One of the key provisions set forth in the new 2010 healthcare law allows for the creation of healthcare exchanges. A healthcare exchange is in essence an organized marketplace where both individuals and small employers can shop for insurance coverage. The basic premise is that risk is diffused when larger populations are insured collectively as a group than would be the case if they were insured individually, which therefore reduces costs. It’s the very same concept that oftentimes allows larger companies to offer their employees better, more affordable health benefits than smaller ones. According to the new law, these exchanges will be in place by January 1, 2014.
With that date in mind, states will have the option to create their own healthcare exchanges, ban together with other states to create more regionally based options or bow out of the process altogether. Just recently, the states of Louisiana and Montana decided against setting up exchanges for a whole host of reasons, while states such as Maryland, Virginia and the District of Columbia have already taken steps toward setting up theirs.
Proponents of the exchange approach claim that exchanges will make it easier for people to get insurance who don’t already have it and that they will also lead to lower prices thanks to greater competition. On the other hand, poorly designed exchanges, it is argued, could result in healthy people avoiding them, which would leave exchanges populated with sicker people and therefore rising prices. With so much at stake, it’s not surprising that everybody from politicians, consumer advocacy groups, disease-interest organizations and lobbyists, to name only a few, are basically falling all over one another in their efforts to have a say in just how these exchanges are set up and regulated.
Healthcare exchanges will initially be open only to individuals who are buying their own insurance coverage, as well as employees of home-based and other small businesses with 100 or fewer workers in some states, 50 or fewer in others. While it is anticipated that most Americans will continue to get health insurance through their jobs and not these exchanges, the U.S. Congressional Budget Office estimates that as many as 8 million people will use the exchanges in the first year and three times as many will be on board by 2018. According to the new law, undocumented immigrants will be barred from the exchanges altogether.
Although healthcare exchange premiums will vary by location and type of coverage, there will be basic provisions when it comes to what many deem to be “essential benefits,” such as emergency and maternity care, hospitalization and lab services, among others. The exact details on what constitutes “essential benefits” are still being hammered out. In addition, annual deductibles will be capped at the amounts that are currently allowed for health savings accounts, roughly $6K for an individual and $12K for a family. And although insurers won’t be able to charge more based on gender or health status, they will be allowed to charge more for older people than young ones.
Just what all of this will mean to you as a home-based or other small business owner, both as an individual and as an employer, is hard to say. Much of it will depend on where you live and work due to the fact that as all of this continues to evolve, the differences among states when it comes to how the new laws are enacted may very well be considerable. That’s why it’s so important for employers to actively pursue information on this topic not just at the federal level, but as it falls out in their own area of the country.
Thankfully there are a number of free resources for information that are out there to offer assistance. For instance, eHealthInsurance has created a comprehensive guide entitled, “Health Insurance for Entrepreneurs: A Buyer’s Guide for Self-employed and Small Business Owners,” which reflects changes from the 2010 health reform laws and is a must-read for anyone who at all feels lost on this issue.
To access this free and outstanding on-line resource, just click here on http://www.ehealthinsurance.com/small-business-health-insurance/resources/buyers-guide.pdf.