The Exchanges Marathon Begins: Improving Health Care Quality and Lowering Cost

Oct 4, 2013, 4:37 PM, Posted by Susan Dentzer

Peter Lee Peter Lee, director of Covered California

When the starting gun went off this week for the nation’s health insurance exchanges, millions of Americans began shopping  for coverage. For those running the exchanges, or marketplaces, it was the start of a marathon.

That’s the conclusion that emerged from a Health Reporters’ Roundtable that the foundation sponsored in Washington recently. As top officials overseeing three of the state-based exchanges told reporters, signing people up for health insurance is just one of their tasks. Over time, the officials plan to use the power of their exchanges to help drive broader changes to improve the quality and value of U.S. health care.  

The foundation-funded State Health Reform Assistance Network is providing technical support to 11 states. Two of those states, Maryland and Rhode Island, were represented at the roundtable—the former by its exchange director, Christine Ferguson, and the latter by Maryland’s secretary of health and hygiene, Joshua Sharfstein, who chairs that state exchange’s board. A third state, California, isn’t receiving help from the network, but was represented by Peter Lee, the director of its exchange, Covered California.

Readiness: Although technical glitches have initially plagued some of the exchanges and the federal website,, exchange directors voiced confidence that most problems would be cleared up well before early December,  when they expect most people to sign up for coverage that will take effect in January.

The three characterized their activities as a marathon, rather than a sprint, because  they are only now laying the groundwork for the broad role in health care quality improvement that the exchanges plan to play over the long haul. 

As “active purchaser” exchanges, these three states, and many others, have already imposed various quality requirements on participating health plans, such as requiring them to have contracts with sufficient numbers of hospitals, doctors and other providers to accommodate all new enrollees. But most intend to ramp up requirements over time to take a firmer hand in improving the quality of health care and reducing its cost. 

“Exchanges like Covered California are are not just about coverage,” said Lee, its director. He noted that his state’s exchange was the first exchange to join the RWJF-supported Choosing Wisely campaign (,  an effort by medical specialty groups to highlight health care interventions that both patients and providers should question because of their dubious value.  By extension, health plans participating in the California exchange will also be engaged in deterring provision of low-value care. 

Value-based insurance design:  It’s well established that aspects of insurance design—for example, waiving drug copayments to encourage patients with chronic illness to stay on their medication—can influence health care and health outcomes over time. The foundation-funded state assistance network has been helping Maryland officials develop standards for value-based insurance plans that would be offered through the state’s exchange, Maryland Health Connection. State health secretary Sharfstein calls that potential “really exciting” and says the state hopes to offer such value-based insurance plans in its second year of operation.

Measuring outcomes: Rhode Island exchange director Ferguson said she sees a future role for her state’s exchange in helping to measure whether broadening health coverage truly leads to better health and other favorable outcomes. The state’s businesses, she noted, are eager to learn whether obtaining medical assistance for conditions like diabetes or sleep apnea will help their workers become more productive. 

So conversations have begun to determine how the exchange could help measure whether particular health plans or health systems truly did a superior job—resulting in, for example, lower worker absenteeism. If such information can be obtained and disseminated, Ferguson said, it will “revolutionize” the purchase of health coverage in the state.

As important, for Ferguson and other exchange directors, the new marketplaces would then be living up to their potential to help deliver on the vaunted Triple Aim of better health, better care and lower cost.