The Patient Protection and Affordable Care Act - Health Insurance Exchanges

The Patient Protection and Affordable Care Act: Health Insurance Exchanges

The Patient Protection and Affordable Care Act enacted on March 23, 2010 includes numerous provisions, one of which is the enactment of Health Insurance Exchanges in each state by January 1, 2014. Senate Committee Finance Chair Max Baucus and President Obama called for the establishment of a health insurance exchange, which is defined as “an organized marketplace for the purchase of health insurance” (Blumberg, 2009). The health insurance exchanges are meant to provide assistance to lower income families and individuals. Individuals with incomes that fall between 138% and 400% of the Federal Poverty Line will receive subsidies in the form of tax credits. The Congressional Budget Office estimates that by 2019, approximately 24 million Americans will purchase insurance through health exchanges, and that 81% of enrollees will receive subsidies. Private insurance markets are often unorganized and difficult for consumers to navigate. Consumers may face barriers to obtaining insurance, such as an inability to afford it, confusion or lack of understanding, or discrimination based on health status (Blumberg, 2009). The health insurance exchanges aim to end discrimination based on preexisting conditions, encourage sharing of health care risk, and promote transparency and accountability (Blumberg, 2009). This paper will discuss the aims and stipulations of the health insurance exchanges, and the considerations that must be taken in order to insure that the exchanges will serve their purpose.

Health insurance exchanges will serve many purposes, primarily to offer consumers a variety of plans at competitive prices. Benefits will be standardized in some way in order for consumers to more easily compare plans. By increasing competition, insurance carriers will not alter their benefits in order to draw healthier consumers (Focus on Health Reform). An additional purpose is to increase transparency and provide consumers with information regarding