Officials, lawmakers get preview of health plan clearinghouse
White House officials and members of Congress have been meeting with a Silicon Valley-based firm to map out how the centerpiece of President Barack Obama’s healthcare reform will look when it is finally implemented.
The company is eHealth, Inc., which is competing to provide the health insurance clearinghouse that Obama and Democratic leaders say will revolutionize healthcare in America by promoting competition.
Policymakers and lawmakers are learning from these meetings that Internet-facilitated insurance applications will make it a lot easier to buy policies but they likely will not reduce costs as significantly as some Democrats promise.
And one expert at the company who has consulted with members of Congress says that health exchanges would proliferate even if Congress didn’t pass a $1 trillion overhaul.
As it turns out, eHealth has already set up an exchange in Utah, one of only two states in the U.S. (the other is Massachusetts) to operate a statewide health insurance clearinghouse. The company also operates two private exchanges in Massachusetts, a state that has served as a model for federal reform plans.
Insurance exchanges are at the heart of the Democratic healthcare proposals, and the subject of an intense policy disputes on the Senate Finance Committee.
Sen. Ron Wyden (D-Ore.), a member of Finance, is battling with his Democratic colleagues to make health insurance exchanges available to all Americans. The pending proposal would limit them to the minority of Americans who do not receive insurance through an employer.
Sen. Robert Menendez (D-N.J.), another member of Finance, has objected to chairman Max Baucus’s (D-Mont.) decision to bar illegal immigrants from buying insurance over the exchange. Menendez argues that the chairman’s draft would unfairly exclude illegal immigrants from reaping the benefits of market competition.
Wyden summed up the promise of exchanges in a recent New York Times op-ed: “Empowering Americans to choose from a broad selection of health plans would turn the tables.”
“The various bills making their way through Congress would, as the president explained, provide some consumer choice by establishing large marketplaces where people could easily compare insurance plans and pick the one that best suits their needs,” Wyden wrote.
Wyden’s gripe is that the Baucus plan and others “would not make the exchanges available to all Americans.”
He estimates that allowing the more than 200 million Americans who receive coverage through their employers to participate in healthcare exchanges would save $360 billion over 10 years and improve quality.
John Desser, the vice president of public policy and government affairs at eHealth, however, puts that sunny projection into some context.
“I wouldn’t expect premiums to come down; you’re more likely to see a reduction in inflation."
Desser said he also is not aware of premiums coming down in Utah or Massachusetts, which already has statewide exchanges. (Utah has had one for a few months and Massachusetts is two years into its reform.)
Some activists in Utah have questioned the impact of the statewide exchange.
“The Utah Health Exchange is not health system reform,” argues Dr. Joe Jarvis, founder of the Utah Healthcare Initiative, which advocates for reducing wasteful healthcare spending. “It is a new way to buy an old and wasteful product: health insurance. It is the most recent iteration of the wishful thinking about markets and healthcare which characterizes American healthcare policy.”
Desser also said that statewide exchanges would arise on their own even if Congress didn’t spent $775 billion to a trillion dollars to overhaul the nation’s healthcare system. He predicted if the legislative push collapsed consumers would see as many as six states set up health insurance exchanges in the following year.
But he said that government mandate for state insurance exchanges will certainly cause millions of Americans to enroll in these clearinghouses faster than if policymakers let the market takes its natural course.
Desser or other eHealth executives have had meetings with the behind-the-scenes players crafting the Democratic overhauls. They have met with senior aides to Baucus, House Energy and Commerce Chairman Henry Waxman (D-Calif.) and House Majority Leader Steny Hoyer (D-Md.).
They also have met with pivotal Democrats on the Senate Finance and House Energy and Commerce panels, such as Wyden, Sen. Blanche Lincoln (Ark.), Sen. Bill Nelson (Fla.), Sen. Tom Carper (Del.), Rep. John Dingell (Mich.), Rep. Jane Harman (Calif.) and Mike Ross (Ark.).
They have persuaded Democratic lawmakers to allow private companies to compete with government agencies in making healthcare exchanges available to consumers. Some liberals initially resisted the idea but after conservative Democrats in the Blue Dog Coalition got behind the idea, it became established in the pending bills.
Nancy-Ann DeParle, Obama’s White House czar, has gotten a sense of what an exchange would look like from eHealth. She bought a policy for her nanny through the company’s platform, according to Desser. One of DeParle’s deputies has met with eHealth to get a better sense of how exchanges work in the real world.
One public relations expert working with eHealth described healthcare exchanges as “Orbitz for healthcare.”
Consumers won’t find lower prices on Orbitz than they would if they called the airlines. But Orbitz, like healthcare exchanges, makes it much easier to comparison shop.
But sometimes things don’t work out as smoothly in practice as envisioned in theory. Anyone who has booked a cross-country flight to Seattle on Orbitz or Travelocity only to wind up in the middle seat of the back row next to the bathroom knows that.
If Congress passes a law that requires all Americans to sign up for health insurance and bars companies from discriminating on the basis of pre-existing conditions, as is expected, applying for a health policy will become much quicker. Insurance companies will no longer spend weeks assessing the risks of insuring individual patients.
“It will be a race for market share,” said Desser.
Consumers who turn on their computer and click on a state-run health exchange or a site created by eHealth will find out in minutes what government subsidies they qualify for and the cost of their monthly payments. They’ll even be able to print out a new insurance card and go to a doctor that same day.
But Desser explained that their choice of insurance plans would be the same as now. The big difference is that consumers may be able to also choose health insurance from a member-run co-op or a government-run plan (the public option). Advocates of co-ops and the public option argue that these government-created competitors will drive down costs, but by how much remains a matter of fierce dispute.