Health Insurance Exchanges — Key Link in a Better-Value Chain
The focus on health insurance exchanges in the Patient Protection and Affordable Care Act (ACA) is one sign of just how politically mainstream the new law is. Not only are exchanges market-based, but also the ACA decentralizes them, delegating primary responsibility to the states. The states are eligible for federal financial support for developing statewide or multiple substate exchanges or forming multistate, regional exchanges. A state may even contract with a private, nonprofit entity to operate its exchange. Only if a state failed to act or to meet minimum standards would a federal exchange operate within its boundaries.
Exchanges have been an important element of almost every recent proposal for national health care reform.1 One of the political virtues of the concept is its flexibility: reformers spanning a fairly broad ideological range have been free to imagine various versions, even as they nod in agreement over the value of exchanges. So how does the ACA envision the function and mission of exchanges, and how do exchanges affect the organization of care?
Simply put, an exchange sells insurance. If it does not enroll many people, it has failed at its core mission. Under the ACA, the administrative budgets for state exchanges will be covered through surcharges on transactions, so both margin and mission depend on sales.
By Jon Kingsdale, Ph.D.
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1. Explaining health care reform: what are health insurance exchanges? Washington, D.C.: Henry J Kaiser Family Foundation, May 2009. (Accessed May 11, 2010, at http://www.kff.org/healthreform/upload/7908.pdf.)