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A Simpler Way to Shop for Insurance: Exploring a Connector-Exchange

 Small business desperately needs a more efficient marketplace in which to purchase health insurance. The connector-exchange approach can be an answer to these needs.
 
A connector-exchange can provide small businesses with an easier way to shop for insurance and expand the number of choices available when buying plans
 
The Connector-Exchange: A Marketplace for Individuals and ALL Small Businesses
  • A connector-exchange model can be structured to serve a variety of consumers – individuals alone, both individuals and small businesses or simply as an alternative marketplace for all purchasers – including large employers. 
  • For purposes of this overview, a connector-exchange would immediately serve both individuals and small businesses comprising what is often referred to as the small group market (2-50 employees, in most states)– the two marketplaces that have historically experienced the greatest lack of choice, the most significant premium volatility and the most severe rating practices.
Insurance Exchanges can Increase Efficiency & Reduce Administrative Burdens and Costs
  • Small business owners are not human resource managers and don’t typically have the skills or time to analyze complex health insurance options. 
  • A well-functioning connector-exchange can significantly reduce the unacceptably high administrative costs that plague the small-group market.
    • The Small Business Administration reports that, on average, administrative expenses for insurers of small health plans make up 25 to 27 percent of premiums and 33 to 37 percent of claims.
    • Conversely, large companies and self-insured plans experience administrative expenses of about 5 to 11 respectively.     
Essential Functions of the Connector-Exchange
The basic idea of a health insurance exchange is similar to the concept of a stock exchange or farmers market – an exchange serves as a market clearinghouse.[1] The connector-exchange could:
  • Provide education, outreach and technical assistance for individuals and employers about health insurance options.
  • Allow employers a way to make a pre-tax or voluntary contribution for an employee’s health insurance plan.
  • Let consumers construct and review side-by-side analysis of policies (e.g. similar to the comparison feature in Consumer Reports).
  • Give online, telephone, written and in-person assistance to consumers and employers purchasing health insurance through the exchange;
  • Include information and enrollment assistance to people who may be eligible for premium or other forms of government assistance.
  • Provide appropriate resources so that complaints about the connector-exchange can be investigated and resolved, ensuring consumer protection and satisfaction.

[1] Edmund F. Haislmaier and Nina Owcharenko, “The Massachusetts Approach: A New Way to Restructure State Health Insurance Markets and Public Programs,” Health Affairs v 25 no. 6, November/December 2006, p. 1580-1590.
 
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