With Healthcare Reform Comes Health Insurance Exchanges

Posted on: April 5, 2013

Are You Ready for Health Insurance Exchanges?

Some 2.7 million New Yorkers lack health insurance, according to New York government data. Without insurance, a serious medical problem can spell financial disaster for a family. Costs for treating the insured can quickly escalate as a result: People who lack coverage are less likely to seek preventive care and more likely to end up in emergency rooms once their condition worsens. The insured bear the brunt in the form of rising premiums and charges for medical care. According to a study led by Cathy J. Bradley, Ph.D., chair of the Department of Healthcare Policy and Research at Virginia Commonwealth University School of Medicine, the cost of caring for the uninsured can be cut in half. Bradley and colleagues tracked more than 26,000 patients for seven years and found that their yearly healthcare costs dropped from nearly $9,000 on average to about $4,500 once they attained health coverage.

Insuring more Americans and reining in healthcare costs is the goal of the Affordable Care Act (ACA). And one of the primary ways the ACA will accomplish its goal is through health insurance exchanges — also known as health benefit exchanges. The exchanges are basically a marketplace where consumers and small businesses can comparison shop for health insurance. States have until January 1, 2014 to set up an exchange, after which the federal government will do it for them. 

New York has taken the initiative by organizing the New York Health Benefit Exchange, a website where New Yorkers will be able to find affordable insurance plans. And you’ll be able to shop knowing that the New York government has approved all the companies on the exchange — as mandated by the ACA — making sure the insurers accept all patients regardless of pre-existing conditions, offer a full-range of benefits, and are financially capable of covering their customers.

The exchanges may offer substantial savings for consumers. Research by the state suggests the plans on the exchange will be about 70 percent cheaper than current options. Insurance will be even more affordable for families of low to moderate income: The government will be offering about $2.4 billion in tax credits to help offset costs.

Small businesses can also take advantage of the health benefit exchange. Businesses with fewer than 50 employees will be able to offer premiums at about a 21 percent discount over what larger companies pay. Again, there is money to help defray costs — $220 million in tax benefits have been earmarked for small businesses.

Beginning October 1, you’ll be able to apply for insurance through the website: www.healthbenefitexchange.ny.gov. The site will list plans under a Bronze, Silver, Gold, or Platinum heading, which indicates how much the plan covers. The basic structure of the benefit plans will be the same making them easy to compare. The more precious metals are an indication that the plans cost more, but also cover more of your expenses.

If you’re worried about what this might cost the state — and by extension, taxpayers — the New York government has some reassuring findings. Research suggests that the health benefit exchange will actually save the state $18 billion over the next 10 years. The Urban Institute, a non-partisan research group in Washington, D.C., estimates that once healthcare reform is fully implemented, state savings will equal $2.3 billion a year.

Not everyone will need to take part in the exchange. If you get insurance through your employer as part of a benefits package, you may not notice a difference as the ACA kicks in. But for the self-employed, the uninsured, and the small business owner, the New York State Health Benefit Exchange offers new options.

View Next Post to see more on this topic, by NWH President & CEO, Joel Seligman.