State Health Insurance Plan Exchanges Begin Launching

According to the national healthcare reform legislation passed this spring

, each state will provide access to an insurance exchange market. These exchanges are intended to allow small businesses and individuals to use bulk purchasing power, therefore making their premiums less expensive.

Over 20 states--mostly in the South--have declined to create their own exchanges. Their residents will have the opportunity to buy in the federal exchange, instead. Those states that have chosen to establish an exchange themselves must begin taking steps now.

As it turns out, California is making the first move. Republican Governor Arnold Schwarzenegger likely plans to sign two state bills into law before the legislative session ends today (August 31).

These bills create the California Health Benefit Exchange. Despite the fact that it probably will not be fully launched until 2014, it is a start regardless. Individuals and companies with under 100 employees (at least until 2017; at that point, the limit can be expanded) can utilize it. Sole proprietors (self-contractors) and some small businesses will also be able to take advantage of tax credits to help them afford health insurance.

The bulk of the program consists of a website that will assist people in selecting the health insurance plan that best suits their needs. In addition to a comparison tool, there will also be a link to a site that can help residents determine whether they are eligible for federal subsidies. The website will be supplemented by a toll-free phone number.

Coverage options available range from bare-bones high-risk catastrophic coverage to so-called "platinum level" plans with more generous coverage, lower deductibles and co-payments (but higher rates). Finally, an oversight board will be created to determine which policies can be included in the exchange. Most likely, eligible plans must offer some minimum level of benefits. This is supposed to encourage health insurers to offer better options, in order to take advantage of the influx of subsidized customers.

State Health Insurance Plan Exchanges Begin Launching

By: Yamileth Medina

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