Focus on Health Care Reform: Health Benefit Exchanges, Part 1

The American Health Benefit Exchange is a major component of insurance reform contained in the Patient Protection and Affordable Care Act (PPACA).  The main purpose of the Exchange is to help individuals and small businesses purchase insurance coverage.  The Exchange is best explained in terms of a marketplace where consumers can easily review benefit packages, compare prices, and purchase coverage.

Under the health reform law, each state is required to establish an Exchange by 2014.  See PPACA, sec. 1311(b).  States are also required to establish a Small Business Health Options Program (SHOP Exchange), in which small businesses with 100 or fewer employees can purchase coverage in the small group market.  But the PPACA permits states to establish a single Exchange as long as it provides both American Health Benefit Exchange and SHOP Exchange services.

Who Will Administer the Exchange?
The PPACA allows the state Exchange to be administered by either a governmental agency or a non-profit organization.  In North Carolina, early indications are that the state’s Department of Insurance wants to administer the Exchange, but the ultimate determination lies with the North Carolina General Assembly.

Whoever ends up operating the Exchange will have to ensure that the Exchange offers all of the following features (and many more), as set out in the PPACA:

  • Certify, recertify, and decertify health plans as qualified health plans (also known as QHPs, which will be discussed in Exchanges, Part 2);
  • Provide a toll-free consumer hotline to answer questions;
  • Maintain a website where consumers can compare various plans with standardized information;
  • Rate each plan offered on the exchange;
  • Provide eligibility information for Medicaid and the Children’s Health Insurance Program (CHIP).

As with many other parts of the PPACA, many details that will affect how North Carolina’s Health Benefit Exchange will operate have yet to be determined.  Stay tuned to NCMS’s series, Focus on Health System Reform, for the latest.


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