Health Care Reform in the United States was a groundbreaking law that already has drastically changed the health care landscape. From the Medical Loss Ratio that put refund checks in the mailboxes of millions of Americans, to a mandate that forced health insurance companies to continue to cover dependents on their parent’s plan up to the age of twenty-six, reform has been very visible. One of the biggest reforms is still yet to come, though, and won’t be put in place for over a year from today: Health Insurance Exchanges.
On January 1st, 2014, every state is required to run a health insurance exchange. They can either set up their own exchange or have the Federal government run their exchange.
What is a Health Insurance Exchange?
A health insurance exchange is essentially an “insurance marketplace” where those who do not have health insurance provided by their employer, or employers with up to 100 employees, can purchase health insurance. These plans are eligible for federal subsidies, and are required to fulfill certain minimum standards such as the following:
- Insurers must cover anyone who wants to purchase; they can’t refuse insurance to anyone
- No lifetime or annual limits on coverage
- Limits on Price Variations
- Must cover claims related to pre-existing conditions
The exchange would be a website that people can access at any time to purchase health insurance. There would be a toll-free phone number that people can call with questions or issues. Beyond that, according to health reform Minnesota, exchanges would also:
- Operating a toll-free hotline and website for providing information
- Ensuring that health insurance plans meet certain standards (for example, related to marketing, access to health care providers, and reporting on quality of care)
- Providing information in a standard format to help consumers compare insurance companies and benefit plans
- Determining eligibility for individual premium tax credits, cost-sharing assistance, and coverage requirement exemptions
- Determining eligibility for Medical Assistance
- Determining eligibility for small business premium tax credits
- Providing real-time enrollment in health benefit plans
- Making an electronic calculator available to display the cost of coverage
- Communicating with employers regarding employee tax credit eligibility, cancellation of coverage, etc.
How does a Health Insurance Exchange work?
Explaining how the health insurance exchanges will work on a detailed level is difficult, because each state will have their own exchange. There will be uniformity because of the minimum standards and structure defined in the Affordable Care Act, but overall there is still leeway for each State to format the exchanges how they see fit.
The exchanges (in theory) would work like this:
- An individual would log on to the website for the exchange in their state
- They would then answer a number of questions
- The application would process their information and show them insurance offers in real-time
- They would be offered insurance rates in real-time
- The individual would choose the plan they want
As stated earlier, this is all “in theory” how the process would work. There is always the chance of computer glitches, databases crashing, and people just plain not understanding how to go through the process. That’s where the toll-free hotline comes into play, though I would imagine that there would be a chat feature integrated into many of these exchanges as well.
What does this mean for you?
Understanding the ins and outs of health insurance exchanges could take months, but there are a few key takeaways:
- There will be subsidized, legally mandated health insurance available starting in 2014
- The cost of insurance from the exchanges will be linked to income and other factors
- Health insurance will be available to all Americans regardless of income, pre-existing conditions, or other factors
- Some states are actively resisting the implementation of exchanges
It will be interesting to see where all the chips fall and how smooth the implementation of the exchanges are in 2014. While the debate rages on as to whether this is the right approach to health insurance and expanding health care coverage, as of today the exchanges will be implemented and a majority of states are actively moving forward in plans to implement. Because of the high level of subsidization of insurance for the exchanges, it will quickly extend coverage to many who either could not afford insurance or were denied coverage due to pre-existing conditions.
In the meantime, if you do not have insurance but want to be covered until the exchanges roll out in 2014, consider looking at the options available to you at eHealthInsurance.com:
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Thanks for the informative post DC. I also wonder what the election will do with this topic. I am sure if Romney wins there’ll be changes if not outright repeal of it. I know that he’s attacked it, but not certain where he might stand at this particular moment. I think there are some good provisions about the plan, I just know though that if the government is involved that it’s bound to be riddled with red tape.
@FrugalRules Romney has already stated he would keep various measures of the health care bill. For example, he supports the age 26 coverage clause that I mentioned in the article. I think Romney nor most of the Republicans have the desire or capacity to overturn it.
Thank you for all the info! As a person with a pre-existing condition, I am truly glad to see that I can no longer be denied health insurance as I have been in the past. I hope these new laws help more than they hur.
@Holly at ClubThrifty Health insurance is a complicated area, and there is no simple solution. I’m glad that you can no longer be denied coverage and that is something I think both sides of the aisle agreed on…just not on how to get to that point.
I actually was on a comittee that had several conference calls with the group setting up the CO exchange. There’s lots of right hand not knowing what the left hand is doing. While it’s a good idea in theory, I’m doubtful about the long term success. Many people who don’t get employee sponsored coverage are usually not proactive enough to educate themselves about insurance needs and I’m not sure the state or fed government can be helpful. Let’s hope.
@Eyesonthedollar I could see care providers educating patients on how to log in and get insurance. It guarantees they get paid and will lower their costs since if they deny health care they know the patient will go to the ER eventually.
@Eyesonthedollar Also, very cool that you got to sit in on the conference calls! That’s something I would have been interested in doing…though I am entirely removed from it at this point.
