The Patient Protection and Affordable Care Act mandates for the formation of a state based health insurance exchange. These exchanges will serve as a regulated insurance marketplace where all the transactions and health plans will be in accordance to the federal healthcare reforms.
Initially the Exchange will only be open to individuals and small firms where they can compare, choose and purchase medical coverage at competitive rates. States that refuse to have an exchange will have access to a multi-state exchange which will be run by the Department of Health and Human Services (HHS) and will be funded by federal dollars. Consumer protection, review of premiums and other rates and other issues related to finance and regulations will be supervised by the state insurance Commissioners. The exchange will have annual audits and the finances will be overseen by the HHS to ensure financial integrity and to take actions to prevent frauds, scams and abuses.
The health insurance exchange will serve as a one stop shop that fosters choice and competition. The use of the online medium will ensure that all residents have complete access to the insurance platform. Apart from being the cheapest, the health plans available on the exchange will come with some essential benefits that will ensure primary and comprehensive coverage. Government sponsored health plans such as Medicare, Medicaid and CHIP will available on the exchange that will provide stiff competition to the private health plans.
The exchange are also meant to be an ideal place to get the most authentic and transparent information regarding health insurance. All the information, definitions, marketing and communication material has to be in a standardized format. A toll free 24*7 telephone line will ensure that residents, agents and insurance companies can clear queries whenever they want. Residents will also have access to information about eligibility determination for government sponsored plans, tax credits and other insurance benefits from the federal and the state government. Grants will also be given to the exchanges to establish and expand health insurance consumer assistance.
For the residents, the exchanges are the best bet to access the cheapest health plans. Not only the health insurance companies required to have their cheapest policies on the insurance platform, but the exchange will also house all the government subsidized plans. Apart from that, residents purchasing health plans from the insurance exchange will also be eligible for tax credits. The tax credits are available to individuals as well as small business firms. However, the amount of credit will differ. Premium tax credits will be available to those families up to 400% of the FPL. Sliding scale tax credits will be available to small firms with 25 employees or fewer and an average annual wage of $50,000.
The idea behind setting up health insurance exchange is to regulate the market place, increase the competition between companies and to create a market place where the consumers can get the best value on their money. Going by basic framework, all these goals seem a real possibility.