1. How to Design an Insurance Exchange?

2. 2014: Open enrollment: Oct 31,2013-March 31,2014
Last minute extensions up through mid-April
8 Million signed up during open enrollment
5.4 in federal exchange
2.6 in state-run exchanges
2.2 million are young adults (18-34)
3.8 million enrolled in the March Surge
1.2 million young adults

5. What plan did they buy?
Total
State-run
Federal-run

6. 2015 (so far) Open enrollment: Nov 15-Feb 15
As of 2/11: 7.75m signed up via HealthCare.gov (37 states)
275,000 signed up between 1/31-2/6 alone
Additional 2.4m over 2014 have signed up via state-run exchanges (13 states+DC)
Obama’s facebook video (2/17) – 11.4 million enrollees
CBO Target: 12 million; Obama target: 9.1 million
Source:

7. 2015 (so far) Average subsidy (healthcare.gov): $268 per month
People paying ¼ of premium
King v. Burwell – Arguments March 4
RWJ estimates 8.2 million would not have health insurance if they get rid of the subsidy on the federal exchange

8. How did you get non-group insurance before the exchange?

9. Pre-ACA: Disorganized marketplace
Any insurance company can offer (subject to state-specific regulations on price/acceptance)
Insurance company largely in charge of design
No central information about who is participating in the market/price
Little risk-adjustment, so lots of incentive for insurance company to “cherry-pick” or “cream-skim”
Pre-existing conditions clauses, active marketing.
No mandate, so insurance pool is relatively high risk
No meaningful cost containment/price limitations

10. How to Manage Competition
Set structure
Have companies bid to participate
Price, quality, (name recognition)
Transparency
Public plan option?

11. Risk Adjustment Try to avoid cream-skimming
Part C: offices on the 6th floor walk-up
NL: over-reimbursed diabetes care intentionally
CH: Unsophisticated formula doesn’t work;
USA: we don’t have good data on new enrollees to do a sophisticated one.
Exclusive market vs. competing market

12. Enforcement IRS= FEAR. Eligibility: could change on a monthly basis.
Buettgens, Nichols and Dorn 2012
6.9m Medicaid <-> Exchange
19.5m Medicaid <-> Ineligibility for subsidies
3m Exchange <-> ineligibility for subsidies
 Total: 31% of the Medicaid+Exchange eligible

13. Quality Of Insurance: Minimum creditable coverage
Federal standards (as of now)
NL: Elected officials MUST take the minimum benefit
Can help with risk sharing
Of care/care delivery: Need data
Right measures
Nursing Home Compare

14. MA, NL, and CH Need to reform health care purchasing market
Payment structure
Global payments (NL, BCBS)
Accountable Care Organizations (ACOs)
Selective contracting?
ACA: Publish standard charges – enough?
Are insurers the right ones to get cost containment?
Do they have the tools?
Do they have the bargaining power? Now, or after ACOs?
How much power does the exchange board have to negotiate with insurance companies?

15. Federal vs. State-level exchange?
Bargaining power of the exchange vs insurance companies vs hospitals
Ability to pool risk

16. How do people chose plans on the exchange?
NL: very few people switch => must be optimum
Abaluck and Gruber (2011): Part D: many ex-post sub-optimal decisions
Ericson and Starc:
Why bronze/silver/gold?
They don’t look like ESI purchasers
Maybe room for heuristics, but not definitive
Significant Heterogeneity in the price sensitivity by age