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Health insurance exchanges

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Obamacare glossary • Effect of Obamacare • Centers for Medicare and Medicaid Services

The Affordable Care Act (ACA), also known as Obamacare, provided for the creation of health insurance exchanges, also called marketplaces, where consumers could browse and purchase plans. Exchanges are "accessible through websites, call centers, and in-person assistance." The idea was to make it easier to buy health insurance and encourage lower prices with insurer competition.

One of the aims of the ACA was to "[m]ake affordable health insurance available to more people," according to HealthCare.gov. Minimum requirements of coverage were established and both individual and employer mandates, enforced by tax penalties, were established over a period of years in order to achieve the goal of expanded health coverage.[1]

HIGHLIGHTS
  • As of November 2017, 28 states had federally facilitated exchanges. Another 17 had state-based exchanges; five of these exchanges were state run while utilizing the federal platform, Healthcare.gov. Six states partnered with the federal government to run their exchanges.
  • Nationwide, enrollment in plans offered on the exchange amounted to about 10.3 million in 2017.
  • Of individuals enrolled, 84 percent were eligible for premium tax credits, which averaged $371 per month. In addition, 57 percent were eligible for reductions in their cost-sharing responsibilities.

    • Overview

    The Affordable Care Act gives states three options regarding the exchanges:[2][3]

    1. Establish and manage their own state exchange, or multiple exchanges if desired (state-based exchange)
    2. Enter into a partnership with the federal government to manage an exchange jointly (state-federal partnership exchange)
    3. Cede responsibility for establishing and managing an exchange to the federal government (federally facilitated exchange)

    States can also set up more than one exchange to serve residents in different areas within their borders, and multiple states can create a regional exchange. However, as of August 2017, no state had chosen those options. At that time, 28 states had federally facilitated marketplaces. Another 17 had state-based exchanges; five of these exchanges were state run while utilizing the federal platform, Healthcare.gov. Six states partnered with the federal government to run their exchanges.[2][4]

    Plans offered

    Insurers participating on the exchange list the plans they have to offer on the exchange's website. This is primarily where consumers can browse health plans to purchase, although plans can also be purchased over the phone or in person. Plans are categorized into four tiers of coverage:[5]

    Source: Connect the Dots USA
    • bronze (lowest premiums, covers 60 percent of costs),
    • silver (covers 70 percent of costs),
    • gold (covers 80 percent of costs), and
    • platinum (highest premiums, covers 90 percent of costs).

    Consumers are responsible for the remaining portion of their healthcare costs. Plans may be purchased during annual open enrollment periods, but individuals that experience certain life events, like job loss, may purchase a plan during a special enrollment period at any time of the year. Individuals below a certain income level may receive financial assistance from the federal government in the form of tax credits to pay their monthly premiums.[6]

    Financial assistance

    Individuals who purchase plans through an exchange and earn incomes between 100 percent and 400 percent of the federal poverty level (FPL) are eligible for premium tax credits—payments from the federal government to help cover the cost of premiums. In states that expanded Medicaid to adults with incomes up to 138 percent of the poverty level, eligibility for tax credits begins at 139 percent of the poverty level; individuals cannot be eligible for both Medicaid and health exchange subsidies. The law limits the percentage of income these individuals could be required to pay towards their premiums. Credit amounts are calculated based on the difference between this percentage and the full premium cost for a benchmark plan. If the monthly premium is above the percentage cap, the tax credit is disbursed; if the premium falls below the capped amount, no tax credit is provided.[7][8]

    For example, when selecting a plan for 2017, an individual who made $29,700 in 2016 would have their monthly premium payment capped at 8.21 percent of income, or $203 per month. The individual would receive no tax credit if the average monthly premium for a benchmark plan in his or her area was below $203 per month, no matter which plan he or she chose. If the premium for a benchmark plan was $250 per month, the individual would receive a tax credit of $47 per month. The percentage of income households must pay was indexed to change each year based on premium growth as compared to income growth. Tax credits can be paid directly to insurance companies on a monthly basis or claim the total credit on an annual basis when filing taxes.[8]

