Insurance Exchanges Aim to Lower Costs of Health Coverage For Small Businesses, Individuals
Affordable Insurance Exchanges, a major upcoming feature of the health care reform law, herald sweeping changes in the options individual consumers and small businesses will have to purchase health insurance coverage.
The Department of Health and Human Services this week proposed new rules offering states guidance and flexibility on how to structure their exchanges, which are slated to go into effect in 2014.
The exchanges dovetail with a requirement of the Patient Protection and Affordable Care Act that most Americans obtain minimum essential coverage — the so-called individual mandate — by 2014 or face a tax penalty.
What’s In It For Individual Customers?
Establishing statewide exchanges is meant to increase competition and bring more affordable options to customers than are available today. The idea is that, with all insurers competing under the same rules, individuals and small businesses would gain access to plans at rates similar to those available to large employers.
The idea behind the exchanges is to make it easier for consumers to:
- Compare health plans based on price, benefits, cost-sharing and quality
- Get answers to questions about coverage options
- Find out whether they’re eligible for private insurance tax credits or cost-sharing reductions, or for health programs like Medicaid or the Children’s Health Insurance Program that make coverage more affordable
- Enroll in a plan
Individuals would gain access to tax credits if their incomes are between 138 and 400 percent of the federal poverty level — between roughly $15,000 and $44,000 for individuals or $31,000 and $89,000 for a family of four in 2011. Tax credits are not available to individuals offered coverage through an employer unless the coverage doesn’t pay for a minimum level of covered benefits or is defined as too costly.
The exchanges, coupled with other Affordable Care Act reforms, could vastly expand the ranks of insured in Michigan, Crain’s Detroit Business reported recently:
More than 1.1 million uninsured people and 1 million underinsured people in Michigan could be eligible to purchase low-cost and subsidized health insurance through the exchanges, which would begin in January 2014. Between 12 percent and 18 percent of the state’s population is uninsured.
Small businesses also will be eligible for a tax credit for coverage they purchase for employees through an exchange.
Policymakers Dig In
Work groups are recommending that Michigan create a single exchange as an independent, public authority, among other recommendations. The Michigan Department of Community Health plans to submit its suggestions by the end of the month to Gov. Rick Snyder, who will then make his own recommendations to the Legislature.
Unlike much of the rest of the Affordable Care Act, the proposed rules have managed to strike at least some common ground among the law’s proponents and detractors, as the New York Times pointed out:
In principle, liberals and conservatives support the exchanges, which they see as a way to increase the purchasing power of individuals and small businesses, but they disagree on how the exchanges should be configured. The regulations issued Monday, which provide a fair amount of latitude to states, were welcomed by consumer groups, patient advocates and some business lobbyists.
You can read more about the new rules here.
What do you think? Will Insurance Exchanges achieve their goal of expanding coverage and lowering the cost of insurance?
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