Exchanges are the central mechanisms created by the health reform bill to help individuals and small businesses purchase health insurance coverage. Beginning in 2014, an Exchange will be established in each state to help consumers make valid comparisons between plans that are certified to have met benchmarks for quality and affordability. The Exchanges will also administer the new health insurance subsidies and facilitate enrollment in private health insurance, Medicaid and the Children's Health Insurance Program (CHIP). Nobody will be required to purchase health insurance through the Exchange, though subsidies will only be available for plans sold through the Exchange. If you would prefer to buy your insurance through an insurance agent or broker, you will be free to do so. If not, you will be able to purchase insurance in a matter of minutes on the Exchange’s website.

The District of Columbia is currently in the planning stages for implementing the Exchange.

How the Insurance Exchanges Will Work

The Exchanges are being compared to websites such as Travelocity or Orbitz, but they’ll be set up for you to buy health insurance rather than book travel and hotels. Starting January 1, 2014, those who want to buy private health insurance for themselves and their families will be able to use these state-run exchanges to find better deals. Instead of searching individually for an insurer, you’ll be able to use the exchange to choose a private plan from a menu of options. Plans cannot refuse to sell you a policy and must comply with the new consumer protections.

Insurance plans will vary—from generous to modest—but each plan must include basic, comprehensive medical coverage and prescription drug benefits. As with the online travel services, you’ll be able to compare the plans’ costs and benefits head-to-head online. What policies will cost is not yet known, but there will be annual limits on how much you have to spend on your deductible and copays. Subsidies or tax credits will be available if you have a low or moderate income.

More information on the Exchanges is available here.