Healthcare Insurance Exchange: Definition, Function, and Pitfalls

This report provides an overview of the healthcare insurance exchange, also known as health insurance marketplaces, established under the Affordable Care Act (ACA). It defines the exchange's function, which is to allow individuals to compare and purchase health insurance plans. The report details the economic value of the exchange, including its role in reducing healthcare costs through subsidies and tax reduction programs. It also discusses the potential pitfalls, such as high premium rates, security concerns regarding personal data, and the impact on part-time employees. Furthermore, the report references the impact of the healthcare insurance exchange on low-income individuals and the challenges faced by both insurance companies and policyholders. Overall, the report aims to provide a comprehensive understanding of the healthcare insurance exchange, its benefits, and its associated challenges.

Running head: HEALTH CARE
Health Care
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Part A.........................................................................................................................................2
Definition...................................................................................................................................2
Function......................................................................................................................................2
Part B..........................................................................................................................................3
Economic Value.........................................................................................................................3
Potential Pitfalls.........................................................................................................................3
Reference....................................................................................................................................5

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Part A
Definition
Health insurance exchange or health insurance marketplaces are organizations where
people can compare and purchase a health insurance plan which is fit to their needs and
economical condition. It is regulated by the Affordable Care Act (ACA, also known as
Obamacare). It became fully operational by January 1, 2014 under federal law. Apart from
the government authorised ACA health care exchanges, private non-ACA health care
exchanges also exist in market, and have already been enrolled over 3 million people from
small and medium size business firms (Carroll et al., 2018).
These exchanges allow the insurers to compare the insurance plans in a cost-efficient
way. They do not insure themselves and do not bear the risk either. But they select the
insurance companies from which their clients are going to compare the plans (Prober et al.,
2016). These organisations provide transparency and accountability, ensure the delivery of
subsidies and increase enrolment. It also helps to deduce the risk of costs associated with
expensive medical treatments.
Function
The Regulations of Affordable Care Act are provided below:
 Insurers cannot discriminate .against or charge higher costs based on any
person’s pre-existing medical conditions or gender.
 There must be some of the essential health benefits included in the plan, such
as- ambulatory care, emergency services, hospitalization, maternity, mental
health, prescription drugs, rehabilitative service etc.
 There must be some tax penalty for those individuals who are not covered by a
legit health insurance policy.

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Part B
Economic Value
According to a survey, the expenses of the 10% high-risk patient are equal to almost
two thirds of the nation’s healthcare spending. The average healthcare cost of 10% most
expensive patient will be almost 50,000$ where as the average cost for everyone else is just
6000$. If we count the 50% population of the country, the average cost will be reduced to
700$. That’s why the ACA is trying to cover every countryman under Healthcare Insurance
policy so that the overall expenses can be reduced (Ament et al., 2017). There are several
subsidies and Tax reduction programmes have been introduced to spread the policy amongst
the people.
The limited competition causes less consumers and higher prices. Many insurance
companies have quitted the market after the few years of their arrival. As a matter of fact, the
economic changes for an individual is also a reason for the lesser number of policy taker. If a
person quit or get fired from his full time job, the healthcare policy provided by the company
will be invalid. In case of losing a job, that individual might not be able to spend money on
premium as he/she used to do. In such cases, the exchange provides subsequent plans in order
to merge with the concurrent situation of the individual.
Potential Pitfalls
The Concerns regarding the Healthcare Insurance Exchange:-
 According to a report of National Public Ratio (NPR), a large number of people who
has a low annual income were not covered in this policy as many states did not
offered Medicaid expansion to 133% of the poverty line.
 Sometimes it can be seen that the premium rate for a single individuals is quite high.
This is also a major concern in order to cover a larger number of citizens.

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 The security of personal data can be a matter of concern to many people as it was
reported of data leaking from the healthcare exchange.
 The loss of coverage can be seen for part-time employees as the policy ends
immediately after quitting their job,
 Various scams are also a matter of concern for the policy takers.
 Insurance companies looking for the wealthy classes as their client are also a problem
to provide maximum coverage. This might be good for the company’s business, but
the classes with low income cannot enjoy the benefits of the policy (Gorman et al.,
2016).

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Reference
Ament, J. D., Mollan, S., Greenan, K., Binyamin, T., & Kim, K. D. (2017). Understanding
United States Investigational Device Exemption Studies—Clinical Relevance and
Importance for Healthcare Economics. Neurosurgery, 80(6), 840-846.
Carroll, A. J., Hallman, S., Umstead, K., Ozturk, H., McCall, J. V., & DiMeo Sr, A. J. (2018).
Healthcare economics and information literacy: Resources for success in
undergraduate biomedical engineering education.
Gorman, D. C., Bronstein, M., Cleveland, T., & Calabria, C. (2016). Taming the Beast: Using
a Risk Assessment Model to Manage Infection Prevention in an Expanding
Healthcare System. American Journal of Infection Control, 44(6), S9.
Prober, A. S., Mehan Jr, W. A., & Bedi, H. S. (2016). Teaching the healthcare economics
milestones to radiology residents: our pilot curriculum experience. Academic
radiology, 23(7), 885-888.