California Pioneering Health Insurance Exchange
October 21 2010
Last month California became the first state to embrace health insurance exchanges in the nationwide push for health care reform. A key part of the Affordable Care Act, the exchanges will help individuals and families find group coverage at lower premiums, and will go into effect nationwide by 2014.
Health insurance exchanges are a new competitive private health insurance marketplace, where consumers will be able to ‘shop around’ for the best benefit packages and bundle plans. You can find more information about the exchanges on healthcare.gov.
From the San Diego Union Tribune:
The California Health Benefit Exchange will provide a place for small businesses and people without employer-based insurance to join together to buy health insurance at lower rates, aided by federal subsidies to low- and middle-income consumers.
The idea for the exchange is that millions of people who now pay top dollar for insurance because they’re buying individually or in small groups — or forgoing coverage because of cost — will benefit from the exchange’s bulk purchasing power to get a better price. The exchange also is charged with making it easier for consumers to compare plans and choose what works best for them.
The Affordable Care Act specifies that people with a household income between 133 percent and 400 percent of the poverty rate will get an immediate tax credit to help offset the cost of insurance. Depending on income, people would pay no more than 2 percent to 9.5 percent of their income on health insurance.
The legislation comes in the wake of an announced $49 million in grants by the U.S. Department of Health and Human Services, meant specifically for the creation of these exchanges. California was awarded $1 million to begin implementation.