An editorial in the Denver Post written by Anne Warhover (President and CEO of the Colorado Health Foundation) highlights a lot of the progress – and some of the setbacks – that Colorado has experienced over the last few years as far as healthcare reform on a state level. We’ve written about many of these issues aswell, and although we share Anne’s frustration at the not-so-stellar marks Colorado has earned on the recent health report cards, we’re glad to see the state taking steps towards insuring more of the population and providing realistic access to healthcare for more Coloradans.
Although I frequently read and write about Colorado’s healthcare reform progress, I wasn’t aware of the work being done by the Colorado Regional Health Information Organization (CORHIO) before I read Anne’s article. Although the PPACA has put a lot more emphasis on electronic health records and healthcare IT, Colorado has been working on its own system with CORHIO. The program is working with healthcare providers to implement health information exchange between providers – saving time and money in the process – and improve the overall quality of care for Colorado patients. CORHIO goal is to have health information exchange implemented in every community in Colorado by 2015, with at least 85% of providers in the state enrolled in meaningful use EHRs by that time.
Anne also writes about the Colorado Health Benefits Exchange (which has received high marks for its progress so far) and notes that it “…will enable up to 960,000 Coloradans to purchase health insurance at a discounted rate.” The exchange has a lot of excellent features, and will no doubt be a solid resource for individuals and small businesses in Colorado. But in order to avoid confusion I think we should point out that the “discounted rate” likely refers to the government subsidies that will be provided to help people pay their health insurance premiums. Subsidies will be available for people earning up to 400% of the federal poverty level, which is roughly $92,000 in 2012 for a family of four. This means that the majority of the population will qualify for subsidies, and that will indeed amount to a lower premium in terms of what the individual will have to pay out of pocket for health insurance. But I think that there could be widespread misunderstanding in terms of what the exchange will be and what it can provide.
To illustrate the point, we can look at a common misperception that exists with regards to the current health insurance market. It’s widely believed that group coverage is less expensive than individual health insurance thanks to the “group discount”. In fact, individual health insurance is quite a bit less expensive because of medical underwriting: group policies have to accept all eligible employees and dependents, regardless of medical history. This drives up the claims expenses for group coverage and results in higher premiums than medically underwritten individual policies. That’s just one example, but I can imagine that the health benefits exchanges might be erroneously viewed as a marketplace where customers can get “special deals” on the health insurance. People shopping in the exchange will be able to know that they’re getting a certain minimum level of coverage and they’ll be able to compare numerous plans side-by-side (in many ways this is similar to what brokers like us already provide). The subsidy system is also expected to be tied in with the exchange’s policy shopping platform so that any applicable subsidy and the purchase of health insurance can be lumped together in one transaction. But beyond the subsidy and the inherent competition that will exist among the carriers participating in the exchange, I’m not aware of any other discounted rates for policies that will be sold in the health benefits exchanges that the states are currently creating.