiers to reflect the level of benefits.
State exchanges will use the same terms, designed to let buyers compare
products from different insurers.
In May, Blue Cross and Blue Shield of Texas plans
to unveil an exchange for small companies with 50-plus employees. Unlike Aon,
all its choices will be with Blue Cross; the variety comes in the range of
coverage.
Potential customers want to know if the company
is gearing up to compete with public exchanges, said Darrell Beckett, senior
vice president. He tells them that Blue Cross plans to be in those markets,
too.
“We know that people move from place to place,
and we want to be there,” Beckett said.