    Those earning between 100 percent (or 139 percent in states that expanded Medicaid) and 250 percent of the FPL are also eligible for a reduction in their cost-sharing responsibilities, meaning they can enroll in silver plans that cover up to 94 percent of their costs, as opposed to the normal 70 percent such plans cover.[9][10]

    Tax credits and cost-sharing reductions are only available to individuals who purchase a health plan through an exchange. For 2017, the U.S. Department of Health and Human Services used 2016 poverty guidelines to determine tax credit and cost-sharing eligibility:[8][11][12]

    • The federal poverty level amounted to $11,880 for individuals and $24,300 for families of four.
    • For individuals, 138 percent of the FPL amounted to $16,394, while 400 percent amounted to $47,520.
    • For a family of four, 138 percent of the FPL amounted to $33,534, while 400 percent amounted to $97,200.
    • Incomes that were 250 percent of the FPL amounted to $29,700 for individuals and $60,750 for a family of four.

    The law did not make tax credits available for individuals below the poverty level. Childless adults who (1) reside in a state that did not expand Medicaid and (2) earn incomes between their state's Medicaid eligibility threshold and the poverty level could still buy insurance on the exchanges, but would not receive tax credits. Click 'show' on the tables below to view complete data on 2016 incomes and the 2017 maximum monthly premium paid for a benchmark plan by poverty level percentage, up to a family of four.[13]


    Enrollment

    See Obamacare exchange enrollment and subsidies by state for historical enrollment statistics.

    Nationwide, enrollment in plans offered on the exchange amounted to about 10.3 million in 2017. Of individuals enrolled, 84 percent were eligible for premium tax credits, which averaged $371 per month. In addition, 57 percent were eligible for reductions in their cost-sharing responsibilities (labled as CSRs in the table below).[14][15]

    Total exchange enrollment and financial assistance, 2017
    State Total exchange enrollment Number receiving tax credits Percent of total Average monthly tax credit received Number receiving CSRs Percent of total
    Alabama 152,543 143,608 94% $519 116,722 77%
    Alaska 14,177 13,128 93% $976 5,895 42%
    Arizona 140,079 120,971 86% $541 78,265 56%
    Arkansas 59,506 51,567 87% $273 34,298 58%
    California 1,389,886 1,181,085 85% $346 673,104 48%
    Colorado 123,746 79,977 65% $393 33,087 27%
    Connecticut 98,260 75,628 77% $443 42,937 44%
    Delaware 24,171 20,125 83% $418 11,152 46%
    Florida 1,437,968 1,331,110 93% $364 1,072,045 75%
    Georgia 404,821 362,868 90% $358 286,076 71%
    Hawaii 16,711 13,728 82% $353 9,859 59%
    Idaho 84,569 74,461 88% $354 56,165 66%
    Illinois 314,038 253,542 81% $364 149,781 48%
    Indiana 146,956 107,994 73% $262 68,937 47%
    Iowa 46,519 40,567 87% $421 24,574 53%
    Kansas 86,310 74,531 86% $379 48,493 56%
    Kentucky 71,585 55,977 78% $293 36,223 51%
    Louisiana 122,691 110,899 90% $433 70,932 58%
    Maine 69,426 60,149 87% $413 36,992 53%
    Maryland 134,432 102,735 76% $314 76,429 57%
    Massachusetts 242,221 178,999 74% $178 150,862 62%
    Michigan 284,433 236,428 83% $265 141,270 50%
    Minnesota 90,146 62,820 70% $435 11,106 12%
    Mississippi 67,203 62,891 94% $380 53,632 80%
    Missouri 213,186 187,251 88% $400 121,896 57%
    Montana 49,007 41,765 85% $476 20,569 42%
    Nebraska 74,582 69,742 94% $511 41,666 56%
    Nevada 75,408 63,968 85% $287 42,533 56%
    New Hampshire 47,777 30,497 64% $251 17,098 36%
    New Jersey 243,743 193,189 79% $350 126,272 52%
    New Mexico 45,372 33,102 73% $283 21,407 47%
    New York 207,083 114,875 55% $230 31,962 15%
    North Carolina 450,822 421,275 93% $592 300,255 67%
    North Dakota 20,306 17,244 85% $289 9,557 47%
    Ohio 207,039 156,711 76% $267 93,661 45%
    Oklahoma 129,060 117,505 91% $551 80,548 62%
    Oregon 137,305 102,893 75% $345 54,153 39%
    Pennsylvania 363,710 301,632 83% $424 205,692 57%
    Rhode Island 29,065 22,551 78% $248 15,933 55%
    South Carolina 183,163 166,682 91% $422 132,649 72%
    South Dakota 27,314 24,953 91% $443 16,144 59%
    Tennessee 200,401 176,463 88% $534 118,901 59%
    Texas 963,171 829,374 86% $333 604,735 63%
    Utah 176,889 154,286 87% $234 109,204 62%
    Vermont 29,088 22,092 76% $325 11,631 40%
    Virginia 364,614 301,669 83% $317 218,241 60%
    Washington 184,070 116,183 63% $253 72,771 40%
    West Virginia 29,674 25,841 87% $558 15,203 51%
    Wisconsin 216,355 179,211 83% $401 111,318 51%
    Wyoming 22,120 20,230 91% $506 12,302 56%
    United States 10,330,759 8,707,757 84% $371 5,895,662 57%
    Sources: Kaiser Family Foundation, "Total Marketplace Enrollment and Financial Assistance"
    Kaiser Family Foundation, "Estimated Total Premium Tax Credits Received by Marketplace Enrollees"

