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h ea l t h i n s uranc e e xchang e s
14
MAR / APR 2013
I
Healthcare Journal of NEW ORLEANS
expected increases in patients with pre-
existing or chronic conditions.
Unfortunately, some suspect that many
of the healthy uninsured will remain unin-
sured, choosing to pay admittedly minor
penalties (at least for the first year), rather
than what could be potentially significant
premiums, or to just wait until they get
sick (since they no longer can be denied
for pre-existing conditions). Based on the
minimum levels of coverage the federal
government is mandating, called essential
minimum benefits, premiums are antici-
pated to be high. Lacking the employer
match that many currently insured citi-
zens rely on, the government has decided
to simulate that employer match with sig-
nificant tax breaks or subsidies for those
whose annual income is up to 400% of the
federal poverty level or a little less than
$45,000. The idea is to bring the premium
down to a rate that is both affordable and
similar to what employer-insured citi-
zens might pay. Whether or not the patch-
work funding the federal government has
tapped to pay for these subsidies is sus-
tainable is one of the many concerns cited
about the exchanges.
While all plans will have to offer the
minimum essential benefits, they will not
be one size fits all. Plans will be available
in four tiers, Bronze, Silver, Gold, Platinum,
depending on the coverage offered and how
much consumers are willing to pay.
Does everyone have
to have an exchange?
Yes. Every state will have to have a func-
tioning exchange in place by January 2014,
with enrollment beginning as early as this
October. States had until December 14,
2012 to indicate if they would be creating
their own state-based exchange. The dead-
line for opting for a state-federal partner-
shipwas February 15, 2013. For those states
However, from the beginning, Louisiana
was among a handful of states that opted
out of creating an exchange at all, some
going so far as to return grant money pro-
vided by the federal government to help in
planning efforts. Since then, several other
states have decided not to pursue a state
exchange. For those states, the federal gov-
ernment has indicated it will put in place a
federally-run health insurance exchange,
but details of what that would look like or
entail remain vague.
What is aHealth
InsuranceExchange
Anyway?
A health insurance exchange is a
type of marketplace or “one
stop shop” for insurance,
likened by some to a dis-
count travel hub like Expe-
dia. Individuals and small
employers can com-
pare plans and rates for
a variety of insurance
plans offered by private
insurers and choose the best
fit for them. The idea was to
make it easier for consumers to purchase
individual insurance coverage, which will
be mandated by PPACA in 2014. Increased
transparency of benefits and prices as well
as competition between insurers would, in
theory, keep the rates down and the indi-
vidual mandate would, also in theory, cre-
ate a larger consumer pool, so there would
be more business for all insurers. How-
ever, insurers have also been hit with other
restrictions such as guaranteed issue for
those with pre-existing conditions, no
rescission, no annual or lifetime caps, etc.,
factors that have traditionally helpedman-
age their risk. It is hard to tell if there will
be enough of an influx of healthy patients
under the individual mandate to offset the