The Pros and Cons of Health Exchanges
Health Exchanges, or the Health Benefit Exchange as they are officially known, are a crucial part of the federal health reforms. These Exchanges are online health insurance marketplaces. Each policy sold through the Exchange should adhere to all the norms set by the People Protection and Affordable Care Act. Initially the Exchange would only be open to individuals and small firms looking for group coverage for their employees.
The Exchange will have the following main functions:
- Make the cheapest health plans accessible to the residents
- Provide transparent and authentic information about health plans and Exchanges
- Ensure that all plans are in accordance with the new federal health reforms
- Encourage healthy competition among the health insurance company that will lead to consumers getting the best value for their money
- Play a key role in the effective implementation of the People Protection and Affordable Care Act
The biggest advantage of a health Insurance Exchange is the availability of the cheapest and the most authentic medical policies. However, the state based online platforms will have other benefits too such as:
- The benefits are standardized, thus making it easier to compare across policies
- Provides information about and access to federal subsidies and government sponsored plans
- Delinking policies from employment ensures that residents have coverage even when they are between jobs
- No need to do a background check as the authenticity of every plan and insurance company is verified by the Exchange.
- More choices and more flexibility in choices
- Non denial to any application ensures that people with pre-existing medical condition also have access to health coverage
- Availability of cheap plans will guarantee that more and more residents have access to medical coverage
The state health Exchange is, however, is not without its drawbacks too. Here is a look at a possible few reasons that could prevent the Exchange from being as successful as it was meant to be:
1. With too many options available, the residents may end up getting confused about the health plan to choose
2. As there is no previous model to follow, building up an Exchange is a trial and error process
3. The Exchange will be funded with federal grants and be administered by state authorities. It has to adhere to federal norms as well as state insurance regulations. Lack of coordination between the federal and the state government could lead to utter chaos in the effective functioning of the health Exchange
4. Health Exchanges, by encouraging a direct interaction between the consumers and health insurance companies, have already ended antagonizing agents and brokers. if they are not seamlessly integrated into the functioning of the health Exchange, it will throw a lot of middlemen out of work.
The drawbacks of health Exchange are certain intrinsic flaws that can well be overcome if the Exchanges are managed effectively and efficiently. And going by the host of advantages that setting up of Exchanges will have, taking care of these shortcomings should not be much of a problem for the federal and state authorities.
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Though functionality of the health Exchange will be initially limited, nonetheless it will provide health insurance solutions to wide range of residents in the state.
An Exchange is an insurance market place which provides a platform for the direct interaction between the insurance companies and the residents.
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The Whitehouse defines a health Exchange as a ‘marketplace that will offer affordable high-quality health insurance options.
Health Insurance Exchanges are expected to regulate the health insurance market. They will make insurance accessible to all, put on display the cheapest plans, foster competition and give more and standardized information about health insurance to the residents.
The Patient Protection and Affordable Care Act make it compulsory for all states to have health insurance Exchange by the year 2014. There are certain guidelines that these Exchanges have to follow to be eligible for federal funding. However, the health reforms have only drafted a basic skeleton. The details have been left to individual states so that they can mold it according to the state specific regulations and the needs of the residents.
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