What You Need to Know About Health Insurance Exchanges

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One of the least controversial features of the health care reform legislation before Congress is the health insurance exchange — a new organized market for purchasing coverage and managing competition among participating health plans. But there is little consensus on how the exchange should be designed institutionally and how it should function.

In the new Commonwealth Fund report, Health Insurance Exchanges in Health Care Reform: Legal and Policy Issues, health law expert Timothy Stoltzfus Jost examines issues related to the design and function of insurance exchanges, reviews prior experience with exchanges, and describes the exchange provisions of the pending House and Senate bills along with the policy issues they raise. In the report, Jost provides answers to such questions as:

  • What are the role and duties of the exchange?
  • Will it be run at the federal or state level?
  • How would health plans available through the exchange be standardized and regulated?
  • How does the exchange make health plan coverage more transparent?
  • How is the exchange funded?
  • How would it control costs?

Jost believes that a robust health insurance exchange "holds real promise as a tool for advancing the goals of affordability and comprehensive coverage." But he cautions that to realize that promise, "Congress must heed the lessons learned from the failed designs of previous exchanges" — foremost by ensuring that risk is spread broadly and adverse selection is avoided.