A recent post by hCentive in their Healthcare Reforms blog: "Private Exchanges will boost Healthcare Reform" was an interesting read. Yet, as potentially promising as this sounds, NY rates for small business continue to go up by huge percentages as players continue to pull out. By example, despite the 9% numbers otherwise suggested in surveys and polls, my small company's renewal rates went up 40% this year after a similar increase last year. Even with the soaring rates, shortly after the increased renewal was offered, our insurer sent another letter telling us that policies would no longer be available in NY after April 2012.
You may be wondering what this has to do with the Private Exchanges. It's simple, if we don't solve at least some of the underlying issues related to the cost to provide healthcare (a few examples):
1) an overwhelming administrative burden (some estimates say 30%+)
2) a lack of available providers
3) overwhelming malpractice burdens on providers
4) defensive medicine or unnecessary testing, treatment (Why Doctors Order So Many Tests)
5) reimbursements to providers that barely help them keep the lights on
5) fraud and abuse
6) games insurers, PBM's (prescription benefit managers) play to restrict treatment and/or reimbursement
7) PBM's making huge profits, instead of those dollars being spread across today's actual healthcare value chain: ie: providers, patients/employees and employers paying for the plans. I believe this only gets worse if the Express Scripts acquisition of Medco Health Solutions is approved.
There are so many more examples, any combination of which solved would improve outcomes and lower costs throughout the system.
As I was saying, if we don't solve at least some of the underlying issues related to the cost of delivering healthcare, how will exchanges work, let alone fix anything? Implementation of the exchanges at the state level was the right start, but we must address some of the above issues to resolve the NY example of insurer's abandoning their provision of coverage here. We need insurers offering geographically localized versions of their coverage, so that people can select their providers based on their needs and the differing local variables of where they choose to live. At the same time, the last thing we want to see is insurer's doing so by selectively domiciling in a state where they have rights to exploit patients and/or providers who don't understand the rules; the result being denied coverage or reimbursement in the time of need, without protection from established government agencies.
If you are not sure what I am suggesting, take out one of your credit cards and look at the back to see where your bank is located. They selected the particular state becuase that is where the rules give them the most rights, leverage, etc. vs their customers (yes, I said customers). Currently, the protections for patients and their rights falls within the states. We don't want to build out new, redundant agencies or infrastructure at the federal level for the sake of expanding government. It would only further add cost, confusion and levels of bureaucracy who's cost and negative effects would be masked within unnecessary growth of the Federal Government.