How Will the Launch of Health Insurance Exchanges Affect Workers?

On October 1st, one of the biggest elements of Obamacare will launch: the health insurance “exchanges,” also called “marketplaces.”  What will this mean for workers?

In short, it depends. First things first: what is a health insurance marketplace? As the Christian Science Monitor explains, “[t]he health care reform bill calls for each state to set up an ‘exchange,’ or marketplace, where people not covered through their employers would shop for health insurance at competitive rates.”  These marketplaces are designed to be somewhat similar to websites like kayak.com, where consumers enter a few bits of information and then can choose from a variety of options in terms of quality and price (consumers will also be able to access the marketplaces by postal mail or in person).  Since some states have declined to set up their own marketplaces,  the federal government “will support or fully run” them in 36 states, although the insurance plans themselves are being offered by private companies.

So which workers will and won’t be affected? Health care reporter Jeffrey Young notes that the marketplaces  won’t affect many of “the 170.9 million people covered by employers and the 101.5 million enrolled in government health programs,” since  “[m]ost company health plans already meet the health care reform law’s standards for benefits and affordability, as do government health programs like Medicare, Medicaid and military benefits.”

Yet, not everyone will be able to keep the insurance they have, and large swathes of workers will see a change.  According to the Congressional Budget Office, seven million fewer people will get their health insurance through work by 2023. Specifically, “[p]eople who work part-time, have low-wage jobs or are employed by smaller companies are most likely to lose their job-based benefits and to use the exchanges instead,” as are the self-employed and some contract workers. We’ve covered the issue of some larger employers dropping coverage to push employees to the marketplaces as well.

But what type of insurance will people be buying on the marketplaces, and how much will it cost? The marketplaces will offer platinum, gold, silver, and bronze insurance plans. At a minimum, all of these plans will include “essential health benefits,” as defined by the U.S. Department of Health and Human Services, with many offering additional features as well.  Platinum plans will cover 90 percent “of the typical person’s medical expenses,” gold will cover 80 percent, silver would cover 70 percent, and bronze would cover 60 percent (health policy experts believe that “silver and bronze plans . . . are the ones people are most likely to buy”).

With respect to cost, “the price of insurance will vary from state to state, within states, and on the person making the purchase.” The federal government released data this week on the price of plans on the federally-supported marketplaces, which have turned out to be lower than the Congressional Budget Office originally projected. Specifically, “the average premium for a 27-year-old nonsmoker, regardless of gender, will start at $163 a month for the lowest-cost ‘bronze’ plan; $203 for the ‘silver’ plan, . . . and $240 for the more-comprehensive ‘gold’ plan.”  Further, those “with household income of less than four times the poverty line, or about $91,000 a year for a family of four and $46,000 for an individual, will be eligible for federal tax credits” or Medicaid.

It is important to note that the government is not setting the prices on these marketplaces; private companies who are willing to meet the standards set out in Obamacare opt in and decide on the rates they will offer. Many insurance companies seem eager to participate: “[t]he average consumer will have more than 50 plans from which to choose,” though the number of plans available varies by state.

What does it all mean? It’s hard to compare the plans and prices that will be offered in the marketplaces to what’s offered to workers now “because the insurance product itself is changing: The benefits under Obamacare are more comprehensive and the policies are available to everybody, not just those who clear medical underwriting.” But amid all these details on the costs, benefits, and choices involved, one broader point seems clear. Once the health insurance marketplaces are underway, virtually all workers who seek relatively affordable, relatively comprehensive health insurance should have access to it – whether through their employer or through an exchange.

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