What's Happening with Health Insurance?

The Affordable Care Act's health insurance exchanges will open for business in a few weeks. On October 1st, each state's exchanges will begin to enroll the nation's uninsured and underinsured in standardized health insurance plans, effective January 1, 2014. The big rollout will generate a lot of media coverage, but it will not have a direct impact on most Americans because the majority already has employer-provided health insurance (55 percent of the population) or Medicare (15 percent). The health insurance exchanges will make a big difference for the 10 percent of Americans who buy health insurance privately and the 16 percent who have no health insurance.

Prepare for a barrage of media reports about the price of health insurance in each state's exchanges. In preparation, keep in mind just how much the average American pays for health insurance. Among private-sector workers, the average health insurance premium for single coverage is $449 per month. For family coverage, the average premium is $1,289 per month, according to the Medical Expenditure Panel Survey. The typical worker spends less than those amounts because employers pay most of the cost. For the self-employed and those without employer-provided health insurance, however, the cost often greatly exceeds those figures and benefits can be limited. Many Americans can't get insurance at all because of pre-existing conditions. This awkward, paternalistic health insurance system has long distorted the labor market and stunted entrepreneurship in the United States.

All that is about to change. The new health insurance plans must accept all applicants regardless of health status, many Americans will receive subsidies to help them pay the cost, benefits will be standardized, and the uninsured will be required to get insurance or pay a fine. Watching how this much-needed update of our antiquated health insurance system affects health insurance coverage, health care demographics, employment, entrepreneurship, and the American psyche is an armchair demographer's dream.