HHS Lays Groundwork for Insurance Exchanges

Marketplaces for health insurance will let individuals and small businesses shop around for the best price.

Marketplaces for health insurance will let individuals and small businesses shop around for the best price.

The US Department of Health and Human Services (HHS) took another step toward implementing health reform yesterday, when it announced the release of proposed rules to govern the so-called health insurance “exchanges.”

A key element of the Patient Protection and Affordable Care Act, the state-run insurance marketplaces will allow individuals and small businesses to purchase private health insurance at competitive prices beginning in 2014. Proponents say the exchanges will make the experience of shopping for health insurance easier, like buying an airline ticket online.

According to HHS Secretary Kathleen Sebelius, the new system is designed to “give individuals and small business the same purchasing power as big businesses and a choice of plans to fit their needs” while forcing insurance companies to compete for business and, hopefully, driving down costs. “Exchanges offer Americans competition, choice, and clout,” she said.

Under the proposed rules released July 11, 2011, subsidies for private insurance will be open to residents who earn up to 400% of the poverty level, or $43,560, Kaiser Health News reported. Those who qualify for Medicaid will be able to sign up for the program using the exchanges. According to estimates by the Congressional Budget Office, 8.9 million patients will use the exchanges in 2014 alone.

The 244-page proposal is the product of more than a year’s worth of meetings between the Obama administration and various stakeholders, state leaders, consumer advocates, employers, and insurers, HHS stated in a press release. The agency will continue to accept public comment on the proposed rules over the next 75 days; final rules are expected later this year.

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