The Current State of Our Nation's Public Exchange Programs and the Rise of Private Exchanges

In a panel discussion moderated by Neil Minkoff, MD, CEO of FountainHead HealthCare, panelists examined the current state of healthcare exchanges, both public and private. Panelists included Dennis Falci, MBA, director, US managed markets training, sales training and leadership development, Sanofi-Aventis SA; Thomas Kaye, director of consulting pharmacy, Prescription Formulary Exchange, LLC; and Sheri Sellmeyer, vice president, market analysis, HealthLeaders-InterStudy, a Decision Resources Group Company. They analyzed the current benefit models required by public exchanges, and the rising popularity of the private counterparts, offering a glimpse into the new healthcare marketplace now unfolding.

One of the major topics of discussion was resistance to mandatory health coverage, particularly among younger Americans. Falci, drawing on his own experiences, surmised that many of those who are young and in good health do not want to "overinsure" themselves with insurance plans that cover services generally utilized by older participants, especially when those plans come with high deductibles. Similarly, high co-pays and costly treatments could sway people to voluntarily decline pharmaceuticals and could promote non-compliance. The panelists agreed that these deterrents could very well hinder the success of the healthcare marketplace, and that individual states and insurance companies may need to offer funding, especially in the form of co-pay assistance, to help stimulate the exchanges. "The federal government and the Obama administration has a lot riding on the success of this," Falci said. "So, if you can show that this may be a prohibitor to its success, you may see funding following behind it."

There is hesitance on the other side of the exchange, as well. With only a few months allotted for open enrollment, some insurance companies are holding back from the marketplace (in some cases, only in certain states) because of the uncertain outcomes. As an example, Sellmeyer pointed out UnitedHealthcare, which is participating in the Texas exchange where it is "competitive," but is refraining from participation in many other states. With the American public's engagement in the marketplace and the feasibility of operating a healthcare exchange both in question, the success of the public exchange still remains to be seen.

The discussion also touched upon the growing trend of private exchanges, a strategy that, according to Sellmeyer, may help large employers keep their costs down. By offering a defined-contribution to employees, and in some cases retirees, employers could potentially spend less money than they would on a traditional group health insurance plan and also keep the market competitive. Some companies that have implemented private exchanges are Walgreen's, IBM, General Electric, and Sears Holdings.

Panelists also predicted that accountable care organizations (ACOs) will enter the healthcare marketplace as well, offering their own exchange plans. "Accountable care organizations are the one part of the Affordable Care Act that both sides can agree on," Falci argued, and a "narrow network" of ACO plans will therefore be embraced by everyone.