In the United States, health insurance marketplaces, also called health exchanges, are organizations in each state through which people can purchase health insurance. People can purchase health insurance that complies with the Patient Protection and Affordable Care Act (ACA, known colloquially as "Obamacare") 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. As of April 19, 2014, 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.
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.
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 (EDI) to transmit required information between the exchanges and carriers (trading partners), in particular the 834 transaction for enrollment information and the 820 transaction for premium payment.
Health exchanges first emerged in the private sector in the early 1980s, and 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 is 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 (ACA) 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.
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.
|48 Contiguous States
The subsidies for insurance premiums are given to individuals who buy a plan from an exchange and have a household income between 133% and 400% of the poverty line. Section 1401(36B) of PPACA explains that each subsidy will be provided as an advanceable, refundable tax credit and gives a formula for its calculation:
Except as provided in clause (ii), the applicable percentage with respect to any taxpayer for any taxable year is equal to 2.8 percent, increased by the number of percentage points (not greater than 7) which bears the same ratio to 7 percentage points as the taxpayer's household income for the taxable year in excess of 100 percent of the poverty line for a family of the size involved, bears to an amount equal to 200 percent of the poverty line for a family of the size involved. *(ii) SPECIAL RULE FOR TAXPAYERS UNDER 133 PERCENT OF POVERTY LINE- If a taxpayer's household income for the taxable year is in excess of 100 percent, but not more than 133 percent, of the poverty line for a family of the size involved, the taxpayer's applicable percentage shall be 2 percent.— Patient Protection and Affordable Care Act: Title I: Subtitle E: Part I: Subpart A: Premium Calculation
A refundable tax credit is a way to provide government benefits to individuals who may have no tax liability (such as the earned income tax credit). The formula was changed in the amendments (HR 4872) passed March 23, 2010, in section 1001. To qualify for the subsidy, the beneficiaries cannot be eligible for other acceptable coverage. The U.S. Department of Health and Human Services (HHS) and Internal Revenue Service (IRS) on May 23, 2012, issued joint final rules regarding implementation of the new state-based health insurance exchanges to cover how the exchanges will determine eligibility for uninsured individuals and employees of small businesses seeking to buy insurance on the exchanges, as well as how the exchanges will handle eligibility determinations for low-income individuals applying for newly expanded Medicaid benefits. Premium caps have been delayed for a year on group plans, to give employers time to arrange new accounting systems, but the caps are still planned to take effect on schedule for insurance plans on the exchanges; the HHS and the Congressional Research Service calculated what the income-based premium caps for a "silver" healthcare plan for a family of four would be in 2014:
|% of Federal poverty level||Dollars (2014)[a]||Cap (% of Income)||Max Out-of-Pocket||Avg Savings[b]|
|State and district exchanges|
|Arkansas Health Connector|
|Connect for Health Colorado|
|Access Health CT (Connecticut)|
|DC Health Link (District of Columbia)|
|Hawaiʻi Health Connector|
|Get Covered Idaho|
|Get Covered Illinois|
|Maryland Health Connection|
|Massachusetts Health Connector|
|Nevada Health Link|
|BeWellNM (New Mexico)|
|NY State of Health (New York)|
|HealthSource RI (Rhode Island)|
|Vermont Health Connect|
In the individual market, sometimes thought of as the "residual market" of insurance, insurers have generally used a process called underwriting to ensure that each individual paid for his or her actuarial value or to deny coverage altogether. The House Committee on Energy and Commerce found that, between 2007 and 2009, the four largest for-profit insurance companies refused insurance to 651,000 people for previous medical conditions, a number that increased significantly each year, with a 49% increase in that time period. The same memorandum said that 212,800 claims had been refused payment due to pre-existing conditions and that insurance firms had business plans to limit money paid based on these pre-existing conditions. These persons who might not have received insurance under previous industry practices are guaranteed insurance coverage under the ACA. Hence, the insurance exchanges will shift a greater amount of financial risk to the insurers, but will help to share the cost of that risk among a larger pool of insured individuals. The ACA's prohibition on denying coverage for pre-existing conditions began on January 1, 2014. Previously, several state and federal programs, including most recently the ACA, provided funds for state-run high-risk pools for those with previously existing conditions. Several states have continued their high-risk pools even after the first marketplace enrollment period.
