National health insurance exchange has restrictions

President Barack Obama extolled the virtues of a national health insurance exchange in a speech to a joint session of Congress.

"If you lose your job or change your job, you will be able to get coverage," Obama said. "If you strike out on your own and start a small business, you will be able to get coverage. We will do this by creating a new insurance exchange – a marketplace where individuals and small businesses will be able to shop for health insurance at competitive prices."

Obama went on to compare this exchange to the Federal Employee Health Benefits Plan, which is offered to all federal employees. (We've written about this plan previously.)

"Insurance companies will have an incentive to participate in this exchange because it lets them compete for millions of new customers. As one big group, these customers will have greater leverage to bargain with the insurance companies for better prices and quality coverage. This is how large companies and government employees get affordable insurance. It's how everyone in this Congress gets affordable insurance. And it's time to give every American the same opportunity that we've given ourselves," he concluded.

But saying every American will get the same opportunity that Congress has to purchase insurance is not correct. There are several key differences between the Federal Employee Health Benefits Plan and the national health insurance exchange.

The biggest issue is that there are significant limitations on who gets to use the exchange. Right now, the House bill allows in individuals and people who work for small businesses.

Pending legislation in the House says that only individuals and small businesses of fewer than 10 employees would be able to use the exchange during the first year, and only individuals and small businesses with fewer than 20 employees in the second year. In the third year, businesses are allowed in "based on the number of full-time employees of an employer and such other considerations as the Commissioner deems appropriate." This sounds like employers will gradually be allowed into the exchange based on size, as well as "other considerations as the (health exchange) Commissioner deems appropriate."

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But people who can get insurance through a large employer will not be eligible to purchase on the exchange if their employer offers a plan that meets minimum requirements for coverage.

We should also add that many employers offer only a few choices of plan. Some only offer one plan. Federal employees, on the other hand, choose from an array of plans, with different levels of coverage. They are part the largest employer-sponsored program in the world, covering over 9 million employees, retirees, former employees, family members and former spouses, according to the Office of Personnel Management's Web site.

To say, as Obama does, that "every American" could get similar coverage as Congress on the exchange is not accurate. People who can get insurance through work are specifically excluded under the House bill. Obama lays out the right categories of people who would be allowed to shop ont the exchange in the first part of his statement: people who lose coverage or who are part of a small business. But he crossed a line when he told Congress, "It's time to give every American the same opportunity that we've given ourselves." There are significant limitations on who will be allowed on the exchange. We rate his statement False.