Health insurance marketplace
Health insurance marketplaces, also called health exchanges, are organizations in each state through which people can purchase health insurance.
In the United States, people can purchase health insurance that complies with the Patient Protection and Affordable Care Act at ACA health exchanges, where they can choose from a range of government-regulated and standardized health care plans offered by the insurers participating in the exchange. ACA health exchanges were fully certified and operational by January 1, 2014, under federal law. Enrollment in the marketplaces started on October 1, 2013, and continued for six months. 8.02 million people had signed up through the health insurance marketplaces. An additional 4.8 million joined Medicaid. Enrollment for 2015 began on November 15, 2014, and ended on December 15, 2014. As of April 14, 2020, 11.41 million people had signed up through the health insurance marketplaces.
Private non-ACA health care exchanges also exist in many states, responsible for enrolling 3 million people. These exchanges predate the Affordable Care Act and facilitate insurance plans for employees of small and medium size businesses.
Background
Health insurance exchanges in the United States expand insurance coverage while allowing insurers to compete in cost-efficient ways and help them to comply with consumer protection laws. Exchanges are not themselves insurers, so they do not bear risk themselves, but they do determine which insurance companies participate in the exchange. An ideal exchange promotes insurance transparency and accountability, facilitates increased enrollment and delivery of subsidies, and helps spread risk to ensure that the costs associated with expensive medical treatments are shared more broadly across large groups of people, rather than spread across just a few beneficiaries. Health insurance exchanges use electronic data interchange to transmit required information between the exchanges and carriers, in particular the 834 transaction for enrollment information and the 820 transaction for premium payment.History
Health exchanges first emerged in the private sector in the early 1980s. They used computer networking to integrate claims management, eligibility verification, and inter-carrier payments. These became popular in some regions as a way for small and medium-sized businesses to pool their purchasing power into larger groups, reducing cost. An additional advantage was the ability of small businesses to offer a range of plans to employees, allowing them to compete with larger corporations. The largest such exchange prior to the ACA was CaliforniaChoice, established in 1996. By 2000, CaliforniaChoice's membership included 140,000 individuals from 9000 business groups.Obamacare maintained the concept of health insurance exchanges as a key component of health care. President Obama stated that it should be "a market where Americans can one-stop shop for a health care plan, compare benefits and prices, and choose the plan that's best for them, in the same way that Members of Congress and their families can. None of these plans should deny coverage on the basis of a preexisting condition, and all of these plans should include an affordable basic benefit package that includes prevention, and protection against catastrophic costs. I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans. This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest." Although the House of Representatives had sought a single national exchange as well as a public option, the Patient Protection and Affordable Care Act as passed used state-based exchanges, and the public option was ultimately dropped from the bill after it did not win filibuster-proof support in the Senate. States may choose to join together to run multi-state exchanges, or they may opt out of running their own exchange, in which case the federal government will step in to create an exchange for use by their citizens.
ACA was signed into law on March 23, 2010. The law required that health insurance exchanges commence operation in every state on October 1, 2013. In the first year of operation, open enrollment on the exchanges ran from October 1, 2013, to March 31, 2014, and insurance plans purchased by December 15, 2013, began coverage on January 1, 2014. For 2015 open enrollment began on November 15, 2014, and ended on February 15, 2015.
Initial launch
On the date the Patient Protection and Affordable Care Act of 2010 was enacted, only a few health insurance exchanges across the country were up and running. Among them were the Massachusetts Health Connector, the New York HealthPass - a non-profit exchange, and the Utah Health Exchange. Advocates claim these exchanges make these "markets" more efficient, providing oversight and structure, arguing that previous health insurance markets in the United States are poorly-organized and deal with wide variations in coverages and requirements among different companies, employers, and policies.It was unknown how many people in total successfully enrolled in the first week. The federal marketplace website was scheduled for maintenance on the weekend.
CGI Group came under media scrutiny as a developer behind several marketplace websites, after numerous issues surfaced with the federal health insurance marketplace, HealthCare.gov.
On October 1, 2013, the state-run marketplaces also opened to the public, and some of them reported first statistics. During the first week of enrollment:
- 28,699 people enrolled in the California health plan marketplace
- 17,300 people enrolled in the Kentucky health plan marketplace
- More than 40,000 people enrolled in the NY State of Health marketplace
- On October 8, 2013, The Seattle Times reported that more than 9,400 people had enrolled in the Washington health plan marketplace. However, a later report clarified that many included in that count were Medicaid enrollees. By October 21, 2013, only 4,500 Washington residents had enrolled in private insurance through the state marketplace.
- Those living in states that use federal exchange, who may avail themselves of a "special entrollment period" that allows individuals to avoid penalties and enroll in a health plan by checking a blue box by mid-April 2014, stating they tried to enroll before the deadline. The New York Post reports: "This method will rely on an honor system; the government will not try to determine whether the person is telling the truth". State-run exchanges have their own rules; several will be granting similar extensions.
