State vs. Federal Health Care Exchanges

HR Resource
January 7, 2013 — 2,470 views  
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Decisions regarding health care coverage plans are made on a regular basis. The PPACA (Patient Protection & Affordable Care Act) ensures that health care exchanges fulfill their promise by providing quality health care at affordable prices. According to the act, states have time until the end of the year to inform the federal government about how their exchanges will be run – whether it will be run by the owners, whether a new entity will be created and designated the task of running them, or if the responsibility will be handed over to the government.

Coop exchanges are expected to become the main platform where owners of small businesses as well as individuals can purchase health care coverage. Until 2014, employers who have less than hundred employees can make the most of these health care exchanges. After 2017, employers who have over hundred employees may also select health care plans through coop or private exchanges.

State Health Care Exchanges

State health care exchanges are established to provide affordable and quality healthcare to individuals in a state. They help individuals get specialized services at the best rates. State exchanges provide authentic and transparent information regarding benefits, premiums, coverage, plans, etc. The main benefit of these exchanges is that coverage can be retained even when an individual is ‘between’ jobs. State health care exchanges often have changing regulations that play a crucial role in their functioning. These exchanges are expected to comply with the standards and regulations set by the government. They must also ensure that their customers are happy at all times.

Although state exchanges do not have the power to set premiums, insurance carriers must be asked to justify the increase in rates. In case a particular state exchange is not satisfied with the reasons as to why there have been hikes in costs, they have the power to implement a ban on the particular carrier refraining it from selling its products. 

Federal Health Care Exchanges

Federal exchanges for health care can be designed in each state, in its preferred way. These exchanges may include non-profit parties developed by the state, a separate public entity, or a component of a state agency that already exists. Subsidiary or regional exchanges can be set up by federal exchanges in order to build partnerships to run the exchange, or to cover certain geographical areas. States will have plenty of freedom when selecting the type and number of health care schemes offered via the exchange.

Federal health care exchanges provide states with an option to merge markets of small groups and individuals. They cover health care plans that are offered via the exchanges as well as those offered by external parties, except employer-sponsored and grandfathered individual plans. Federal exchanges also require states to offer four unique tiers of benefit which cover 90%, 80%, 70%, and 60% of the values of the benefits covered respectively. All four categories of benefits must be offered mandatorily according to the PPACA.       

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