Health Insurance Exchange

A health insurance exchange is a set of government-regulated and standardized health care plans in the United States, from which individuals may purchase health insurance eligible for federal subsidies. All exchanges must be fully certified and operational by January 1, 2014, under federal law.

Scope

Exchanges of this type were intended by the administration of President Barack Obama as a governmental or quasi-governmental entity to help insurers comply with consumer protections and to compete in cost-efficient ways, and to facilitate the expansion of insurance coverage to more people. Exchanges are not themselves insurers, so they do not bear risk themselves, but determine the insurance companies that are allowed to participate in them. Ideally, a well-designed exchange will promote insurance transparency and accountability, facilitate increased enrollment and the delivery of subsidies, and play roles in spreading risk to ensure that the costs associated with those with high medical needs are shared more broadly across large groups rather than spread across just a few beneficiaries. This is what has occurred in the state-run Health Connector exchange in Massachusetts. Some hope that insurance exchanges also will help to contain overall health costs.

Health Insurance exchanges in the Patient Protection and Affordable Care Act (ACA)

President Obama promoted the concept of a health insurance exchange as a key component of his health reform initiative. Obama stated that it should be "... a market where Americans can one-stop shop for a health care plan, compare benefits and prices, and choose the plan that's best for them, in the same way that Members of Congress and their families can. None of these plans should deny coverage on the basis of a preexisting condition, and all of these plans should include an affordable basic benefit package that includes prevention, and protection against catastrophic costs. There are those who strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans. The belief is that it will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest. However, the public health insurance option was ultimately dropped from the reform legislation; the insurance sold on the health insurance exchanges in the United States will, therefore, now be exclusively from the private insurers.

The Patient Protection and Affordable Care Act (ACA) sets up insurance exchanges in each state known as American Health Benefits (AHB) Exchanges. Implementation of the individual exchanges changes the practice of insuring individuals. The expansion of this market is the major focus of President Obama's Patient Protection and Affordable Care Act. Studies have shown that increases in health care costs are driven by increases in per-case cost, not merely the overall prevalence of disease, thus driving the need for greater access to health coverage.

Author: Wikipedia Contributors

Publisher: Wikipedia, The Free Encyclopedia

Date of last revision: 7 March 2013