So, What's Your Exchange Policy? [Part 2]

In Part 1, we were introduced to Utah�s unique Health Insurance Exchange program. Today, we conclude our exclusive interview with the Exchange�s Director and Project Manager, and offer some thoughts and observations of our own:

InsureBlog: How do you get around the problem that the biz owner can't fully participate in the 125/HRA?

Patty/Sue: First, your readers need to understand that the whole program is based on the concept of �defined contribution.� So the employer agrees to set up (for example) a health reimbursement arrangement (HRA) or other similar plan, and to fund it at a previously agreed upon level. Once each employee has chosen a plan, premiums are forwarded to the appropriate carrier.

It�s true that the business owner doesn�t really get the same tax benefits of the HRA (or 125, etc) as the employee, but so far no one seems to mind [ed: or at least no one�s piped up about it]. Our take is that the employers are willing to trade a tax break for certainty and simplicity in the budgeting process.

IB: Are groups in the Exchange still subject to other rules, such as portability, COBRA, etc?

P/S: Yes, all the relevant rules and regs apply. We don�t provide the COBRA admin; our operating principle is to basically just stay out of the way.

IB: I have to ask this: what happens to the Exchange if ObamaCare� is, in fact, fully implemented? In other words, what about 2014?

P/S: Utah will continue the approach it�s taken since 2005, which is to provide a cost effective solution for small businesses. We are prepared to do whatever is necessary to meet whatever guidelines that ultimately go into effect.

And by the way, we�re not selfish: we�d be delighted to share our experience and expertise with other states that want to �facilitate, not mandate.�

IB: Our last question is about the large group pilot program. I understand that it�s new, so there�s not a lot to talk about, but I have to question the value of the Exchange to, say, a 500 person group. After all, an ERISA plan lets you do pretty much the same thing, you don�t really need Utah (for example).

P/S: That�s true, and we don�t really anticipate �jumbo� groups. The industry defines small group as 2-50 lives; we're also looking at programs for mid-size groups (51-99 lives).

IB: Okay, that�s all the questions I had prepared for you. Is there anything you�d like to add in conclusion?

P/S: Yes: our goal has always been to create a free market approach, cooperating with our stakeholders all through the process. We welcome broker feedback, for example, because they are stakeholders, as well. In fact, they�re our best marketers � as we noted before, they bring in the bulk of our business. And agent compensation through the exchange is the same as the traditional pipeline, so there�s no financial downside to the agent.

Thanks Patty and Sue!

Well, now you�ve seen under the hood of the Beehive State�s Exchange program. Is it perfect? Of course not, but it�s much more business-friendly (and ultimately consumer-helpful) than the Massachusetts or ObamaCare� versions. Bob and I do have some reservations, though:

First, it's still employer-based, so the plans aren't "portable;" that is, if an employee leaves the group, he can't just take the plan with him (aside from COBRA continuation, which is a short-term solution). That's not necessarily a fatal flaw, but it is something to consider.

Second, the website needs some tweaking:

The �Individual� portion is simply a conglomeration of eHealthInsurance-type links and product placement opportunities. Thankfully, it�s not a part of the Small Group program. Still, it�s kind of embarrassing.

And the site does �Small Group� a disservice with confusing and inaccurate descriptions of how that program really works.

Finally, since it�s such a new effort, with a very small population of covered lives, we really don�t know how rate renewals will go. I did ask about them, but decided not to include that in the post; as Bob pointed out to me, this metric is relatively meaningless because, by definition, we're only talking about a maximum of 550 covered employees (11 groups times 50 lives).

We certainly appreciate all the time and cooperation we received from Patty and Sue. They came across as professional, competent and very eager to make this program self-sustaining. It probably helps that they both come from the corporate world, so there�s actual real-world experience involved.