All This Talk of a Health Exchange, But What Is It?

Are you wondering what exactly a health exchange is? It’s a hot topic with the 2012 election candidates. The term is even buzzing around Facebook and Twitter.  Steve clears up the confusion in this simple to follow summary.

Every state will be required to have a health exchange by the year 2014. President Obama signed the Patient Protection and Affordable Care Act last March and it is now taking action. The purpose of such an exchange is to make health insurance more affordable and easier to purchase for small business and individuals. The exchange will let individuals and small business to compare costs and coverage benefits.

A significant benefit of the health insurance exchanges is to make it easy for you to purchase and enroll in a health plan or provide health coverage for your employees. Each state will offer a website to search for a healthcare provider, plans, and costs in your personal zip code. You will be able to enroll online, in person, by mail or by phone. Now your state will be set up to help you find the right health insurance plan.

If you cannot afford to purchase a plan in an exchange, you may be eligible for a subsidy from the government based on your income and family size. If your yearly income is higher than 133% of the federal poverty level but less than 400% of the poverty level (about $43,000 for an individual), you will get a tax credit to help you pay your health plan’s premiums and out-of-pocket expenses. In this way, insurers will have to offer more coverage for individuals, including free comprehensive coverage (physicals, well-baby exams, immunizations, etc.) and subsequently rates in the individual market may go up as much as 10%. However more than half of individuals will now qualify for tax credits, and these credits will actually lower the individual rates as much as 50%.

Sixty percent of Americans get health insurance through their job. But what about individuals? Health care reform will make it illegal to deny coverage or raise rates for people with pre-existing conditions.

Consumer Operated and Oriented Plans (CO-OPs) will also be coming into play. These will be non-profit, member-run health insurance companies.

In a nutshell, this is what you will expect to see coming soon! The following website offers up to date information on which states have enacted a health exchange and which are currently pending. As you can see, California’s plan was signed into action last December.

Source: “What Is a Health Exchange?” by Michael Bihari for

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