Pricing variation will be allowed by area (within a state) and family composition ("tier") as well.
Within the exchanges, insurance plans are offered in four tiers designated from lowest premium to highest premium: bronze, silver, gold, and platinum. The plans cover ranges from 60% to 90% of bills in increments of 10% for each plan. For those under 30 (and those with a hardship exemption), a fifth "catastrophic" tier is also available, with very high deductibles.
Insurance companies select the doctors and hospitals that are "in-network".
Proponents of health care reform believe that allowing comparable plans to compete for consumer business in one convenient location will drive prices down. Having a centralized location increases consumer knowledge of the market and allows for greater conformation to perfect competition. Each of these plans will also cap liabilities for consumers with out-of-pocket expenses at $6,350 for individuals and $12,700 for families.
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.
The health insurance advocacy group America's Health Insurance Plans was willing to accept these constraints on pricing, capping, and enrollment because of the individual mandate: The individual mandate requires that all individuals purchase health insurance. This requirement of the ACA allows insurers to spread the financial risk of newly insured people with pre-existing conditions among a larger pool of individuals.
Additionally, a study done by Pauly and Herring estimates that individuals with pre-existing conditions in the 99th percentile of financial risk represented 3.95 times the average risk (mean). Figures from the House Committee on Energy and Commerce would indicate that approximately 1 million high-risk individuals will pursue insurance in the health benefits exchanges. Congress has estimated that 22 million people will be newly insured in the health benefits exchanges. Thus the high-risk individuals do not number in high enough quantities to increase the net risk per person from previous practice. It is thus theoretically profitable to accept the individual mandate in exchange for the requirements presented in the ACA.
HIX (Health Insurance eXchange) is emerging as the de facto acronym across state and federal government stakeholders, and the private sector technology and service providers that are helping states build their exchanges. The acronym HIX differentiates this topic from health information exchange, or HIE.
The de facto acronym of HIX will be replaced with HIEx in the 3rd Edition of the HIMSS Dictionary of Healthcare Information Technology Terms, Acronyms and Organizations, to be released in March 2013.
The message, "Please try again later", greeted many people who tried to view information on marketplace websites across the United States during the first week of operation. Websites were reported to have either crashed or to offer very sluggish response times. A statement by Todd Park, U.S. Chief Technology Officer, resolved the initial disagreement about whether the culprit was the high volume of views or deeper technical issues: he asserted that glitches were caused by unexpected high volume at the federal health exchange (HealthCare.gov), when the site drew 250 thousand visitors instead of the 50-60 thousand expected, and claimed that the site would have worked with fewer visitors. More than 8.1 million people visited the site from October 1–4, 2013.
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. Some reporters nicknamed the program "Slowbamacare".
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:
On October 23, 2013, The Washington Post reported that Americans with no health insurance would have an additional six weeks before they would be penalized. That deadline was extended to March 31, and those who do not enroll by then may still avoid incurring penalties and getting locked out of the healthcare enrollment system this year. Exemptions and extensions apply to:
On October 28 and 29, 2013, Sen. Lamar Alexander (R-TN) and Rep. Lee Terry (R, NE-2) introduced the Exchange Information Disclosure Act (S. 1590 and H.R. 3362, respectively). Terry's bill would have required the United States Department of Health and Human Services to submit weekly reports to Congress on the status of HealthCare.gov including "…weekly updates on the number of unique website visitors, new accounts, and new enrollments in a qualified health plan, as well as the level of coverage," separating the data by state, as well as reports on efforts to fix the broken portions of the website. The reports would have been due every Monday until March 31, 2015, and would have been available to the public.
