It’s a major piece of “Obamacare,” and set to debut in just under 10 months. But unless you’ve been paying close attention, you might not be totally clear on exactly what a health insurance exchange is. Here’s a primer.
What is an exchange?
An exchange is a store for selling health insurance. Every state is supposed to have one as part of federal health reform. Connecticut’s is expected to begin selling coverage in October; the plans will take effect Jan. 1, 2014.
Connecticut Health Insurance Exchange CEO Kevin Counihan said it’s intended to be a simpler, more transparent way to buy coverage than the market that exists now.
Who will use it?
If you buy coverage for yourself, you will have the option of buying it through the exchange. So will small businesses. Anyone who gets subsidies through the federal reform law to buy coverage (more on those later) will have to buy their coverage through the exchange.
The exchange is not intended to replace Medicare or Medicaid. People who qualify for those programs will continue to receive that coverage separate from the exchange. Similarly, people who get their coverage through their jobs won’t be using the exchange. And people will still have the option of buying insurance through the state’s existing individual and small group insurance markets, outside the exchange.
What will the exchange sell?
The exchange will sell health plans offered by private insurance carriers, like Aetna, Anthem Blue Cross and Blue Shield and ConnectiCare. (Insurers can decide whether to sell plans on the exchange or not, so it’s not clear which ones will or won’t yet.) In addition, Counihan said two new nonprofits are coming to the state and could sell plans on the exchange: a new plan called Healthy CT that’s being launched with federal funds, and Harvard Pilgrim Health Care, a nonprofit Massachusetts insurer.
Each insurer will be required to offer standardized plans with four variations. Those variations, referred to as bronze, silver, gold and platinum, have to do with how much of a person’s medical costs the plan will pay for. A bronze plan, for example, will pay for 60 percent of the enrollee’s covered medical costs, while the enrollee will have to pay out-of-pocket for the other 40 percent. A silver plan will cover 70 percent, a gold plan will cover 80 percent and a platinum plan will cover 90 percent. Plans that cover more will generally have higher premiums.
Insurers will also be allowed to sell additional plans that have different types of designs. Counihan said those could include plans with limited networks, tiered networks or designs aimed at encouraging wellness.
The idea is to make sure that the insurers offer standardized plans that customers can easily compare while also letting the insurers try different methods for achieving more affordable or innovative coverage.
How will shopping at this “store” work?
The exchange will have a website that people can use to buy coverage. Customers will be able to enter information about themselves, and it will tell them what options are available, presented in a way that lets them can compare plans and select one. Counihan, who worked for the exchange set up under Massachusetts’ health reform law, said that in that state, it typically took people 15 to 20 minutes to buy insurance through that state’s exchange.
There will also be a toll-free call center for people who have questions or want to discuss the process with a person. Counihan said the representatives will be trained in the health reform law, the benefits and plans offered, and will be trained to expect to spend a long time on the phone with callers. He said they’ll be sensitive to the fact that many people calling will be getting insurance for the first time, or getting covered again after a long gap.
In addition, the exchange will have “navigators,” people who can offer help — in person, potentially — to those looking to buy coverage. The exchange will also certify insurance brokers who can sign people up for coverage.
What will it cost?
Plan costs — whether they’ll be affordable — is a major concern of many supporters and critics of health reform. It won’t be clear exactly what insurance plans in the exchange will cost until carriers have had a chance to submit their proposals and get the rates approved by the state insurance department next year. Some experts expect that prices for plans both inside and outside the exchange will be higher than what many people pay now because of new requirements in the health reform law.
But for many people, there will be limits on what they pay, regardless of what the plans cost.
For people earning below 400 percent of the poverty level, premium costs will be capped at 9 percent of their income. That means that if you have a family of four and earn $92,200, you won’t have to pay more than $692 a month for health insurance. (The federal government will pick up the rest of the cost.)
You can get an estimate of whether you qualify for premium subsidies, and how much they’d be, here.
“Even with these subsidies, this is a lot of money,” Counihan said. “But it’s clearly intended with these subsidies to make a very expensive product more affordable.”
People earning below 250 percent of the poverty level will also be eligible for federal subsidies to reduce the copayments and deductibles they have to pay.
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