Group says exchanges likely to fail

WASHINGTON, Dec. 16 (UPI) -- Insurance exchanges proposed in the U.S. Senate health reform bill are likely to fail as currently structured, a non-profit group said.

The Committee for Economic Development, a group of 200 business leaders and university presidents, said exchanges -- health insurance marketplaces where individuals without employer coverage and employees of some small businesses would go to obtain coverage -- are central to managing healthcare costs effectively and increasing access to care.

The exchanges are potentially -- and with substantial improvement and expansion -- the best way to force insurers to compete on quality and price, the committee said, but without such competition costs will not be contained and U.S. healthcare will not be truly reformed.

A report by the committee said the Senate bill has taken some, but not all, necessary regulatory precautions against adverse risk selection that could discourage insurers from offering plans in the exchange. Adverse risk selection would occur if the exchange attracts more sick people than a cross-section of the population, for whatever reason, and under such circumstances, the exchanges would fail, the report said.

The study recommends Congress include language from the House bill prohibiting "improper steering" of high-risk patients into the exchange and require that providers have adequate networks to care for people with expensive health conditions.