A private health insurance exchange is an exchange run by a private sector company or nonprofit. Health plans and insurance carriers in a private exchange must meet certain criteria defined by the exchange management. Private exchanges combine technology and human advocacy, and include online eligibility verification and mechanisms for allowing employers who connect their employees or retirees with exchanges to offer subsidies. They are designed to help consumers find plans personalized to their specific health conditions, preferred doctor/hospital networks, and budget. These exchanges are sometimes called marketplaces or intermediaries, and work directly with insurance carriers, effectively acting as extensions of the carrier. The largest and most successful private health care exchange is CaliforniaChoice, established by the Word & Brown General Agency in 1996.
Private health exchanges predate the Affordable Care Act. One example of an early health care exchange is International Medical Exchange (IMX), a company venture financed in Louisville, Kentucky, by Standard Telephones and Cables, a large British technology company (now Nortel), to develop the exchange concept in the U.S. using on-line technology. The product was created in the mid-1980s. IMX developed an eligibility verification system, a claims management system, and a bank-based payments administration system that would manage payments between the patient, the employer, and the insurance carrier. Like proposed exchanges today, it focused on standards of care, utilization review by a third party, private insurer participation, and cost reduction for the health care system through product simplification. The focus was on creating local or regional exchanges that offered a series of standardized health care plans that reduced the complexity and cost of acquiring or understanding health care insurance, while simplifying claims administration. The system was modeled after the standardized stock exchange and banking industry back office processes. The major difference was that IMX health care exchanges would provide their products through a national network of existing commercial banks rather than setting up a duplicate payment and administration systems network as proposed today. The IMX product rights were acquired by Anthem (then Blue Cross and Blue Shield of Kentucky). The exchange product became the basis for inter-carrier claims settlement between commercial insurance carriers and Blue Cross organizations. The founders of IMX were from top management at Humana, and top management of First Tennessee National Corp (now First Horizon).
In overlapping markets, the co-existence of public and private exchange plans can lead to confusion when speaking of an "exchange plan." In California, Anthem Blue Cross offers HMO plans through both the state-run Covered California exchange and the private CaliforniaChoice exchange, but doctor networks are not identical. Physicians advertising acceptance of Anthem Blue Cross Exchange HMOs may misinform individuals enrolled in Anthem Blue Cross Exchange HMOs through the private exchange.
Sebelius said on Monday that 'the key date really is the 15th of December,' the deadline for buying coverage that starts on January 1.
Generally, in 2010, the filing threshold is $9,350 for a single person or a married person filing separately and is $18,700 for married filing jointly.
Described in 26 USC § 5000A(f)(4)(A)
There are 5 categories of Marketplace insurance plans: Bronze, Silver, Gold, Platinum, and Catastrophic.
Access Health CT is the health insurance marketplace for the U.S. state of Connecticut. Access Health CT will enable people and small businesses to purchase health insurance at federally subsidized rates.Arkansas Health Connector
Arkansas Health Connector/Arkansas Private option is the health insurance marketplace, previously known as health insurance exchange, in the U.S. state of Arkansas, created in accordance with the Patient Protection and Affordable Care Act. The marketplace operates a web site and a toll-free resource center.
The marketplace is offered to individuals and families who are not covered by their employer. It allows enrollees to compare health insurance plans and provides those who qualify with access to tax credits. Enrollment started on October 1, 2013.The Arkansas Exchange will be run as a State-Federal partnership where the state will be responsible for the disseminating information regarding the marketplace. Actual enrollment of consumers in Arkansas will be handled by the Federally Facilitated Marketplace at HealthCare.gov.
As of December 2013, the state of Arkansas has received over 53 million dollars for operation of the site.Connect for Health Colorado
Connect for Health Colorado is the health insurance marketplace, previously known as health insurance exchange, in the U.S. state of Colorado, created in accordance with the Patient Protection and Affordable Care Act. It is located in Denver. The marketplace operates a toll-free call center and offers 541 health plans from 18 insurance companies.
