Question: What is an active purchaser health exchange?
Answer: A health insurance exchange’s active purchaser role is primarily the power to be selective about plans that qualify to be in the exchange - as opposed to simply providing a marketplace for any plans offered by the health insurance carriers in a given state. The California Health Benefit Exchange will develop a competitive process to select health insurers who will become certified to participate in the Exchange. It can stimulate price competition because health plans will want to get their products on the shelves of the Exchange. Carriers will compete on price to be selected. The more value a health plan offers the Exchange users, the more the Exchange is going to want these plans. First they have to compete to become qualified health plans in the Exchange and then they have to compete again to be selected by the individual healthcare shopper. Currently, the California Department of Insurance does not negotiate health insurance rates with the carriers. In its role as active purchaser the California Health Benefit Exchange can become a proactive force of change in the California health insurance market.
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