The Patient Protection and Affordable Care Act (PPACA or ACA) signed into law March 23, 2010, has mandated that each state establish a health insurance (or health benefits) exchange. This new law allows states to create a virtual, hybrid market place for individuals, families and small businesses to shop for health insurance coverage. The goal of this initiative is to significantly reduce the cost of health insurance coverage, provide all individuals with a standard essential health benefits plan, and create a “one-stop-shop” marketplace for millions of uninsured consumers to obtain health coverage.
This – health insurance exchange – will be a predominantly web-based portal for, health insurance quotes, coverage and billing options, premium tax credits, qualified health plans, insurance laws, links to brokers, plus online and telephone call center customer service.
This state run exchange will actually encompass two health exchanges. 1) Individual Exchange, for individuals and families, 2) Small Business Exchange, for the small business market. Individuals and families that access the exchange will be offered a variety of health plans from which to choose. The single mom applicant will be referred directly to the child health plus Medicaid option. Uninsured intact families and single entrepreneurs can shop competitive pricing among premier health insurance carriers, and may also qualify for federal subsidies and tax credits designed to keep premiums affordable. The unemployed applicant will qualify for the Medicaid health plan option.
Business owners will be referred to the – Small Business Health Options Program – or “SHOP” Exchange. This entity will allow small businesses to competitively shop health plan options in a competitive market environment. The SHOP exchange will consist of an online marketplace where business owners can comparatively shop for the most cost effective qualified health plans (QHP) for their employees. Data will be securely exchanged electronically between businesses and the exchange, to ease the burden of the application process. Customer service reps are available to assist the small business owners. Tax incentives and cost sharing subsidies are also available for all businesses that qualify.
Under this SHOP exchange model, employers can make defined contributions, and employees will be free to choose from an array of qualified health plans (QHP) that have been benchmarked against the best, State health plans, Government health plans, and private health insurance HMO/PPO plans. The Affordable Care Act (ACA) also mandates that each QHP (and individual plan) must offer what is referred to as “Essential Health Benefits.” This plan option must include 10 essential benefits; namely, inpatient hospitalization, emergency services, ambulatory services, maternity and newborn care, mental health and substance abuse services, preventative/wellness services, prescription drug plan, pediatric services (including vision and dental care), lab testing services, and chronic disease management.
The ACA is a very comprehensive and complicated law. There are several aspects to this Act; however, in my opinion the small business community is a major driving force behind this health insurance exchange concept. The State exchange will market qualified health plans that will provide everyone with a standardized health insurance product that will include essential health benefits. This in itself is a monumental accomplishment.
Another caveat of the SHOP Exchange provides general insurance agencies and brokers the flexibility to transition into the SHOP program. Small business owners can maintain their relationships with their brokers, because the health exchange recognizes that these relationships are important. It creates a win-win scenario. The health insurance brokers will market and promote the SHOP exchange to other small businesses, and the small businesses can work directly with brokers who are familiar with the SHOP process.
The State run health insurance exchange appears to be a wonderful concept. The ACA has certainly streamlined the health insurance process. But the debate against this legislation continues to rage on. Several issues that have come to the forefront include; State run health exchanges (like New York) will receive federal subsidies and tax credits. States that op to let the government set up their exchange will not receive a subsidy or tax credit. Without tax credits, individuals and businesses alike will not be able to afford health insurance. Will the ACA support a “pay-for-performance” model and eliminate “fee-for-service?” What long term effects will this Act have on Medicare and Medicaid? These are just a few of the topics that continue to fuel the pro and con rhetoric surrounding Obamacare.
Our health care system was in desperate need of a serious overhaul and President Obama has taken some bold and aggressive steps toward this goal. It’s certainly not the end-all, be-all solution, but with some tweaking and bi-partisan support the ACA will transform health care delivery in these United States, and become a leading model for global health care delivery.
The author is a healthcare administrative aide with the North Shore Long Island Jewish Health System.