A Potential Market Analysis Of Private And Public Health Insurance Exchanges
The state health insurance exchanges online portals for individuals
, groups and seniors to purchase health insurance were introduced by the ACA to increase consumers access to high-quality health plans at standardized low costs. However, the sudden surge in the number of private health insurance exchanges across the nation may become instrumental in driving away consumers from the government run health insurance exchanges - scheduled to come into operation from January 1, 2014.Private insurance exchanges are exchanges that are set up either by a leading health carrier offering health coverage across the entire U.S., or a coalition of several health carriers. The private health insurance exchanges are likely to establish a strong-foot hold in the insurance market, irrespective of whether the Affordable Care Act gets repealed or not. The online insurance marketplace concept is attractive to both insurance providers and insurance buyers. While insurers can access a larger client pool and can display all their health plan offerings at a single location, Insurance buyers too benefit from such a structure as they can access a lot of health plans from different health carriers, compare them and remain easily updated with all plan related financial or policy changes.
As ordained by the Affordable Care Act, uninsured Americans who do not possess employer sponsored coverage and who are eligible to purchase health coverage from a health insurance exchange, can avail of federal subsidies on premium rates of participating plans. As the subsidies can only be offered in a state health insurance exchange operating in individual insurance markets, there is likelihood that the state exchanges will be more popular than the private exchanges in the individual markets. Thus, private exchanges selling insurance to individuals are likely to not compete well with state HIX individual markets.
However, private health insurance exchanges would be able to compete with the state based exchanges in the small businesses market segment, as the federal health law has not mandated small businesses to purchase their health insurance from the SHOP (Small Health Options Program) exchanges. Private insurers thus have a large pool of uninsured Americans who are employed in small businesses and receive health insurance from their employers. With easy insurance application interface, high-quality health plans and great user shopping experiences, private health insurance exchanges can secure these customer pools much ahead of the state HIX which will begin operation a couple of years later.
Private exchanges can also offer administrative assistance to large businesses, with more than 100 employees, as they are not eligible to purchase and offer insurance to their employees from the proposed SHOP exchanges. Businesses can avail of the DCHPs to contain healthcare and administrative costs and offer best value plans to their employees. Under the DCHPs, instead of giving benefit packages to their employees every year, employers can instead grant a set amount of money to their employees to purchase coverage.
Most of the private exchanges operating today are primarily limited to specific regions. A number of insurers have announced that they would be setting up nation level exchanges to allow consumers from the entire nation to purchase health insurance through their platform.
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