Health Insurance Exchanges Should Support Consumer Choice

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Health Insurance Exchanges Should Support Consumer Choice The Affordable Care Act depends on states to establish Health Insurance Exchanges with the goal of making it easier for individuals and small employers to shop, compare, and enroll in health insurance coverage. Many policy choices will determine how successful Health Insurance Exchanges will be in assuring that consumers and employers have a wide choice of attractive products over the long term. Position: A founding principle of our coalition is that health insurance exchanges should promote consumer choice by encouraging competition. We support designing exchanges in a way that gives consumers a wide array of plan choices: 

Exchanges should Maximize Health Plan Participation and Consumer Choice. To keep exchanges competitive and maximize plan options to consumers, it is critical that choice not be restricted via an “active purchaser” exchange, where government decides which health plans are available. Giving exchanges the ability to pick and chose health plans would:

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Limit Consumer Choice and Undercut Competition Based on Value. Limiting the number of health plans would stifle competition and ultimately fail to provide choices consumers want. This happened to state purchasing cooperatives in the 1990s, which were typically limited to HMOs and failed to attract significant numbers of small employers. To maximize choice for consumers and encourage plans to compete based on value, exchanges should allow all qualified health plans to participate.

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Limit health plan participation. The cost of developing products for exchange participation will be substantial. If health plans know that they will be accepted for participation if they meet specified standards, and more plans will be willing to invest in the infrastructure to participate resulting in greater competition.

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Force Consumers to Switch Plans. Limiting the choices available on exchanges will force many consumers to drop their current health plan to obtain coverage through an exchange. Given that subsidies are only available through exchanges, many consumers will find themselves having to choose between their current plan (and its provider network) and subsidized coverage available through the exchange. This would be magnified by exchanges that limit plan choices, and consumers could even be forced to change health plans annually as the mix of plans selected varies from year to year.

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Exchanges Tools Will Empower Consumers to Navigate Plan Choices. Some have argued that “too much choice is no choice” – that allowing all qualified plans to participate on exchanges will provide so many choices that consumers will be overwhelmed by the choices available. This position fails to take into account the tools that exchanges will provide to facilitate consumers’ plan selections. Exchange websites will provide consumers with the ability to sort plans by features such as price, level of coverage and cost-sharing, quality, and networks. These features will make it easier for consumers to find the plans that best suit their needs. Where consumers have trouble shopping or picking plans, they can get extra help from navigators or agents. This provides the best of both worlds – savvy consumers will have access to the products that are right for them, while those who can’t navigate exchanges can obtain help in selecting a plan from experienced professionals.

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Consumers are Better Suited to Determining What Products the Market Should Offer than Government. There are very few instances where government has demonstrated that it is better in giving consumers the choices they want at an affordable price than the private market. Americans place an intrinsic value on competition, which is the driving force behind a healthy

free market. In a free market, where consumers pick winners and losers, products succeed because of market demands, not political whims. 

Federal QHP standards are Substantial. Some advocates claim that an “active purchaser” is necessary to keep out “lousy plans.” However, the reform law already includes a comprehensive array of requirements for health plans participating on exchanges that will keep out plans that are not meeting stringent standards. These include requirements to:

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Offer plans that meet essential benefit requirements; Offer plans that meet actuarial value requirements; Ensure sufficient choice of health care providers; Be accredited for clinical quality measures; Implement and report on a quality improvement strategy; Provide uniform coverage summaries; Comply with transparency and disclosure requirements; Comply with marketing requirements; and Comply with insurance reform requirements.