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Online marketplace will help insurance industry

Dramatic changes are coming to Washington’s health insurance marketplace.

What those changes — many required by national health care reform — will actually look like, however, has yet to be revealed.

What is known is that starting next fall, individuals, families and small businesses will be able to go online to a central marketplace to purchase insurance and receive government subsidies. Plans will also be available outside of this marketplace, but to receive a subsidy, plans must be purchased within the site.

This online marketplace was officially dubbed the “Washington Healthplanfinder” in October, though some shorten the name of the business behind the program and call it the “Exchange.”

“It’s really exciting,” said Michael Marchand, director of communications for Washington Health Benefit Exchange. “It’s the first step in what I would consider a very important move toward creating a more efficient system and a more efficient health care system as a whole. Not just for our state, for the nation as a whole.”

What the plans in the Exchange will look like and how much they will cost are still up in the air.

“(The Exchange) is really a new channel for us to bring our products to the individual customer,” said Jim Pinkerton, assistant director and actuarial for Regence, a licensed health insurance provider. “We are still evaluating the products that are going to be offered in and out of the exchanges.”

Pinkerton, who serves on an Exchange advisory committee, said insurance companies are not sure how consumers are going to react to the Exchange, but he is expecting to see more business.

“We will clearly see an increase in the market size because of the subsidies available for people purchasing through the Exchange and the obligation to provide coverage for themselves,” he said. “The small employer will have to evaluate the value proposition the Exchange brings and what they are trying to offer. We will have to see how those evaluations work out.”

Operations

The first step to change was Washington deciding how the Health Benefit Exchange would be operated. The state decided to create an independent exchange that would operate without federal guidance, but could receive federal grants.

“It gives (the state of) Washington control,” said Chris Free, president of the Washington Association of Health Underwriters. “In the long run, I think it’s great that Washington picked this up and said, ‘We have a Washington way of doing things and that’s what we want to do.’”

While federal grants have helped get the Exchange up and running, eventually the program has to be self-sustaining. The site and program will cost about $50 million a year; that money will either need to come from the plans within the Exchange or all of the plans issued in Washington state.

The Legislature will ultimately decide which plans will pay for the state’s new online marketplace.

While the Exchange could add an extra cost to all insurance plans, Free said that what will really impact the cost of insurance for everyone is the addition of so many individuals, especially those with pre-existing conditions.

“If you want a new system, you have to invest in a new system,” Free explained. “We have to have a more efficient marketplace.”

And Marchand believes the Washington Health Exchange is going to provide this desired efficiency.

“Everything leads me to believe we will be successful,” he said. “I’m very bullish in the Exchange. If I was judging by interest, we would be successful, but it will come down to the purchasing decisions.”

Marchand does not deny that plans in the Exchange may be more expensive, but that’s because they are required to offer a minimum amount of benefits. Plus, Marchand said, many would be able to afford plans in the Exchange because of the subsidies available to low-income individuals.

“This is a huge opportunity for people who have never been insured and for small businesses that maybe were never able to provide their employees insurance,” he said.

Reach writer Breanne Coats at bcoats@BusinessExaminer.com.