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February 2011 Newsletter

We are proud to announce that we are expanding our offices and relocating on Friday, November 5, 2010.  The new office is very near the current office and the new address is 310 Louisiana Street.  Please drop by and visit!

Click here to read the Hatcher October 2010 Newsletter

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A number of recent health care reform plans call for the creation of a health insurance “exchange,“ a new entity intended to create a more organized and competitive market for health insurance by offering a choice of plans, establishing common rules regarding the  offering and pricing of insurance, and providing information to help consumers better understand the options available to them.

An exchange is part of the plan aiming for universal coverage. It’s is a key element in providing coverage to the currently uninsured and  in facilitating changes to the insurance market, particularly for those who buy insurance on their own. Some proposals allow employers or employees to purchase coverage through the exchange as well.

 

Purpose and Function of an Exchange

In the context of a health reform plan aiming for a substantial expansion in the number of people insured and universal access to affordable coverage, there are a number of functions envisioned for exchanges, including:

1. Offering consumers a choice of health plans and focusing competition on price. Exchanges offer enrollees a choice of private health insurance plans, and some proposals also envision including a public, Medicare-like plan. Covered services and cost sharing (i.e., deductibles, coinsurance or co-payments, and out-of-pocket limits) would be organized or standardized in ways that make comparisons across plans easier for consumers. The aim is to focus competition among plans on the price of coverage and minimize the  tendency for plans to vary benefits in order to attract healthier than average enrollees.
2. Providing information to consumers. In conjunction with offering a choice of health plans, an exchange is intended to provide consumers with transparent information about plan provisions such as premium costs and covered benefits, as well as a plan’s  performance in encouraging wellness, managing chronic illnesses, and improving consumer satisfaction. The exchange could also serve a customer assistance function—typical for large employers—to assist consumers who encounter billing or access problems with  their plans.
3. Creating an administrative mechanism for enrollment. For people who obtain private insurance coverage through work, the employer typically facilitates enrollment in a plan and the payment of the premium. This is especially true in larger businesses. An  exchange could serve a similar function for people without access to that kind of assistance, including people buying insurance on their own or who work for small businesses. The exchange could also be used to determine eligibility for and administer income-related subsidies. Alternatively, these functions could be handled by a government agency or through the tax system.
4. Moving towards portability of coverage. Coverage through an exchange can be de-linked from employment, helping to make health insurance more portable for people moving from job to job. However, since employment-based coverage would still exist under  some proposals, insurance may not truly be fully portable. Exchanges also could coordinate enrollment shifts between Medicaid and subsidized private coverage for people with very low and potentially changing incomes.
5. Reforming the insurance market. Another function of an exchange is to facilitate changes in the rules overning how insurers sell coverage. In most states today, people buying insurance in the non-group market can be denied coverage or charged a higher  premium based on a pre-existing health condition. Health insurers are required by federal law to offer health insurance to any small business, but premiums in most states can vary within prescribed limits based on the health status of workers. Many health reform proposals would require insurers to accept all applicants without consideration of the applicant’s health, and would further prohibit or significantly limit premium variation related to health status. Although these types of changes can be implemented simply by  changing insurance laws and do not necessarily require the creation of exchanges, some argue that exchanges can make these insurance market reforms more effective by monitoring marketing practices and administering a uniform system for enrolling in a health  insurance plan.

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