Health insurance Exchange is one of the major aspects of The Patient Protection and the Affordable Care Act. These Exchanges are however not just an online platform for insurance plan transactions nor a mere listing of the insurance companies operating in the state. These Exchanges are governed by certain guidelines, need to mandatorily perform certain functions and must have certain features that will be common across the States.
The Exchange will function as an expansive online health insurance marketplace where residents can window shop and compare plans and finally purchase a policy that suits their medical needs and financial budget completely.
Though the Exchange will be funded by federal dollars, it will be governed by state authorities. Though the health reforms propagate that each state must have its own Exchange, it has also left for a Regional Exchange that will cater to a group of states. A regional Exchange will be cost effective and will be able to tap a bigger market, thus ensuring more competitive rates.
Low Cost Insurance:
The Act makes it all compulsory that all participating companies will exhibit their cheapest plan on the states. Also, the intense competition between the companies will lead to price war which will finally lead to residents accessing policies at the most competitive rates. Apart from the price war, the Exchange will also house sponsored health programs like CHIP, Medicaid and Medicaid. So, if a resident wants to purchase the cheapest plan, he will not have to look beyond the health Exchange.
Not Government Insurance
The Exchange is not a government insured health program. It is only an online platform, built with the government money and guided by government guidelines, that allows health insurance company, private or otherwise, to display their products on the Exchange.
Will not replace company sponsored plans
The Exchanges are not an alternative to getting coverage at work. Employer sponsored insurance will still remain one of the cheapest way to access health insurance. In fact, the Exchange will have a special segment for group coverage. Known as SHOP (Small Business Health Option Plan), this sub platform is meant for small business firms who are looking to purchase health insurance on behalf of their employees.
Not a way to curb premium rates
The main idea behind setting up an Exchange is to bring in more regulations in the insurance market place. Cheaper health plans are only a by-product of a perfectly built health Exchange. Otherwise, as the residents of Massachusetts have discovered from their experience with the Connector, the Exchange could end up going the cable TV way, with rising prices and limited choices.
Shaun Mike is an expert on health insurance and is currently studying about the intricacies of the state health insurance exchange that are to be formed soon.