With State Health Exchange deadline still a couple of years ahead, several health plans have cited their intentions to set up their own private health insurance exchanges in near future to lock in the large pool of individuals seeking health insurance.
With hardly a few fully operational exchanges in U.S. currently,
the U.S. exchange market is still in its nascent stage and if tapped into aggressively, it can offer health plans a chance to pull in physician networks, small and large businesses, individuals and groups seeking insurance, before the state health exchanges even come into effect.
The strategic move is also wise considering the fact that the government sponsored Exchanges and Small Business Health Options (SHOP) exchanges which are to go live in 2014, may upend the individual and small business market share of most health plans.
The newly set-up private exchanges are likely to operate on similar guidelines as the ACA proposed State Exchanges, but with the key difference that they will be set-up and managed by health plans or certain groups working in coalition.
In general, a private exchange can operate either of the two ways – in one setup, an individual can view and purchase variety of health plans from a single company and in another setup, an individual has the option of selecting health plans from different insurance companies participating in the exchange. The web-based private exchanges may be hosted by health plans on their own website or on a separate website managed by a partner or exchange-hosting firm.
At present, Massachusetts and Utah have operational Health Insurance Exchanges but they operate on entirely different business structures. In 2011, several health plans entered into collaboration or acquired firms offering insurance exchange hosting and other exchange related services.
With a few currently active models of state based and privately operated insurance exchanges, large insurers are investing at an aggressive rate in private exchange start-ups to get an early edge and establish dominance in commercial market.
Massachusetts Health Connector, the successful state operated exchange in Massachusetts, is a present day model of fully operational public exchange. In direct competition to it is HSA Insurance, the private exchange operating in Massachusetts that has been in operation for over 30 years and covers over 150,000 people employed under 30,000 employers in Mass.
In August 2011, OptumHealth announced its intentions to acquire Connextions, an Orlando, Florida based company to implement a Private Insurance Exchange for individuals and businesses.
In September 2011, WellPoint, Health Care Service Corporation and Blue Cross Blue Shield of Michigan collaborated with Bloomhealth, a Minneapolis based company to launch a national level private exchange.
In November 2011, Highmark Inc., a Pittsburg based independent BCBS health plan, revealed that it had partnered with Array Health to establish a private exchange for small businesses operating in Pennsylvania.
The evident success of the Massachusetts based HSA Insurance and the looming Jan 2014 deadline of nationwide state exchanges commencement, has galvanized many health insurers to set up their own working models of private exchanges. The U.S. healthcare landscape is destined to witness a significant boom in the number of health insurance exchanges over the next couple of years.
