Health insurance exchanges can help bring down costs for U.S. consumers

The re-election of President Barack Obama signals full-speed ahead for the implementation of the health care reforms contained in the Patient Protection and Affordable Care Act, including the creation of public health insurance exchanges. The act mandates that all states and territories establish and launch their own health insurance exchanges by Jan. 1, 2014, or default to a federal fallback program.

While the number keeps fluctuating, it is estimated that between 16 and 23 states, plus Washington, D.C., plan to launch their own exchanges. Another 15 intend to defer to the federal government, and the balance are still mulling over their options.

One year from now, 12 million Americans are expected to begin purchasing health insurance through exchange, and ultimately that number is likely to more than double, according to the nonpartisan Congressional Budget Office.

Health insurance exchanges create an online, one-stop shopping mall where employers, consumers, insurance brokers and others can easily view competing health plans side by side, comparing benefits, costs, provider networks and other features.

That transparency and accessibility are designed to help consumers select the health plan, benefits structure and doctors that best meet their needs and budgets.

For many consumers, health insurance exchanges can have a positive effect in three key areas:

Choice: Through an exchange, employees of small businesses and other individuals will have multiple health plan carriers and multiple plan designs from which to choose. This could range from “gold” or “platinum” plans with wide-ranging benefits to, at the other end, a high-deductible plan with the lowest possible premium and a high personal accountability for how health care dollars are spent.

Cost: The government hopes exchanges will help reduce the number of Americans who are uninsured, currently more than 45 million, by driving down the cost of health insurance as companies compete for business on a level playing field. An individual participating in an exchange will be able to select the health plan that best fits his or her budget. In addition, many consumers will be eligible for government assistance to pay premiums.

Flexibility:  Through an exchange, consumers will have the flexibility to move from one plan design to another as their personal situations change (marriage, birth of a child, etc.). This provides peace of mind, security and the same kind of overall health insurance options that have been available to members of Congress for years.

Perhaps the best news of all is that experience has shown that health insurance exchanges can work well. Some public exchanges are already up and running, while the country’s most successful private exchange, CaliforniaChoice, has effectively served the small to medium market for 16 years, currently providing coverage for 10,000 employers and 150,000 individuals.

And while public exchanges are grabbing all of today’s headlines, private exchanges — unbound by public exchange requirements — will continue to compete, innovate through program design, and in all likelihood lead the way in the quality of customer experience.

Health insurance exchanges move America toward a more rational approach to purchasing health care. They also represent the largest expansion of health coverage since the creation of Medicare in 1965.

As a result, many believe that these exchanges will be the yardstick by which health care reform is judged for years to come. Consumers should learn all they can about health insurance exchanges and see if this option is right for them.

Ron Goldstein, is president and chief executive officer of CHOICE Administrators, the nation’s leading developer and administrator of health insurance exchanges.

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