A significant component of the Affordable Care Act (ACA) is the establishment of health care exchanges. The primary function of these exchanges is to offer a marketplace for individuals to purchase health insurance from a variety of providers in a competitive pricing environment. Plans are required to include ten categories of health services known as “essential health benefits”, in order to meet a given state’s specific benchmarks. Although these exchanges are scheduled to be opened by January, 2014, they will need to operational by October, 2013 so that enrollment can be completed for 2014. The various deadlines for states to complete submissions have already been extended and given the complexity of this undertaking it seems improbable that these dates can be met.
Employers are particularly interested in health exchanges because they will be a key to the success of defined contribution health plans which employers have been trying to implement for years. The idea behind these plans is for an employer to control the cost of health insurance by providing employees a fixed amount so that they can use to buy their own health insurance. Historically, employers offer employees a choice of health insurance plans, or in many cases only one plan. Over time premiums have increased for the employees, as have costs to the employers. By adopting a defined contribution health plan, an employer limits the contributions to, as well as the administration of its health insurance.
Per the ACA, individuals must purchase health insurance in 2014, and the exchanges will give them options to match their specific needs with the best plan available. Importantly. in 2014, individuals with preexisting conditions will be able to access health insurance and the various exchanges should be able expect to offer numerous providers to address these individuals specific requirements.
Given the fact that the establishments of state and partnership exchanges has been very slow, private exchanges have been created by benefits firms and other entities familiar with health insurance. The idea behind these private exchanges is to allow employers to set up defined contribution health plans without having to wait for the state exchanges to be created.
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