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December 1, 2012

The Health Insurance Exchange – What’s the Big Deal?

by Anne Paddock

The governor of Arizona let the federal government know the state does not plan to set up a Health Insurance Exchange by October 1, 2013 – the deadline to have the exchanges operating to allow consumers time to purchase policies for 2014 coverage. 17 states and the District of Columbia plan to create their own health insurance exchanges and the remaining states have until December 14, 2012 to decide what they are going to do. For those states that decide not to set up a Health Insurance Exchange themselves, the task will be left to the federal government who has the authority to step in and create the exchanges.

A Health Insurance Exchange is going to be a central marketplace in each state for those who lack health insurance coverage. The marketplace is on-line and people will go to the site to learn:

1.  Whether they quality for Medicaid (in the states that agree to the medicare expansion for those earning up to 133% of the poverty level, or about $15,000 annually); or

2.  Whether they qualify for the health insurance tax credits available to anyone earning up to four times the federal poverty level, which amounts to about $45,000 annually; or

3.  All about the private health insurance plans available to purchase.

The concept of a Health Insurance Exchange is a one-stop shopping principle in which the uninsured consumer can compare plan benefits, costs, and network providers. Instead of googling “health insurance,” or falling victim to unscrupulous insurance providers, consumers can go to one on-line resource to obtain accurate and good information. The exchanges will vary from state to state but the general goal is to give consumers choices over a wide variety of health insurance options and to help people through the complex process of choosing a plan.

The exchanges are also being put into place to ensure only licensed insurers sell health insurance policies in compliance with consumer protection laws including the prohibition against rejecting people with pre-existing conditions, limiting lifetime ceilings, and that all policies meet a minimum benefit standard, as defined by the federal and state laws.

So, what’s the big deal? Why are 17 states refusing to set up a health insurance exchange in their respective states conceding control to the federal government? According to Jan Brewer, the governor of   Arizona, the failure to “timely issue detailed regulations, written guidance, and inform States when required services will be made available has made it impossible for Arizona and other states to make informed decisions on proceeding with a State-based Exchange.” Really. Gee, are the other states currently setting up the website just smarter, more organized, or technically gifted? Probably not. Somehow, the refusal to set up the health insurance exchange seems to be more about politics than process.

The Republican party has historically been the party of personal responsibility so I never understood why the party generally opposed a mandate for individuals to buy health insurance for themselves and their families. They claim small businesses can’t afford to provide health insurance to employees and their families but fail to say that most companies that do offer health insurance plans to their employees only provide the health insurance policy in whole or part to the employee. More often than not, the employee is paying a portion of their health insurance. The employee also has to pay for the spouse and dependent coverage – not the company. There is also a wide variety of health insurance policies that vary from low-cost HMO’s and catastrophic plans to high-cost PPO plans so businesses do have a wide variety of choices but the greater burden is on the individual, not the company.

We live in a country where we are going to treat the sick and for those that don’t qualify for an entitlement program, health insurance should be a mandate because it is each and everyone’s responsibility to take care of themselves and their family so they don’t become a burden to the taxpayers. Many people don’t want to pay 8-10% of their pre-tax income on health insurance and medical expenses and instead take a chance thinking they won’t get sick or if they do, they will go to an emergency room. If the illness turns out to be serious, the taxpayers end up paying the bill. In a system where we all benefit, we all have to participate. The healthy subsidize the sick and that’s the truth and to ask the taxpayers to pay for those that decide not to buy health insurance is as far from personal responsibility as I can think of.

Maybe the States opposed to the health insurance exchanges disagree with the Medicaid expansion or maybe they disagree with tax credits but how can any state not encourage and rejoice when the uninsured buy health insurance from a private insurer which will ultimately lighten the burden on taxpayers?

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