- Members of the Pre-Existing Condition Insurance Program, who were given a one-month extension until the end of April 2014.
- Those who have successfully applied for exemption status based on criteria published by HealthCare.gov, who are not required to pay a tax penalty if they don't enroll in a health insurance plan.
According to the US Department of Health & Human Service, as enrollment for the Health Insurance Marketplace began on November 15, about 11.4 million people have explored their options, learned about the financial assistance available, and signed up for or renewed a health plan that meets their needs and fits their budget. As of February, 2015, $268 was the average monthly tax credit for people who qualify for financial assistance in 37 states using HealthcCare.gov through January 30.
Impacts
Implementation of the individual exchanges changed the practice of insuring individuals. The expansion of this market was a major focus of ACA. Over 1.3 million people had selected plans for 2015 marketplace coverage in the first three weeks of the year's open enrollment period, including people who renewed their coverage and new customers.As of January 3, 2014, 2 million people had selected a health plan through the health insurance marketplaces. By April 19, 2014, 8.0 million people had signed up through the health insurance marketplaces and an additional 4.8 million joined Medicaid. As of February, 2015, about 11.4 million people had signed up for or been automatically renewed for 2015 marketplace coverage. Today, more than 1,400 local outreach events have been conducted in federally facilitated marketplace states across the country.
Regulations
- Insurers are prohibited from discriminating against or charging higher rates for any individual based on pre-existing medical conditions or gender.
- Insurers are prohibited from establishing annual spending caps of dollar amounts on essential health benefits.
- All private health insurance plans offered in the Marketplace must offer the following essential health benefits: ambulatory care, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse services, prescription drugs, rehabilitative and habilitative services, laboratory services, preventive and wellness services, and pediatric services.
- Under the individual mandate provision, individuals who are not covered by an acceptable health insurance policy will be charged an annual tax penalty of $95, or up to 1% of income over the filing minimum, whichever is greater; this will rise to a minimum of $695, or 2.5% of income over the filing minimum, by 2016. The penalty is prorated, meaning that if a person or family has coverage for part of the year they won't be liable if they lack coverage for less than a three-month period during the year. Exemptions are permitted for religious reasons, for members of health care sharing ministries, or for those for whom the least expensive policy would exceed 8% of their income. Also exempted are U.S. citizens who qualify as residents of a foreign country under the IRS foreign earned income exclusion rule. In 2010, the Commissioner speculated that insurance providers would supply a form confirming essential coverage to both individuals and the IRS; individuals would attach this form to their Federal tax return. Those who aren't covered will be assessed the penalty on their Federal tax return. In the wording of the law, a taxpayer who fails to pay the penalty "shall not be subject to any criminal prosecution or penalty" and cannot have liens or levies placed on their property, but the IRS will be able to withhold future tax refunds from them.
| Persons in Family Unit | 48 Contiguous States and D.C. | Alaska | Hawaii |
| 1 | $11,490 | $14,350 | $13,230 |
| 2 | $15,510 | $19,380 | $17,850 |
| 3 | $19,530 | $24,410 | $22,470 |
| 4 | $23,550 | $29,440 | $27,090 |
| 5 | $27,570 | $34,470 | $31,710 |
| 6 | $31,590 | $39,500 | $36,330 |
| 7 | $35,610 | $44,530 | $40,950 |
| 8 | $39,630 | $49,560 | $45,570 |
| Each additional person adds | $4,020 | $5,030 | $4,620 |
- In participating states, Medicaid eligibility is expanded; all individuals with income up to 133% of the poverty line qualify for coverage, including adults without dependent children. The law also provides for a 5% "income disregard", making the effective income eligibility limit 138% of the poverty line. States may choose to increase the income eligibility limit beyond this minimum requirement. As written, the ACA withheld all Medicaid funding from states declining to participate in the expansion. However, the Supreme Court ruled in National Federation of Independent Business v. Sebelius that this withdrawal of funding was unconstitutionally coercive and that individual states had the right to opt out of the Medicaid expansion without losing pre-existing Medicaid funding from the federal government. For states that do expand Medicaid, the law provides that the federal government will pay for 100% of the expansion for the first three years, then gradually reduce its subsidy to 90% by 2020. fifteen states—Alaska, Alabama, Georgia, Idaho, Indiana, Iowa, Louisiana, Mississippi, Nebraska, North Carolina, Oklahoma, South Carolina, Texas, Wisconsin, and Virginia—were not participating in the Medicaid expansion, with ten more—Kansas, Maine, Michigan, Montana, Missouri, Ohio, Pennsylvania, South Dakota, Utah, and Wyoming—leaning towards not participating.
- The Patient Protection and Affordable Care Act eliminates lifetime and annual limits from plans in the individual health benefits exchanges. This effectively eliminates the ceiling on financial risk for individuals in the individual exchanges.