The Truven Health Blog

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By Truven Staff

Three Reasons Why It’s a Good Thing Hospitals Are Engaging in Health Insurance Exchange Plan Enrollment

Mike Taylor imageAn article last week in the Washington Post (“Hospitals Emerging as Powerful Healthcare Sales Force,” by Jay Hancock, Sept. 13, 2013) explored a growing trend in the world of healthcare reform — the role of hospitals in recruiting newly eligible consumers for insurance coverage.

As the new health insurance exchanges, or marketplaces, open for business next month, research from Truven Health about the Accountable Care Act shows that an additional 21 million people will be eligible for coverage in 2014.

For hospitals, that number represents potential revenue from a fresh, newly covered market — new revenue from patients who did not seek out medical care in the past because of financial barriers, and from uninsured people who sought out care but couldn’t pay their medical bills.

Obviously, then, it’s a smart move for hospitals to help those new consumers enroll in coverage. But there are other reasons why this trend is positive: 

  1. Hospitals and health plans need each other to impact higher-quality care. In the past, hospitals and health plans worked for opposite incentives. Hospitals were rewarded for higher numbers of services performed. Health plans wanted to keep the number of services rendered low. Now as a result of reform that rewards quality, not quantity of care, the two entities are coming together — particularly when partnering in risk contracts — to figure out how to measure, manage, and deliver higher-quality outcomes. The trend is indicative of the transformation going on in healthcare as we move from a fee-for-service to a value-based purchasing model. 
  2. Hospitals must do whatever it takes to protect their market share. It makes good business sense for hospitals to protect their existing market share in a complex environment where things are changing rapidly. Closely partnering with insurance plans and helping patients find the best plan for them are two avenues to prevent erosion and boost patient loyalty and engagement. 
  3. Patients will ultimately benefit. A lack of transparency has been a problem — with different contracts for different plans driving care costs. But with stronger affiliations between hospitals and health plans, transparency should increase, with consumers gaining a better understanding of price points.
Another important benefit for consumers is that once a hospital helps a person get enrolled in a plan, he/she can take advantage of preventive care. That should mean less ER visits — and better chronic condition management.

In addition, hospital-health plan alignment paves the way toward better population health data and analytics  — which the hospital can act on to improve overall community health.

Finally, the fact that hospitals are actively recruiting for exchange plans is directly tied to healthcare’s overall bottom line. The more people who are insured, the fewer write-offs are needed. That should trickle down to better pricing for consumers. But for that to happen, the new exchanges need to sign up enough of the newly eligible — many of who are young, healthy people who don’t see a need to enroll. The more recruiting help exchanges get from all sides, the better for all consumers.

Note: For more information on the population that is newly eligible for coverage through health insurance exchanges, view our infographic, “Unmasking the Uninsured Population in Your State.”

Michael L. Taylor, MD FACP
Chief Medical Officer