With open enrollment underway again, one mid-sized community health system decided to join a public exchange to prepare for the future of healthcare.
In 1980, Sparrow Health System in Lansing Mich., and a group of physicians came together to develop Physicians Health Plan, a broad-based independent practice association. This year, PHP, which is still a part of Sparrow, took a bold step to offer its health insurance plans on a public exchange.
For 2014 to 2015, PHP is anticipating a couple thousand people will enroll in its plans through the exchange. However, joining the exchange was more about the long-term than the short-term, according to Mark L. Brett, senior vice president of affiliate operations at Sparrow. "One of the biggest drivers to join the exchange was realizing that in the future the majority of health insurance is going to be purchased on both private and public exchanges," he says.
By joining a public exchange at this point, PHP hopes to gain a wealth of knowledge, such as what population of people will buy insurance on the exchange and how they will use their coverage. Joining the exchange will also help PHP to better understand the needs of the people purchasing coverage on the exchanges. "The earlier we can understand that, the better," says Mr. Brett.
Although there is a lot to gain by joining an exchange, there is also risk involved. For instance, companies offering plans on the public exchanges don't know the health behavior of the people who purchase coverage, which prevents actuaries from determining anticipated medical costs. "With the exchange all bets are off," says Mr. Brett.
However, in the first three years of the exchanges, the federal government is providing risk adjustments that provide a floor in terms of absolute loss for companies offering plans on the exchanges.
There is a lot of unknown concerning the exchanges, but PHP is embracing the challenge to be prepared for the growing number of people who are anticipated to purchase their insurance through exchanges in the future.
More articles on health exchanges:
Federal exchange site is working, and much better than last year
Judge rules D.C. Health Link can continue to collect tax from insurers to fund $29M budget
55% of uninsured Americans plan to get insurance to avoid fine