What is a Health Exchange?

June 15, 2015 Jack

What is a Health Exchange?

The health exchanges are online “marketplaces” where consumers and small businesses can go to shop for health insurance. These exchanges were established to impact the health insurance industry how Expedia impacted the travel industry. Similar to Expedia, consumers can go to one of the health exchanges sites, where they can shop for policies from competing private health insurance providers on price, coverage quality, and any other unique criterion. Shoppers can also use price calculators and questionnaires to see if they qualify for government support (subsidies, tax credits, Medicaid, CHIP). In this marketplace model, insurance companies are expected to be more competitive and innovative with their services (delivering on price and quality) to gain and retain more customers.  The main draw of this set up is that it is a convenient way for a shopper to buy insurance, much like he might purchase a plane ticket on Expedia, without the help of a broker or having to visit multiple different sites.

 

How health exchanges control costs:

The exchanges create a pool of consumers representing individuals, families and small businesses. By bringing together these different groups to form a large collective unit, it gains more buying power in the insurance market. Similar to how large employers were able to bargain insurance rates in the past, now individual and small businesses can also negotiate and bargain for reduced costs on health insurance. Coupled with marketplace competition, this set-up is meant to empower the individual consumers. At least this is one of the economic reasoning, the reality however, is not as theoretically elegant. Insurance premium rates, on average, have been increasing, albeit at a slower pace since ObamaCare became law. Only time will tell if the stated economic market forces will be realized, but as of 2015, the research have produced mixed results about the model’s success.

Health Exchange Enrollment Numbers:

Since its launch in 2012, the health exchanges have been plagued with numerous technical problems, and many Americans have complained that the plans available through the exchange are more expensive than before. Officials have stated that most the issues have now been fixed, but every open enrollment period will certainly have its own unique challenges. As of March 2015, a Health & Human Service report stated that a total of 16.4 million Americans obtained coverage due to ObamaCare, whereas a separate RAND report stated that 22.8 million obtained coverage while 5.9 million lost their plans, netting at 16.9 million newly insured. The exchanges are estimated to help 30 million Americans purchase insurance by 2020; however, it is too soon to tell if the exchanges will reaches this number.

How the Exchange Works, and How We Do It Better:

Health Exchanges are run either by the State or by the Federal government. If your state decided to establish its own health exchange, you will have to go to the state marketplace (visit your State Government site for more info). If your state opted-out of establishing its own exchange, you will have to enroll through the Federally established marketplace (healthcare.gov). Additionally, as you shop through the exchange, you may also qualify for subsidies to help with paying for insurance.

Ofcourse, you can opt to have a better experience by trying to explore through our site. Our web service (like the health exchange) helps you shop for health insurance, but it is easier to use, has more personalized options, and does not overburden you with too much information. Let’s get real, buying insurance can be overwhelming, but I don’t think most of need to be experts to get the best plans.  Try our free web survey, you can learn more at TakeCommandHealth.com.

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