Health Insurance Exchanges and Physicians

April 7, 2013
Martin Merritt

Health insurance exchanges, created under the Affordable Care Act, take effect in 2014. Here's what they are and what physicians need to know.

News earlier this week that the Obama administration has delayed the rollout of a plan intended to give small businesses multiple health plan options starting in 2014 is almost universally met with a simple question: "What are they talking about now?"  

Small businesses and those who work for them have always been at a disadvantage. It is more difficult to find affordable plans for smaller businesses, due to a lack of purchasing power. As a result, small businesses have always paid much higher premiums. This often has limited the number of small businesses offering insurance to workers. One purpose of Affordable Care Act is to level the playing field by offering small businesses (25 or fewer employees) large incentives through tax credits.

Starting Jan. 1, 2014, small companies with up to 100 workers will be able to buy coverage through new health insurance marketplaces called exchanges. These exchanges will likely be subsidized by the government, meaning, workers may obtain below-market prices for health insurance.  As originally envisioned, employees would have been the ones to pick their plans. But now, for the first year, the employer will choose for the entire company.

There are also provisions for tax credits for individuals purchasing coverage. Individuals in the private health market have not only been forced to pay higher premiums, their coverage usually comes with more requirements and fewer protections. Under the ACA, individuals will have the ability to shop for insurance through exchanges, where they will be able to buy at prices everyone else on the exchange pays. If a person’s income is low enough, he will qualify for a government subsidy, which lowers the cost even further.

Under the ACA, if a person’s income is at or below 133 percent of the federal poverty level, he or she will qualify for Medicaid. But the Supreme Court opinion upholding ACA struck down the provision allowing the federal government to force states to adopt this provision. For example, a person in Alabama is disqualified from Medicaid if he has a job and earns over 25 percent of the poverty level (about $5,000 a year.) Under the ACA this person should be able to qualify for subsidized insurance through an exchange.

This should be great news for physicians, because of the reduced number of uninsured persons. It remains to be seen whether the benefits paid to physicians will approximate current reimbursement rates for commercial health insurance benefits, or if the rates will more closely resemble those paid by Medicaid.