The Utah Health Exchange is part of Utah’s overall health system reform effort that is aimed at increasing the number of Utahns with health insurance. It is designed as a market-driven solution to create a competitive environment while providing multiple medical plan options for consumers. The Exchange brings the consumer back into the equation by promoting employee engagement to choose health coverage for themselves and eligible family members.
The Utah approach to reform is based on enhancing consumer choice and the ability of the private sector to meet consumer needs. Individuals are able to find coverage by using a “farmers market” approach, which gives consumers three on-line options to shop for and buy a policy. Currently, there are five private online shopping services, five insurers and thousands of agents available through the Exchange.
Small businesses are able to leverage group rating rules — just like in the wider traditional market — but with an increased focus on choice and value. The Exchange’s defined contribution model gives employee’s control over health care costs and lets employees choose the policy that works best for them. Three participating carriers currently offer more than 140 plans ranging from high-deductible options to comprehensive coverge.
Small Businesses and Defined Contribution
The Exchange’s primary market is small businesses with 2-50 employees. We have found that focusing on small businesses lets us help the greatest number of Utahns with the highest degree of efficiency. This is because approximately 98 percent of the state’s business community is made up of small businesses — and those small businesses employ roughly half of all Utahns. In addition, we have found much success in the small business market, thanks to our innovative “defined contribution market,” which benefits employers and employees alike.
The defined contribution model lets employers offer an extensive array of benefits and provider networks, from which employees make selections ranging from very rich plans to high-deductible plans, all with a pre-tax advantage. At the same time, employers pay a flat dollar amount toward employee benefits, helping them remain within a predictable budget.
As in the traditional market, groups on the Exchange pool risk for employees in the company, which results in the potential for overall lower rates. When joining the Exchange, employees are able to choose from more than 140 benefit plans across three insurance carriers to meet personal budget and family needs. The Exchange works with insurance producers that specialize in small group policies to help them educate employers about the potential benefits of using a defined contribution approach and to facilitate the use of the Exchange as their enrollment mechanism.
FY2012: Year In Review
Participation continues to grow each year. At the end of FY2010, its “beta testing” phase, the Utah Health Exchange had 11 small business groups offering health benefits and health savings accounts (HSAs) to their employees. By the end of FY2011, its first full year of operation, the Exchange had grown to encompass 157 small business groups. Reporting FY2012 results, there are now 6,924 members covered which comprises 296 small businesses offering health benefits and HSAs to their 2,462 participating employees – a year over year increase of 88.5 percent.
It has also become apparent that the vast majority of groups that join the Exchange choose to continue coverage upon reaching their annual renewal date. Existing small employer groups participating on the Exchange began to renew in January 2012 and the administration of renewals has continued each month thereafter. In FY2012, 93 percent of groups renewed with the Exchange during their re-enrollment cycle. This is a significant percentage, considering that in the traditional market fewer than 30 percent of companies tend to renew with the same plan from year to year.
The Exchange introduced a new call center methodology during FY2012 to provide efficiencies through a series of call tree prompts that directed consumers to the applicable source for answering their questions. The customer service line answers nearly 400 calls per month. More than 95 percent of calls come from health insurance producers supporting their customers on the Utah Health Exchange.
Administration of the enrollment and underwriting process received a lot of attention this past year. An additional technical partner was added to improve the online employer and employee application workflow. This brought efficiencies in processing and decreased the underwriting timeline significantly. Existing
Exchange technical partners also implemented a series of enhancements to
improve existing plan comparison and shopping tools for consumers.
The Exchange also initiated a marketing campaign and rebranding effort with a local communications firm. The project began in May and was in the initial stages of development by the end of June. The campaign will encompass a new name for the Exchange, as well as materials to be used for advertising and marketing across the state. We expect that this effort will have a strong impact on Exchange operations and effectiveness in coming years.
Work in Progress
The Exchange’s Advisory and Steering Board was established in 2010 and is composed of health care providers, insurance agents, state agencies and community groups. Members advise Exchange staff regarding topics including operations, consumer ease of use and transparency. Action items this year have included a change in the underwriting process for carriers, marketing and outreach activities, assessment and discussion regarding the Affordable Care Act (ACA), feedback on the Exchange’s forward-looking technical blueprint, and coordination with Legislative workgroups.
The Exchange relies heavily on health insurance producers to educate small business employers regarding insurance needs for their customers and the value of the Utah Health Exchange. The Office of Consumer Health Services (OCHS) offers instructional courses, taught throughout the state, to the producer community. Curriculum includes information about Utah’s Exchange model, processes, roles and responsibilities, in addition to timeline requirements. OCHS also produces a monthly producer newsletter that highlights the latest Exchange initiatives, gives additional instruction and offers tips and tricks.
“The Right Approach to Health Care Reform”
In June 2012, the United States Supreme Court upheld the constitutionality of the ACA. This act mandates that all Americans have health insurance, and levies penalties on those who do not. ACA also stipulates that companies with more than 50 employees must offer group insurance or pay a fine. Individuals or those without group insurance will qualify for tax credits that may be used to secure health coverage. We anticipate that these new requirements will increase interest and business on the Exchange when the ACA goes fully into effect on January 1, 2014.
While Utah is still working to understand the details of how the Exchange will need to adjust to meet the requirements of the federal reform, it is very likely that the core features of the defined contribution market and the technology to facilitate consumer choice will be a part of Utah’s plan for the foreseeable future.