“Rising health costs are the single biggest problem we face,” the Menomonie non-profit administrator told me. She saw double digit inflation in health insurance costs for years. “We are having a serious talk with our employees about options. None are good.”
“With the drop in milk prices,” the Tomah dairy farmer told me. “Health premiums now take up a quarter of our milk check.” Insurance premiums for the farmer and his brother add up to over $900 a month. “What can you do to help?” he asked.
This week I unveiled a bill to create affordable health insurance exchanges for small businesses and individuals. An exchange is a competitive marketplace where health insurance companies compete for business.
For small businesses, farmers and others who buy insurance on their own, a well run exchange does two things. First, exchanges give small groups big buying power. No longer are you on your own buying insurance for just yourself or your business.
Second, the exchange provides information not now available to small businesses and people who buy insurance on their own. Consumers can clearly compare plans.
The idea behind the exchange is to make buying health insurance more competitive. And through this competition, drive down costs. But to be a true marketplace, consumers must have clear and comparable information not only on cost but on quality.
In my bill, information about medical performance and price will be in one place - a website where people, either on their own or with an agent, can comparison shop. Consumers and employers can easily compare the potential price, benefits and quality of each choice.
The exchange increases choices. It also helps people find out if they are eligible for tax credits or other programs like BadgerCare.
But the exchange is more than a website. Behind the scenes, insurers are providing information to the exchange to make accurate and simple comparison of plans possible.
In crafting my bill, I intentionally worked to keep the information available to consumers simple and complete. The exchange will rate plans based on benefits. Other information on quality will be available for comparison.
Imagine if people buying insurance could simply compare plans not only on cost but on quality: how well the plan delivered the healthiest outcome from a surgery? Or kept diabetics the healthiest?
I also sought to make the buying group as strong as possible. This is accomplished by expanding the group to as many employers as allowed by federal law - all employers with 100 employees or less. A separate exchange will serve all citizens who now buy insurance on their own (with the exception of those served by Medicare, Medicare and other government programs).
Wisconsin is one of only eleven states without an exchange legislative proposal. Wisconsin must make progress developing exchanges by the end of next year or risk federal government intervention. Because the Legislature must act by next May it is likely we will see several exchange proposals in the coming months.
Not all exchange proposals are created equal. They can fall short in three important ways: by creating too small of a bargaining group; by not allowing clear apples-to-apples comparison on price, benefits and quality and by failing to keep the operation of the exchange as clean as possible.
This means the exchange must be accountable to the public and transparent in all its business. The exchange must be insulated from political influence. Elected officials should not be on the board, nor should those who have a financial interest in the outcome.
People on the governing board I created will have experience in health matters but must follow strict rules forbidding employment in health care, avoiding financial conflict of interests and disclosing all economic interests. Likewise, in my bill, the authority running the exchanges must follow all open records and open meetings laws, must submit to regular performance and financial audits and regularly report to the public.
A well run exchange can provide affordable insurance to farmers, small businesses and those who buy insurance on their own. But we must carefully design the law to maximize our success.