Welcome to the New Health Insurance Marketplace

Posted by Phil Dougherty
September 4, 2013

There are a lot of new terms emerging with the onset of the new Health Insurance __???__. The federal government first called it a Health Insurance Exchange in hopes it would empower consumers to purchase their own insurance.  What is an “exchange” and where do you find one? A shopping mall? Wall Street? The corner of 3rd and Main to see a guy in a trench coat?  After surveying the public the feds determined “exchange” did not compute. 

They felt a change was needed so they put their wordsmiths on the case.  Around the first of the year, “marketplace” was called in to relieve “exchange”. So it is the new Health Insurance Marketplace where one can obtain insurance.

California, which operates a state-run “marketplace”, made the change as well and aptly named it Covered California.  But there is still room for confusion.  Covered California is not the only place one can purchase health insurance.  It is certainly the one you’ll hear a lot about in the coming weeks, but many believe the “other” marketplace could be as active and more suitable for some consumers.

Covered California is the public marketplace and the “other” marketplace is the private marketplace.  In order for consumers to receive financial support in the form of a premium tax credit or cost-sharing subsidy, they must go through Covered California, the public marketplace. The private marketplace, not officially named as yet, will be offering plans from the same private companies as those in the public marketplace.  Private marketplace plans must cover the same “essential benefits” as the public marketplace. (See my July 25 blog posting, Health Care Reform. Here are the changes in a nutshell.)

So what’s the difference?  One difference will be efficiency. We are told private marketplace plan applications will be much shorter than public marketplace applications. Also, public marketplace applications will require a tax disclosure.  Even though a private exchange must comply with Affordable Care Act (ACA) mandates, there may be enough wiggle room for carriers to offer additional plans giving consumers more choice.  Perhaps even more important, carriers may offer consumers access to a larger provider network with private marketplace plans. Pricing will be key of course and we await the final unveiling of rates and other important information. The veil may not be completely lifted until the official launch date on October 1…or later.

Our recommendation is to wait until ALL the facts are in and initial bugs are worked out before enrolling in a plan from either the public or private marketplace. We look forward to helping you understand your options in both marketplaces.

Phil Dougherty