Health Exchanges: What Are They?
The health care reform legislation now separately approved by the House and Senate contains a new mechanism - health exchanges - for persons not working for large employers and not on Medicaid, Medicare, or other public programs to purchase health insurance. Working adults with ADHD with modest incomes who not employed by large employers will look to health exchanges to purchase insurance. Enactment of the healthcare reform legislation would result in an estimated 30 million Americans receiving health insurance through exchanges. As a small employer (25 employees), CHADD would likely turn to an exchange for our health insurance.
What are health exchanges and how will they work?
A health exchange is a government-sponsored or authorized organized market for purchasing health insurance. Examples of existing exchanges are the Federal Employee Health Benefits Program (FEHBP), Massachusetts Health Connector, Connecticut Business and Industry Association Health Connections, and the Utah Health Exchange. Exchanges created in California, Florida, and Texas have closed, as they were not financially viable as structured. Governments do not operate these exchanges; rather, governments sponsor or authorize them.
I don't want to scare people, but exchanges are based on the Clinton administration-proposed managed-competition philosophy, where preregistered and preapproved private insurance companies compete for enrollees based on publicly stated measures of price, benefits, provider networks, consumer satisfaction surveys, and in theory, quality. At a seminar I attended last week in Washington, DC, the CEOs of the Massachusetts and Connecticut exchanges stated that quality is not yet a factor in their exchanges. Only preapproved health plans meeting standards and requirements may compete in an exchange.
Exchanges would prior-approve health plans. Under healthcare reform, plans would have to deliver standardized benefits and would have to ensure practices such as guaranteed coverage and renewal (thus prohibiting pre-existing condition exclusions) and establish publicly known and regulated premiums.
There are major differences between the House and Senate legislation around exchanges: how much national government control and authority versus how much state government; how much public disclosure and transparency by health plans; how much authority to require risk pools and risk adjustments; how much authority to limit-regulate premiums. There are also differences in whether individuals who are not part of small group plans would use the exchange or some other mechanism to purchase health insurance. And, a larger issue of congressional health care reform is the affordability and amount of subsidy for people with modest incomes.
The seminar on exchanges was conducted by the Alliance for Health Reform and financed by the Commonwealth Fund and the Kaiser Family Foundation. The Alliance for Health Reform has posted a webcast, podcast, and videos of the seminar for anyone interested in learning more.
I hope this is helpful.