National plans bring competition to insurance exchanges

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Insurers soon will have a new type of competition--two national health plans contracted with the federal government--when they sell policies through the forthcoming health insurance exchanges.

The Office of Personnel Management, which currently manages federal employees' health insurance, will work with the contracted private insurance companies to administer benefits. OPM also will negotiate premiums and benefits for the plans, which were included in the reform law as a substitute for the public health plan option, reported The New York Times.

The nationwide plans should increase competition and amplify pricing pressure in individual insurance markets, particularly when dominated by single insurers. What's more, the nationwide plans could enroll far more members than other plans, allowing them greater bargaining power to negotiate lower prices, The Washington Post reported.

Private insurers already began expressing concern about the national plans, particularly whether they will comply with various state laws, consumer protection standards and benefit mandates. It's also unclear whether the national plans will be required to meet each exchange's certification standards.

"We are concerned that OPM has not yet released rules specifying the requirements for the multi-state plan," Jay Warmuth, a lawyer at UnitedHealth Group, told the Times. In fact, the White House has been reviewing the rules addressing the national plans for three months.

To learn more:
- read the New York Times article
- see the Washington Post article

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