Comparison shows merits of 'active purchasing' on health insurance exchanges
"Active purchasing" on health insurance exchanges can result in lower premiums for better products than passive marketplaces, according to the authors of a post on the Health Affairs Blog.
The authors held up Covered California, the country's most active purchaser, as an example of this model's success over passive marketplaces.
"Covered California has proven that active purchasing can deliver lower premiums for better products than can passive marketplaces," wrote the authors. The result is that California, among only a few states that actively negotiate plan prices, can attract broad enrollment of consumers in the health insurance exchange.
The authors compared Covered California with Florida and Colorado exchanges. Florida offers coverage through the federal exchange, and exemplifies the passive marketplace with minimal regulations of product features and prices. Colorado has a state-based exchange that uses purchasing tools but in a "softer manner" than California and gives insurers discretion in terms of price and performance, the authors note.
Exchanges that serve as active purchasers of health insurance offer consumers a more narrow range of pre-contracted offerings. Covered California rejected a bid from one insurer to sell plans on the state exchange in 2016.
Active purchasing exchanges function much like employer-based insurance markets, the authors said. "The health insurance exchange can do the same, only bigger and better," they argued.
California has also been able to control prices with the average 2016 premium increase only 4 percent across the insurance plans. But not everything has been rosy. Covered California has had enrollment and tax-related issues that have caused consumers to be denied coverage, FierceHealthPayer previously reported.
To learn more:
- read the blog post
Covered California reports modest premium increase of 4 percent
Covered California under fire for enrollment delays, tax issues
4 keys to Covered California's exchange success
California exchange rejects UnitedHealth