Health insurance exchanges are, perhaps, the most accepted provision of last year’s Affordable Care Act. While some states have railed against the notion of the federally mandated program, most have been eager to explore their options. States have been slow to pass legislations making the exchanges possible, but have wasted no time in making preparations for the system. According to a new report from the Institute of Medicine, however, the future of insurance exchanges may be in jeopardy if federal legislators cannot solve the expensive flaws in the system.
Exchanges are meant to provide consumers with affordable insurance coverage by bringing competition to state markets. The Institute of Medicine (IOM) notes that this will be the case initially, but that competition will fade soon after the exchange begins operating. The problem lies in the lack of a basic benefits package that would provide consumers with the essentials of health care at low cost. Last month, the IOM submitted recommendations to the federal government concerning the design of such a package, but has recently amended its recommendations.
The IOM now asserts that balance is the key to the success of the exchange program. Previously, the organization suggested that a bare-bones benefits package would help keep down the costs of insurance, but such an unappealing plan would attract little to no consumer interest. Steering consumers away from the exchange with a plan that is not in their interest will make the program financially unstable. The IOM says that plans that couple attractive benefits with modest cost will not only keep overall insurance costs down but also gain the favor of consumers.
