Health Insurance Exchanges under the Affordable Care Act

Health insurance exchanges provided under the Affordable Care Act (aka “Obamacare”), and run either by a state or the federal government, open for business on October 1. For a six-month open enrollment period, consumers will be able to shop for a health insurance plan. Both opponents and supporters of the Affordable Care Act are paying close attention to the milestone. Brookings experts have offered their thoughts generally on health care reform, and in this case on the health exchanges.

Senior Fellow Henry Aaron and Kevin Lucia of Georgetown University’s Health Policy Institute review the four specific functional areas with which the exchanges will contend. They also focus on the promise that the exchanges will promote competition in the health insurance market:

This list of the ways in which the exchanges may act to transform health care financing and delivery is merely illustrative. Mundane administrative tasks will occupy the exchanges for the first year or two. But the exchanges are an instrument of enormous potential power. Political resistance may inhibit the use of this instrument. But over time, as the initial administrative glitches are ironed out, we believe that the exchanges will be seen as a means for promoting a competitive insurance market in which consumers can make rational decisions and that they will become an instrument that can reshape the health care delivery system.

Earlier this year, Aaron noted that ACA opponents “can be expected to trumpet each mistake as confirmation of their dire warnings.”

Observers should keep in mind that when millions of people are applying for coverage, thousands of mistakes are inescapable. They should not lose sight of the fact that many of those mistakes will result from the uncooperative and obstructionist efforts by those who have refused to recognize that the Affordable Care Act is the law of the land and that law-abiding citizens obey the law.

Lawrence Kocot, a visiting fellow, put the exchange enrollment experience into the context of consumers—the men, women and families that will (or won’t) participate in the system:

While we do have some evidence and experience from which we can make reasonable assumptions about new insurance enrollee behavior, this is largely a national experiment of first impression with plenty of variables to keep us guessing about how the “affordability” story will unfold across the country. The man, woman, or family on the street has not spoken yet, and until they do, we are purporting to walk in their proverbial shoes with regards to what is “affordable” to them. In the next few months, we will learn a lot about the initial exchange enrollment experience from these subsidy-eligible individuals and families; the next big lesson we may learn from them could be about retention.

Finally, Fellow Kavita Patel, a practicing internal medicine physician, looks ahead to a time when those states that have resisted setting up their own insurance exchanges will react favorably to successful implementation:

Because the states that opted not to do their own exchange have to default to the federally-facilitated exchange—they will have an exchange, it will backed up by the federal government—so I don’t see that much downside … One of the things that I know about Texas state politics is that if they can see that this federally-facilitated exchange is not this intrusiveness of government, and people really like it … and all the uninsured people in Texas—which we do have some of the highest rates of uninsurance—can benefit from it, I definitely see the political winds changing in the state and state politicians reacting more favorably to it.

And you can see other states like Texas, like Florida, looking at this and saying “wait a minute, we want to put our own imprint on this now. We don’t want our state to be governed by some federal exchange.” So, I don’t think there is going to be any downside in the short term. I think it will all be from some shift, and politically how can states then message “well, no, we want to take this back, this is about our people.”

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