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What is a Health Insurance Marketplace?

One of the pillars of the Affordable Care Act (the law better known as Obamacare) is the creation of online, government-run health insurance marketplaces. Sometimes referred to as health insurance exchanges, these are websites where individuals, families and small businesses can shop for and purchase individual or family health insurance plans under Obamacare.

There are non-government online health insurance marketplaces too.

This short video will explain the different types of individually purchased insurance plans that meet the standards of the Affordable Care Act:

Health insurance marketplaces: what they are and how they work

Health insurance consumers can use health insurance marketplaces to enroll in Obamacare coverage during the annual Obamacare open enrollment period or when they experience a qualifying life event that makes them eligible for a special enrollment period.

A health insurance marketplace operates in a very similar manner to an online travel site like Expedia and Travelocity. Users provide some basic information about themselves and an algorithm operates in the background to display an array of Obamacare health insurance plans, optimized for the individual.

Different types of health insurance marketplaces

There are essentially two types of health insurance marketplace: marketplaces that are run by government agencies, and private marketplaces.

Some government marketplaces are run at the state level; in 2016 these include the government-run Obamacare marketplaces in the states of Washington, California, Idaho, Colorado, Minnesota, New York, Vermont, Massachusetts, Rhode Island, Connecticut, Maryland, and the District of Columbia. In other states that have not built their own Obamacare health insurance exchanges, an online Obamacare marketplace run by the federal government is utilized instead. This federally-run Obamacare marketplace is widely known as

Finally there are private Obamacare health insurance marketplaces that also offer individual and family Obamacare-compliant health insurance plans.

Government-run marketplaces vs private marketplaces

A key tenet of Obamacare, and a vital piece of information for all health insurance shoppers to understand, is that consumers will find the same plans listed at the same prices on any authorized Obamacare marketplace. Whether consumers turn to marketplaces operated by the state or federal government, or those run by a private company, they will find the same health insurance plans with the same benefits at the same prices.

So, if it’s the same product at the same price, what’s the difference between a government-run exchange and a private exchange?

There may be several notable differences between government-run and private Obamacare marketplaces. These differences can be broken down into four main categories: 1) Customer experience 2) Customer service 3) Selection 4) Other products offered.

Customer experience and Obamacare health insurance marketplaces

The first category, customer experience, comes down to the relative capabilities of a government agency vs. a private company to adequately run a modern e-commerce platform. Some consumers feel like they get a better experience on private marketplaces, as most of these companies have been operating in the highly competitive e-commerce world for years before the government entered the market in 2014. Private marketplaces succeed when they are focused on the expectations and needs of shoppers, and when they deliver the services that users find valuable.

Government-run Obamacare health insurance marketplaces exist because they are mandated by law. In 2014 and subsequent years, government-run marketplaces (both federal and state marketplaces) experienced some technology challenges that have garnered media coverage and have contributed to a perception among some consumers that e-commerce shopping experiences are better provided by the private marketplace.

Customer service and Obamacare health insurance marketplaces

The second category, customer service, is highly related to user experience but has some intricacies that deserve mention. Government-run health insurance marketplaces typically have staff in call centers to help people who are having difficulty submitting an application for a plan by themselves. These staff members are called “navigators” and are there to help consumers understand the application process. Navigators are typically not licensed insurance agents, and as such are prohibited by law from giving you advice or making a specific health insurance plan recommendation on a plan for you.

Private exchanges, on the other hand, are often staffed with licensed health insurance agents who can help you through the application process while also providing personal recommendations based on your coverage needs and budget. Even after you purchase an Obamacare health insurance plan, they can serve as your advocate with the health insurance company in case there’s a dispute about coverage of specific medical services or about a medical claim.

Selection of plans and Obamacare health insurance marketplaces

When it comes to the third category, selection, there are pros and cons to shopping with government-run marketplaces or with a private health insurance marketplace. If you go with a government exchange, the advantage is that if you are eligible for a subsidy, you will have access to 100% of the Obamacare health insurance plans available in your geography which are eligible for use with a subsidy. If you go to a private health insurance marketplace, there are certain states that have not allowed private exchanges to offer subsidies online, so you may have to pick up the phone in order to enroll and get your subsidy.

Many private marketplaces, however, may offer most if not all of the same plans available through government marketplaces. They may also offer other Obamacare-compliant plans that aren’t eligible for use with government subsidies and which generally aren’t available through government-run marketplaces.

Other products available and Obamacare health insurance marketplaces

Government-run marketplaces and private health insurance marketplaces will also differ from one another when it comes to providing consumers access to other health insurance products. Government exchanges offer for sale Obamacare major medical health insurance plans which are qualified for use with government subsidies. These generally do not include related insurance products that many users like to purchase concurrently with their major medical insurance, such as: dental insurance, vision insurance, accident insurance and short-term health insurance plans. Private Obamacare health insurance marketplaces tend to include these and other products and often will help you “bundle” these services into a single purchase with your major medical plan.

Obamacare health insurance marketplaces – in closing

To sum things up, there are pros and cons whether you shop with private health insurance marketplace or a government-run health insurance marketplace. To help explain the difference, a comparison may be drawn with the experience of using Federal Express vs. the U.S. Postal Service. Both can deliver a package for you, but each will offer specific values to the individual that ultimately determine which service the consumer will pick.

The key thing to remember when it comes to Obamacare health insurance coverage, is that there is no price or product difference when it comes to private vs. government health insurance marketplaces. The same insurance plans at the same prices can be found on either private or government-run Obamacare exchanges. The difference lies in the user experience, customer care, supply and breadth of services offered on the site.