Private vs. Public Exchanges
In the realm of health care reform, it’s important you are aware of the different types of available exchanges. For the most part there are private exchanges and public exchanges, both of which cater to different approaches to offering health care plans. However, according to TimeMagazine, within the private exchanges, a number of insurance brokers are offering health plans that sound too good to be true. Specifically, the article warns consumers to be skeptical of “discount medical plans,” which are known for strategically labeling themselves as affordable health coverage. Most “discount medical plans” give the illusion of providing full coverage to customers, but in reality most of them fall short of the coverage promised. As a result, customers that buy into these “discount medical plans” will soon realize that most of their medical needs will not actually be covered. Therefore, employers should make sure when purchasing health insurance from the exchanges that they are actually getting what they pay for, and thus employers are encouraged to seek legal advice before committing to any type of market.
Private exchanges, however, are generally expected to be a legitimate competitive force to the public exchanges provided by the Affordable Care Act. In comparison to public exchanges, private exchanges argue they provide employers with more transparency, more choices for employees, and more control over health costs than the public exchange. For example, private exchanges provide employers with a fixed contribution strategy to offer employees more choices, while still controlling costs. In other words, the employer provides the employee with a set amount to be spent on a health plan, which can be tailored to their personal needs. This approach is intended to give the employee free range to pick a health plan while the employer is able to stick to a fixed budget and keep track of how much the employee is spending.
Conversely, public exchanges are designed to make shopping for insurance less of a hassle for employers. All the SHOP Exchanges will be accessible on one specific website. However, since more than half of all the states, including Texas, opted to have the federal government run their exchanges, the Obama Administration announced the federal SHOP exchanges would be delayed until 2015. In 2015, employers will have four different levels of health plans to choose from: Bronze, Silver, Gold, or Platinum. Every insurance company listed on the federal SHOP Exchange must conform their policies to one of these four levels, in addition to meeting other requirements, before being listed on the exchange. Next, federal SHOP Exchanges will provide employers with two measures of offering insurance. The first requires the employer to choose a level, and then give their employees choices among that level. In the second option, the employer picks the plan, without giving the employee any choices, and the employee simply enrolls in the chosen plan. Transitional relief for states that choose to run their SHOP exchanges starting in 2014, provides the employer only with option two while option one can be put off until 2015. These two options were specifically designed for small businesses, giving them a simplified process of shopping for a suitable health insurance plan.
If you’re deciding whether to go with a private or public exchange, contrast what they individually have to offer and align your values with the options they each provide. Also, be apprehensive of “discount medical plans” that label themselves as an affordable alternative to standard health coverage, but in reality offer no coverage or very little. For more information on private and public exchanges, contact us so we can lead you in the right direction.
Mario K. Castillo