Health Insurance Exchanges

Health insurance exchanges are marketplaces designed to give consumers a “one-stop-shopping” option for researching and enrolling in health insurance plans, as well changing coverage from one plan to another. The purpose of health insurance exchanges is to consolidate the information and streamline the application process, making it easier for consumers to make an informed decision about the health insurance plan to select. Insurance companies benefit from health insurance exchanges because they’re able to compete on the benefits and costs of their programs, instead of on the wittiness of their advertising or the persuasiveness of their sales staff.

The Current Model: Organized Chaos

Currently, most purchasers of health insurance buy a policy from the first sales agent they consult with, because the agents are trained to close such sales on the initial visit. Those who do have the chance to research the different programs available often are overwhelmed by the number of choices available, and wind up limiting their choices from among two or three of the largest well-known companies. Most states have hundreds or even thousands of insurance companies selling health insurance within their borders, and it can be a bewildering process for a consumer to research them all. In many cases, the consumer never gets to see the “best” health insurance plan available. Insurance companies themselves understand this and put significant resources into sales, ultimately increasing premium costs..

How Can Health Insurance Exchanges Help?

Health insurance Illinois exchanges are designed to overcome this type of problem – a health insurance exchange would vet all companies and plans included, so that consumers wouldn’t have to be concerned about their credibility. They work by taking the consumer’s coverage needs and matching them up against all the health insurance companies doing business within the state, and returning the information to the consumer, who can then either “tweak” information or coverage parameters to fine-tune the coverage, or simply enroll in the best plan.

Health insurance exchanges also provide a streamlined administrative process designed to accept and evaluate an application within minutes and issue a coverage decision on-the-spot. Health insurance exchanges would also be able to help consumers identify special financial or medical situations that would trigger financial assistance or enrollment in high-risk pools, and implement those triggers automatically.

An Increased Role in the Future

Looking toward the future, health insurance exchanges could be a critical element in the move to make health insurance truly portable. Currently, employees whose health insurance coverage is provided through their employer lose that coverage upon leaving employment, and must go through another enrollment process when starting new employment – even if the new plan is identical to the old plan, and is offered by the same company! Using health insurance exchanges, consumers would be able to pick the best insurance coverage for their situation, and employers who subsidize their employees’ health insurance would simply make their premium payment to the health insurance exchange, which would distribute the funds among the insurance companies involved.

There are presently only three active health insurance exchanges operating in the US – in Massachusetts, Utah and New York state. Health care exchanges are featured as a critical component of the Patient Protection and Affordable Care Act of 2010, commonly known as “Health Care Reform,” and will be developed as the law progresses toward full implementation.


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