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Exchanges should make health care observable, transparent

ALBUQUERQUE, N.M. — Competition made possible by the Massachusetts health insurance exchange is slowing premium growth in that state and should do the same in New Mexico and nationwide.

That’s according to a member of New Mexico’s health insurance exchange board of directors who spoke to the Economic Forum on Wednesday.

Martin Hickey, who is also CEO of New Mexico Health Connections, a co-op that will sell insurance on the exchange beginning Oct. 1, said, “People in October will see essentially simple choices — health plans by price.”

The Affordable Care Act, which establishes the exchanges, is an attempt to put into place market forces that don’t exist today to restrain unnecessary spending on health care and improve quality of care.

The industry provides a large volume of care, but it must instead provide value for the dollar and make it observable and transparent.

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“There is no real transparency (now), so there is no real competition,” Hickey said. “You don’t know what the pricing is.” The exchange is designed to provide that transparency, he said.

Individuals also will need to know more about the system.

Insurance companies, including his own, are unsure how to price insurance to be sold on the exchange, Hickey said. Though the law requires everyone to have insurance the penalties in the early years are low enough that some people probably won’t sign up. Insurers are concerned people who haven’t had insurance will require a lot of expensive care immediately when they finally have coverage. It is possible sick people will buy insurance and healthy people will not. Unless regulators intervene, it is possible some companies will under-price their products to attract customers and raise rates later.

“Nobody knows how this is going to turn out,” he said. “There are so many variables, so many assumptions, nobody knows exactly which ones are going to take hold.”

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