Just what is a health insurance exchange?

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By Colin Goldfinch, Group Health Public Policy Analyst
From the blog GroupHealth INNOVATES

Health Benefit Exchanges are a signature part of the Affordable Care Act but what is an exchange? Is it just “Expedia” for health insurance? The exchange’s primary role is to make health insurance in the individual and small group market easily accessible through a central online market place.

The exchange will function a bit like the Human Resources department of a large employer. It will support people who purchase insurance on their own by offering a platform for making an apples-to-apples comparison between plans that offer a similar level of coverage and disbursing Federal subsidies like a large employer contributes to premiums for their employees.

Through the exchange, people will be able to:

  • compare health plans;
  • check qualifications for premium tax credits or cost sharing reductions, as well as eligibility for public programs (Medicaid); and
  • choose and enroll in a health plan that fits that person or small company’s needs related to price, provider network, quality, and other plan features.

Exchange-Graphic

Here are some additional responsibilities of exchanges. They will:

  • certify whether health plans are qualified and will review annual premium increases;
  • offer a uniform enrollment form and will direct those applicants that are eligible to a Medicaid plan;
  • provide access to a calculator to applicants who are above the income threshold for Medicaid eligibility that will help them compare the cost of different plans, taking into account premium tax credits and cost-sharing subsidies;
  • establish a quality rating system to help consumers compare price and value;
  • operate a “Navigator” program, contracting with representatives from various communities to provide unbiased support to applicants as they decide between health plans;
  • operate a phone-line and website that consumers can use to enroll in the plan of their choice and get access to navigators for help; and
  • continue to engage brokers and producers, who will play the important role of steering new enrollees to the exchange and will continue to earn commissions for this work, although the details are still being refined in draft regulations.

Applicants to the exchange living between 100-400 percent of the federal poverty level (FPL) will have access to premium credits. Applicants with incomes between 100-250 percent  FPL will also have access to reductions in their deductible, co-insurance, and co-payments.

They will choose between bronze, silver, gold, and platinum-level plans that cover a specified percentage of the total value of the plan for an average population, also known as the actuarial value of the plan.

Exchanges either can be run by the state, by the federal government, or as a state-federal partnership. To date, 18 states and the District of Columbia have stated they will run their own exchange, although not all of those states have received approval from the federal Department of Health and Human Services.

Two years ago, Washington State became one of the first states to announce that it would operate its own exchange. The Washington Health Benefits Exchange is a quasi-governmental organization operated by a Board of Directors proposed by the state legislature and appointed by the Governor.

The Washington State exchange, named Washington healthplanfinderplans to be ready to assist people with health insurance choice and purchase starting October 1, 2013 for coverage that will be effective on January 1, 2014. Group Health, along with other insurance carriers in the state, is busy working with the exchange staff and Federal and State regulators to offer its products in this new market place.

This article first appeared on GroupHealth INNOVATES blog and is reposted with Group Health’s permission.

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