Two Major Benefits Enabling Success of Health Insurance Exchange

The U.S. health insurance market is at its peak of major transformation essentially from an employer-based model to something that directly involves more and more consumers and employees. In this scenario, the private health insurance marketplaces carrying a defined approach helps acting as a significant catalyst to the process. There are at least 10 factors that enables a private health insurance exchange to be successful in providing seamless healthcare facilities to its consumers, two of them have been discussed here:

1. Abundant coverage capitalizing

The present health care system provides two ways to fund how to buy health insurance plans.

One- funding health insurance on the basis of after-tax expenditure. Here, enrollees pay the coverage out-of-pocket, without having any tax preference while buying the plan. This kind of coverage is commonly practised in the individual market of health care plans. In this kind of plan, Government or employer does not provide subsidies to the coverage.

Two- This is an employer-based buying of healthcare coverage. In this plan, the employer will typically pay either the entire or a part of the employee’s medical coverage. This plan typically reduces the employee’s cost incurred towards the plan. Moreover, even though a portion of the employer’s contribution comes from employee’s compensation, this portion paid by the employer will not be taxable to employee’s income tax. If the employee is paying a portion of the subsidy, employers usually provide tax exemption plans so that employee pays that amount before his tax gets calculated on his salary. The tax exemption feature is the best benefit provided by employer-based health insurance plan.

Any successful health insurance exchange will enable a smooth process for a health insurance enrollee to buy the coverage. This help will be irrespective of whether the enrollee is paying it entirely from his pocket or his employer is buying the coverage for him.

It will be the task of private health insurance exchange to provide a defined system of payment in a situation where the employer is just contributing in funding of the medical coverage buying. The exchange may either outsource the functions of payroll reduction to another business that is specially involved in giving payroll services or provide the service in-house. In both situations the task of the exchange is to enable smooth and error-free transfer of funds to the insurer company that is providing the coverage.

2. Stock of most of the important health plans

Yet another factor that makes private health insurance exchange successful is providing the consumer a plethora of health insurance plans to choose from. There can be more that 15 to 20 health plans that an exchange has in stock- all ranging from high-cost to even the minimum low-cost sharing health insurance plans. These variety of healthcare designs provides both the individual consumer and the employer to choose that funding system that suits him best. This actually helps in huge cost saving for both the individual and employer.

An important point of observation for private healthcare marketplaces is the wide array of major health insurance plans that are offered by many carriers. As most of the plans today get underwritten on individual basis, the carriers are usually managing their consumer’s risks that they have covered under the insurance plan.

There is ample likelihood of private exchanges to flourish. It is highly possible that there will be many undifferentiated offerings that will get implemented soon. However, to win in this marketplace, the exchange will require to differentiate all by itself through creation and sharpening a significant value proposition.