Insurance Exchanges Gearing Up

One of the key provisions of the Affordable Care Act (ACA)–the establishment of insurance exchanges–is scheduled to kick in this October 1. Under the law, Americans not covered through work will be able to comparison shop for health insurance plans in an online marketplace. Come January 2014, most consumers will be required to have health insurance or face a penalty.

The original intent was that each state would set up its own exchange. However, many states, mostly with Republican governors, have not been interested in doing so. Thus the federal government will be taking on the running of exchanges in more than half of the states.

The ACA has established four broad coverage plans—Bronze, Silver, Gold and Platinum—with benefits varying based on out-of-pocket expenses consumers will pay. The Bronze plan is least expensive but requires a co-pay of 40%. In contrast, in the most expensive Gold plan, the insured will have a co-pay of about 10%. Lower income consumers will have their premiums subsidized by the federal government.

Both state- and federally-run exchanges require insurers to offer 10 basic benefits, including hospitalization, emergency care, newborn and maternity care, and prescription drugs. For the first, time insurers will be prohibited from denying coverage to individuals with pre-existing medical conditions. Premiums for elderly insured can be no higher than three-times the premiums charged for younger consumers.

State officials are attempting to streamline offerings to avoid the confusion that occurred in Massachusetts in 2007, when that state implemented universal healthcare with too many plan options.