Explaining State Health Insurance Exchanges in Less Than 10 Minutes


Well, it’s finally happening. After years of drama on Capitol Hill, a Supreme Court case, a Presidential election, and a Mayan Apocalypse that could have stopped it dead in its tracks — but didn’t — the marquee elements of the Affordable Care Act, sometimes called ObamaCare, are about to kick in. And big changes are coming to health insurance in 2014. In the next five minutes you’ll get a pretty good lay of the land by once again watching your fellow Americans, the YouToons, find their way through the system.

There are four main ways nearly all of us will experience health care once the health reform law goes fully into effect. About half of us will get insurance through our jobs, just like today. About one-third will get covered by the government through Medicare and Medicaid. Around one in ten will buy insurance ourselves. And unfortunately another thirty million of us or so, just under one in ten, still may not have coverage at all.

Those on employer-sponsored (i.e. group) health insurance

Let’s begin in the workplace. Many Americans are already covered by their employers, and for them not a whole lot will change. There will be some new advantages though — like caps on how much you have to pay out of pocket, and free preventive care. The bigger changes are coming for those who work for larger companies but aren’t covered now. That’s because the government will require companies with fifty or more employees to cover full-time workers — or pay a penalty (not in 2014) — so more workers may find themselves covered.

Smaller employers won’t face the same penalties for refusing to buy insurance but they’ll be encouraged to. The government will be setting up special marketplaces to make it easier for small employers to take the plunge. Some will be offered temporary tax breaks if they do. And unlike now, insurers can’t inflate prices if some employees are sick. So, many of us will be getting covered at work.

Those on government-provided health insurance

A lot of us will be covered with help from the government, just like today. Not much will change for seniors on Medicare — the law has already started helping with prescription drugs and better preventive care, and that will continue. Medicaid, on the other hand, is expanding to cover more of us, especially poor adults, many of whom aren’t eligible today. If your income is low, Medicaid will cover you, most likely in a private insurance plan. But there’s a catch. The Supreme Court ruled that governors and legislatures of each state should decide whether or not to be part of expanding Medicaid.

In states that get on board the feds will cover almost all of the cost. For those that don’t, you may be left with the same options you have today if you’re poor. You’ll want to check out your state’s decision if you think you might qualify for Medicaid.

Those unnisured

Even with employer coverage and the expansion in Medicaid, a lot of us will still be left out. For those not covered, or who find their work coverage too expensive, a new way to buy insurance on our own will be popping up everywhere. They’re called Health Insurance Marketplaces, though they may have a fancier name than that in your state.

Those on individual health insurance

The health insurance marketplace is like a virtual insurance mega-mall. Here you’ll find private insurers competing for your business. You’ll be able to pick how much coverage you want and how much you want to pay for it, from cheaper high deductible Bronze plans to more expensive Platinum plans. Still, all plans will cover a comprehensive set of services like hospital and doctor visits, maternity care, mental health care, and drugs — most everything any of us need, at least when it comes to medical care.

As with Medicaid, not all governors are on board to set up these marketplaces. But the feds will open their own in those states, so you probably won’t notice much of a difference. One big advantage of buying insurance through these new marketplaces is that the federal government will provide most people with a tax credit to make insurance more affordable if you don’t have any other options and your income is below a certain level.

In fact, most people buying on their own will be eligible for a credit and won’t have to pay the whole premium themselves. And the marketplaces will make sure insurance companies operate fairly under strict rules. They’ll have to offer everyone insurance even if they’re sick. And they won’t be able to charge more for pre-existing conditions.

Unlike today, men and women will pay the same price. And prices for older people will come down, while young people will pay more. To keep costs down for young people, they’ll be able to stay on their parents’ plans ’till twenty-six and buy low-budget “catastrophic” plans ’till they’re thirty. Of course all these changes still don’t mean insurance will be cheap. Most people buying their own coverage will end up paying less with the new health insurance tax credits. But some people will have to pay more, even though many of them will be getting better and more secure insurance.

And let’s be realistic. Not everyone’s going to run out and buy insurance. Some might say,

“Hold on a minute! If I can’t be turned down or charged more, why not just wait until I get sick or injured to buy insurance at all?” Well, first, you can only get coverage during special enrollment periods, so if you snooze you may lose. And second, thanks to something called the individual mandate, if you’re not insured you pay a fine, making this option seem not nearly so clever. Still, if you really can’t afford to buy in, and can’t get insurance anywhere else, the government will waive the penalty. So don’t panic.

By now you’ve probably noticed a lot more people will be getting a lot more coverage.

Where will the money to pay for that come from? Taxes — many of them targeted at the health industry itself, and even tanning services. Yes, individuals will pay too, mostly the wealthiest Americans who will be paying more into Medicare. Also, hospitals and insurance companies participating in Medicare will get paid somewhat less. Not painless, but somebody’s gotta pay. So as America prepares for twenty-fourteen, how will you be covered? How would you like to be? Now’s the time to figure it out — and get on the path to setting yourself up for the best insurance at the best price… because who wouldn’t want that?