A preview of Montana's Health Insurance marketplace.

• Author: Davis, Gregg
• Position: Statistical data

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One of the more visible changes soon to be brought to the forefront by passage of the Affordable Care Act (ACA) is the health insurance exchange, or marketplace. More than 350,000 Montanans may have some change in health insurance as a result of the ACA, although not all will enter the marketplace.

The "No Wrong Door" approach to applying for individual health coverage directs applicants toward the appropriate insurance option, such as Medicaid, the Children's Health Insurance Program (CHIP), or private insurance policies sold in the marketplace. The applications are available online at http://www.healthcare.gov/blog/2013/04/marketplaceapplication.html.

In theory, the health insurance marketplace will enhance competition among health insurers while at the same time offering consumers the ability to make apples-to-apples comparisons of benefit designs, provider networks, and limits on cost-sharing. It is designed to operate similarly to the dozens of online travel sites that allow users to compare prices based on select criteria such as travel dates, destination, and number of travelers. But buying health insurance, it turns out, is far more complicated and confusing than buying a plane ticket.

One challenge for the marketplace is creating a consumer-friendly health insurance shopping experience. The purpose of the marketplace is to foster competition among health insurers, but sometimes when consumers face too many choices--whether it is jams at the supermarket, 401 (k) plans, or Medicare prescription drug plans--they struggle to make selections that are optimal for them.

Over the past seven years, the cost of individual coverage for employees in Montana with access to employer-provided health insurance increased 45 percent, more than five times the rate of general inflation for the same period and nearly twice the rate of growth in wage earnings. This rate of increase is similar throughout the country. The insurance marketplace, if in fact it does make health insurance more affordable, will primarily do so through economies of scale made possible by the individual mandate and increased competition among health insurance providers. Whether competition will thrive in the marketplace is unknown. In Montana, three or four insurers will participate in a federally facilitated individual health insurance marketplace (FFM), and three will participate in the federally facilitated small business health options program (FFSHOP). This is similar to the number of health insurers active in those markets now. However, there are also some additional health insurers selling outside the exchange, including some insurers that are new to the individual and small employer group market.

States have three operational choices for their health insurance marketplaces. Eighteen states and the District of Columbia will run state-based marketplaces, providing a higher degree of autonomy from the federal government. The vast majority of states, 32 of them, including Montana, will have a federally facilitated marketplace (FFM). Fifteen of the FFM states are marketplaces partners, where the state insurance department is participating in plan management. Under the federally facilitated marketplace, the U.S. Department of Health and Human Services (HHS) will assume primary responsibility for operating the exchange, except in the 15 states where the department of insurance is performing some of the plan management functions (including Montana) and, in some states, also consumer assistance functions.

Plan management includes certification of Qualified Health Plans, collecting and reviewing rate information, collecting quality information, and coordinating with HHS on quality rating and enrollee satisfaction. Consumer assistance includes overseeing the navigator program (see sidebar), maintaining a website and call center, providing outreach and education, and helping people shop for qualified health plans, including comparing premiums, calculating the tax credit, and choosing a plan. Eligibility determines whether...