Obamacare Exchanges Limit Insurance Choices

Original post date: September 16, 2013
Article by: Anonymous

While Florida decided against setting up the insurance exchange that’s part of Obamacare, many states are on board with the idea. This gives the states that are sitting out of the exchange game for now an example of how it will be implemented and what the consequences may be.  Illinois is one of the states that agreed to set up an exchange, but unfortunately for Illinoisans, the process has been less efficient than desired.

Initially, state officials expected 16 different insurance companies to offer plans through the exchange, but several large companies—including UnitedHealth Group, the nation’s largest—are disinclined to join the system because they are afraid they will lose money by participating, due to artificially low premiums. Rather than the estimate, only 5 companies are in the exchange. At least two of the 5 companies on board carry prominent names: Humana and Blue Cross Blue Shield.

One of the 5 insurance companies is a federally funded startup, called Land of Lincoln Health Inc. Co–op. Since the states have begun forming exchanges, federally funded start-up insurance companies have been popping up all over, so far in at least 25 states. The federal government has set aside $160 million to be loaned to “a hospital trade organization […] to compete against major insurance carriers in the state.” Kathleen Sebelius, the Secretary of Health and Human Services, announced earlier this month that  grant awards will go to 1,159 health centers, with the intent of making the transition as easy as possible by educating the public about the exchanges and expediting enrollment in the new plans.

In addition to the federal loans, other tactics are being used to draw support for the Obamacare exchanges. The state of Illinois plans to spend between $30 and $35 million in federal grants to advertise Obamacare. Some of the methods that have been chosen include airplanes flying banners across beaches, “Obamacare”-branded coffee cups and sunscreen, and media promotion through radio and TV ads. So far it seems that both the federal and some state governments are putting effort into getting the policy implemented, but other states are taking their time adopting the new law and its components.

States across the US are in the midst of a large transition, and it is likely that different states will produce different results in the healthcare insurance industry as a result of different policies. Florida has time to sit back and watch as other states experiment with the exchanges and individuals get acclimated. Perhaps by the time January comes, there will be more conclusive preliminary evidence about the effectiveness of Obamacare’s exchanges.

About DeVoe Moore Center

The DeVoe L. Moore Center is conducts economic research and policy analysis focused on state and local policy issues and is located in the College of Social Sciences and Public Policy at Florida State University in Tallahassee. As an educational institution the DMC provides professional research experience to undergraduate and master’s students through an extensive program of internships and independent study, preparing them for a future in public policy, economic development, public sector accountability and entrepreneurship.
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