Health Insurance Exchange: Not the Panacea to Insurance Problems

Health Insurance Exchanges are expected to regulate the health insurance market. They will make insurance accessible to all, put on display the cheapest plans, foster competition and give more and standardized information about health insurance to the residents.

However, the setting up of health exchanges is not all good news. They come with their own share of problems. Here are the a few loopholes that could be possible roadblocks in health insurance exchanges becoming as effective as they are meant to be.

To begin with, the structure of the Exchange has been loosely defined by the federal guidelines. Though there is a basic premise that the states have to adhere to, the details have been left to the individual states. Now due to the lack of any precedence, states are doubtful about how to go about building an Exchange. They have the option of either administering it themselves, or outsourcing it or even asking the federal government to step in and build the online platform. Though there is more federal funding coming their way, states are doubtful if they will be able to meet the deadlines.

The administration of the Exchange could be another problem too. The health insurance platform will be funded by federal grants. It however has to be governed by local authorities. Therefore, it is essential that the powers and responsibilities of the federal as well as the state government are clearly demarcated to avoid any confusion in the implementation of the Exchange.

Another concern in the implementation of the health Exchange would be the medium that the state chooses. The choice is left to the states and most of them will be going in for an online regulated health insurance platform. While the Internet will definitely make health plan transactions much easier and faster, those who do not have access will have to find alternatives. For these residents, purchasing health insurance from the state-based Exchange will become tougher rather than being hassle free.

The health Exchange is all about fair play and fostering competition. The Exchange will give the power the residents to choose from a wide array of options. Just as too many cooks spoil the broth; too many options could end up leaving the client confused and he may end up picking a plan that is not the best deal.

The building up of health insurance Exchange could also end up antagonizing the brokers and agents who till now had acted as bridges between the health insurance company and the client. But with the residents being able to purchase their plans directly through the Exchange, the role of these middlemen will be diminished. Though experts believe that agents can use the Exchange as a support mechanism to aid their business further, the damage has already been done. Agents and brokers see the Exchange as competition to their profession.

The Exchanges are a great way to bring in more regulations in the health insurance sector, but it is not the panacea to all the problems in the industry. They are issues with the building and the effective implementation of the Exchanges and the state and federal authorities need to sort out these concerns before they make the platform accessible to the residents.

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