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Healthcare policy in the U.S.
Obamacare overview
Obamacare lawsuits
Medicare andMedicaid
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Obamacare glossary •Effect of Obamacare •Centers for Medicare and Medicaid Services

TheAffordable Care Act (ACA), also known as Obamacare, provided for the creation ofhealth insurance exchanges, also called marketplaces, where consumers could browse and purchase plans. Exchanges are "accessible through websites, call centers, and in-person assistance." The idea was to make it easier to buy health insurance and encourage lower prices with insurer competition.

One of the aims of the ACA was to "[m]ake affordable health insurance available to more people," according to HealthCare.gov. Minimum requirements of coverage were established and both individual and employer mandates, enforced by tax penalties, were established over a period of years in order to achieve the goal of expanded health coverage.^[1]

Overview

The Affordable Care Act gives states three options regarding the exchanges:^[2][3]

1. Establish and manage their own state exchange, or multiple exchanges if desired (state-based exchange)
2. Enter into a partnership with the federal government to manage an exchange jointly (state-federal partnership exchange)
3. Cede responsibility for establishing and managing an exchange to the federal government (federally facilitated exchange)

States can also set up more than one exchange to serve residents in different areas within their borders, and multiple states can create a regional exchange. However, as of August 2017, no state had chosen those options. At that time, 28 states had federally facilitated marketplaces. Another 17 had state-based exchanges; five of these exchanges were state run while utilizing the federal platform,Healthcare.gov. Six states partnered with the federal government to run their exchanges.^[2][4]

Plans offered

Insurers participating on the exchange list the plans they have to offer on the exchange's website. This is primarily where consumers can browse health plans to purchase, although plans can also be purchased over the phone or in person. Plans are categorized into four tiers of coverage:^[5]

Source:Connect the Dots USA

• bronze (lowest premiums, covers 60 percent of costs),
• silver (covers 70 percent of costs),
• gold (covers 80 percent of costs), and
• platinum (highest premiums, covers 90 percent of costs).

Consumers are responsible for the remaining portion of their healthcare costs. Plans may be purchased during annual open enrollment periods, but individuals that experience certain life events, like job loss, may purchase a plan during aspecial enrollment period at any time of the year. Individuals below a certain income level may receive financial assistance from the federal government in the form of tax credits to pay their monthly premiums.^[6]

Financial assistance

Individuals who purchase plans through an exchange and earn incomes between 100 percent and 400 percent of the federal poverty level (FPL) are eligible for premium tax credits—payments from the federal government to help cover the cost of premiums. In states that expanded Medicaid to adults with incomes up to 138 percent of the poverty level, eligibility for tax credits begins at 139 percent of the poverty level; individuals cannot be eligible for both Medicaid and health exchange subsidies. The law limits the percentage of income these individuals could be required to pay towards their premiums. Credit amounts are calculated based on the difference between this percentage and the full premium cost for abenchmark plan. If the monthly premium is above the percentage cap, the tax credit is disbursed; if the premium falls below the capped amount, no tax credit is provided.^[7][8]

For example, when selecting a plan for 2017, an individual who made $29,700 in 2016 would have their monthly premium payment capped at 8.21 percent of income, or $203 per month. The individual would receive no tax credit if the average monthly premium for a benchmark plan in his or her area was below $203 per month, no matter which plan he or she chose. If the premium for a benchmark plan was $250 per month, the individual would receive a tax credit of $47 per month. The percentage of income households must pay was indexed to change each year based on premium growth as compared to income growth. Tax credits can be paid directly to insurance companies on a monthly basis or claim the total credit on an annual basis when filing taxes.^[8]

Those earning between 100 percent (or 139 percent in states that expanded Medicaid) and 250 percent of the FPL are also eligible for a reduction in their cost-sharing responsibilities, meaning they can enroll in silver plans that cover up to 94 percent of their costs, as opposed to the normal 70 percent such plans cover.^[9][10]

Tax credits and cost-sharing reductions are only available to individuals who purchase a health plan through an exchange. For 2017, theU.S. Department of Health and Human Services used 2016 poverty guidelines to determine tax credit and cost-sharing eligibility:^[8][11][12]

• The federal poverty level amounted to $11,880 for individuals and $24,300 for families of four.
• For individuals, 138 percent of the FPL amounted to $16,394, while 400 percent amounted to $47,520.
• For a family of four, 138 percent of the FPL amounted to $33,534, while 400 percent amounted to $97,200.
• Incomes that were 250 percent of the FPL amounted to $29,700 for individuals and $60,750 for a family of four.

