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Understanding health exchanges

Under the recently upheld Patient Protection and Affordable Care Act (PPACA), every state in the nation will be required to create health insurance exchanges for businesses, employees and individuals. The healthcare organizations aim to create a more organized and competitive market for the purchase of health insurance, offering buyers a choice of health plans, certifying plans and information to encourage more informed decision making.

Basics of the exchanges
The establishment of a health insurance exchange by each state will be required at the start of 2014, primarily serving individual consumers shopping for private health insurance, as well as small businesses with up to 100 employees. States have the freedom to include larger employers in the health insurance exchanges in the future. Some states are considering opening up the health insurance exchange to local public employers to simplify the purchasing process. These exchanges would include private, public and Medicare-like plans. If a state fails to deploy a health insurance exchange by the predetermined deadline, the federal government will step in and create one to meet the growing demand for affordable healthcare options.

The main purpose of the health insurance exchanges is to create a one-stop shop for health insurance products. Most typical health insurance exchanges offer a choice of two or more health insurance options to shoppers, provide advice and recommendations on what health insurance options and benefits suit individual needs, and offer automated billing for health insurance premiums to simplify the payment process. Health insurance exchanges will continue to provide ongoing support for health insurance buyers, offering guidance even after the point of purchase.

When offering a choice of health insurance plans, the health insurance exchanges will provide details and insight on numerous components of the coverage such as deductibles, coinsurance, out-of-pocket limits and covered services. The exchanges must organize information in a standardized format to make it easy for shoppers to compare plans across numerous providers and features.

Health insurance exchanges also aim to provide transparent information directly to consumers or employers regarding plan provisions, including premium costs and covered benefits. Employers and shoppers will receive data and insight on a plan’s performance in encouraging wellness, managing chronic illnesses and other characteristics before making a purchasing decision. The exchange is intended to act as a store as well as a customer assistance hub where buyers can seek help with various issues such as billing or paperwork.

The health insurance exchanges will also play a vital role in the enrollment process for employers and employees receiving benefits through their place of work. Typically, an employer will facilitate enrollment in a plan and the payment of a premium with health insurance coverage. The health insurance exchanges will serve a similar function for people buying their own insurance or who are employed by a smaller employer. The exchange will help buyers determine eligibility for certain coverage and accelerate the enrollment process through efficiency and technological resources.

The dynamics of health insurance coverage will be changed through the implementation of health insurance exchanges. Coverage procured through an exchange can be de-linked from employment, making health insurance coverage more portable for many people changing careers or jobs. For individuals continuing to opt for employer-sponsored health insurance coverage, the exchanges will coordinate enrollment shifts between Medicaid and private coverage for people with low or fluctuating incomes.

Finally, the health insurance exchanges hope to have a long-term effect on the U.S. insurance market by facilitating changes in the way coverage is distributed and governed. The various requirements and changes to health insurance coverage guaranteed in the PPACA will be put into action through the health insurance exchanges, ensuring every resident has the opportunity to obtain affordable health insurance coverage.

Nebraska’s exchange
The Nebraska Department of Insurance is currently examining its options for a health insurance exchange, evaluating each potential model with extreme detail. The state of Nebraska, as well as many other states in the nation, is considering three options: creating its own state health insurance exchange, allowing the federal government to setup an exchange or participating in a state-federal partnership for the exchange. The state’s decision on how to establish the health insurance exchange will determine how involved local agencies will be in the administration of health benefits to citizens, the Star Herald reported.

According to the Nebraska Department of Insurance’s analysis of the options, the state has a budget of $14.6 million to $23 million to build the health insurance exchange, not taking into account investment in a new technology system to manage the operations. The federal government will pay for the establishment of the health insurance exchange, but the maintenance and functionality of the exchange will fall on the shoulders of the state. The exchange will likely be fully operational by 2016, reporting estimated costs of up to $14.7 million. The insurance department is looking for a business model that will enable the health insurance exchange to remain self-sustaining to provide a long-term solution to local residents seeking health insurance coverage, the Star Herald reported.

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Carolyn Wonders
Carolyn Wonders
In a world of constant interruption, regular onslaught of emails and ever increasing bids for our attention, schools, cities and counties are finding it harder than ever to connect with employees. That’s when we call in Carolyn Wonders. Carolyn heads up NIS’ Marketing Team, who creates and executes employee benefit communications for NIS’ growing list of clients.

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