President Barrack Obama, while explaining the concept of health insurance Exchange stated that it would 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.”
Though that encapsulates everything good about these Exchanges, these state based online health insurance platforms are not without their drawbacks.
To begin with, these online Exchanges have no predecessors to emulate from. There is the Utah’s Health Exchange, Massachusetts Connector and Health Pass which is a New York based non-profit Exchanges. However these existing models fall short of meeting all the federal guidelines. States have to begin from scratch to build and online platform that meets all the new insurance regulations and is hence eligible for federal funds.
The administration of the health Exchange could also be a possible source of concern. The Exchange has to function according to federal requirements but also has to meet the state health insurance regulations as well. It has to be governed by a local state authority body that has to coordinate carefully with the Center and the other states if it wants the funds coming in.
The health Exchanges seek to bring in more transparency to the health insurance sector by encouraging a direct interaction between the consumers and the health insurance companies. However, that would also mean that the role of the middlemen will be diminished and many agents and brokers will find themselves out of work. Though the Exchange can serve as a support mechanism, agents and brokers have already started to see it as competition rather than a tool that will help them further their business.
Another major problem with the Exchange is the unlimited number of options that it will offer the residents. In a world where citizens are naive about the conditions, the terminologies and the jargon of their medical policies, too many choices could spell out more confusion. If the health Exchange is not equipped with some sort of decision making sort, then buying a health plan from the Exchange could end up being more trouble.
The formation of health Exchange is one of the key features of the federal insurance reforms. The implementation of the online insurance platforms will ensure that People Protection and Affordable Care Act is effectively implemented. However, there are certain intrinsic weaknesses of the health Exchange that need to be addressed first before they are up and running.