September 17, 2009
New England Journal of Medicine

Americans purchase health insurance in various ways. Some buy individual policies. For them, medical underwriting is common, and preexisting conditions can preclude, limit, or dramatically increase the cost of coverage. Many buy insurance through small employers, which typically offer little or no choice of plan. Their premiums tend to be higher than those of consumers purchasing through large employers, which can bargain effectively on prices. Large employers usually offer a modest selection of high-quality plans at competitive prices. Medicare recipients can join traditional Medicare and then choose drug coverage from any of dozens of stand-alone prescription-drug plans (PDPs) or join MedicareAdvantage and choose among numerous private health plans. Given that plan choices are difficult to make and that large purchasers can whittle down prices, a reformed health care system is likely to employ health insurance exchanges to stand between consumers and insurers. The Massachusetts Health Insurance Connector, in operation since 2007, runs the best-known such organization.