Will Insurance Exchange Help Cut Health Costs?
One of the key issues in the health care debate is how to make health insurance more affordable. Front and center in the Democrats' plans is something that has gotten little attention but could be central to cutting costs: an insurance exchange.
The insurance exchange would operate much like a stock exchange, but instead of stocks, shoppers can purchase different health insurance plans.
The idea is that those who don't like their insurance, or don't have any at all, can go to the exchange and choose from a variety of different health insurance providers, big and small. For those Americans who like the insurance they have, President Obama has said they can keep their plan.
In the exchange, the lowest premium presumably would come from the federal government, or what has become better known as the "public plan." Because the government wouldn't have to make a profit, or do all the marketing that private plans now do, it would likely be the cheapest around.
In theory, this would prompt companies to trim costs and lower their premium costs in order to compete with other providers and the government plan. Supporters say it's a way to make insurance companies more competitive and keep health benefits tax free.
Companies selling on the exchange would be required to provide coverage to those with a pre-existing condition. People could keep the policy if they change jobs or move. Those who can't afford insurance, but make too much money for programs like Medicaid, would benefit from subsidies paid directly to the exchange. And, small businesses would be able to buy into the exchange in order to provide coverage for their employees.
The system has drawbacks that have yet to be hammered out. Some proposals are for state — not national — exchanges, meaning that people would not be able to keep their policy if they moved out-of-state.
Another risk is that the number of individuals and small businesses that qualify for the exchange may be too small, and there might not be enough volume to create competition. Or, conversely, if it turns out that too many people sign up only when they get sick, or sign up for a few months at a time then drop their policy, companies won't be able to break even. In that case, the exchange won't save anyone any money at all.
9(MDAyNzUwMDI2MDEyNTA3MTU5NzcyNTQyNA004))
LINDA WERTHEIMER, host:
A key part of the health care debate is how to make health insurance more affordable. The Democratic plan contains a provision intended to cut costs, though it's received little attention. It's called an insurance exchange. NPR's Joe Neel explains how it would work.
JOE NEEL: An insurance exchange might look like another kind of exchange you already know.
(Soundbite of bell ringing)
NEEL: Okay, there wouldn't be an opening or closing bell.
(Soundbite of people yelling)
NEEL: And it would probably be a lot calmer than a stock exchange and more like, well, an insurance office.
(Soundbite of song, "The Girl from Ipanema")
NEEL: But as President Obama is saying, if you already have insurance and you like it, you can keep it. But if you don't like what you have now or you don't have insurance at all, you could go to this exchange, which might be in an office or it might be all online.
You would have a bunch of health insurance policies to choose from there - from the biggest names in the business to smaller companies, too. In theory, at least, all of the companies would be knocking themselves out to give you the most for your money at the lowest price.
The lowest premiums - especially in the beginning - would be from the government, the now-famous public plan. Because it wouldn't have to make a profit or do all the marketing that private plans now do, it would likely be the cheapest around. And that, Democrats dearly hope, would cause competitors to shape up, trim costs and drop their premiums so that your health care costs would start to go down.
And insurance exchange would work like a stock exchange in this way: There would be a central clearing house for all claims and premium transactions would be settled up. If it works, that alone could save a boatload of money by streamlining the paperwork.
Companies selling on the exchange would be required to cover you if you have a preexisting condition. You could even keep the policy when you change jobs or move. People who can't afford insurance, but make too much money for programs like Medicaid, would get subsidies, which would be paid directly to the exchange. Small businesses could buy group coverage here, too, and get help if they needed.
Now all of this is what the proponents are promising. Here's where the rubs come in. Some proposals are for state exchanges, not national, so you wouldn't be able to keep your policy if you move out of the state. Or if too few individuals and small businesses are allowed to shop at the exchange, the whole thing might not work because there's not enough volume to create competition.
And another thing: If it turns out that too many people only sign up when they get sick or sign up for a few months at a time and then drop their policy, companies won't be able to break even. And in that case, the exchange won't save anyone any money at all.
Joe Neel, NPR News.
STEVE INSKEEP, host:
Some people without insurance are finding creative ways to pay for doctors' visits today. The Associated Press reports that the number of people bartering for medical treatment has risen. As the economy went down, a bartering network called ITEX saw its health care business go up. It climbed almost 50 percent over last year.
One New Jersey resident without insurance used Craig's List to work out a deal, trading his Web design skills for some dental work. And then there is the Barter Clinic in Floyd, Virginia. They provided medical services in exchange for childcare, violin lessons and firewood.
(Soundbite of song, "The Girl from Ipanema")
INSKEEP: This is NPR News. Transcript provided by NPR, Copyright National Public Radio.
