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25 things to know about health insurance exchanges

The health insurance exchanges are an integral piece of the Patient Protection and Affordable Care Act. Here are 25 things to know about them.

1. Under the PPACA, states were required to set up health insurance exchanges or marketplaces where individuals and businesses can purchase health insurance, an action made mandatory by the law. The federal government stepped in to create exchanges in states that did not create their own. Some states partnered with the federal government to launch exchanges. However, the establishment of these exchanges, like other portions of the PPACA, has faced controversy.

2. Private health insurance exchanges are also growing as an alternative to the public exchanges. One in five Americans are expected to purchase benefits form a health insurance exchange by 2017, around 18 percent of the American public. Aon, Hewitt, Buck Consultants, Mercer and Towers Watson were among the benefits consultancies launching private exchanges, according to an Accenture report.

3. There are around 25 percent of employers considering a move to private exchanges over the next three to five years. However, 83 percent of Americans at this time are unfamiliar with the private exchange concept.

Number of enrollees

4. As of March 2015, 36 percent of potential marketplace population has enrolled. Vermont has the highest percentage of the potential population enrolled at 77 percent, followed by Florida at 57 percent. Iowa has the lowest potential marketplace population enrolled, at 17 percent.

5. During 2015 open enrollment, approximately, 11.7 million are estimated to have enrolled in the marketplaces. This includes 4.5 million who re-enrolled from 2014.

6. An estimated 6 million people enrolled in health coverage using privately-managed health insurance exchanges in 2015, according to an Accenture report. Based on its research, the company estimates that enrollment of employees under 65 years old and dependents enrolling in health coverage using private health insurance exchanges will grow to 12 million in 2016 and 22 million in 2017.

7. The PPACA's individual mandate requires all citizens to obtain health insurance and fine those who do not enroll. However, an estimated 3 million to 6 million people remained uninsured in 2014 and faced a penalty this year from not signing up.

8. Data from the Kaiser Family Foundation shows 90 percent or more of the potential market for health insurance exchanges signed up for Healthcare.gov in parts of Miami-Dade and Broward counties in Florida; Philadelphia; Jackson, Miss.; and Atlanta. Enrollment was below 15 percent of the potential market for exchanges in parts of Texas, Iowa and Ohio.

9. Within states, however, the enrollment results vary substantially, according to the Kaiser Health Foundation analysis. For example, in Florida — a state with 64 percent market saturation in 2015 — the signup percentage ranged from 21 percent in the Tallahassee area to approximately 100 percent in parts of Miami. In Texas — a state with more modest enrollment at 39 percent market saturation — the share of potential enrollees signing up ranged from 12 percent in the College Station area to 81 percent in some Houston suburbs.

10. Exchanges run by the federal government experienced higher enrollee retainment in 2014 as well as higher new enrollee rates in 2015 as compared to state-run exchanges, according to an Avalere report.

11. In 2015, federally facilitated exchanges reenrolled 78 percent of their 2014 enrollees, whereas state-run exchange states reenrolled 69 percent of their 2014 enrollees. Federally facilitated exchange enrollment increased by 61 percent from 2014 to 2015, rising to 8.8 million. By contrast, state-run exchange enrollment increased by 12 percent, to 2.8 million.

12. Although the reason for the differences in attrition and new enrollment rates is unclear, one potential reason is technical glitches. State exchanges may also have more enrollees who over-reported their income in 2014.

Finances

13. Nearly half of the 17 insurance marketplaces set up by the states and Washington, D.C., are struggling financially, according to The Washington Post. States have received nearly $5 billion in federal grants to establish the online marketplaces. But, federal funding ended at the beginning of 2015, and exchanges now must cover their operating costs.

14. There are some states still struggling with the cost of exchanges. Hawaii, for example, needs $28 million to cover operations through 2022. In part, the financial distress may be attributed to tepid enrollment numbers and growing costs, especially for technology and customer call centers.

15. The largest nonprofit health insurer in the country, Chicago-based Health Care Service Corp., reported a $281.9 million loss in 2014 — the first year U.S. citizens could purchase health insurance through the public exchanges, which caused the number of medical claims to rise significantly. In 2013, it reported a $684.3 million surplus. The corporation is the Blue Cross & Blue Shield insurer for Illinois, Montana, New Mexico, Oklahoma and Texas.

16. Some of the 13 state-run healthcare insurance exchanges are considering becoming multi-state exchanges, which is driven in part by the financial pressure. Sharing marketplaces is allowed by the PPACA, and Delaware, Maryland and West Virginia commissioned a study to create a shared marketplace in 2013, but decided against the idea.

King v. Burwell lawsuit

17. Subsidies for the exchanges are a current point of contention. The PPACA established the exchanges with ambiguous language about whether enrollees in states with federally-run exchanges were entitled to subsidies. This is the central point of contention in the King v. Burwell lawsuit.

18. The plaintiffs in the case argue the language of the law states that only eligible enrollees in states that have set up their own insurance exchanges should receive subsidies. The subsidies were designed to help enrollees in a certain income bracket afford their insurance.

19. The Obama administration and other defendents insists that the language of the law is clear —subsidies are available through all exchanges, irrespective of whether they are federal or state-run.

20. If the Supreme Court rules in favor of the challengers, PPACA subsidies for 6.4 million people in 34 states using the federal marketplace would be eliminated. There would also be approximately 8.2 million more uninsured people, according to a February study from the Urban Institute.

21. In particular, these 10 states — which have the highest number of people enrolled for coverage under the federal exchange — are home to the highest number of people at risk of losing their subsidies:

•    Florida — 1.32 million people at risk
•    Texas — 832,334 people
•    North Carolina — 458,738 people
•    Georgia — 412,385 people
•    Pennsylvania — 348,823 people
•    Virginia — 285,938 people
•    Illinois — 232,371 people
•    Michigan — 228,388 people
•    Missouri — 197,663 people
•    New Jersey — 172,345 people

22. HHS Secretary Sylvia Mathews Burwell stated in a letter to Congress that the Obama administration does not have a contingency plan if the U.S. Supreme Court blocks subsidies.
 
23. Republican leaders in Congress have however drafted legislation that would allow subsidies to continue for up to two more years after the Supreme Court decision, should the Court rule against the subsidies.

24. Cloud-based healthcare exchanges could allow states to keep healthcare coverage subsidized if the plaintiff's case prevails. The federal HealthCare.gov site is run through Amazon Web Services and as part of the redesign after its glitch-ridden launch, it was set up to run on Amazon EC2 clusters as a software-as-a-service application. The SaaS application can be customized and operated by states as independent exchanges.

25. Both Delaware and Pennsylvania were "conditionally approved" to create their own health insurance exchanges. They are the only two states that submitted contingency plans to save the subsidies in their states while awaiting the King v. Burwell ruling expected by the end of June.

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