The success of health care reform, with its promise of affordable coverage for all, is expected to depend on the establishment of competitive health insurance marketplaces - virtual shopping malls where employers and their employees can compare and purchase affordable health coverage.  

Virtual insurance marketplaces paving the way for efficient health care reform

The success of health care reform, with its promise of affordable coverage for all, is expected to depend on the establishment of competitive health insurance marketplaces - virtual shopping malls where employers and their employees can compare and purchase affordable health coverage. 

The design and establishment of these marketplaces is one of the most pressing issues facing many state legislators now and in the coming year. 

The U.S. Department of Health & Human Services last month awarded nearly $49 million to help 48 states and the District of Columbia plan for the establishment of their virtual health insurance marketplaces.

 We spoke to Marc Arrouet, Senior Product Manager for Ceridian Exchange Services, a subsidiary of Ceridian, about these Web-based insurance marketplaces and what they mean to employers and their employees. 

Why are states looking into establishing insurance marketplaces? 
Some states have been working on developing these marketplaces for quite some time now as a way to create a centralized system where small businesses can help employees get affordable health coverage. Small businesses often do not have the buying power of large corporations and are not able to spread insurance risks as easily, which can make health coverage difficult to afford. Massachusetts was the first to create such a marketplace, followed by several states since then. 

Now, under the Patient Protection and Affordable Care Act, every state is mandated to establish its own insurance marketplace, or exchange, by January 1, 2014, or have the federal government run one on its behalf. 

Beginning in 2014, employers with 50 or more full-time equivalent employees will either offer health insurance that is "qualified and affordable" or opt out and pay fines to the government. Those with fewer than 50 full-time equivalent employees are exempt from the mandate, but would still need to decide whether to offer employer-sponsored health insurance. 

The exchanges are designed to facilitate the process of obtaining insurance for those individuals and families who are not offered health care coverage through their employers. 

What will these insurance marketplaces eventually look like? 
The goal is to bring together insurance carriers, business consortiums and consumers for greater access to affordable, quality health care and services. The marketplaces will be virtual, accessible through Web portals that will allow small businesses and consumers to shop, compare and enroll in affordable health insurance plans offered by private companies. 

What kinds of businesses will be affected? 
The health insurance exchanges will focus initially on providing an alternative to traditional coverage to small businesses that do not offer employer-sponsored health coverage today. Each state will determine what eligibility criteria will be established. They might first target, for instance, businesses with 50 or fewer employees. Later, in 2017, states may decide to allow larger businesses (with fewer than 100 employees) to participate. 

For a small employer, what are the advantages of enrolling in such a state-based program? 
Every small employer will have to determine if enrolling in an exchange is right for them. 

But for a lot of employers, they would now have an opportunity to provide their workers with access to affordable health care benefits - something they might not have been able to do before. For years, health care benefits have been beyond the financial reach of many small employers and their workers. Rising costs, complicated administrative processes and a general lack of quality information have made access to quality health care coverage almost impossible for small businesses. These marketplaces are meant to change that. 

Second, these programs offer small employers predictable health care costs, depending on your company's enrollment levels. You can provide your employees options for coverage in a comparatively low-cost manner, with minimum set-up and monthly fees. Also, enrollment in these marketplaces is designed to be easy, with significantly less time spent on administrative processes. For instance, as an employer, you might only be responsible for calculating and deducting monthly premiums from your payroll, as well as informing your employees about the program. 

Finally, the exchanges are designed to save your company money by offering you tax credits. This can help keep your business more competitive in a challenging economy and rapidly changing marketplace. 

Why would employees be interested in it? 
These marketplaces are designed to provide employees access to a "one-stop shop" for researching, comparing and purchasing health insurance at competitive prices. There will be levels of coverage from which they can choose, so they can select the health plan that best suits their unique needs and their families' needs. Eligible employees might also be offered government subsidies if they need them. 

Another advantage is that these services will be very easy to use and will provide step-by-step guidance and support. They will be delivered through a single access point, using call-center and Web-portal technology. 

The Web portals also may expand to provide links to general health care and wellness information and, possibly, community support, which can encourage employees to make better health care and lifestyle decisions. 

When can small businesses start seeing more information on the exchanges? 
Keep in mind that establishing exchanges is a new role for states. They will have to arrange online shopping and other offline access points to handle payments. They will have to negotiate with health plans to make sure they're affordable and meet minimum requirements. They will have to work more closely with the IRS for tax data and monitor quality assurance reporting and medical loss ratio. And they would have to engage with brokers and agents, using them as valuable resources to help find affordable, quality insurance. 

There are a lot of moving parts that must be coordinated, and many states are beginning to do this now. 

For small employers, these exchanges will bring new opportunities to provide their employees with access to affordable coverage without the typical administrative hassles associated with traditional health care coverage. And for many, that will be a welcome change.