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Small Business Employee Benefits and HR Blog

Public vs Private Exchanges - What's the Difference?

May 7, 2014
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One of the biggest healthcare buzzwords of the decade is "Health Insurance Exchanges". Public and private health exchanges are very similar - but there are also key differences. Here's what you need to know about public vs private exchanges.private_vs_public_exchanges

Understanding Health Insurance Exchanges

At a basic level, a health insurance exchange is a store or shop specializing in health insurance merchandise. Today's health insurance exchanges typically include the following components:

  • A choice of two or more health insurance options

  • Advice and recommendation on what health insurance options best fit your needs

  • Automated billing for the chosen health insurance plan premium(s)

  • On-going support for the chosen health insurance plan(s)

Public vs Private Exchanges

The difference between public and private exchanges is pretty straightforward:

  • A private health insurance exchange is a health insurance exchange run by a private company.

  • A public health insurance exchange is a health insurance exchange run by a government (or government-contracted) entity.

Since the ACA required states to create a health insurance exchange by 2014, those exchanges (aka the Health Insurance Marketplaces) are considered public health insurance exchanges. 

Numerous entities ranging from start-ups to new divisions of leading insurance companies have been created to offer new private health exchanges. In fact, if you're a health insurance broker you probably already offer a Private Health Insurance Exchange (see: How to Offer a Private Health Insurance Exchange in 3 Steps).

Other Exchange Differences

In addition to being public or private, there are other differences with health insurance exchanges.

  • Is the health insurance exchange Individual Market Based or Group Market Based?

  • Who is eligible to participate in the health insurance exchange?

  • What products are available in the health insurance exchange?

  • What is unique about the health insurance exchange?

Read more: 5 Minute Guide to Health Insurance Exchanges.

Questions about public vs private exchanges? Leave a comment.

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