One interesting mandate in the recent health reform acts is the implementation of a health insurance exchange in each state. According to President Obama, a health insurance exchange is to be a place where American citizens can shop for a health care plan, compare benefits and prices, and choose which plan is best for them. The insurance plans marketed on the health insurance exchange would ideally not deny individuals coverage based on pre-existing conditions, protect Americans from catastrophic medical costs, should all include basic benefits, including preventive services.
Congress hopes that a health insurance exchange will promote transparency and accountability within the health insurance industry. This would occur because information on the many different health insurance plans from many different health insurance companies would be publicly displayed on the health insurance exchange. Customers would then be able to compare plans side-by-side. A health insurance exchange should objectively and impartially provide information for consumers using simple language that is easy to understand. Some people have suggested that the search results be randomized so that there is no alphabetical preferential treatment. In other words, if the search results are alphabetical every time, Aetna will always be seen much earlier than United Healthcare. This is not objective and impartial.
A health insurance exchange will not function as an insurance provider. In other words, they will not be the insurer themselves. They would similarly to an insurance broker, however, without the customer service provided by licensed insurance brokers. A health insurance exchange would contract with private health insurance companies to offer their plans and policies, and to provide this information and quotes to consumers.
There were a few health insurance exchange set up already in the United States, most notably in Massachusetts (Massachusetts Connector) and Utah (Utah Health Exchange). These have been good examples for how a health insurance exchange is supposed to work. There is also a New York-based, non-profit health insurance exchange called Health Pass. However, there has also been a couple of failed health insurance exchange in Texas and California. These two health insurance exchange resulted in higher premiums, and “cherry-picking” of customers.
Obviously, it is hoped that each state will implement and administer an excellent quality health insurance exchange within each state. Some states have chosen to administer these themselves, while others have allowed the federal government to run that state’s health insurance exchange. The debate has been over how to fund this plan. Some experts believe a health insurance exchange helps facilitate the enrollment of more American citizens into a health care plan, while also providing structure and supervision to the current health insurance market.
The Patient Protection and Affordable Care Act of 2010 (PPACA) has set up for the implementation of the health insurance exchange, but there is still some leeway regarding how it is to be set up, and how each state should handle it. There are also questions regarding whether the federal health insurance exchange will include a government-run insurance option. Although this was originally a part of the health reform bill, it was removed before it passed.
At this time, it appears as though a health insurance exchange will provide a web portal with information and quotes about health insurance plans, which it is hoped will result in more American citizens enrolling in an affordable health insurance plan.