The Design of Exchanges
What are exchanges?
An exchange is a place where those buying health care insurance can connect with those selling it. An exchange is not necessarily a brick and mortar facility, but rather a website where consumers can compare plans, learn more about the costs of those plans, and purchase one if they choose to do so.
The Patient Protection and Affordable Care Act (PPACA) calls for each state to create an exchange by January 1, 2014.
Who will be able to buy health care insurance through the exchange?
Initially, exchanges will be open to individuals and small employers (up to 50 or 100 employees depending on state interpretation). Eventually, exchanges would be open to larger employers.
The following individuals will be eligible to buy insurance through the exchange in 2014:
- Unemployed or self-employed Individuals.
- Individuals with employer coverage deemed “unaffordable”, i.e. who must pay more than 9.5 percent of their income for premiums, or those whose plans do not cover more than 60 percent of the cost their benefits.
- Employed individuals who do not have access to coverage through their employer or who forgo the offer of coverage from their employer.
- Employed individuals who work for an organization that employs fewer than 50 full-time employees.
- Individuals with incomes that are between 250 percent and 400 percent of the poverty level (that’s $55,125 to $88,200 for a family of four) would be eligible for premium subsidies through the exchanges. Those that have an offer of “affordable” employer-sponsored coverage would not be eligible for subsidies.
What does The Alliance’s resolution say about exchanges?
The Alliance’s resolution says that if exchanges are developed, policy makers should create exchanges that help consumers understand insurance and promote high-value providers. Specifically, exchanges should:
- Improve health, health care and control costs.
- Minimize the risk of negative market consequences.
- Advance public reporting and consumer understanding of cost and quality information.
- Reward high-value health care providers.
- Encourage and support consumers to be good stewards of their health and health care dollars
- Be voluntary.
- Simplify and streamline choices for consumers.
- Operate efficiently
You can read the entire resolution on the design of exchanges here (.pdf).
Why did The Alliance comment on this particular issue?
The exchange will be a powerful influence when it comes to setting policy for health care. Therefore, we want the exchange to contribute to the goal of system-wide improvement in quality and cost control so that the value of health care improves for everyone.