A Look at How Exchanges Will Change the Health Insurance Sector

Health Insurance Exchange is a term that most residents are familiar with by now. Commonly known as an insurance market place and initially open to only individuals and small businesses, these Exchanges have four major functions:

a) Promote choice and competition
b) Provide information and promote transparency
c) Ensure affordable coverage, especially to the low-income population
d) Make health reforms more effective

Here is a look at how the Exchange will go about achieving these functions.

Promote choice and competition: The Exchange will encourage competition among the health insurance companies and thus more choices for the residents by allowing more and more companies to participate in the Exchange. Since the online platform will open the floodgates for the uninsured population, these companies will try to outdo each other by offering health plans at competitive rates. It is also mandated by the federal government that the companies will have to display their cheapest plan on the Exchange.

Provide information and promote transparency: All the information, definitions, marketing requirements, jargons, plan details have to be presented in a standardized and easy-to-understand format. Every health insurance Exchange should have a toll free 24*7 helpline to assist residents, navigators, agents, brokers and even insurance companies and to clarify any doubt they might have about the health plans and the Exchange itself. It is also the duty of the Exchange to make information available through other means to those who do not have access to the Internet. The Exchange, through the navigators, should also make the residents more aware about health insurance and the newly implemented federal reforms.

Ensure affordable coverage: The surest place to find the cheapest health plans is the state health insurance Exchange. Add to that the competitive pricing, and the residents will have access to some of the most affordable plans available. If a resident is eligible for government sponsored insurance programs, then the Exchange will inform him about it. Residents and small firms buying health plans from the Exchange will be eligible for tax credits, which will further bring down the costs of their coverage. The tax credits will depend on several factors like the type of plan chosen, the number of members in the family, the annual income of the family and in case of small firms, the size of the firm and the percentage of the premium it is paying on behalf of its employees.

Effective implementation of health reforms: The Exchange is expected to bring in more regulations in the health insurance sector. There are certain criteria insurance companies have to meet before they are eligible to be a part of the Exchange. They must spend a minimum of 80% of their premium dollars on providing healthcare. The cheapest plan of each company must be available on the Exchange. They cannot deny the application of residents with pre-existing conditions or charge them more. Access to health plan will be delinked from employment ensuring residents have medical coverage even when they are between jobs.

Health insurance Exchanges are expected the change the way citizens look at their medical policies. It is anticipated that with the Exchanges coming up, purchasing health plans will be an easier and more pleasurable experience for the residents.

Shaun Mike is an expert on health insurance Exchange and is currently studying about the intricacies of the state health exchange that are to be formed soon.