Will this go into effect despite who wins the election? It seems scary that insurance companies can’t refuse coverage to people. What is that going to do to our premiums? I know this is supposedly going to be paid by our govt. but it’s scary thinking about what’s going to happen to our national debt. Maybe I’m missing something?
@Veronica @ Pelican on Money
Scary? Maybe….but health insurance shouldn’t only be for healthy people. What kind of country are we if we just let sick people go without care?
@Holly at ClubThrifty @Veronica @ Pelican on Money I don’t see the election having any effect on the health care law. A lot of the Republicans are much more centrist than most people think.
I used to blog about politics and I’m trying very hard not to dive into that sort of blog posting/commenting but I will say this: In theory (remember this is theoretical and it would take a lot more than a blog comment to arrive at how this would play out in real life) I believe the government can’t be charitable because they have to take everything they have by force. If they are subsidizing health care through programs and whatnot, it’s redistribution. In theory I believe that charities that get money voluntarily should be filling the gap and providing the funds for people to get care who either can’t afford it or who are stuck with a bill they simply can’t pay (yes prices are outrageous!). I would imagine that the health insurance companies and many others would be more than happy to donate money to these charities. No one is denied care, and it would all be administered through a nonprofit.
BUT like I said that is in theory.
In reality a charity like that would fail because government has taken on that role through medicaid, medicare, and through the new regulations set out in health care reform. I disagree that the end justifies the means, but that is essentially irrelevant.
What we have is in 2014 exchanges coming into place and there is almost zero possibility that these will be shot down by the Republicans.
@DC @ Young Adult Money @Holly at ClubThrifty Hehe David, I know how politics gets people upset, I wish it didn’t. I’d say my opinion on issues that divide this country down the line are quite radical. I try not to speak my political opinions because every time I open my yap someone gets upset.
@Holly at ClubThrifty I’m not an advocate of restricting health care access to privileged only. I wholeheartedly agree that everyone should have insurance coverage, but I also realize that health care is broken in our country. PF bloggers are great at advocating budgets, yet our government doesn’t seem to care to follow it’s own. Healthcare for all is a great concept and I fully support it, but we’re just not there yet (politically, economically) and we can’t simply ignore budget deficits and the national debt. At the very basic core of things we should at least have a national campaign to get people healthy. This however, seems like an undertaking equivalent of getting people off fossil fuels.
I don’t think we disagree. We cannot continue to ignore budget deficits. We also cannot ignore sick people who need care. The key is to find a solution that provides people with care yet is financially sound.
There are a lot of people who are chronically ill who cannot buy health insurance because no one wants to cover them. Then there are people like me- with a pre-existing condition- who are extremely healthy. I only went to the doctor once this year- yet I cannot buy coverage on the open market because of a prior back surgery.
Luckily we finally got a group plan at work and I am now covered. However, I didn’t get to have kids until I was 29 because I couldn’t buy health insurance because of my pre-existing condition. There is something extremely wrong about a system that dictates when people are allowed to have children. And remember- it wasn’t because I didn’t have the money to buy insurance. I have plenty of money yet no one would cover me.
It is a complicated issue but I think that it would be helpful if everyone started off with the fundamental understanding that we are all going to pay for each other’s healthcare whether we want to or not. People who do not have insurance use the expensive emergency room or run up bills that they can never pay off. All of those costs get passed on to everyone else and it is beyond our control.
This year my family paid $10,000 for our group health insurance policy. We were all very healthy and my kids went to the doctor a few times and I went once. Anthem took in 10K and paid out $325. Over $9500 in profit off of us yet they raised our rates 11% for next year. They do this because they have to cover other people’s healthcare costs and rising rates.
This is why I am an advocate of Universal Healthcare. We are all paying for each other already.
As a Canadian, I really can’t believe what you guys have to go through in terms of your insurance policies. I can’t imagine being denied medical treatment for preexisting conditions let alone worry I may not be able to get insurance to cover me (this insurance really only being necessary for prescriptions as our universal healthcare would cover 100% of any and all medical treatments I may need). Given that I don’t know that much about how your system works in terms of current policies, as it stands right now, is the only way to get insurance through an employer? Do you have to have a job to get insurance or can you buy into your own private insurance?
@PlungedinDebt You absolutely do not have to have a job to get insurance, it’s just a lot cheaper than the individual market. That’s all essentially irrelevant now with the dawn of exchanges.
Best write up on this topic I’ve seen so far, DC. Thanks for the thorough coverage. I’ll be interested to see how it all rolls out.
@AverageJoeMoney Thanks appreciate the feedback!
Us Canadians at Outlier Model are pretty ignorant about the ways of US health insurance ;) This was very informative, thank you!
Beginning in 2014, Exchanges will serve primarily individuals buying insurance on their own and small businesses with up to 100 employees, though states can choose to include larger employers in the future. States can create multiple Exchanges, so long as only one serves each geographic area, and can work together to form regional Exchanges. The federal government will offer technical assistance to help states set up Exchanges.
Good information on health exchanges. What about the inclusion of dental, vision and prescription needs as a part of Affordable Health Care Act?
http://www.dentalandhealthmatters.com