By Amy Jeter |
Imagine if buying health insurance was kind of like reserving a hotel room.
You log on to a website and answer questions about your age, the number of people in your family, your address.
You answer more questions about your income, whether you want to keep your doctor, your preferred deductible amount, and whether you want to pay a percentage of your health costs out-of-pocket for some more expensive services.
A list of insurers and plans appears, with standardized descriptions of prices and benefits. All you have to do is choose one and sign up.
That's how a health benefits exchange works. Under the national health law, starting this time next year, people with moderate to low incomes will be able to purchase individual plans this way for coverage that begins in 2014. Exchanges also are being set up for small businesses.
It's not just about online shopping. The exchange for individual plans:
* Allows people who meet income guidelines and don't have access to other affordable coverage to pay lower premiums and out-of-- pocket costs through tax credits and other government assistance.
* Requires plans to make public disclosures that include finances, denied claims and enrollee rights, among other information.
* Rates each plan based on quality and price.
* Operates a toll-free phone assistance hotline and pays for a program to educate the public about the exchange.
"It gives people an opportunity to cut through the complexity of insurance and compare different plans, apples to apples and oranges to oranges, to make the choice that suits them best," said Jill Hanken, staff attorney for the Virginia Poverty Law Center. "It's really going to be the best game in town for people to shop for insurance."
The Patient Protection and Affordable Care Act calls for exchanges in every state. Though anyone can use them to shop for individual plans, they're geared toward uninsured people who earn too much to be eligible for Medicaid but struggle to pay for coverage. The exchanges also provide a way for smaller employers to get insurance for their workers.
By 2019, about 24 million people will buy individual plans through an exchange, along with another 5 million employed by small businesses, according to estimates from the Congressional Budget Office.
In Virginia, about 283,000 individuals and 232,000 small- business employees could participate in the exchanges in 2014, according to the Urban Institute.
States can elect to build their own exchanges, enter into a state- federal partnership exchange or default to one run by the federal government. They may transition to a different model after the exchanges start operating in 2014.
Gov. Bob McDonnell has waffled on his preference for Virginia, most recently saying that a lack of information from the federal government makes it difficult to commit to a state-run exchange.
Consumers are unlikely to see much difference between an exchange run by the federal government versus one run by a state, said Timothy Jost, a health law professor at Washington and Lee University School of Law.
What they might see are higher premiums.
In general, rules for the exchanges call for plans to cover more services than they have historically and for insurers to offer plans in which premiums pay for a larger share of health costs, said Branch McNeal, a senior partner with human resources consultant Mercer. Those enhancements could drive prices up.
"The cost is really a big potential concern for people," he said.
Steve Cindrich worries that the federal subsidies won't do enough to make the plans affordable, and consumers will opt to remain uninsured and pay the penalty tax.
"Is this penalty really going to work? We're hoping that it does," said Cindrich, director of strategic business development for Optima Health, the insurance arm of Norfolk-based Sentara Healthcare.
To succeed, the marketplaces need broad participation by consumers and insurers.
Exchanges suffer if they attract a large proportion of sicker people - who tend to have more expensive medical needs - while healthier people seek coverage elsewhere.
That makes it necessary to standardize rules for plans available inside and outside the exchanges, said Jennifer Tolbert, director of state health reform for the Kaiser foundation. However, she said, the federal subsidies probably will motivate people to use the exchanges.
In states that opt out of expanding Medicaid, the exchanges will include more lower-income people, who tend to be less healthy.
People earning less than the federal poverty standard but too much for Medicaid won't qualify for assistance through the exchange and could be left with no realistic way of acquiring insurance.
"If we don't go ahead with the Medicaid expansion, we'd be creating this big coverage gap," said Michael Cassidy, president of the Commonwealth Institute for Fiscal Analysis.
Jost of Washington and Lee has studied exchanges in the United States and abroad. Massachusetts runs one, and the Federal Employees Health Benefits Program operates like one.
"It's not like this is some kind of wild social experiment," he said. "It's something that can work."
Amy Jeter, 757-446-2730, firstname.lastname@example.org
do I qualify for aid?
People meeting income guidelines who don't have access to other affordable coverage can qualify for federal assistance when they buy a plan on a health benefits exchange.
Details, Page 6
Some state governors want more time to decide whether to opt for a state-run exchange.
Qualifying for aid in a health insurance exchange
People meeting income guidelines who don't have access to other affordable coverage can qualify for federal assistance when they buy an individual plan on a health benefits exchange.
What assistance is available?
Tax credits reduce premium costs on a sliding scale, so enrollees pay no more than a set percentage of their income for insurance.
Cost-sharing subsidies allow lower-income people to enroll in plans that pay a greater share of covered benefits on average.
There are limits for out-of-pocket spending for essential benefits based on income.
Who qualifies for a tax credit?
A family must earn between one and four times the federal poverty standard. In 2012, the cutoff ranged from $44,680 a year for a household of one to $92,200 for a family of four.
People who are eligible for Medicaid or Medicare do not qualify. Those offered health insurance through an employer don't qualify unless either the person's share of the premium exceeds 9.5 percent of his or her income or the plan on average covers less than 60 percent of the cost of covered benefits for a standard population of enrollees.
How much is the tax credit?
The tax credit is based on income and applied on a sliding scale. It's meant to cap the percentage of a person's income that he or she is paying for health premiums. For example, credits for people making three to four times the poverty level would keep their health premiums below 9.5 percent of their income.
The credits are based on the premium for the "silver plan," which has the second-lowest cost of those offered on the exchange. The tax credits are available to people who don't have tax liability, and a person may receive the assistance at the time they buy the insurance rather than as a reimbursement.
Who qualifies for cost-sharing subsidies?
Families with incomes at or below 250 percent of the federal poverty level qualify on a sliding scale. In 2012, that ranged from $27,925 for an individual to $57,625 for a family of four.
Who qualifies for out-of-pocket spending limits?
People making one to four times the federal poverty standard.