How Will Health Insurance Exchanges Work?

The Wall Street Journal reports:

“This fall, people in every state are supposed to be able to buy health insurance through new online marketplaces, or exchanges, instituted by the federal health-care law. Insurers have been preparing for the rollout with research, trying to figure out what products to offer and how to market them. For consumers, here are some important questions and answers about the exchanges.

Who will sell insurance in the new marketplaces?

That is expected to vary depending on where you live. Nearly every state is likely to see offerings from local Blue Cross and Blue Shield plans, and there could also be a variety of new players like not-for-profit co-ops and insurers that have previously focused largely on Medicaid. Some of the biggest insurance companies, including UnitedHealth Group Inc. Aetna Inc.  Cigna Corp. and Humana Inc., have said they will only initially participate in a limited number of the new exchanges.

How many choices will consumers have?

That is likely to vary as well. Obama administration officials have said that they expect around 90% of the seven million people expected to sign up for their own coverage through the marketplaces will be in states with products available from at least five different insurance companies. But some states or regions may have fewer carriers. Rhode Island, for instance, is only expected to have two insurers selling individual plans in its exchange next year. Regulators in New Hampshire have said they received applications from only one carrier.

What will the plans look like?

The plans will be divided into tiers of coverage, ranging from “bronze” to “platinum.” The basic difference between the metal levels is that consumers will have to pay more out of their pockets for care in the bronze plans than in the platinum – in the form of deductibles, co-payments and other charges. The bronze plan covers about 60% of a consumer’s health costs, the silver 70%, the gold 80% and the platinum 90%. A more limited “catastrophic” plan is available for people younger than 30.

For example, California’s exchange has mandated standard benefit designs for the metal tiers. One bronze design there has a $5,000 overall deductible. A version of platinum has no deductible at all.

How will plans differ?

One important difference is likely to be the choices of health-care providers that different plans include. Many insurers, to keep premiums down, are using smaller networks of hospitals and doctors for plans they will sell in the new marketplaces. You may still be able to see other doctors or go to other hospitals, if you pay somewhat more. Or in some cases, the coverage may only apply when you see the providers that are in the plan’s network, a “closed” approach traditionally associated with some health-maintenance organization, or HMO, plans. With a few likely exceptions such as medical emergencies, that would leave you to pay the full bill for care received from outside doctors or hospitals.

How much will the plans cost?

Yet again, this will vary – and consumers with lower incomes will be eligible for federal subsidies that could defray much of the cost. According to a recent Wall Street Journal analysis based on filings of proposed premiums by insurance carriers, the least-expensive plan available to a 40-year-old nonsmoker in Richmond, Va., will be $193. In Ohio, carriers whose filings are available are proposing monthly premiums starting at $211 for a 40-year-old nonsmoker living in Columbus for a plan that covers 60% of costs. In Atlanta, Georgia, the least-expensive bid for such a plan is $212. In Olympia, Wash., a carrier has proposed charging $220 and in Hartford, Conn. early filings show such a plan could start at $242. In a few places, lower-cost options may be available. In Washington, D.C., the cheapest premium for a 40-year-old nonsmoker’s plan covering 60% of costs is $166, and in Nashville, Tenn., a plan is set to be available for $149 a month.  Read more on insurance exchanges.