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Guest Column: The Upcoming Health Insurance Marketplace

First published in Landings, August, 2013.

Beginning on October 1, those without access to affordable coverage through work will be able to enroll in available qualified health plans on the new Health Insurance Marketplace. As we approach October’s Open Enrollment period, it can be hard to separate the wheat from the chaff when it comes to information about this opportunity to get health insurance coverage on the Health Insurance Marketplace (often referred to as the Exchange).

One doesn’t have to look far to see that the Obama Administration’s decision to delay the larger employers’ mandate to offer creditable coverage has fueled the debate further, but that particular delay and the Congressional ruckus shouldn’t obscure the coming practical realities for Americans who have long suffered worsening coverage at higher premiums. Regardless of one’s political perspective, the Marketplace deserves scrutiny as a vehicle for enjoying newfound coverage or improved coverage over existing individual and small group policies.

The concept of a health insurance exchange (now called Marketplace) is designed to foster competition among insurers and give purchasing power to the entire population of subscribers that have thus far experienced the highest premium prices and worst coverage: individuals and small groups. By aggregating individuals as well as small group insureds, the Marketplace expands and therefore stabilizes these risk pools, all with an eye to bring down the cost of coverage.

The Marketplace also allows plan comparison within similar benefit tiers, requires a minimum set of essential benefits, provides an income-based subsidy and small business tax credits (see below) to help increase affordability, and applies risk adjustment and reinsurance tools to prevent the Marketplace from becoming a de facto high risk pool. Today, plans are in the process of being fully vetted by both state and federal authorities to ensure appropriate rates and compliance.

Once plans are approved as Qualified Health Plans (QHPs), consumers will be in a position to examine comparable levels of benefits and their pricing – including premiums, co-pays, deductibles and coinsurance. Maine people looking for better coverage options should also examine the provider network of QHPs and compare the summary of benefits and coverage for each plan of interest. All of this should be available through the Marketplace for Maine, and Maine Community Health Options (MCHO) will also provide full description and support tools on our Web site, www.maineoptions.org, in the coming weeks in advance of the October 1st start of Open Enrollment.

Still, you ask, what’s it going to cost? While final rates aren’t approved yet, there’s been a lot of speculation about the direction of rates going into 2014. A “rate shock” has been predicted by some thinking that certain regulatory changes may create higher rates. However, this possibility should be considered on a state-by-state basis, based on the degree of any pre-existing consumer protections. For those states without much prior consumer protection, the newly-introduced standards of guaranteed issue, no pre-existing condition exclusions, no life-time caps on coverage, and community rating may in fact raise the costs of coverage for some. For states like Maine, however, which have long had greater consumer protections, the health reform law standards require minimal changes, and so rate shock seems unlikely. In fact, rates may even go down for some relative to current pricing, if looking at plan types of similar benefit levels.

The experience of a dozen or so state-based exchanges bears this out: the average premium price of the lowest priced “silver level” plan is forecasted to be cheaper than current coverage.

In order to help make coverage possible for all people, those with incomes up to four times the poverty level ($45,960 for an individual and $94,200 for a family of four currently) can get reduced premiums for coverage purchased on the Marketplace. Additional cost sharing reductions are available for those with incomes less than two-and-a-half times the poverty level. For more information on eligibility to get coverage, premium assistance and lower out-of-pocket costs on the Marketplace, visit www.healthcare.gov.

For companies with 50 or fewer employees, the small business marketplace will similarly offer an array of Qualified Health Plans at the various levels of coverage amounts. Small businesses with fewer than 25 full-time equivalents (FTE) can further benefit through employer health care tax credits if the payroll averages about $50,000 per FTE a year or less. To get more information on the Small Business Health Care Tax Credit, go to: www.healthcare.gov.

In sum, the advent of the Marketplace in Maine should be a boon to Maine consumers seeking health insurance coverage on the individual or small group markets. The competition and choice of Qualified Health Plans and the availability of subsidies, cost sharing reductions and tax credits will make coverage more affordable for thousands of Maine people and businesses. As we get the green light from our regulators, we at Maine Community Health Options will provide information and decision aids to help people find the coverage that best suits their needs.

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