Government insurance exchanges vs. commercial insurance exchanges

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August 1, 2015 by Tony Novak

There may be an even greater difference between health plans purchased on government-run health exchanges and commercial exchanges than we previously realized. Government-run insurance exchanges have under financial pressure and media scrutiny lately primarily because of their high cost of operation and operational woes that caused customer service problems. But this week here is even more bad news for government-run insurance exchanges that may more directly affect businesses and consumers who have a choice in selecting their source of health insurance.

Avalere Health, a Washington DC consulting firm, compared the average number of primary care physicians, specialists and hospitals in exchange networks relative to group and individual markets outside the exchanges in five state insurance exchanges. They found that there are significantly fewer fewer medical providers available through health plans offered on the government health insurance exchange as compared with those offered in the commercial market. The decrease ranges from 24% for hospitals to 42% for oncologists.

Until now we believed that the health plans purchased on a government-run insurance exchange like Healthcare.gov were almost the same as those purchased on a commercial insurance exchange like Members Insurance Exchange. The primary difference, we thought, was the level of customer service. Now it appears that the government-run exchanges might be inferior in both product and service.

A summery of the report was published in Employee Benefits Adviser on July 30, 2015. Avalere Health has apparently not made its full report available to the public.

Freedom Benefits and others have predicted that one of the unintended side-effects of the Affordable Care Act will be to create two distinct health insurance purchasing systems: a government-run system with less choice for lower income Americans and a commercial system for businesses and more affluent individuals.

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