Bill Wehrle is Vice President, Health Insurance Exchanges for Kaiser Permanente. In this role, he is responsible for influencing the policy development of health insurance exchanges in each state. In California, Mr. Wehrle is responsible for leading Kaiser Permanente’s relationship with the California Health Benefit Exchange and leading Kaiser Permanente’s strategy and execution for exchange products and membership.
Mr. Wherle participated in a forum sponsored by The California Endowment and organized by the California Small Business Majority. The three-part forum on how to best implement the SHOP Exchange in California took place between October 14, 2011 and January 11, 2012. We have gathered some of Mr. Wehrle’s comments here.
A Successful Exchange
“CaliforniaChoice, a private exchange that offers health coverage from several carriers including Kaiser Permanente…has been quite successful. However, adding choice can be very expensive. This is one reason why CaliforniaChoice is more expensive than the rest of the market”.
On Employee Choice
“Kaiser Permanente believes that offering a choice of carriers is crucial. However, introducing unfettered choice among benefits is expensive. We favor a system where the employer picks a benefit level (bronze for example) and the worker can buy up one level (silver) if he chooses. That offers some choice, but is not completely unfettered.”
On Standardization of Benefit Plans
“Kaiser believes standardizing plans can be an effective approach to promote healthy competition among insurers. With that said, the SHOP must offer more than just a very small number of plans in order to meet the needs of California’s diverse small businesses. Kaiser believes this can be accomplished by having one Health Maintenance Organization (HMO) plan and one Preferred Provider Organization (PPO) plan offered in each benefit tier, both inside and outside the exchange. That would help end the carrier practice of competing to attract the healthiest customers rather than on plan price or quality. By getting creative with plan design, insurers can control the type of risk coming into their pools,and can become quite profitable by attracting healthy customers. Once one insurer does this, its competitors will often follow suit to stay competitive. By making plans standard, or as close to standard as possible, insurers will be forced to compete on price and quality, not plan design. Plan standardization must be done market-wide. Only standardizing plans that are sold in the exchange would be a mistake and would lead to adverse selection.”
On Using the Active Purchaser Role
“The challenge will be to use the exchange’s tremendous power as an active purchaser to bring real change to the marketplace. The exchange can make use of their clout to set the terms by which plan choices are offered. For example, the exchange can use its active negotiation power to standardize products-meaning plans can compete on price and quality but not benefit design. Another thing the exchange can do is to require plans to set up competing networks so there are competing healthcare delivery systems, not just plans.”
On Underwriting Rules
“There are some areas where the SHOP exchange will not want to differentiate itself from the marketplace. Underwriting decisions, for instance, must be the same within the health benefit exchange as they are in the outside market to avoid adverse selection, This is what caused adverse risk selection in PacAdvantage.”
“Brokers must be paid market-rate commissions in the SHOP exchange. Failing to do so means brokers will be actively selling products that compete with the exchange rather than working for it.”