The Exchanges are Coming

What some consider to be the central piece of the Affordable Care Act is starting to be unveiled and should be fully functional by October 1st.  Yes, the Health Insurance Exchanges are finally starting to emerge.  The October 1 date is critical as this will give individuals and businesses time to shop and purchase insurance that will begin on the first of the year.  If they work, the ACA will be a success and if they don’t the administration will have a significant issue on their hands.

Take a look at last week’s piece in the New York Times that talks about what the New York program will look like and the significant savings individuals will see due to the new competitive marketplace.  The most interesting part of the piece is right at the end where the customer starts to realize that they really can shop around.  He asks about preexisting conditions and if there is any downside to switching?  He wonders about being able to keep his own physician.  Finally, the real upsides of the ACA are starting to become clear.  The out of control increases in healthcare costs have slowed dramatically.  Insurance companies are reinventing themselves to comply with the new rules and almost all of these changes benefit the insured.  Preexisting conditions and lifetime limits are a thing of the past.  Things seem to be going in the right direction, but it will all come tumbling down if the exchanges don’t work.

For those who work in the healthcare industry, it is important to really get a feel for the exchanges.  Some states will run their own and many others will rely on the Federal government.  There will be minimum coverage requirements and basic drug formularies as well, but these are merely the minimums.  There will be national and local plans that make up the exchanges in each state.  Some states will be very competitive and others will not.  Navigators will be hired to help people maneuver through the system.  Each state will have various level plans that will be described by different types of medals for the different levels of coverage and obviously costs.  The exchanges will list the price for the coverage but the government will subsidize those under a certain level of income. Take some time and dig into all of these issues as they will become a critical part of healthcare delivery in the next few months.

The real key is what will happen once the exchanges go live and who will use them?  Will employers abandon coverage, increase worker pay and let them buy off the exchanges?  Will the exchanges really become the Expedia of healthcare where there is tremendous transparency that allows even established businesses to better negotiate with insurance companies?  Will the insurance companies offer broader drug coverage than expected trying to lure individuals into their plans based on the drugs they are currently taking or will everyone stick to only basic drug coverage?  Will insurance companies with small patient share in different states use the exchanges as an opportunity to really shake up the market and gain influence much faster than they could have without the exchanges?  Will the exchanges really become the perfect marketplace where, through competition, people can buy more for less as economists promise?  It will be very interesting to watch.

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