The U.S. Department of Health and Human Services today released rules governing how states will structure their new health insurance exchanges, which will be launched in 2014 as part of the health reform law.
The exchanges, designed to serve as a one-stop shop for individuals and businesses seeking to buy health insurance, will allow users to compare plan benefits and prices and determine eligibility for insurance tax credits.
“Insurance companies will compete for business on a transparent, level playing field, driving down costs; and exchanges will give individuals and small businesses the same purchasing power as big businesses and a choice of plans to fit their needs,” HHS Secretary Kathleen Sebelius said in a statement.
The HHS rules outline minimum standards for the exchanges, though the agency insists allow enough flexibility so that each state can tailor its plan to its unique market. The rules allow states to determine whether the exchanges should have a regional or local scope; whether they should be operated by a non-profit; and whether they'll work independently to create the exchanges or in concert with HHS.
The rules are not quite finalized, as the agency will accept public comment for the next 75 days.
(More details on the rules are available here.)
Forty-nine states, D.C., and four territories have accepted federal grants that will allow them to establish exchanges.
The exchanges are designed to provide a measure of protection to small companies and individuals selecting private insurance. Insurance is more expensive in that market than its is for large group plans, and benefits comes with more restrictions.
The issue is complicated by the fact that there isn't a single official source for comparative information on plans.
“Exchanges will give Americans competition, choice, and clout in the health insurance market,” Sebelius wrote in a Huffington Post column published Sunday. “They'll be transparent marketplaces where insurers will compete on the basis of cost and benefits. They'll allow individuals and small business owners to pool their resources so they have the clout that big businesses have today. And people will have a choice of health plans to fit their needs.”
In an addition to allowing comparison shopping, the exchanges themselves will be able to set standards for health plans by only allowing plans with a minimum level of coverage into the virtual marketplace.
Exchange plans must be approved by HHS no later than Jan. 1, 2013 so they can be be launched a year later. Some delays may be granted if a state isn't making enough progress.