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Health Care Exchanges: Just Five Months Away

Original article from United Benefit Advisors

Health care exchanges, a foundation of the Patient Protection and Affordable Care Act (PPACA), launch in five months, yet there is still great uncertainty about how effective they will be among legislators, insurance brokers and advisors.

The central idea of the exchanges is “more choices, greater competition.” Yet, when the exchanges launch in October, people in many states aren’t expected to have a lot of choices, reports Stateline, the daily news service of the Pew Charitable Trusts.

Health economists believe the exchanges will drive more competition to states that already have robust competition among insurance companies (Colorado, Minnesota, Oregon) but won’t add much to states that are dominated by a single insurance company (Alaska, Hawaii, Michigan and Delaware, among others).

The exchanges are designed as private markets operating within federal guidelines, with the purpose of giving Americans who don’t get health insurance from employers the opportunity to choose from an array of private insurance plans, and to generate competition among insurers that will lead to lower premiums,Stateline reported.

Individuals and businesses with up to 100 employers will be able to shop on the exchanges, and people who can’t afford coverage on their own will get government subsidies to help them.

There is some hope that new entrants to the insurance market may provide extra competition.

Some predict that new insurance carriers, made up of hospitals and large physician practices, will emerge. Medicaid managed-care companies, which are used to providing care to low-income people, may decide to offer commercial plans on the exchanges,Stateline reported.

Another option, as reported by Politico, could be CO-OPs (member-governed, nonprofit health carriers), which are new to the scene. CO-OPs, however, have a challenge to compete with large, established insurers, which already have provider networks in place, established reputations and large marketing budgets. Most CO-Ops, on the other hand, have operated for less than a year and have limited resources to mount their challenge.