Ramsey: Premium Prices Key To Insurance Exchange Success

Arkansas Times associate editor David Ramsey says premium prices for health insurance plans offered in a forthcoming state exchange may be more important than the number of carrier participants.

Ramsey, who appeared on the latest webcast/podcast episode of Talk Business Arkansas, noted that every state that has opted into some form of Medicaid expansion is unique.  He said the news that Arkansas landed five insurance firms expressing interest in participating in the new exchange was encouraging, but should be viewed cautiously.

“In terms of a number, is five enough? There should be pretty good competition between five carriers,” said Ramsey, who has closely tracked Arkansas’ private option debate and studied other state and national trends.

“The bigger question is: will anything happen to change the current status quo? Which is that Arkansas Blue Cross Blue Shield has more than 75% of the market. Just because you have five carriers doesn’t meant that they’re going to put any kind of dent on that market share domination,” Ramsey said.

The private option, which is expected to offer health insurance to 200,000+ uninsured Arkansans, is slated to start accepting applicants October 1, 2013 and be up and running by January 1, 2014. The legislation allows Arkansas to use federal Medicaid money to subsidize private health insurance plans for low-income workers in a soon-to-be-created state-federal exchange.

Ramsey said he doesn’t think a large part of that newly insured universe will be price sensitive because the government will be picking up the tab.

“As the carriers are competing for those customers, they might be competing on various things but price is not going to be one of them,” he said. “So what are they going to look for? A name like Blue Cross Blue Shield – they may be able to dominate that market, and if they soak up those customers, we may be back to square one.”

Ramsey also thinks “navigators,” which are temporarily hired workers and contractors to help potential newly insured applicants “navigate” the system may become controversial.

Why might they be a source of controversy?  What has been happening in other states on this topic?  And what might still be on the horizon in Arkansas?  Watch Ramsey’s full interview below or at this link.