Colorado’s health exchange – due to come online in October 2013 – is expecting 960,000 customers within three years of startup.
The health-exchange bill was passed by the legislature and signed into law in 2011. Proponents expect more than half of the customers to use the exchange to cut the cost of their insurance with federal tax credits.
Others are expected to buy insurance on the exchange because it will simplify the current, often mind-numbing experience of having to sort through insurance plans with hundreds of variations.
Other states are currently grappling with setting up their own exchanges, which were set in motion with passage of the federal Affordable Care Act. Lawmakers in Colorado adopted the exchange after businesses seeking a less expensive way to buy insurance persuaded some Republicans to join most Democrats to create the system. A core group of Republicans opposed the exchange, critical of its connection to the federal health-care law. Some opponents say it will slap price controls on private enterprise.
Myung Oak Kim, spokeswoman for the Colorado exchange, rejects that claim.
“The exchange is a tool to provide people with choices,” Kim said. “Our job is to help people get insurance and to take advantage of the tax credit.”
Here are some answers to common questions about the Colorado health insurance exchange:
What is the Colorado health exchange?
The exchange will be a website offering health insurance policies streamlined to make them more understandable to consumers. Customers buying a “platinum” plan can expect 90 percent of their health costs to be covered. They can choose cheaper categories instead, down to 60 percent of expected costs.
A study reported in the health policy journal Health Affairs found half of all individual policies in 2010 actually covered less than 60 percent. Every plan on the exchange will cover a minimum list of health-care services and will not have gaping holes such as no coverage for surgery.
Customers also will be able to sort policies by providers, locations and their own health-care needs.
All insurance, not just policies on the exchange, will limit the customer’s share to about $6,000 for an individual and about $12,000 per family. That’s because high deductibles, co-pays and out-of-pocket limits have been bankrupting many people who don’t have large amounts of cash.
Does the exchange limit my choices of insurance plans?
Insurance companies still can offer other policies outside the exchange, though customers won’t be able to collect the tax credit that way. Opponents of the exchange say that some people want less expensive policies that cover less and have higher deductibles. Proponents of the exchange consider the rules to be consumer protections against the sale of insurance that doesn’t cover what the public expects.
What if I don’t have a computer or don’t understand?
The exchange will have “navigators” available by phone to assist.
Who must use the exchange?
No one is required to use it, but Coloradans who want the tax credit can receive it only through the exchange. It will be open to individuals as well as small businesses and nonprofits with up to 50 employees. That number rises to 100 employees in 2016.
Will the exchange fix prices?
No. Exchange spokeswoman Kim said Colorado’s program has no regulatory authority. Insurers may offer policies at any price, and they may also sell policies outside the exchange that don’t fit its rules. The Colorado Division of Insurance and the federal health-care law do require all insurers to justify major price increases, and some have been ordered to pay refunds to customers.
How does the tax credit work?
The tax credit is set by income, family size and the cost of a “benchmark” insurance plan in Colorado. Families that choose less expensive plans will pay less, and the tax credit remains the same.
How much is the tax credit?
The Kaiser Family Foundation has created a subsidy calculator based on estimated prices.
Here’s an example from the Treasury Department:
A family of four with an income of $50,000 is expected to pay no more than $3,570 toward health insurance.
If a benchmark plan turns out to cost $9,000, then the subsidy would be $9,000 - $3,570 – $5,430. A similar family choosing a cheaper policy would get the same credit and pay $2,000.
Will this raise federal spending?
The federal government will have to pay more for tax credits if insurance rates keep rising.
Who is paying for the exchange?
The federal government has granted Colorado $63 million so far, and more money is expected. Eventually, the exchange expects to pay for itself.
Will the exchange want my private information?
The exchange must verify income to determine the tax credit. Customers will be able to input specific health issues they may have – such as the need for eyeglasses or more mental-health care – to sort for policies with better coverage they need.
Which insurers will use the exchange?
Colorado won’t know until spring, 2013. Nationally, most insurers say they expect to use exchanges, which should substantially cut their cost of selling individual policies, one at a time.