Coming to a store near you: health insurance exchanges

The exchanges will favor individuals and small groups of consumers

In addition to milk, bread and aspirin, consumers may soon be purchasing their health insurance at a nearby store, according to industry experts.

That's because the federal government is mandating that by 2014 states set up public health insurance exchanges (HIX) to create more industry competition and consumer choice.

And to get ahead of the public exchanges, private insurers are looking to set up their own private ones -- in the form of in-store kiosks and online sites where consumers and businesses can compare plans based on price and coverage.

The Congressional Budget Office estimates that 12 million consumers will buy health insurance in the exchange market in 2014, with that figure rising to nearly 28 million people by 2019.

Every state must build and operate an HIX with multiple points of contact, including paper-based systems, phone lines and online channels where any qualified individual can shop for and buy health insurance. People will also be able to use the exchanges to submit questions to insurers and find out whether they're eligible for tax credits for private insurance programs or qualify for public programs, such as the Children's Health Insurance Program (CHIP).

HIXes are one of the cornerstones of the Affordable Care Act (ACA), which became law a year ago. Some public HIXes are already online, such as Massachusetts' Health Connector. Other states are behind the curve and facing tough deadlines to enact HIXes. Health Connector uses a model where the state evaluates and selects insurers in a competitive bidding process.

According to PricewaterhouseCoopers International, most insurers in a recent survey indicated they will opt for a variation of an open-market model, such as the one used in Utah. There, any insurer can sell policies on the exchange as long as it meets certain minimum benefit requirements.

Retail and wholesale stores have already seen the value in offering healthcare technology. For example, Walmart and Sam's Club already offer bundled electronic medical records (EMR) systems to physicians through their online electronic cart. Now, some retailers may turn to in-store kiosks to offer customers their own version of HIXes.

"Thirty-six million individuals will purchase the mandated health insurance from sources other than the public HIX, and with health insurance already approaching a trillion-dollar-a-year industry, retailers like Wal-Mart stand to quickly become insurance powerhouses," said Scott Donahue, vice president of TripleTree, an independent investment bank and strategic advisory.

Private HIXes will likely offer a choice of approved health plans from different carriers, easy-to-use comparison tools that allow consumers to research the best policy for their needs, and enrollment assistance, according to TripleTree.

There will also likely be a method to recoup operational costs of the HIX through surcharges to make them self-sustaining, he said.

Chris Hoffmann, chief marketing officer at TripleTree, said the idea behind HIX kiosks would be to locate them close to in-store pharmacies and combine the insurance services with pharmacy benefits. "For example, buy your healthcare through Walmart and get a discount on prescription drugs," he said. "Or, if you buy healthy foods and other healthy products at Walmart, you might qualify for discounts on healthcare premiums."

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