United Hospital Fund Report Examines Whether New York's Health Benefit Exchange Should Be a Passive Clearinghouse or an Active Purchaser
Among the fundamental decisions New York policymakers face in establishing a health benefit exchange are the roles the exchange should play, ranging from a passive marketplace, with the free market alone determining the quantity and scope of offerings, to an active purchaser, with the exchange using its leverage to achieve one or more systemwide goals. To assess the options from which New York policymakers can choose, this new report from the United Hospital Fund carefully examines the State’s unique insurance profile, its regulatory history in shaping the insurance market, and the pros and cons of both the “passive” and “active” approaches.
“The challenge for New York policymakers … may be to chart a course somewhere between the passive market organizer and active purchaser approaches,” the report concludes.
The report, Passive/Active: Defining the Role for a Health Benefit Exchange in the Interests of New Yorkers, also takes a closer look at the two state exchanges that predate the Affordable Care Act and embody the range of possible approaches: those of Utah (a passive market organizer) and Massachusetts (an active purchaser).
The report examines how the complexity of New York’s insurance markets presents both opportunities and challenges for the health benefit exchange. New York typically ranks above average among states in terms of the competitiveness of its insurance markets, with over 30 different commercial health insurance licensees in 2009. The state is also a combination of regional markets with varying degrees of concentration—with nonprofit insurers more prominent in the upstate market and for-profit insurers playing a larger role in the New York metropolitan area. In addition, New York has also adopted many consumer protections providing tools for New York regulators that many states lack, such as a 2010 law that requires health insurance premium increases to be approved by the superintendent.
“A purely passive market approach seems an unlikely direction for New York, but the State still has strategic decisions to make for its health benefit exchange,” said Peter Newell, director of the Fund’s Health Insurance Project and the report’s lead author. “New York could pursue a number of goals, such as reducing premiums through a competitive framework, simplifying consumer decision-making through standardizing product options, or setting minimum standards to drive quality improvement.”
“This report aims to move discussions in New York from ‘theoretical’ to ‘informed,’” said Fund President Jim Tallon. “Our health benefit exchange may not present easy opportunities, but it certainly presents important ones, with consequences for health plans, providers, and consumers alike.”
Passive/Active: Defining the Role for a Health Benefit Exchange in the Interests of New Yorkers was written by Peter Newell, director of the Fund’s Health Insurance Project, and Robert L. Carey, principal of RLCarey Consulting, Inc.
Support for Passive/Active: Defining the Role for a Health Benefit Exchange in the Interests of New Yorkers was provided by the New York State Health Foundation. Available on the Fund’s website (www.uhfnyc.org), the report is the fourth in a series focusing on New York’s health benefit exchange. The first was Building the Infrastructure for a New York Health Benefit Exchange: Key Decisions for State Policymakers, which examined the initial set of governance and organizational choices for states in designing their exchanges. The second was Coordinating Medicaid and the Exchange in New York, which focused on the successful integration of New York’s public insurance programs with subsidized and unsubsidized coverage to be made available through the new health benefit exchange. The third was Two into One: Merging Markets and Exchanges under the Affordable Care Act, with its bipartite focus on combining individual and small business health benefit exchanges and on merging the individual and Small Group markets. All are also available from the Fund’s website.
About the United Hospital Fund: The United Hospital Fund is a health services research and philanthropic organization whose primary mission is to shape positive change in health care for the people of New York.