Monday, December 3, 2012

What's A Health Insurance Exchange

Most folks are referring to a Health Insurance Exchange as Travelocity for health care plans. I guess that will not be far off. 

There will definitely be several types of exchanges in our future. 

For us residents of Colorado, we will have our Colorado Health Benefit Exchange, administered by our own state. Many others will have theirs taken care of by the federal government. 

It was just released today that any insurance carrier that will elect to participate in the federal exchange will pay a fee of 3.5% of premiums received. Not a great start for trying to bring health insurance costs down. 

In addition there will also be private exchanges. These may be put together by certain association groups or possibly insurance consulting firms. Some large employers already use private exchanges to give their employees variety of plan choices.

Federal and state sponsored exchanges must be used for anyone seeking any assistance with premium subsidies based on income (from 133% to 400% of federal poverty level). No subsidies will be available in the private exchanges. 


All plans will be required to cover the government based essential benefits. This will include coverage from angioplasty to x-rays.  


Coverage levels will be determined by tiers:

Bronze - 60%, Silver -70%, Gold - 80% and Platinum - 90%.

These percentages are determined by "Actuarial Value", which is a complicated term that boils down to someone figuring out how much you will pay out of pocket - NOT including your monthly premium - for all your medical costs covered by the plan, like office visits, deductibles, and everything else.

Will exchanges be good or bad? Really there is no way to gauge that until we see them in operation. Certainly if you like shopping for plane tickets online and have any reasonable knowledge of health insurance plans you should be fine. If comprehension of insurance is a struggle then you will for sure want to work with a competent insurance broker to discuss the available options and determine your best fit for coverage. 

You can be sure that the cost of the coverage will be higher regardless of being in a public or private exchange. Since new mandated coverages require the insurance companies to cover more conditions or to cover them more fully, the companies will have to pay out much more in claims costs. And in return, they will absolutely have to raise premiums in order to cover those claims.



" Good Health That's The Plan "


2 comments:

  1. Hi Randy!

    Do you think the ACA can be described as "requiring US citizens to be good Samaritans"? In that parable, a Samaritan voluntarily chose to spend his money to help someone who needed healthcare.

    With the ACA, is it accurate to say that we are now subsidizing the healthcare of low-income citizens by being in a national risk pool?

    I'm sure you would agree that everyone SHOULD have good healthcare, but are there any other ideas on the table that provide health insurance for everyone? The previous system resulted in 16% of Americans without health insurance.

    Thanks for your thoughts,

    Tristan

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  2. Thanks for the comment Tristan. Very good points and questions. First off I could not compare the ACA to being a good Samaritan as there is nothing "voluntary" about it. I am not a big fan of government forcing all to buy anything. I do agree and have experienced personally how the "Good Samaritan" payment for healthcare needs have worked for many. You may be aware of a few Christian based organizations that sponsor a shared risk pool that have worked well for some time now.

    We have always been providing coverage for low income citizens through medicaid. The ACA expands this to include insurance premium subsidy through tax credits based on income above 133% of the federal poverty level. This however I do not consider a national risk pool. I can see your thought though. The subsidy will be provided by increased taxes and fees that we will all have a part in paying in one fashion or another. A tax pool not a risk pool.

    I do agree that everyone should have good healthcare. Sadly what we have on the table right now is it. No other action is even being discussed. The idea of covering everyone will NEVER happen. The often disputed 16% that you mention includes many that have the ability to pay for their own coverage but won't. They will pay the penalty and move on without coverage. It also includes others that reports refer to as under insured. These are people (myself included) that have purchased high deductible plans that government considers bad for some reason. I hope that gives you some perspective.

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