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The Nebraska Legislature will soon be debating the merit of the development of a health insurance exchange in Nebraska. Rural places and their residents have unique circumstances that must be considered and addressed in the development of Exchanges. It is important to note that rural patients face the most daunting of health care challenges: they are older, poorer and sicker. Rural America is less healthy due to too much smoking, drinking and eating, and too little exercise, education, jobs and income.
Because the structure of the health care system, the characteristics of the population, and other facts of rural life differ in significant ways from the urban experience, the market and policy effects of these forces in rural areas can be quite different from the effects in urban areas. The consequences of the failure of a provider, whether it be a health facility or a health professional’s practice, are potentially greater in rural areas. Because alternative sources of care in the community or within reasonable proximity are scarce, each provider likely plays a critical part in maintaining access to health care in the community.
Health insurance exchanges must assure network adequacy and accessibility. Enforcement of community access standards for exchanges is absolutely critical to prevent steerage of enrollees and inordinate leverage by health plans against rural providers. To that end, it is important that all exchanges meet strong access standards. As an example, the current Medicare Advantage program statutes and regulations have required CMS to ensure that plan enrollees have reasonable local access to covered services. Incorporation into the risk adjustment mechanism of a cost adjustment factor for providing care in rural localities will reduce the pressure on health plans to ‘red line’ rural enrollees–to not enroll them.
Insurers who are committed to providing local access and who attract more rural enrollees are more likely to see their enrollees using rural providers who face higher stand-by costs and lower economies of scale. This risk is equivalent to other variables traditionally controlled for in a risk adjustment model; methodologies exist and can be adapted to specific state circumstances.
Health insurance exchanges must assure rural relevant risk sharing. We understand and support the value in the pooling of risk amongst insurers that occur amongst qualified plans for sales both inside and outside of the exchange. By pooling risk across a larger portion of the population relative to the individual market, exchanges will spread risk and create a much more stable market place. Exchanges can both reduce premium costs for residents and attract a greater volume of health plans to the market. In the past, many health plans have competed on who was best at avoiding sick people. The elimination of medical underwriting is hugely important to this principle, but it could be lost if the individual mandate and accompanying tax credits is eliminated as a consequence to adverse action by the courts.
The Nebraska Legislature will soon be debating the merit of the development of a health insurance exchange in Nebraska. Rural places and their residents have unique circumstances that must be considered and addressed in the development of Exchanges. It is important to note that rural patients face the most daunting of health care challenges: they are older, poorer and sicker. Rural America is less healthy due to too much smoking, drinking and eating, and too little exercise, education, jobs and income.
Because the structure of the health care system, the characteristics of the population, and other facts of rural life differ in significant ways from the urban experience, the market and policy effects of these forces in rural areas can be quite different from the effects in urban areas. The consequences of the failure of a provider, whether it be a health facility or a health professional’s practice, are potentially greater in rural areas. Because alternative sources of care in the community or within reasonable proximity are scarce, each provider likely plays a critical part in maintaining access to health care in the community.
Health insurance exchanges must assure network adequacy and accessibility. Enforcement of community access standards for exchanges is absolutely critical to prevent steerage of enrollees and inordinate leverage by health plans against rural providers. To that end, it is important that all exchanges meet strong access standards. As an example, the current Medicare Advantage program statutes and regulations have required CMS to ensure that plan enrollees have reasonable local access to covered services. Incorporation into the risk adjustment mechanism of a cost adjustment factor for providing care in rural localities will reduce the pressure on health plans to ‘red line’ rural enrollees–to not enroll them.
Insurers who are committed to providing local access and who attract more rural enrollees are more likely to see their enrollees using rural providers who face higher stand-by costs and lower economies of scale. This risk is equivalent to other variables traditionally controlled for in a risk adjustment model; methodologies exist and can be adapted to specific state circumstances.
Health insurance exchanges must assure rural relevant risk sharing. We understand and support the value in the pooling of risk amongst insurers that occur amongst qualified plans for sales both inside and outside of the exchange. By pooling risk across a larger portion of the population relative to the individual market, exchanges will spread risk and create a much more stable market place. Exchanges can both reduce premium costs for residents and attract a greater volume of health plans to the market. In the past, many health plans have competed on who was best at avoiding sick people. The elimination of medical underwriting is hugely important to this principle, but it could be lost if the individual mandate and accompanying tax credits is eliminated as a consequence to adverse action by the courts.
Health insurance exchanges must assure reduced administrative costs. Exchanges can also reduce the administrative burden and costs–for small business and for individuals–of shopping for and enrolling in health insurance. By centralizing the research and shopping portion of the process, exchanges save individuals and companies time. Exchanges that deliver real-time premium rate quotes and have a single interface for enrolling in all available plans, reduce time and save money for buyers. Consumers have enjoyed similar systems for shopping online and can handle comparison shopping.
We realize that some have argued that national health plans are antagonistic to individual state exchanges and much prefer to compete within the context of a single set of rules determined by the Federal government as default for those states who do not establish an exchange by 2014. However, we believe that there are many high-value in-state insurance products that have developed and that these products will better continue to flourish with state-based exchanges. We believe the quality of products will increase more if exchanges facilitate a consistent set of metrics that are the focus of any incentives by health plans within the exchange.
The Nebraska Rural Health Association sees the exchanges as a critical tool for expanding access to health insurance coverage, while fostering value-based competition among private plans to promote quality and efficiency. Exchanges are particularly important in rural communities as they are in general more dependent on the individual and small group markets. To the detriment of rural communities, many have seen these markets as being less functional than the market for larger employers. We believe that it is critical for the Nebraska Legislature to establish an exchange that is consistent with Federal requirements rather than using the national default exchange.
