Hurdles that the State Health Insurance Exchanges Could Face

It is anticipated that the state health insurance Exchanges will forever change the way Americans look at their health policies. But to say that the Exchanges have everything right going for them would be far-fetched statement. The Exchanges are sure to bring about a drastic change in the world of health insurance, but the government might end up facing a few hurdles before it effectively implements these state based online insurance marketplaces.

The governance of the Exchange is a major concern. The Exchange will be funded by federal dollars. It has to meet the guidelines set by the federal as well as the state government. So should it governed by a body that represents both the parties? Or should a non-profit entity be handed over the charge of administration? Governing a regulated insurance marketplace, and more importantly, who is in charge of the job will perhaps be one the first few problems that the Exchange has to deal with.

The insurance is a regulated market place for the participating insurers. But what about those who choose to remain away from the Exchange? Will they be free of the regulation that the Exchange mandates? Or will the government choose to completely eliminate the insurance market beyond the Exchange? Ideally HHS (The US Department of Health and Human Services) should design a high-end and practical risk-adjustment system that will allows states to adjust risk among participating and non-participating health insurance companies.

Initially there would be restrictions on who can purchase health plans from the Exchange. Large employers and self-employed employees will be kept out of the Exchange in the starting phase. But these statuses should be clearly defined to avoid any sort of confusion. However states should seriously consider extending the Exchange to the larger companies and self-employees in the later stages to bring more residents under the umbrella of the Exchange.

The key to the success of the Exchange would be the participation of small businesses in large numbers. States have to figure out a way to attract these small firms to these health insurance Exchanges. There should be greater incentives in terms of either the coverage provided or the tax benefits that the companies receive. Employers could also offer more support to lower income employees with the help of the subsidies they receive through the Exchange.

There are a few requirements that the companies have to meet before they are eligible to take part in the Exchange. The Exchange even has the authority to disqualify those who do not meet these guidelines. But how the Exchange exercises its authority still remains a question. A bigger question is amount of power and authority that the state will bestow on the Exchange.

The federal government will aid the building up of Exchanges in every state. But these health insurance Exchanges will need to develop a variety of revenue sources. They should try to lower administrative costs and rationalize the commissions that will be given to the agents and brokers, irrespective of whether they use the Exchange or not.

The federal government and the implementing authorities should seek to address these concerns before they decide the present the Exchange as a remedy to all the health insurance problems that the residents are facing.

Shaun Mike is well known authority on health insurance in the US. He is currently looking to expand his expertise to health insurance and other healthcare software available.