A Private Solution to a Public Problem

Fully Integrated Health and Benefits

The public exchanges were created under the Affordable Care Act and are creatures of that legislation; Private exchanges are operated without subsidy or tax credit benefits and are creatures of the marketplace. The idea behind the Affordable Care Act is relatively simple: if virtually the entire population participates in the private health insurance system we have in this country, carriers will have incentive to compete with each other on price. In addition, the more people the system serves, the more widely shared the risk.

While public exchanges attempt to remedy the adverse consequences of people not obtaining insurance coverage, private exchanges (such as the CieloChoice Fully Integrated Health and Benefits System) attempt to provide a transparent and efficient shopping experience in the individual or employer-sponsored market. For this reason, there will be only occasional overlap or interaction as between the public and private exchanges.

Key ACA Provisions

Individual Mandate - More people will become familiar with exchanges in general because starting on January 1, 2014 almost everyone must have health insurance coverage or pay a penalty.

Employer Mandate - Under the ACA, employers with 50 or more full-time workers must offer health insurance that meets standards of quality and affordability by January 1, 2014 or pay a $2,000-per-employee annual penalty. The Act also requires employers to provide detailed reporting on their health benefits plans. The Obama administration has subsequently delayed the effective date of the employer mandate to Jan. 1, 2015.

Enrollment

Public exchanges seek to enroll in private health insurance plans (a) those previously ineligible because they were declined coverage, (b) those who previously could not afford health insurance, (c) those who refuse employer-sponsored coverage because they need higher levels of care than that offered to them, (d) those who need a place to transition from a state-based medical assistance plan and (e) certain other individuals or groups.

Private exchanges seek to enroll primarily those who will be offered some form of employer-sponsored health insurance and individuals who want a place to shop for unsubsidized coverage. 

Coverage

The public exchanges, at least for now, deal only in major medical health insurance policies while private exchanges offer both major medical coverage and voluntary benefits such as vision, dental, life, disability and the like.

These are just a few of the differences between public and private exchanges.

Which is Right for Me?

This largely depends on your position as an employer or an individual; each type of exchange has been created to serve a separate market segment.

The public exchange offers those without health insurance coverage access and, in many cases, greater affordability while the private exchange offers individuals or those who will be offered employer-based coverage transparency and efficiency in the selection and buying experience.

Books can be written on the subject and, in fact, CieloStar has already supported the writing and publication of one - Overdose:  Your Health, My Money - by two of the officers of the company, John Reynolds and Pierce McNally. We highly recommend it!