    Co-ops

    The Affordable Care Act also created a new type of nonprofit health insurance company to offer insurance on the exchanges: the Consumer Operated and Oriented Plan, or co-op. The law stipulates that no representative from an insurance company or association can serve on a co-op board and that no co-op can accept outside investor funding. Co-ops are also required to sell most of their plans in the individual or small employer market; one-third of their plans can be offered in the large employer market. Co-ops received start-up funding through low-interest government loans; some also received solvency loans. Twenty-three co-ops were ultimately established nationwide and collectively received $2.4 billion in loans.[16]

    By the end of 2015, 12 of the 23 co-ops had closed. The closed co-ops had collectively received over $1 billion in government loans. According to HealthInsurance.org, an online guide to health insurance, over 1 million people were enrolled in co-ops during 2015 and about 500,000 were impacted by the closures at the end of the year. Individuals who had purchased insurance through these co-ops had to change insurers. Of the remaining co-ops, only one (Maine) was operating with a positive net income in 2015, thus raising the possibility that more co-ops would fail. Over the next year and a half, six more co-ops closed, and as of September 2017, four co-ops remained in operation.[16]

    For more on the co-ops and why they closed, click here.

    Exchange financing

    States received a number of grants from the federal government to support the establishment and early administration of the exchanges:[17]

    • Planning Grants were awarded to states for research related to the establishment, operation, and governance of an exchange.
    • Level One Establishment Grants were awarded to states to develop state-based exchanges. These grants provided one year of funding support, but states were allowed to apply for multiple grants.
    • Level Two Establishment Grants were awarded to states that demonstrated that they (1) were prepared to manage their own state exchange by showing proof of their legal authority via the state legislature to do so, (2) had designed a structure of governing the exchange, and (3) had a plan for financing the exchange in the long run. These grants provided funding for three years.
    • Early Innovator Grants were awarded to states to design and build the state-based exchange website and the IT infrastructure behind it.

    The grant program ended on January 1, 2015, after having awarded a total of nearly $5 billion to states.[17][18]

    Click [show] on the red bar below to view information on the types of grants and amount of money received by each state. Most funds came through the Level One and Level Two Establishment Grants, which provided about $2.1 billion and $2.7 billion, respectively. New York received the highest amount of Level One grants, at about $238 million, while California received the highest amount of Level Two grants, at about $823 million.

