The Economics, Opportunities, and Challenges of Health Insurance Exchanges
The Economics, Opportunities, and Challenges of Health Insurance Exchanges
A key component of the Affordable Care Act (ACA) is the creation of state-based health insurance exchanges, which have the potential to substantially improve the functioning and expand the reach of the private health insurance market. This chapter describes salient features of the current market for health insurance and explains how the exchanges will build on this system by altering incentives for individuals, employers, and insurers. The U.S. private health insurance market has been dominated by employer-sponsored insurance (ESI). In 2009, more than 90 percent of the 172 million non-elderly individuals with private health insurance obtained it through their, or a family member’s, employer. Individuals without ESI coverage can buy private health insurance on the individual market, though without the tax subsidy ESI enjoys. Additionally, individuals with existing health problems often find it difficult or impossible to obtain coverage at affordable rates. The ACA will increase health insurance coverage beginning in January 2014, through two channels: First, Medicaid eligibility will be extended to individuals with incomes up to 133 percent of the federal poverty line (FPL). Second, the creation of state-based health insurance exchanges will allow individuals to select from qualified health plans operating in their area of residence.
Keywords: Affordable Care Act, ACA, state health insurance exchanges, health care policy, health care reform, health care services, health insurance market
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