With the controversy of health care reforms, Obamacare, and health insurance issues in the United States of America in the past few years, Americans have become more knowledgeable about health care and health insurance issues. Terms that were considered only as jargon before like deductibles and HMO are now clear. One of these terms or topics is health insurance exchange.
A health insurance exchange is a health insurance plan provided by a state that is federally subsidized. This was included and implemented in Pres. Barack Obama’s health care reform program in order to assist more people in terms of being able to afford health insurance. Health insurance exchange spreads the risk between the insurance companies and the state and federal government. They are not able to exclude people due to preexisting conditions.
According to the Patient Protection and Affordable Care Act signed in 2010, a health care exchange will be created in each state where individuals who earn between 100 to 4000 percent of the federal poverty level can buy subsidized health insurance. It will be the federal government who will choose the companies that will be allowed to sell in the federal exchange, and these companies must sell virtually identical products and share profits and costs for a certain period of time. However, state governments can choose to either manage the exchange themselves or even not to run it at all.
In 2012, the state of Ohio said it would default to a federally facilitated exchange, but the state will continue to be the one responsible for regulating control of its insurance industry, including the determination of Medicaid eligibility.
According to their governor at that time, the state government wanted every citizen in Ohio to have health care coverage, and they believed that it would be achieved through a market-based system that encourages both high quality and low costs. They believe that the health insurance exchange reduces the citizen’s ability to choose and it also drives up costs.
Furthermore, the state government of Ohio came up with the following analyses that made them decide not to run the Obamacare health exchange: that states lack flexibility or control over exchanges, that setting up and running exchanges are quite expensive, that inadequate information is available from the federal government and finally, that the Obamacare health exchange will impact Ohio in a uniquely negative way.
The state government further explains these analyses by explaining in detail that whatever plans or reforms they apply regarding exchanges would always have to be approved by the federal government and with regard to expenses, if Ohio ran the health exchange, they would need to spend $63 million to set it up and an annual cost of $43 million to keep it going versus the $21 million set up cost if the exchange will be ran by the federal government.
Also, Ohio has claimed that they have received little information from the federal government regarding some aspects about the health exchange such as the benefits that must be offered by health plans sold on the exchange, how the federal government will pay for the exchange and the requirements that multi state plans needs to meet in order to be sold on the exchange.