Affordable Care Act: The Health Insurance Exchange concept seems to do the trick... so why complaints?

The Health Insurance Exchange idea allows individuals to come together and have the purchasing power of a large corporation. In this manner these uninsured people can get insurance at affordable price. This seems to really solve the problem.. who cares that insurance companies are making money? So long as it's affordable, and no pre-existing conditions excuses are used, people can be fully covered.

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  • 1 decade ago
    Favorite Answer

    Well, anyone who REALLY understands how a reciprocal exchange works, would realize that this will NOT work.

    There's really NOT going to be a significant "group purchase power" discount going on here.

    See, how it works, is if you get 100 people, and they all divide up each others claims. If they're really sick people, and they each have $1,000 a month in prescription costs, and $2,000 in doctor visits a year, well, then EACH of them will have to pay $14,000 a year.

    What's more, exchanges are NOT required to have substantial reserves, and aren't regulated as strictly as insurance companies. Those massive "profits" you hear about insurance companies making, that's interest income off their reserves - they USE that, to subsidize the operation costs of the business. An exchange won't have that.

    So, all other things being equal, premiums for an insurance company will be LOWER than your share buy-in for an exchange. Yep, the exchange is going to COST MORE.

    Worse, as they aren't INSURANCE companies or subject to those regulations, if an exchange runs out of money to pay your claim, TOO BAD, your problem. Insurance companies pay in to a state solvency fund, and an insolvent insurer has active customers transferred to another insurance company.

    An exchange, you'll lose the PROTECTION of insurance company regulations, and the costs will be approximately 30% more . . . UNLESS you don't exclude preexisting conditions, and then the costs will have to skyrocket accordingly.

    As long as people can buy insurance cheaper than buying into the exchange, they will - so eventually, the least healthy people with the most claims costs will all be on the exchange, driving costs up even further. That's called an adverse selection death spiral.

    Won't work.

  • 7 years ago

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    RE Affordable Care Act: The Health Insurance Exchange concept seems to do the trick... so why complaints?

    The Health Insurance Exchange idea allows individuals to come together and have the purchasing power of a large corporation. In this manner these uninsured people can get insurance at affordable price. This seems to really solve the problem.. who cares that insurance companies are making money? So long as it's affordable, and no pre-existing conditions excuses are used, people can be fully covered.

  • Tom Z
    Lv 7
    1 decade ago

    When you examine the facts the cost of health care is reflected in the premiums that you will have to pay. It really does not amount to a hill of beans whether you buy from an insurance exchange or an insurance company because the underlying costs of health care have not been addressed.

    In fact, Extra cost is added to the system -

    Individual and group health plans will be prohibited from placing lifetime limits on the dollar value of coverage. This, of course, must eventually be reflected in the premium.

    Preexisting conditions will be covered. So you could choose to pay a small fine and only purchase insurance after you get sick. Already in Massachusetts where you can not be declined for a preexisting condition the insurance companies are experiencing an increasing trend where people purchase coverage when they are ill and then drop the coverage once they recover.

    An excise tax will be imposed on insurers of employer-sponsored health plans that are considered "Cadillac" plans. If you are lucky enough to have such a plan you can be sure the excise tax will be passed on in the premium or the benefits will be reduced.

    The health care bill imposes an annual fee on the health insurance sector as well as the pharmaceutical manufacturing sector. The bill imposes an excise tax of 2.3% on the sale of any taxable medical device.

    Again, these fees or taxes, one way or another, end up in the group health premiums and in the cost of prescriptions. It does not matter that you might be getting your insurance through an exchange

    Maybe we could save some money by reigning in frivolous lawsuits? Nope, there is not a peep about tort reform other than funding some study that will never see the light of day.

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  • Anonymous
    4 years ago

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    RE :Affordable Care Act: The Health Insurance Exchange concept seems to do the trick... so why complaints?

    The Health Insurance Exchange idea allows individuals to come together and have the purchasing power of a large corporation. In this manner these uninsured people can get insurance at affordable price. This seems to really solve the problem.. who cares that insurance companies are making money? So long as it's affordable, and no pre-existing conditions excuses are used, people can be fully covered.

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  • 1 decade ago

    To MBRCatz: you might be right about a reciprocal exchange but you've completely misunderstood the exchanges being set up by the reform bill. These are simply and only a place for the PRIVATE insurance companies to sell their plans to a very large pool of individuals. A well-run exchange can indeed provide a large, diverse pool of insured individuals who run the gamut from very young/very healthy to old and sick - thus spreading the risk and the reducing costs for everyone. The insurers on the exchange will have to compete with each other for the business - helping to keep premiums under control.

    Large pools spread the risk & keep individual costs under control. It's a pretty simple formula.

    My big worry about the reform bill is that it needed to do more to control costs on the medical side - but there are some good things in the bill that will start to address that and I hope that further legislation will encourage more of the kinds of practices that reduce costs: tort reform, funding for innovative treatment models, rewards for medical efficiency etc.

  • 1 decade ago

    The keyword "affordable" is just a buzz word put in the legislation to make it sound pleasant. Ask yourself, who determines what is affordable?

    The increased taxes on medical supplies and investments along with required reporting by insurance companies will undoubtedly increase costs. And the "requirement" that everyone "buy" insurance is not going to encourage lower rates.

    The exchange for people with preexisting conditions will be a "high risk" pool, so you would be grouped with others of high risk, with appropriate rates. So things are not as rosy as some try to make it appear. Try reading the legislation yourself, weeding through 3 bills of amendments of amendments and ambiguities. It sets up a lot a lot of unknown things to be determined later on a whim.

  • Kini
    Lv 7
    1 decade ago

    This will be much bigger than the Massachusetts Health plan so more people lower the cost for everyone.

    Most of the answers were skeptical about the cost of the insurance. If someone qualifies they can be subsidized or you will get a tax credit for buying it. In the long run it saves the government money. You will always find the opposing viewpoint. Most people are opposed to the idea of being required to buy insurance especially the young ones. They have been told they are contributing to government programs that wont be available to them and they resent that, and they have been told their tax money is supporting ne'er-do-wells, so they are naturally opposed to any idea put forth by Mr. Obama's administration.

  • Anonymous
    6 years ago

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  • 1 decade ago

    OK so inviduals form a pool and purchase group insurane together. rates lower with large group. insurance companies get their dough. insurance companies are big business like these mega banks. complaints about socialism unfounded. it supports big business, not big government.

  • Anonymous
    1 decade ago

    How well the exchange concept will work (and how "affordable" premiums will be) is an unknown at this point since they do not yet exist.

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