The law did not make tax credits available for individuals below the poverty level. Childless adults who (1) reside in a state that did not expand Medicaid and (2) earn incomes between their state's Medicaid eligibility threshold and the poverty level could still buy insurance on the exchanges, but would not receive tax credits. Click 'show' on the tables below to view complete data on 2016 incomes and the 2017 maximum monthly premium paid for a benchmark plan by poverty level percentage, up to a family of four.^[13]

Enrollment

SeeObamacare exchange enrollment and subsidies by state for historical enrollment statistics.

Nationwide, enrollment in plans offered on the exchange amounted to about 10.3 million in 2017. Of individuals enrolled, 84 percent were eligible for premium tax credits, which averaged $371 per month. In addition, 57 percent were eligible for reductions in their cost-sharing responsibilities (labled as CSRs in the table below).^[14][15]

Co-ops

The Affordable Care Act also created a new type of nonprofit health insurance company to offer insurance on the exchanges: the Consumer Operated and Oriented Plan, orco-op. The law stipulates that no representative from an insurance company or association can serve on a co-op board and that no co-op can accept outside investor funding. Co-ops are also required to sell most of their plans in the individual or small employer market; one-third of their plans can be offered in the large employer market. Co-ops received start-up funding through low-interest government loans; some also received solvency loans. Twenty-three co-ops were ultimately established nationwide and collectively received $2.4 billion in loans.^[16]

By the end of 2015, 12 of the 23 co-ops had closed. The closed co-ops had collectively received over $1 billion in government loans. According toHealthInsurance.org, an online guide to health insurance, over 1 million people were enrolled in co-ops during 2015 and about 500,000 were impacted by the closures at the end of the year. Individuals who had purchased insurance through these co-ops had to change insurers. Of the remaining co-ops, only one (Maine) was operating with a positive net income in 2015, thus raising the possibility that more co-ops would fail. Over the next year and a half, six more co-ops closed, and as of September 2017, four co-ops remained in operation.^[16]

For more on the co-ops and why they closed,click here.

Exchange financing

States received a number of grants from the federal government to support the establishment and early administration of the exchanges:^[17]

• Planning Grants were awarded to states for research related to the establishment, operation, and governance of an exchange.
• Level One Establishment Grants were awarded to states to develop state-based exchanges. These grants provided one year of funding support, but states were allowed to apply for multiple grants.
• Level Two Establishment Grants were awarded to states that demonstrated that they (1) were prepared to manage their own state exchange by showing proof of their legal authority via the state legislature to do so, (2) had designed a structure of governing the exchange, and (3) had a plan for financing the exchange in the long run. These grants provided funding for three years.
• Early Innovator Grants were awarded to states to design and build the state-based exchange website and the IT infrastructure behind it.

The grant program ended on January 1, 2015, after having awarded a total of nearly $5 billion to states.^[17][18]

Click[show] on the red bar below to view information on the types of grants and amount of money received by each state. Most funds came through the Level One and Level Two Establishment Grants, which provided about $2.1 billion and $2.7 billion, respectively.New York received the highest amount of Level One grants, at about $238 million, whileCalifornia received the highest amount of Level Two grants, at about $823 million.

After January 1, 2015, state-based exchanges were expected to be self-sustaining. States have utilized a variety of methods to keep their exchanges running:^[17][18]

• Fees charged to insurers that sell plans on the exchanges, typically 1 percent to 3.5 percent of premiums or a flat per-member per-month fee (California, Hawaii, Idaho, Massachusetts, Minnesota, Nevada, Oregon, Washington)
• Fees charged to all insurers in the state, regardless of whether plans are sold on the exchange (Colorado, Connecticut, District of Columbia, Kentucky, Maryland)
• State appropriations (New York)

Financing an exchange viapremium fees or per-member per-month fees on insurers means that the exchange's financial stability relies directly on individual enrollment in plans offered on the exchange. In May 2015, news outlets, includingKaiser Health News andThe Washington Post, reported that nearly half of the 17 state-based exchanges were struggling with financial sustainability due to enrollment that was lower than expected in the open enrollment period from November 2014 to February 2015. Enrollment had increased by an average of 12 percent in states with their own exchanges. The report cited costs related to website technical problems and customer call centers as particularly challenging for states.^[19][20]

Recent news

The link below is to the most recent stories in a Google news search for the termsHealth insurance exchanges. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.

See also

• 

  Federal policy on healthcare, 2017-2020

• 

  Medicaid spending in Vermont

• 

  Healthcare policy in Vermont

Effect of the Affordable Care Act in the 50 states

Click on a state below to read more about how the Affordable Care Act has affected that state.

Footnotes