Understanding Health Insurance Exchanges

Among the most consistent concepts found in the various health reform bills under debate in the Congress is that of entities called “Health Insurance Exchanges (Exchange),” sometimes called “Cooperatives.” The pivotal role in the debate seems to place the Exchanges as an alternative to the public option plan desired by the President and the House leadership.

After the August Congressional recess, it appeared that— because of both opposition from the Republicans and the “Blue Dog” Democrats in the House—the odds were mounting against a meaningful public option program. By October, the prospects of a public option had improved as the House unveiled a bill with a public option, and Senate leadership indicated its intention to do the same.

The purpose of this paper is to examine the Exchange concept, with emphasis on where a similar program operates today.