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Promoting Healthy Competition in Health Insurance Exchanges: Options and Trade-offs
Policy Analysis Examines Benefit and Premium Standardization of Exchange Insurance Products
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Written by Chapin White, Ph.D., a senior researcher at the Center for Studying Health System Change (HSC), the analysis examines five key design decisions related to the degree of benefit and premium standardization of health insurance products sold in the exchanges.
“Within broad federal guidelines, states inevitably will make different policy decisions, but all states will face a similar set of trade-offs,” according to the analysis. “The most basic trade-off is between simplicity and flexibility—a highly standardized health insurance market simplifies the consumer shopping experience and intensifies insurer competition but limits insurers’ flexibility to develop innovative products.”
Under national health reform, new federal rules will govern the nongroup and small-group health insurance markets, including a requirement for state-based health insurance exchanges, or marketplaces, to be operational by Jan. 1, 2014.
According to the analysis, “There are at least three rationales for standardizing plan designs in the new health insurance exchanges: promoting price competition, preventing favorable selection by some plans through designs that would encourage healthy people to enroll, and determining which plans qualify for subsidies and satisfy the individual mandate for coverage.”
As federal and state policy makers implement state-based health insurance exchanges, they will face many important questions about the design and operation of the exchanges, including:
The Policy Analysis—Promoting Healthy Competition in Health Insurance Exchanges: Options and Trade-offs—is available online at www.nihcr.org.
The National Institute for Health Care Reform contracts with the Washington, D.C.-based Center for Studying Health System Change to conduct high-quality, objective research and policy analyses of the organization, financing and delivery of health care in the United States. The 501(c)(3) nonprofit, nonpartisan Institute was created by the International Union, UAW; Chrysler Group LLC; Ford Motor Company; and General Motors to help inform policy makers and other decision-makers about options to expand access to high-quality, affordable health care to all Americans.
The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nations changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is affiliated with Mathematica Policy Research.