Addressing Health Care Market Reform Through an Insurance Exchange: Essential Policy Components, the Public Plan Option, and Other Issues to Consider

Source: Paul Fronstin and Murray Ross, EBRI Issue Brief, No. 330, June 2009

From the abstract:
Managed competition and a health insurance exchange appear to be the primary proposed vehicles for expanding Americans’ access to health insurance coverage. For managed competition to work, most analysts agree that a number of components will need to be included: individual mandates, risk adjustment, streamlined comparability of benefit design, subsidies for the low-income population, some form of community rating, and guaranteed issue. Most also agree that, absent mechanisms to restrain the growth of the underlying costs of care, the combination of universal coverage and subsidized premiums will produce even faster cost growth than the current system.

This paper examines issues related to managed competition and the use of a health insurance exchange for the purpose of addressing cost, quality, and access to health care services. It discusses issues that must be addressed when designing an exchange in order to reform the health insurance market, examines state efforts at health reform that use a health insurance exchange, and discusses implications for employment-based health benefits. This paper is neutral on whether an exchange should or should not be formed, and focuses instead on the logistics and implications of what would be involved in implementing an insurance exchange and the potential ramifications of such an action.

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