Health Insurance Exchange – One National Exchange or Many State Exchanges? (Part 2)
Six months ago I wrote on this site that a congressional proposal for Health Care Reform would likely include exchanges at the state level, and that this was the most sensible way to go. In fact, today’s Senate bill outlines a plan for state and regional exchanges. But the House bill, which passed last month includes a plan for a national exchange. Over the next month, the two entities will have to come to a single recommendation on this issue. Here are the differences in the two bills regarding exchanges.
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HOUSE |
SENATE |
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National or state |
National exchange and, with federal approval and oversight, some state exchanges allowed. |
States would form their own exchanges, like Massachusetts’ Health Connector. States could join together to form regional exchanges.
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Accessibility |
Individuals who do not currently have access to employer plans, Medicare or Medicaid.
Over time, small employers would have access and ultimately all employers could participate.
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Plans offered |
Both bills mandate that insurance companies offer a basic plan, plus three others. The actuarial values differ. Policies currently bought in the individual market cover on average 55% – 60% of costs.
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Basic plan coverage |
70% of costs
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60% of costs |
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Three non-basic plans |
Up to 95% of costs |
Up to 90% of costs
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Price regulations |
Premiums for seniors must be less than 2x premiums for younger adults
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Premiums for seniors can be up to 3x premiums for younger adults. |
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Rate increases would have to be justified and approved by regulators.
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Medical Loss Ratio |
Insurers must spend 85% of premium dollars on medical claims. |
Insurers must spend 80%-85% of premiums on medical claims. |
For an exhaustive and up-to-date comparison of the House and Senate Bills, go to the Kaiser Family Foundation site.
The issue of whether insurance is sold through one national or many local exchanges is incidental to the specifics of the proposed regulations. Medical loss ratios, premium differentials and rate adjustments can all be similarly legislated regardless of their distribution channels. Like Medicare and Medicaid, we can have a national program that is completely managed at the state level.
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Posted on Thursday, December 24th, 2009 at 3:35 pm. You can subscribe via RSS 2.0 feed to this post's comments. You can comment below. Your comments will appear immediately, but the author reserves the right to delete innapropriate comments.
Wednesday, March 31st, 2010 at 8:26 am
DO you believe companies like Quotit and ehealth.com will be tapped to run the various state exchanges, or at least the web-generated offerings?
Who is the platform vendor for the current Massachusetts Connector, if any? It sure looks a lot like the ehealth.com platform and interface.