In U.S. health insurance marketplaces, also known as health exchanges, are organizations set up to help make easy the purchase of health insurance in states in accordance with the Patient Protection and Affordable Care Act (ACA, known colloquially as “Obamacare”). Marketplaces provide a set of government-regulated and standardized health care plans from which individuals may purchase health insurance policies eligible for federal subsidies.
All ACA health insurance marketplaces or health exchanges were to be fully certified and operational by January 1, 2014, under federal law. Enrollment into the marketplaces started on October 1, 2013, and lasted 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 November 15, 2015 and ended December 15, 2015.
Private non-ACA health exchanges also exist in many states, they are responsible for enrolling about 3 million people. These exchanges predate the Affordable Care Act and facilitate insurance plans for employees of small and medium size businesses.
About Health Insurance Exchanges in U.S.
Health insurance exchanges in the U.S. tends to help insurers comply with consumer protection laws, compete in cost-efficient ways, and expand insurance coverage to more people.
Exchanges are not themselves insurers, so they don’t bear the risk, what they do is determine the insurance companies that are allowed to participate. An ideal exchange promotes insurance transparency and accountability, which facilitates an increased enrollment and delivery of subsidies, and helps to 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. The Health Insurance Exchanges will use EDI (Electronic Data Interchange) to transmit required information between the Exchanges and Carriers (trading partners), in particular the 83 transaction for enrollment information and the 820 for premium payment.
The History Of Health Insurance Marketplace
Health exchanges was first founded by the private sector in the early 1980s, they made use of computer networking to integrate claims management, eligibility verification, and inter-carrier payments. It became popular in some regions as an opportunity for small and medium-sized businesses to pool their purchasing power into larger groups, reducing cost. An added advantage was the ability of small businesses to offer a range of plans to their employees, allowing them to compete with larger corporations. The largest of such exchange that was prior to the ACA is the CaliforniaChoice, which was established in 1996. By 2000, CaliforniaChoice’s membership included 140,000 individuals from 9000 business groups.