WASHINGTON (USA TODAY) -- An overhaul of the nation's health care system could help do away with one of the most aggravating and expensive experiences for millions of individuals and small businesses: shopping for insurance on the open market.

A central element of all the proposals pending in Congress is the creation of a health insurance "exchange" -- a way to offer a range of plans. Its rules could guarantee that all applicants can get insurance. Its size could produce better prices than consumers can get on their own.

Options include one national exchange or many on a state or regional basis. An exchange could be operated by the government or an independent agency. It could administer federal subsidies to low-income people. It could collect fees required from employers who don't provide health insurance to their workers. It could be open to all comers or exclude large employers and others with insurance already.

Those are the details being debated, but proponents say one thing is certain: An exchange, coupled with changes in the insurance market, would increase availability and cut costs for people who don't get health insurance through their employers.

Much of the savings would come in administrative costs. For more than 14 million people who buy insurance on the individual market, administrative costs represent nearly 30% of their premiums, compared with 12% in the large group market, according to the Congressional Budget Office.

"The exchange idea is like a slam dunk," says Steven Findlay, senior health policy analyst at Consumers Union. "Everyone agrees you have to coordinate this marketplace in a better way."

Beyond that, there is less agreement:

*Some health insurers worry that the exchange will be given broad authority to cherry-pick plans and mandate benefits. "Everybody supports the idea of one-stop shopping," says Robert Zirkelbach of America's Health Insurance Plans. "The question becomes, how is it structured?"

*Some conservatives fear the exchange could become a regulatory behemoth and lead to a government takeover of health care -- particularly if it includes a public plan to compete with private insurers. "It's an enormous concentration of regulatory authority," says Robert Moffit of the Heritage Foundation.

President Obama heralded the exchange last week as a way for people to "one-stop shop for a health care plan, compare benefits and prices ... the same way, that federal employees can do."

"If you like what you're getting, keep it. Nobody is forcing you to shift," he told the American Medical Association. "But if you're not (happy), this gives you some new options."

Massachusetts has the most applicable model, and Utah also has created one. In 2006, Massachusetts created two exchanges, one for low-income people receiving government subsidies and one for those who don't get employer-provided insurance. In both cases, the state chooses and contracts with insurance plans to get the best deals. Employers who do not offer health insurance can allow their employees to buy it through the exchange on a pre-tax basis, the same way workers at large employers can.

"We're like a market. We're trying to compete. We have to offer more choice if we want people to buy from us," says Jon Kingsdale, director of the Massachusetts Connector. "It's not called regulation. It's called prudent purchasing."

In three years, the Massachusetts exchange has signed up nearly 200,000 people. About 170,000 others remain uninsured despite the law's requirement that residents have health insurance.

Len Nichols, director of the health policy program at the New America Foundation, a non-partisan think tank, says an exchange helps reduce costs for people who buy insurance on the individual or small group markets.

"You cannot expand coverage greatly without spending way more than we're already talking about, unless you significantly reduce the administrative load people are paying," he says.

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