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Buying Health Insurance Post Reform

September 28, 2009 - by Donny Shaw

One of the things just about every member of Congress and President Obama can agree on for health care reform is creating new “exchanges” where people can comparison shop for insurance plans. Basically, these “exchanges” will be websites where people can plug in their zip codes and some basic information about themselves and get back a list of plans that are available to them, with prices and services laid out side-by-side in a standard format. Think Travelocity.com for health insurance.

Two states have already set up exchanges. Massachusetts was the first to set one up in 2006 under Governor Mitt Romney. You can see it here. If you want to try it out, you’ll ned a Massachusetts zip code. Use mine: 01084. Utah recently set up an exchange as well. Actually, they set up a series of exchanges, run by private companies, that are all centralized on a government website, here. For sampling purposes, the zip code for Salt Lake City is 84101.

Living in Massachusetts, I know a bit about the exchange here and how it’s different in a few key ways from what is being proposed by Congress. First, the Massachusetts exchange doesn’t have any regulatory characteristics, whereas the new federal exchange would. The proposals in Congress would only allow insurance plans into the exchange that met new consumer protections criteria. Among these, a company participating in the exchange wouldn’t be allowed to deny coverage because of a pre-existing condition, they would have to provide parity between mental health coverage and physical health coverage, and they would have to cover, at minimum, a list of basic services. In Massachusetts, the exchange is really just a marketplace; it doesn’t guarantee the quality of coverage it sells. For that, you still would need to weed through the fine print of the plans (probably a good idea anyways).

The second big difference is that Massachusetts doesn’t have a public plan on the exchange. You choose only between a series of private plans – Blue Cross Blue Shield, Fallon, Aetna, etc. All bills in Congress besides the Senate Finance version would set up a government-run insurance plan to compete against the private plans on the exchange. The Congressional Budget Office has estimated that the government would be able to offer the public plan with a premium about 10 percent cheaper than similar private plans. The idea behind the public option is to provide a strong competitor to other plans on the exchange in order to encourage them to lower their premiums to stay competitive.

The Hill had a piece yesterday on some discussions lawmakers have been having with a company, eHealth, Inc., which is competing to help build the proposed federal exchange. The company, which operates an exchange as part of the Utah system, doesn’t think the new federal exchange system would bring down prices if there is no public option included.

John Desser, the vice president of public policy and government affairs at eHealth, however, puts that sunny projection into some context.
 “I wouldn’t expect premiums to come down; you’re more likely to see a reduction in inflation."
 
Desser said he also is not aware of premiums coming down in Utah or Massachusetts, which already has statewide exchanges. (Utah has had one for a few months and Massachusetts is two years into its reform.)

 
The main value of the exchanges, as Dresser of eHealth sees it, is helping people get insurance quicker:
 

Desser also said that statewide exchanges would arise on their own even if Congress didn’t spent $775 billion to a trillion dollars to overhaul the nation’s healthcare system. He predicted if the legislative push collapsed consumers would see as many as six states set up health insurance exchanges in the following year.
 
But he said that government mandate for state insurance exchanges will certainly cause millions of Americans to enroll in these clearinghouses faster than if policymakers let the market takes its natural course.

[…]

If Congress passes a law that requires all Americans to sign up for health insurance and bars companies from discriminating on the basis of pre-existing conditions, as is expected, applying for a health policy will become much quicker. Insurance companies will no longer spend weeks assessing the risks of insuring individual patients.
 
“It will be a race for market share,” said Desser.
 
Consumers who turn on their computer and click on a state-run health exchange or a site created by eHealth will find out in minutes what government subsidies they qualify for and the cost of their monthly payments. They’ll even be able to print out a new insurance card and go to a doctor that same day.

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Comments

  • Anonymous 09/28/2009 1:42pm

    eHealthinsurance.com offers a place to comparison shop right now. I’ve used it in the past. Of course, what it found for me was moot since no company would issue a policy to me because of my age (58) though I have no health problems, with normal blood pressure, not overweight, etc. They fell all over themselves trying to insure my daughter, age 22, until she went in to be checked for a vaginal cell abnormality. The finding was no malignancy, no problems found but, afterward, no company wants to insure her now, either.

    Single payer is the way to go. Everyone in, nobody out in one huge pool that shares the risks and no private insurance companies given the right to profit by picking and choosing those who are not likely to use the insurance. Health insurance company profits and the cost of their support of multiple bureaucracies/multiple operational procedures is a dead loss that rides on the back of health care in America.

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    Anonymous 09/29/2009 7:23am

    I lived in Canada for 3 years. Single payer is NOT the way to go. People DIE waiting for a diagnosis, let alone treatment. Those who choose not to wait for their ‘turn’ to die, come to the U.S. If you think that there won’t be rationing of care, you are kidding yourself. Rationing is just another way of saying ‘prioritizing’, and that is what needs to be done when determining who is treated for what…………based on numbers/statistics.

    Americans are being delusional if they believe that Canada’s healthcare is a)free and/or b)better. Been there. Done that. You don’t want it.

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    Anonymous 09/29/2009 9:00am

    Nonsense, ChristeDeire… We do want single payer health care. The Canadian system and every other nationalized system in the world – Japan, Great Britain, Sweeden, Germany… you name it… are all better systems. The US is #37 on the list of “efficient” health care delivery.

    Its time to get with reality. The US system doesn’t work.

  • CMBrooks 09/28/2009 11:43pm

    Thanks for such a useful and informative post. It was a brilliant touch to provide the zip codes!

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    Anonymous 10/01/2009 4:30am

    With all due respect CM you need to really examine those health systems. The new Canadian appointee to health service was qoted as saying the system was imploding. There is no such thing as free health care and many of those countries you hold up as examples are finding that single payer health care is not working and they are trying to introduce private insurance back in. Sweden may be the only country happy but their tax rate is 60%…no thanks. There are so many avenues that could be explored and implemented before replacing our system. You really need to talk to residents of those countries and not just young people; talk to those in their middle years who are finding they need health care. The story is much different than you realize.

  • Anonymous 09/29/2009 7:37pm

    Insurance companies have been running without accountability for too long and it would be nice to see a plan that gives us a public option, but also regulates the private companies as well. We are too far down the list in health care at this point in history, with all of our money and technology, why don’t we use it for our own people and the future generations of America. I read an article written by a panel of medical professionals http://www.ourblook.com/component/option,com_sectionex/Itemid,200076/id,8/view,category/#catid107 and throughout the article there is a statistic by the World Health Organization that puts as #37 in health care.
    We need to create a system that really focuses on prevention. Help this country get back on track, eat better, live better, and with a plan that would allow more freedom, people may no longer have need to be bound by jobs they dislike simply to guarantee they have health coverage.

  • Anonymous 10/02/2009 12:21am

    An interesting part of the Baucus bill is the rate setting. Watch out those heading toward there 50’s or perhaps an even earlier age – you may lose a considerable amount of your retirement savings just trying to pay for the mandatory insurance. The rate the insurance companies can charge based on age is 5:1. (by the way, tobacco use in only 1.5: 1. I just did a rate comparison on line with one insurance company for a policy for 2 people, choosing the best option, current rate would be $303 per month if the couple was in their late 20’s/early 30’s. In their 50’s, the same policy currently would be $849 per month, a 2.8:1 ratio. With the 5:1 ratio in the Baucus bill, the rate could rise to $1515 per month for a couple in their 50’s.
    The public option would help keep the rates reasonable and the 5:1 ratio would probably never happen, but if it did, then at least you would have an alternative to wiping out your savings.

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