The marketplace is a resource for families and small business to compare and enroll in health insurance plans offered. It also provides enrollees with access to tax credits. Enrollment started on October 1, 2013. It is estimated that there are currently 700,000 medically uninsured individuals living in Colorado, and the marketplace hopes to sign up 125-140,000 individuals in the first year.On October 22, 2013, the local CBS affiliate reported that Colorado’s marketplace has had a relatively smooth rollout and that 3,000 families and individuals had already enrolled. There are 150 health plans to choose from and an ability to offload choices into an Excel spreadsheet. However, this report is only in comparison to the significantly worse off federal run plans. The website is just as metered in crashes, glitches and technical issues as most other state run health exchanges.Patty Fontneau, the president and CEO of Connect for Health Colorado from its inception, announced in July 2014 that she would leave Connect for Health after 2-1/2 years to lead the private exchange market at one of Colorado’s largest insurers, Cigna.Covered California
Covered California is the health insurance marketplace in the U.S. state of California established under the federal Patient Protection and Affordable Care Act (ACA). The exchange enables eligible individuals and small businesses to purchase private health insurance coverage at federally subsidized rates. It is administered by an independent agency of the government of California.DC Health Link
DC Health Link is the health insurance marketplace for the District of Columbia, created pursuant to the Patient Protection and Affordable Care Act. DC Health Link is administered by the District's Health Benefit Exchange Authority.As of January 10, 2014, DC Health Link had enrolled 3,646 people in individual or family insurance plans. The District has had more success than the states' health insurance exchanges in signing up young people. Many members of Congress are enrolled in DC Health Link.Essential health benefits
Essential health benefits (EHBs) have been defined since the 2010 United States Affordable Care Act as a set of benefits which Individually purchased health insurance in the United States and insurance plans in small group markets, both inside and outside of the Health Insurance Marketplace must cover for people.
Exempt from the EHB requirement are large-group health plans, self-insured ERISA plans, and ERISA-governed multiemployer welfare arrangements not subject to state insurance law.Form 1095
Form 1095 is a collection of Internal Revenue Service (IRS) tax forms in the United States which are used to determine whether an individual is required to pay the individual shared responsibility provision. Individuals can also use the health insurance information contained in the form/forms to help them fill out their tax returns. The individual forms are Form 1095-A "A Health Insurance Marketplace Statement", Form 1095-B "Health Coverage", and Form 1095-C "Employer-Provided Health Insurance Offer and Coverage". Individuals may receive one or multiple versions of Form 1095.Hawaii Health Connector
Hawaii Health Connector (or Hawaiʻi Health Connector) was the health insurance marketplace, previously known as health insurance exchange, in the U.S. state of Hawaii, created in 2013 in accordance with the Patient Protection and Affordable Care Act. It was located in Honolulu. The marketplace operated a toll-free call center and offered 95 different health plans.After widespread difficulties, including technical problems that plagued the system from its start, in June 2015 the State of Hawaii announced that the Hawaii Connector would close.HealthSource RI
HealthSource RI is the health insurance marketplace for the U.S. state of Rhode Island. The marketplace enables people and small businesses to purchase health insurance, many at federally subsidized rates. The marketplace's web site also allows people to sign up for Medicaid, the health care program for the poor.
