Insurance Exchange

Explaining Health Care Re form: What Are Health Insurance Exchanges?
A number of recent health care reform plans call for the creation of a health insurance “exchange,“ a new entity
intended to create a more organized and competitive market for health insurance by offering a choice of plans,
establishing common rules regarding the offering and pricing of insurance, and providing information to help
consumers better understand the options available to them.
An exchange is part of the plan aiming for universal coverage currently being implemented in Massachusetts
(where it is called the “Connector“). It was also featured in proposals from the major Democratic candidates for
President (including President Obama), in the Healthy Americans Act sponsored by Senators Ron Wyden and
Bob Bennett (where they are called Health Help Agencies), and in a white paper released by Senate Finance
Committee Chair Max Baucus. In all of these plans, the exchange is a key element in providing coverage to the
currently uninsured and in facilitating changes to the insurance market, particularly for those who buy insurance
on their own. Some proposals allow employers or employees to purchase coverage through the exchange as well.
This brief explains the purpose and function of exchanges, how they would relate to greater regulation of the
insurance market, and some of the key questions likely to be addressed by any health reform proposal that calls
for the creation of exchanges.