What’s An Exchange?

Q. What is an exchange?

A. Basically, it’s a marketplace where people can shop for health insurance. An exchange could be simply a detailed listing of all the insurance plans available in an area or a more regulated marketplace, where the exchange selects the insurers allowed to sell policies and sets the minimum benefits those insurers must provide.

Q. Who could use an exchange?

A. All the proposals before Congress would allow uninsured individuals and those who buy their own insurance to buy through the exchange. Small businesses are included. Under some circumstances, employees with job-based insurance could instead buy through an exchange.

Q. Would I have to buy through the exchange?

A. No, not unless you are getting a federal subsidy.

Q. If I work for a large employer, what might happen?

A. Large employers will probably not be allowed to participate in the exchanges, at least initially.

Q. What will exchanges mean for health care costs?

A. Competition among plans may help drive down premiums.
Proponents say exchanges also may reduce administrative costs, by cutting the expenses associated with marketing and enrollment. The Blue Cross Blue Shield Association disputes that, saying it will still be more expensive to sign up individuals and small groups than large employers, so administrative the savings may not be great.

Q. Do exchanges already exist?

A.The Massachusetts Health Connector is a well known exchange, and the only state-sponsored program available to the general public. Individuals and small businesses can choose among policies offered by six insurers, which were selected by an appointed board. Coverage must include prescription drugs and a broad range of other services, such as hospital and doctor care. Congressional lawmakers may copy some of the Connector’s features.

Q. Insurance is expensive. Will there be subsidies to buy coverage through the exchange?

A. Both a Senate Health, Education, Labor and Pensions Committee proposal and legislation proposed by three House committees include subsidies for people making up to 400 percent of the federal poverty level, or $88,200 for a family of four. Massachusetts subsidizes people earning up to 300 percent of the federal poverty level, or $66,150 for a family of four. The proposals require people seeking subsidies to enroll through the exchanges.

Q. Who will oversee the exchange?

A. The Senate HELP bill gives authority to the exchange to pick the insurers that can participate, provide information to consumers about the plans and handle complaints. The House proposal establishes a commissioner who would solicit bids from insurers wanting to participate and negotiate contracts with them.

Q. What insurance benefits will exchange plans offer?

A. The Senate HELPĀ bill directs the secretary of Health and Human Services to draw up a benefits package, which would include coverage of doctor and hospital care, prescription drugs and other services. There would be at least three tiers of policies, tied to the percentage of medical costs that insurers would pay. For example, with a basic plan, insurers would pick up 76 percent of expected costs. The highest level plan would require insurers to pay 93 percent of medical bills. The House bill creates a Health Benefits Advisory Council to draw up a benefits package, which must cover at least 70 percent of expected medical costs.