Health Insurance Exchanges Gain Attention

Kaiser Health News reports on health insurance exchanges, a concept now being considered in the context of Congress's health overhaul proposals. "The seemingly simple idea behind exchanges – one-stop shopping for insurance – masks the cornerstone role they may play in a national overhaul of the health system. President Obama supports the idea, and exchanges are included in most of the health care proposals now before Congress. Done right, proponents say, exchanges could transform how insurance is sold, giving individuals and small businesses improved purchasing power, increasing price competition among insurers and creating standardized benefits. Done poorly, analysts and critics say, exchanges could drive up insurance costs and encourage employers to drop coverage, unraveling the system that insures most working Americans. While it's still unclear what Congress will do, Senate Democrats have looked closely at Massachusetts. Here's how it works there: The state established its exchange, called the Health Connector, mainly for the benefit of individuals who aren't insured by employers. They include the self-employed and the unemployed, two categories of people who traditionally have the most difficulty obtaining policies. Although not required to buy through the exchange, doing so gives them group-purchasing power. Lower-income people are eligible for state subsidies."

KHN reports: "But Congress may balk at certain features of the Massachusetts model. Some lawmakers oppose compelling people to buy policies or penalizing employers who don't offer coverage, for example. And lawmakers expect fierce debate over government subsidies: who should qualify, their size and how to fund them. It's not just politics complicating the picture. Insurance exchanges are more complicated to design than, say, sites like Travelocity and Orbitz where consumers shop for plane tickets and hotels. Critical decisions must be made, for example, about who participates and how insurance prices are negotiated. Generally, economists say, larger groups have more bargaining power. ... If bigger is better, then a national exchange would in theory have more clout than a series of state or regional exchanges" (Appleby, 7/10).

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