Health Exchanges: Choice Without Hassle and the Heart of Reform

05.03.2010 - National Healthcare Reform

In the heart of Upper Manhattan, a small, nonprofit tutoring center—Operation Exodus Inner City—is bucking national trends by offering its four employees health benefits. This is not just a single take-it-or-leave-it plan, but a choice of 30 plans from five different organizations. The organization doesn't have a human resources staff, there is no state mandate that requires Exodus to offer benefits of any kind, and no, the company didn't just hit the lottery. How is the rich menu of benefit options possible?

The answer is HealthPass, a health exchange offered in and around New York City since 1999. "Before HealthPass, we offered a single plan," said center director Matthew Mahoney. "It basically eliminated the hassle factor involved with offering health benefits and it's flexible enough so that we can contribute whatever amount we can afford and the employee pays the rest:"

Choice Without Hassle
HealthPass is what is known as a health exchange, essentially a way for individuals and small employers to purchase health insurance with a wide range of plan options, unlimited flexibility in terms of employer contribution, and virtually zero administrative hassle. That last factor is significant. In New York, HealthPass handles all the administrative issues normally involved in working with a plan—eligibility, enrollment, education, member advocacy, billing—and makes offering a choice of plans exceedingly simple.

Health exchanges are a hot topic, and are at the center of the new health care reform law. While key provisions establishing state-run exchanges may not take effect until 2014, it now seems certain that exchanges will factor into the nation's health care future as a way of expanding access and choice to millions of Americans.

Though no more than a dozen exchanges are thought to exist nationwide, their appeal on both sides of the political aisle is not hard to understand. Notable successes among the handful of existing exchanges include:

  • helping companies and employees select plans that are right for them;
  • reducing administrative costs by streamlining marketing;
  • establishing mandatory minimum benefit levels;
  • negotiating with insurers for the best possible rates; and
  • helping facilitate the implementation of Massachusetts' individual insurance coverage mandate.

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