Obamacare Marketplaces Will Function as Payment Clearinghouses for Insurers

    As full implementation of the Affordable Care Act draws nearer, some aspects of its operation have received relatively little attention.  The October 1 launch of the marketplaces, or exchanges, is less than a week away, but outside of offering a Price Line-like shopping experience for health insurance, not much has been released about their function once a plan is chosen.  Although, the marketplaces have been primarily promoted as a place to shop for, compare, and choose coverage, they will actually function as payment clearinghouses as well.
    According to Betsy Charlow, the Communications Manager for the Maryland Health Connection, Maryland's marketplace, businesses that purchase coverage for employees through the Small Business Health Options Program (SHOP) will have an ongoing relationship with the marketplace, unlike individuals who will be passed on to private insurers soon after chosen policies are in place.
     "All employer bills get handled by Maryland Health Connection (federal requirement) regardless of whether it's employee choice or employer choice," said Ms. Charlow via email.  "Individuals who purchase can make their first premium payment on Maryland Health Connection or they can elect to pay the carrier directly. For all subsequent bills, the carriers would send these to individuals directly."
    One of the apparent reasons for the ongoing relationship of businesses with the Marketplace is the opportunity businesses will have to offer a variety of plans from different insurers to employees, yet have the convenience of a single bill. (This option will not be available on the federal government's Marketplace until 2015.) Again by email, Ms. Charlow said, "According to Tequila Terry, director of plan and partner management, the employer would not get multiple bills. The SHOP would aggregate all carrier bills so the employer can make one payment. The Maryland Health Benefit Exchange would then distribute payment to the appropriate carriers on behalf of the employer."
    Given that the security of the marketplaces and the data they will be collecting has been called into question in recent months, the revelation that not only will the exchanges be collecting personal and health information on individuals but financial information as well to facilitate payments could give rise to further concerns.  An email inquiry to Ms. Charlow regarding methods of payment to be available on the Maryland Health Connection (credit card, debit, check) has not yet been answered.
    Although the operation of the Maryland marketplace likely mirrors the operation of other state-run exchanges, not all states are operating their own marketplaces.  The federal government will be operating marketplaces for the non-participating states through the Healthcare.gov website.  Earlier in the month, THE WEEKLY STANDARD reported on a no-bid, emergency contract awarded in August to a Pennsylvania firm to provide a "financial management services system" for the Centers for Medicare & Medicaid's (CMS) operation of the marketplace.  The award noted:

With the impending and mandated October 1, 2013, Marketplace enrollment and January 1, 2014 go-live deadlines nearing, CMS' need for contractor-provided financial management services has reached an unusual and compelling level of urgency. The prospect of a delay in implementing the Marketplace by the operational date of January 1, 2014, even for a few days, would result in severe consequences, financial and other. 

    The contract description of the services required included accounting, printing and mailing, tracking of accounts receivable and accounts payable, documenting funds collected by CMS, data validation, debt management functions, and referral of debt to the Department of the Treasury, among others.  When inquiry was made to CMS about how these services related to the function of the federal Marketplace, particularly relative to transactions between consumers and the Marketplace, Richard Olague of the Media Relations Group for CMS replied via email on Tuesday, September 24, "We’re working on getting you more information."  No additional reply has been received as of this time.
    A single-payer national health system has been discussed for decades, but has never gained much popular support.  The structure of the state-run marketplaces, and possibly the federal marketplace, would go a long way in smoothing the path to such a system.  Businesses who use the exchanges will soon be remitting payments to the government for health insurance coverage, and even individuals will apparently have that option for the initial payment on their new policies.  The government already runs huge health insurance programs (Medicare and Medicaid), and the number of persons insured by Medicaid is expected to expand dramatically under the Affordable Care Act.  With more and more persons insured through the government and a growing number remitting payment for insurance through the government, the United States will certainly find itself closer than ever to national healthcare than at any time in its history.


Note: A version of this article first appeared at The Weekly Standard.