The Affordable Care Act  each state to set up an insurance exchanges—a marketplace where individuals and employers can shop for health insurance and apply for public programs and subsidies. Exchanges must be accessible via telephone, the internet, or on a walk-in basis. States have a significant discretion on how these exchanges will function.

The simplest exchanges could act as “clearinghouses” and allow any and all plans to operate on the exchange (provided they meet the minimum requirements set forth by the federal government). Or, an exchange could be an “active purchaser” and act on behalf of enrollees to negotiate the best possible plans for the lowest possible prices by. This is done by leveraging the exchange’s purchasing power, much like a large employer would for its employees, to selectively contract with health plans.

To learn more about why New York needs active purchasing, read the full brief attached:

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• Insurance Exchanges- Why New York needs active purchasing