On July 11, 2011, the U.S. Department of Health and Human Services (“HHS”) issued a proposed rule that would implement Affordable Insurance Exchanges, pursuant to the Patient Protection and Affordable Care Act (“PPACA”). Exchanges are, in essence, state-based insurance marketplaces that combine insurance risks together with insurance premiums. Exchanges are set to be operational and available on-line or by phone beginning January 1, 2014. In New York State, as we previously reported here, both the Senate majority and Governor Cuomo have submitted bills establishing the Empire State’s exchange.
HHS asserts that these exchanges “will provide competitive marketplaces for individuals and small employers to directly compare available private health insurance options on the basis of price, quality, and other factors.” HHS Secretary Kathleen Sebelius believes exchanges “will offer Americans competition, choice and clout.”
According to the federal government’s health care website, exchanges will also provide individuals and families with more personalized assistance when purchasing insurance. This predicted benefit, of course, relies on the fact that exchanges create “a single place where you can enroll in private or public health insurance coverage.” For small employers, supporters assert that exchanges will level the playing field and provide a “better choice of plans and insurers at a lower cost, the way larger employers do now.” In other words, greater competition among insurance companies will drive costs down.
All states must have an exchange in place by January 1, 2014. Federal officials will gauge each state’s exchange by January 1, 2013 to determine whether the state is qualified to run its own exchange. If a state’s exchange is not complete or fails to meet “operational readiness,” HHS will run that state’s exchange for them.
This post was contributed by Aaron Mensh.