Using a Health-Insurance Exchange to Pool Risk and Protect Enrollees

Source: Center on Budget and Policy Priorities, April 14, 2009

Several leading health-reform proposals include a new entity — often called an “exchange” — that would offer a choice of health insurance plans to individuals and, if designed well, provide insurance options that are affordable, comprehensive, and easy for consumers to compare. Most current proposals, however, do not spell out all of the steps needed to ensure that an exchange meets the goals of protecting vulnerable enrollees, simplifying consumers’ choice of plans, and promoting competition among insurers that is based on the cost and the quality of their products rather than on their ability to maximize profits by attracting healthy, less costly individuals and deterring sicker, costlier ones.

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