One of the biggest changes in health care that comes as a result of last year’s vote to institute health care reform, hasn’t begun to take shape yet. This is the inception of the “Health Care Exchange” marketplaces – due to take effect by January 2014. And once the health care exchanges get rolling, we’ll finally see the full impact of health care reform.

But what is a Health Care Exchange, exactly, and how will it affect you? Think of it as a health insurance “store,” where individuals and small businesses get to choose the best policies for their needs. Only those insurers that meet certain requirements will be allowed to sell their policies in this “store.” For example, each insurer will have to offer plans with certain “essential benefits” and will not be able to deny coverage to those with pre-existing conditions, nor will they be able to exclude coverage for benefits that such people need. Most states will run their own Health Care Exchanges but some might opt to partner with neighboring states, while others might let the federal government run their exchanges.

A big question everyone wants answered: will insurance sold on the Health Care Exchanges be affordable? Here is where health care reform shows its muscle. Insurers, under the health care law, must pay out from 80 to 85 percent of premiums for health care costs. And, according to this article in the Washington Post:

People who make less than 133 percent of the federal poverty level, $14,484 this year, will qualify for Medicaid in all states, under the law. Above that, sliding-scale subsidies for private insurance on the exchanges will be available for residents who make up to 400 percent of the poverty level, about $43,560 this year. Most people will be required to have coverage of some sort beginning in 2014.

But probably the best cost controls come from the transparency of the Health Care Exchange system, because consumers and small businesses will be able compare one policy to another in terms of cost, coverage, deductibles, and exclusions, before they buy. And maybe – just maybe – that will bring health insurance costs in the U.S. more in line with other developed countries where people typically get much better coverage at much lower cost.

– Yvonne S. Thornton, MD, MPH