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Minnesota’s Health Exchange Takes Shape

December 15, 2011 By Aaron Sinner, Hindsight Community Fellow

Pop Quiz!

Identify which of the following elements were and were not included in the final health reform package President Obama signed into law:

a. A new government-run insurance plan
b. Subsidies to help individuals pay for health insurance
c. Tax credits for small businesses
d. A ban on co-pays for preventive care
e. A government panel that makes decisions about end-of-life care for Medicare recipients

The Affordable Care Act crossed the President’s desk in March 2010—just over a year and a half ago. Yet even today, most Americans don’t know much about what’s in the law.

(Quiz answers: b, c, and d are all actual components of the law.)

A recent poll from Kaiser Health shows that Americans struggle to identify what was and wasn’t included in the 2010 reforms. In some ways, our collective ignorance is understandable: Health care is a complex issue, and the Affordable Care Act marks a complex solution with many different parts. Further adding to the confusion, many pieces of the legislation have yet to be implemented. On top of it all, conservatives insist on continuing the rhetoric of what the law will and won't do. 

Luckily, information surrounding one central piece of the legislation has just become easier to grasp in Minnesota. Our state is now piloting five models of health insurance exchanges.

It’s worth clicking through (the health insurance exchanges link) to see what the future holds, but the central premise is this: An exchange is a marketplace where individuals and small businesses can shop for health insurance. Because of the exchanges' structures, individuals and small businesses will be able to band together and share their risk in order to purchase insurance at a “bulk” discount.

These exchanges will likely be similar to, say,’s used books purchasing section. Individuals will enter their basic information and the exchange will return a list of insurance plans, their prices, and what they cover.

The Affordable Care Act allows states to craft their own exchanges. Minnesota’s executive branch is doing just that, despite Tea Party resistance in the legislature to do anything resembling compliance with President Obama’s signature legislative accomplishment. In the end, such resistance could hurt our state’s ability to craft an exchange tailored to Minnesota, as failure to implement a state exchange would mean the federal government will step in with a national exchange.

The exchange plays a crucial role in health reform going forward. Minnesota 2020 has previously detailed how the Affordable Care Act will impact Minnesota (see here and here), but it’s worth noting that the exchange plays a central role by (1) providing a one-stop shop for purchasing insurance on the individual marketplace, a previously-difficult way to buy insurance, and (2) offering an easy access point to determine one’s eligibility for health insurance subsidies.

The law makes health insurance affordable like never before by expanding Medicaid up to 133% of the federal poverty line—an annual income of $29,000 for a family of four—and by offering graduated subsidies for households making up to four times the poverty line—$88,000 for that same family of four.

Furthermore, an exchange will allow side-by-side comparison shopping between insurance plans in a way that just might introduce greater competition into the health insurance market, driving down costs.

While these sample exchanges will be available through the end of January, health insurance exchanges will truly open for business in 2014. That might seem like a long way off, but crafting a Minnesota-targeted exchange, setting up its ground rules, and ensuring it is fully functional will take time.

In the meantime, these pilot exchanges can begin educating Minnesotans on the details of last year’s health reform effort. Reshaping the U.S. health system toward a lower-cost, higher-quality model won’t happen overnight, and implementing a fully-functional exchange will be central to that effort.

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