Health Insurance Marketplaces Under the Affordable Care Act

Health insurance marketplaces, also called health exchanges, are a means for people to purchase health insurance. They are organized in each state. These marketplaces allow you to choose the best policy that will suit your needs. Depending on where you live, you can shop for a plan through a federal or state exchange.

State exchanges

The new state exchanges for health insurance marketplaces will have several important responsibilities. These include maintaining toll-free hotlines for consumers to call in case of questions, helping consumers choose a health insurance plan, determining eligibility for federal subsidies, and providing information on the quality of health plans. Health exchanges are also responsible for conducting outreach and education efforts to ensure consumers can make an informed choice. The exchanges should also establish clear criteria for which health plans will qualify for subsidies.

One of the main challenges that state exchanges will face is adverse selection. This is a problem known as overrepresentation of high-risk individuals in the marketplace, which increases costs and premiums. This can be addressed by implementing risk-adjustment mechanisms that shift funds from low-risk enrollees to higher-risk ones. States should monitor and adjust these mechanisms as needed.

Federal funding for health insurance marketplaces is necessary for state exchanges to be fully operational by January 2014 sharecaretaker.com. Most states are already planning for federal funding for their exchanges. The Department of Health and Human Services announced grants to support state exchanges in September 2010 and early innovator grants in February 2011. The grant money will be used to support planning and implementation. Further funding may be made available as implementation progresses. The HHS secretary is responsible for overseeing the exchanges in each state.

The goal of health insurance exchanges is to make insurance more affordable for consumers. The exchanges help stimulate competition in the insurance market, which leads to lower premiums and higher quality plans. But some people choose to purchase health insurance outside the exchange. Fortunately, there are several ways to find a plan without a plan through an exchange. For instance, eHealth makes it possible to search health insurance plans from multiple providers using your state or zip code.

However, the cost of operating an effective exchange is not the same in every state. Long-running exchanges spend between $240 and $360 per enrollee annually. Newer exchanges plan to spend around $360 per enrollee.

Federal exchange

The Affordable Care Act includes two basic types of federal requirements for Exchanges: minimum functions to be performed by the exchange and oversight responsibilities. Under the Act, Exchanges must certify Qualified Health Plans and monitor their performance. They also must comply with state insurance laws and federal requirements under the Public Health Service Act. States should incorporate these federal requirements into their exchange legislation.

Currently, many states are working on exchange legislation, but many are waiting for additional policy guidance from the federal government. One of the biggest challenges to the exchange is a problem known as adverse selection. This refers to the disproportionate enrollment of high-risk individuals and employers into the exchange. This disproportionate enrollment results in higher premiums for everyone in the exchange. The higher the cost of coverage, the more people will drop out of the exchange. This creates a high-risk pool and a death spiral of rapidly rising costs.

The cost of running a strong exchange varies widely. In Utah, for example, the exchange is run by private companies with a modest budget, and its role is to provide basic requirements and scale up the exchange. In addition, it collects data on health plans that participate in the exchange. However, Utah's exchange does not turn away carriers. Utah considers the private insurance market to be working for its residents.

The exchange allows people to input information such as income and family size in order to find the best insurance plan. In addition, people can also input their medical providers and find out whether different plans cover their prescriptions. Depending on your needs, you can even narrow down your search by selecting the plan type, insurance company, or cost. Ultimately, the goal of the exchange is to make health insurance more affordable for everyone.

There were some technical problems with the enrollment and eligibility process, but these were quickly resolved. The most widespread problem was a common data-matching issue that affected nearly all consumers. This was a problem with the federal data services hub, which allows state agencies to exchange information. Fortunately, FixInsured and GetInsured subsequently identified the issue as faulty computer logic.

Private exchange

Many states are planning to develop laws governing the private exchange health insurance marketplace. The federal government has already released initial guidance on exchanges, and the National Association of Insurance Commissioners (NAIC) has developed model legislation. Activity in developing state exchange laws has increased dramatically in recent months, and states are eager to move forward with their plans, anticipating further guidance from HHS. A key consideration for state planning efforts will be the creation of a comprehensive, essential health benefits package.

Private exchanges are typically operated by carriers, benefits consultants, and technology platforms. Benefitfocus, for example, is a cloud-based platform that enables individuals to shop for health insurance and other benefits. Liazon, a division of Willis Towers Watson, has been in operation for more than a decade and serves more than a thousand clients through its private benefits exchange. Another notable player in the health insurance marketplace is bswift, which was acquired by Aetna in 2014. It also offers exchange solutions for active employees and retirees.

Another benefit of the private exchange health insurance marketplace is that it provides employees with many plan options. Most traditional employer coverage offers one or two plans. Private exchange health insurance marketplaces feature hundreds of plans for individuals to choose from. Although this increased choice can be overwhelming for enrollees, most exchanges have decision support tools to help them choose the best plan for their needs.

The Affordable Care Act leaves states with substantial flexibility over the governance of exchanges. They can determine the organizational and financing structure of their exchanges and their operational standards to meet federal requirements. These decisions will determine the success of the exchange in providing affordable health insurance options to consumers. For instance, a health insurance exchange in Utah may choose to use a rating system to certify the insurance plans that are offered.

While the private exchanges may not offer the same choice and flexibility as SHOP Marketplaces, they may provide some administrative services that help employers comply with the ACA. Moreover, they may offer cost-reduction strategies such as high-deductible plans, defined contributions, and reference pricing. Some respondents argue that this model will boost competition among insurers and lead to efficiencies in benefit administration. However, most respondents argue that the primary benefit of private exchanges is the increased choice of plans and lower premiums.