Under construction: nation’s first insurance exchange

Tuesday, January 22, 2013
Becky Yeh - California correspondent (OneNewsNow.com)

A California health expert says it will be interesting to see how the Golden State implements the nation's first health insurance exchange marketplace.

The federal government handed California $674 million last week to implement the state's health insurance exchange. The two-year grant will fund California's effort to implement the nation's first insurance marketplace. As a key component of the Patient Protection and Affordable Care Act (a.k.a. "ObamaCare"), the state-run exchange allows consumers to compare health insurance plans. Even though the state received less than expected, officials say they are excited to launch what they describe as the "biggest transformation of America's healthcare system" in 50 years. The exchange must be ready to go by January 2014.

Sally Pipes of the Pacific Research Institute believes that setting up the exchange will prove to be more difficult than anticipated, and that many people will be disappointed in the results.

Pipes, Sally (Pacific Research Institute)"Of course, California was the first state in the nation to take funds to help set up the exchange -- and to date, we still don't have an exchange," she tells OneNewsNow. "Peter Lee and his Covered California [have] had remendous difficulty getting this up and running. And as I say, they were the first state to take the money, and it's going to be very expensive. I think it's going to be a very difficult situation for people who are uninsured, who qualify for this update or have to purchase insurance under the exchange."

The federal government will use the exchanges to monitor if individuals are complying with ObamaCare. However, Pipes believes many uninsured Californians may choose to forgo insurance and be taxed rather than purchase health insurance under ObamaCare.

"I think many people will be very surprised at the cost of insurance plans within the exchange," she says. "Exchanges are there for individuals and small business.

"But with the essential benefit plan and the mandates that insurance companies have to cover, I think that a lot of people, particularly young people, will say I'd rather pay that $95 -- the $95 tax, the one percent of income -- rather than spending what it costs to purchase health insurance. The young people will say, for them, that it is a great savings and they feel that they won't be able to afford insurance."

Since ObamaCare requires that no applicant be turned down, premiums are expected to rise. Commentators say the mandate for insurance companies to charge a common premium for those insured, regardless of health conditions, will drive up costs.

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