    Back to top↑

    After January 1, 2015, state-based exchanges were expected to be self-sustaining. States have utilized a variety of methods to keep their exchanges running:[17][18]

    • Fees charged to insurers that sell plans on the exchanges, typically 1 percent to 3.5 percent of premiums or a flat per-member per-month fee (California, Hawaii, Idaho, Massachusetts, Minnesota, Nevada, Oregon, Washington)
    • Fees charged to all insurers in the state, regardless of whether plans are sold on the exchange (Colorado, Connecticut, District of Columbia, Kentucky, Maryland)
    • State appropriations (New York)

    Financing an exchange via premium fees or per-member per-month fees on insurers means that the exchange's financial stability relies directly on individual enrollment in plans offered on the exchange. In May 2015, news outlets, including Kaiser Health News and The Washington Post, reported that nearly half of the 17 state-based exchanges were struggling with financial sustainability due to enrollment that was lower than expected in the open enrollment period from November 2014 to February 2015. Enrollment had increased by an average of 12 percent in states with their own exchanges. The report cited costs related to website technical problems and customer call centers as particularly challenging for states.[19][20]

    Recent news

    The link below is to the most recent stories in a Google news search for the terms Health insurance exchanges. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.

    Health insurance exchanges - Google News

    See also

    Effect of the Affordable Care Act in the 50 states

    Click on a state below to read more about how the Affordable Care Act has affected that state.

    http://ballotpedia.org/Effect_of_the_Affordable_Care_Act_in_STATE

    Footnotes

    1. ↑ HealthCare.gov, "Affordable Care Act (ACA)," accessed August 17, 2017
    2. ↑ 2.0 2.1 National Conference of State Legislatures, "State Actions to Address Health Insurance Exchanges," October 13, 2015
    3. ↑ Healthcare.gov, "Health Insurance Marketplace," accessed November 16, 2015
    4. ↑ The Staff of The Washington Post. (2010). Landmark: The Inside Story of America's New Health-Care Law and What It Means for Us All. New York, NY: PublicAffairs.
    5. ↑ Healthcare.gov, "Health Plan Categories," accessed November 16, 2015
    6. ↑ Obamacare Facts, "Health Insurance Exchange," accessed September 19, 2016
    7. ↑ Healthcare.gov, "Advanced Premium Tax Credits (APTC)," accessed October 19, 2015
    8. ↑ 8.0 8.1 8.2 Internal Revenue Service, "Questions and Answers on the Premium Tax Credit," accessed October 19, 2015
    9. ↑ The Henry J. Kaiser Family Foundation, "Cost-Sharing Subsidies in Federal Marketplace Plans," February 11, 2015
    10. ↑ Healthcare.gov, "Cost Sharing Reduction," accessed October 19, 2015
    11. ↑ Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, "Computations for the 2016 Poverty Guidelines," accessed August 21, 2017
    12. ↑ Healthcare.gov, "Federal Poverty Level (FPL)," accessed October 19, 2015
    13. ↑ The Henry J. Kaiser Family Foundation, "The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid – An Update," October 23, 2015
    14. ↑ Henry J. Kaiser Family Foundation, "Total Marketplace Enrollment and Financial Assistance," accessed November 8, 2017
    15. ↑ Henry J. Kaiser Family Foundation, "Estimated Total Premium Tax Credits Received by Marketplace Enrollees," accessed November 8, 2017
    16. ↑ 16.0 16.1 HealthInsurance.org, "CO-OP health plans: patients’ interests first," August 27, 2017
    17. ↑ 17.0 17.1 17.2 The Henry J. Kaiser Family Foundation, "Total Health Insurance Exchange Grants," accessed October 20, 2015
    18. ↑ 18.0 18.1 The Commonwealth Fund, "State Marketplace Approaches to Financing and Sustainability," November 6, 2014
    19. ↑ Kaiser Health News, "Nearly Half Of State-Run Health Exchanges Face Financial Woes," May 4, 2015
    20. ↑ The Washington Post, "Almost half of Obamacare exchanges face financial struggles in the future," May 1, 2015
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