A primer on health-care ‘exchanges’

It seems like a simple idea: Create new marketplaces, called “exchanges,” where consumers can comparison shop for health insurance — sort of like shopping online for a hotel room or airline ticket.

But, like almost everything else connected with the health-care overhaul law, state-based insurance exchanges are embroiled in politics. Some Republican governors are threatening to refuse to set up exchanges unless they get more flexibility over Medicaid, the state-federal health program for the poor. Others say they don’t want to implement any part of the federal health-care law.

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Last week, Louisiana officials decided against setting up an exchange. And in Montana, GOP lawmakers killed a GOP-sponsored Senate bill to set up an exchange. Still, some Republican officials are embracing them. And consumer advocates, disease groups and industry lobbyists are jockeying for influence over how the exchanges will be regulated.

If done well, proponents say, exchanges could make it easier to buy health insurance and possibly lead to lower prices because of increased competition. But, if designed poorly, experts say, healthy people could avoid the exchanges, leaving them to sicker people with rising premiums.

Here are some common questions.

Q: What is an exchange, as envisioned by the health-care law?

A: It’s a marketplace where individuals and small employers will be able to shop for insurance coverage. They must be set up by Jan. 1, 2014. The exchanges will also direct people to Medicaid, if they’re eligible.

Will all states have exchanges?

States have the option of setting up their own exchanges, forming coalitions with other states to create regional exchanges or opting out altogether. In that case, the federal government would run the exchanges.

What about Maryland, Virginia and the District?

They’re all moving forward with legislation to set up exchanges.

Will anyone be allowed to buy from the exchanges?

No. Initially, exchanges will be open to individuals buying their own coverage and employees of firms with 100 or fewer workers (50 or fewer, in some states). Most Americans will continue to get insurance through their jobs, not the exchanges. The Congressional Budget Office estimates that 8 million people will use the exchanges in 2014 and 24 million in 2018. Most will be people who are eligible for subsidies, which will average an estimated $5,700 a person. Undocumented immigrants will be barred from the exchanges.

What about federal workers?

Members of Congress and their staffs will be required to buy through exchanges if they want coverage from the federal government. Other federal employees won’t be required to use an exchange.

Will exchanges be like travel Web sites or some existing health insurance sites?

In some ways. People will be able to compare policies sold by different companies. But information on the plan benefits will be standardized to make it easier to compare cost and quality. Plans will be divided into four types, based on the level of benefits: bronze, silver, gold and platinum.