Despite ambiguity swirling around the Supreme Court on "Obamacare," the creation and establishment of health insurance exchanges continues to be implemented at the state level and is one of the major components shaping the health care market place.
But, exactly what are the health exchanges?
Right now, they allow individuals and small businesses to use a Web-based system to compare private health plans, get information about coverage options, determine eligibility for tax credits, and enroll in a health plan that meets their needs at lower costs. Essentially, consumers have an opportunity to make informed and educated decisions about purchasing health insurance. They can keep the insurance they have, upgrade, or switch to another provider altogether.
In an effort to lower costs and improve quality care, all states are required to implement affordable insurance exchanges by the year 2014. States have the option to establish one or more state or regional exchanges, partner with the federal government to run the exchange, or to merge with other state exchanges. If a state chooses not to create an exchange, the federal government will set up the exchange(s) in the state. As of March 2012, 13 states and the District of Columbia have enacted state-based health insurance exchanges. Massachusetts and Utah passed laws prior to the enactment of Obama Care in March 2010.
Last month, the Department of Health and Human Services (HHS) published a final rule on Affordable Health Insurance Exchanges offering a framework to assist states in setting up Affordable Insurance Exchanges. The framework preserves and, in some cases, expands the significant flexibility in the proposed rules that enables states to build an Exchange that works for their residents.
For example, the final rule allows states to decide whether their Exchange should be operated by a non-profit organization or a public agency, how to select plans to participate, and whether to partner with HHS for some key functions. The final rule offers additional flexibility regarding the eligibility determination process. It also makes it easier for small businesses to get coverage through the Small Business Health Options Program (SHOP), strengthens consumer protections, and keeps it simple for health plans interested in participating in Exchanges.
Perhaps, even in this uncertain economic and political environment, many of the state based insurance exchanges are being created because there is a perfect fit in the exchange of goods and services with the ideological concepts of a free market place and competition.
For example, Florida which is one of the 26 plaintiff states against Obama Care and the individual mandate, is working on an insurance exchange that would open in 2012 to small businesses only. The exchange will not provide subsidies or tax credits, or have an essential benefits requirement, but will provide an online tool allowing businesses to easily shop for health plans offered in their respective county. Florida's exchange would be implemented to attract employers who are less likely to offer insurance coverage to their employees.
A PwC Health Research Institute Consumer Survey conducted in 2011 showed that 34% of the consumers reported they would have a less than favorable impression of a health insurance company that decided not to participate in their state's exchange. 37% of consumers surveyed think health insurance exchanges will make it easier for them to find and purchase a competitive health insurance plan. 29% of the consumers felt they do not know enough about health insurance exchanges to form an opinion.
As a result, marketing strategies for many insurance providers now consist of targeting specific businesses and population segments, as well as providing information and expanding direct-to-consumer sales while new channels for reaching consumers directly are being explored. These are all signs of the health care market place steadily transforming and providing opportunities to offer health insurance exchanges to different market niches.