An estimated 1.1 million Hoosiers will obtain health insurance through a yet-to-be-created online exchange, according to the latest estimates from the task force guiding Indiana’s response to the 2010 health reform law.
If that estimate proves out, it means one of every six Hoosiers under the age of 65 would be shoppers in the exchange. It also would be twice as many people as currently obtain coverage through the individual market or through employers with fewer than 50 workers.
"That number could be a lot higher if we have a lot of employers that decide to drop coverage," said Seema Verma, a consultant for the Indiana Family and Social Services Administration and a lead member of the task force, who disclosed the 1.1 million prediction during a July 13 presentation to the state Legislature’s Health Finance Commission.
Of course, how exactly an exchange would operate—and who would operate it—have yet to be determined. The health reform law, called the Patient Protection and Affordable Care Act, requires that such exchanges be in full operation by 2014. Verma offered four possible models during her presentation.
The simplest model would create a shopping hub like the website Orbitz does for airline tickets. Customers could enter their relevant personal details and then shop for various plans, with the site presenting options to allow easy comparisons of their standardized features and prices.
Or the exchange could operate more like online retailer Amazon, which would evaluate each health insurance plan offered, rate them and identify those that are “top tier,” according to exchange criteria established by the federal government.
A third option would be to adopt Massachusetts’ model, in which the exchange operates more like an employer, buying coverage from a few insurers and then offering their plans to all exchange participants.
Last, the state could punt on operating an exchange and instead participate in one the federal government will set up. No details about how the federal exchange would operate are yet available.
The task force has already surveyed 2,600 Hoosiers—mostly consumers, but also businesses, health care providers, insurers and brokers— to see which models they prefer. Nearly 44 percent picked the Orbitz model, nearly 41 percent preferred the Amazon model and 11 percent chose the Massachusetts model.
The idea of the exchanges is to pool the risk of all health insurance customers getting coverage as individuals or as employees of small business with fewer than 50 workers. That should, in theory, help moderate price spikes.
Also, the health reform law will fund subsidies for all exchange customers whose incomes are less than four times the federal poverty limit—which is currently $89,400 for a family of four.
But Verma threw cold water on the idea that health reform overall will moderate costs, especially for individual customers. She cited actuarial studies the state commissioned from Seattle-based Milliman Inc., which predict that by 2019 costs in the individual market could rise as much as 95 percent more than they would have already.
Milliman’s projections have consistently run higher than many other analyses around the country, drawing criticism from defenders of the health reform law. But Verma and officials throughout Gov. Mitch Daniels' administration have continued to use them.
The biggest reason Milliman expects costs to spike is that in 2014, the state’s high-risk insurance pool will be merged into the individual and small-business risk pool. That could hike costs 35 percent to 45 percent, Milliman predicts.
Also, since the health reform law mandates essential benefits, which are in many cases richer than most current individual policies, that could add another 20 percent to 30 percent in costs, Milliman predicts.
For small businesses, Milliman predicts costs rising 5 percent to 10 percent more than they would have without the health reform law.
"We're not expecting to see lower prices in the exchanges," Verma said.