In 2013 and 2014 the word “exchange” was being used everywhere in the health insurance industry. Now, just a couple of years later, that term isn’t being used as frequently as it was just a couple years prior. Why? For one, the federal government decided the phrase “health insurance marketplace” or “marketplace” was what they would start calling their exchange. The media and general public also seem to associate the word “Obamacare” as being synonymous with the government-run exchanges. Additionally, private exchanges are not experiencing the growth rates that many had projected. So where do exchanges stand today?

 

These are the exchanges where individuals and families can obtain a health insurance plan with assistance from the government in paying out-of-pocket expenses and/or premiums if certain criteria are met. As of March 31, 2016, approximately 11.1 million individuals were enrolled in coverage through a Health Insurance Marketplace. Earlier reports from the Congressional Budget Office (CBO) projected enrollment would be closer to 21 million by this time. Now, it appears the CBO thinks enrollment through a Health Insurance Marketplace will eventually plateau at somewhere around 16 million enrollees according to an article by Forbes. 

 

There is a concern right now about the long-term stability of the Health Insurance Marketplace causing some insurance carriers to exit the exchange and others to increase rates substantially. Lots of ideas are being floated around on how to improve the Health Insurance Marketplace, and include things such as having a single exchange for the entire country to consolidate risk pools, changing rate structures so premiums for younger (and presumably healthier) populations are more attractive, and having a public health plan like Medicare as an option.    

The SHOP is a government-run exchange for small businesses (up to 50 employees in most of the country). The intent was that smaller businesses would be able to offer coverage options to employees from multiple health insurance companies through a SHOP Marketplace. However, due to technical problems, lack of participation from health insurance carriers, and other reasons, enrollment has been low. The federal government doesn’t usually publish SHOP enrollment data, but in May of 2015 it was reported by Kevin Counihan, Director and Marketplace CEO, that approximately 85,000 individuals were receiving coverage from a SHOP Marketplace.      

     

These exchanges have been created by private companies such as insurance carriers, brokerages, consulting firms and technology innovators. The intent is generally to provide employers with the ability to offer employees and/or retirees multiple coverage options (sometimes from multiple health insurance carriers) through an online platform. Accenture estimates there are now about 8 million people enrolled through a private exchange nationwide. However, this number is lower than anticipated and adoption rates are growing slower than projected. Private exchanges usually offer fully insured plans and some employers find offering self-insured coverage to be less expensive. In addition, some employers fear transitioning to a private exchange that they may end up dissatisfied with having to spend more money switching to a different exchange. Other reasons also exist for the slower than expected growth. 

 

As with so many things going on in the industry, there are uncertainties and questions about exchanges. How will regulators respond to the long-term stability of the Health Insurance Marketplace? Will enrollment in the SHOP Marketplace increase? Will private exchanges consolidate? Arguably most important, what’s next for exchanges?