As of February 8, 2014, 16,512 people had signed up for private health insurance through HealthSource RI, and 107 small businesses had enrolled 658 employees and dependents. An additional 35,821 people had signed up for Medicaid.On February 4, 2015, Richard Salit of the Providence Journal wrote that 27,000 2014 enrollees may owe money to the IRS because they may have received too large of a subsidy.Illinois Health Benefits Exchange
Get Covered Illinois is the health insurance marketplace for the U.S. state of Illinois. The exchange enables people and small businesses to purchase health insurance at federally subsidized rates. Since its inception, over 388,179 Illinois consumers have gained health insurance coverage.Kynect
kynect, formerly and also called the Kentucky Health Benefit Exchange, is the health insurance marketplace, previously known as health insurance exchange, in the U.S. Commonwealth of Kentucky, created in accordance with the Patient Protection and Affordable Care Act. Governor Matt Bevin ended Kynect enrollment for individuals as of 2017. The marketplace operates a web site for small business owners.MNsure
MNsure is the health insurance marketplace for the U.S. state of Minnesota. The exchange enables people and small businesses to purchase health insurance at federally subsidized rates. The current CEO is Nate Clark.Maryland Health Connection
The Maryland Health Connection (administered by the Maryland Health Benefit Exchange) is the health insurance marketplace in the U.S. state of Maryland, created in accordance with the Patient Protection and Affordable Care Act.The marketplace is offered to individuals and families who are not covered through their employers. It allows enrollees to compare health insurance plans and provides those who qualify with access to tax credits. It also provides access to Medicaid enrollment for low-income Marylanders. Enrollment started on October 1, 2013. As of February 1, 2014, 29,059 people had enrolled in private health plans through Maryland Health Connection.The marketplace is also due to open to small businesses starting in January 2015.NY State of Health
NY State of Health is the health insurance marketplace, previously known as health insurance exchange, in the U.S. state of New York, created in accordance with the Patient Protection and Affordable Care Act. The marketplace operates a web site.
The marketplace is offered to individuals and families who are not covered by their employer. It allows enrollees to compare health insurance plans and provides those who qualify with access to tax credits. Enrollment started on October 1, 2013.
During the first month of operation 16,404 enrolled in health plans offered through New York’s health insurance marketplace.Nevada Health Link
Nevada Health Link is the health insurance marketplace for the U.S. state of Nevada. The exchange enables individuals and small businesses to purchase health insurance at federally subsidized rates.New Mexico Health Insurance Exchange
New Mexico Health Insurance Exchange, otherwise known as BeWellNM, is the health insurance marketplace for the U.S. state of New Mexico. The exchange enables people and small businesses to purchase health insurance at federally subsidized rates.
On Jan 15, 2015 Mike English reported on Albuquerque Business First more than 40,000 health insurance signups.Vermont Health Connect
Vermont Health Connect is the health insurance marketplace, previously known as health insurance exchange, in the U.S. state of Vermont, created in accordance with the Patient Protection and Affordable Care Act. The marketplace operates a web site.
The marketplace is offered to individuals and families who are not covered by their employer. It allows enrollees to compare health insurance plans and provides those who qualify with access to tax credits.Washington Healthplanfinder
Washington Healthplanfinder is one of the fourteen health insurance marketplaces in the United States and was created in accordance with the Patient Protection and Affordable Care Act, commonly referred to as Obamacare.
Washington Healthplanfinder is a state-operated website that allows residents of the state of Washington to shop for and to sign up for medical insurance with a private insurance company.
Individuals who sign up may also obtain subsidies from the state that cover a portion of the insurance premiums in accordance with Obamacare.
The subsidies may be paid directly to the insurance company.
The premium payments (minus subsidy) are paid directly to the insurance company by the insured individual.
Individuals who obtained subsidies during the year must include this information when filing their income tax return the following April (U.S. tax returns are due on April 15 every year).
In order to maintain coverage individuals must sign up every year during the open enrollment period. The open enrollment period for 2017 was November 1, 2016 until January 31, 2017.Your Health Idaho
Your Health Idaho, sometimes known as the Idaho Health Insurance Exchange, is the health insurance marketplace for the U.S. state of Idaho. The exchange enables people and small businesses to purchase health insurance at federally subsidized rates.
|Health insurance marketplaces|
|Federal insurance exchange|
|Other reform proposals|
from the 111th Congress