States Flubbed the Rollout of Their Health Insurance Exchanges. Now They’re Ready to Try Again.

It's almost funny to look back now, but this was one of the great debates ten years ago: should the states control their marketplaces or should we just build a single federal marketplace?

The House reform bill way back in 2009 took the latter view. It would've created a new federal "Health Choice Administration" complete with a "Health Choices Administrator" responsible for creating a federal marketplace for insurance.

The Senate bills back then, given the Senate's proclivities, went the other way, envisioning 51 state-based marketplaces with local control and variation, with a federal backstop option available only in the rare (preferably nonexistent) instance that a state opted to hand responsibility for its marketplace off to the feds.

But truth is stranger than fiction. While almost every state took federal money to explore/plan the creation of a marketplace, rather than retaining oversight of their marketplaces most red states opted to hand them off to the feds (at the states' expense) in some odd teenager-esque act of sullen rebellion. Or to be more fair to them, perhaps they saw the limits of their own competence in a way some of their more enthusiastic peers did not. Lots of blue states opted to build their own marketplaces, but many turned out to be inept at procuring the necessary IT infrastructure. Of course, so did the feds, as we all saw in October 2013, but the feds at least airlifted in some Silicon Valley types to fix it in a matter of weeks.

I suppose a decade is a long time in the tech world. And the policy world, for that matter. So here we go again!

States Flubbed the Rollout of Their Health Insurance Exchanges. Now They’re Ready to Try Again.

The experience so rattled states that seven years later, only 11 of them, plus Washington, D.C., operate independent marketplaces. The rest either use the federal marketplace or a federal-state partnership.

But now at least six states — Maine, New Mexico, New Jersey, Nevada, Oregon and Pennsylvania — are creating their own marketplaces or seriously considering doing so. Officials in those states insist they can avoid past failures and state-focused websites can help more residents get insurance. They believe they can piggyback on the successes of other states, and knowing their population and geography better positions them to increase enrollment and possibly reduce their residents’ premiums. In recent years, experts say, vendors have developed software and other technology to make the online sign-up systems work.

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A recent report by the National Academy for State Health Policy presented evidence that state-based health insurance exchanges enrolled more residents and kept premiums lower than Healthcare.gov. The decline in marketplace enrollment since 2016 has largely been driven by states using the federal marketplace, the report found.

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Jessica Altman, Pennsylvania’s insurance commissioner, said she is confident her state’s marketplace, which it hopes to launch in 2021, will be superior to the federal marketplace.

“We know our markets and our consumer and our carriers best,” Altman said in an interview. “We believe we can leverage that information to make the experience of seeking health insurance more consumer-friendly and provide plans that are more affordable.”

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I'm curious if the results aren't just that developing an exchange indicated some actual, you know, interest in getting people signed up. I know Tennessee has been hostile to the ACA from the beginning, and despite losing $billions in Medicaid money I'm paying taxes to send to other states, still hasn't expanded Medicaid. Point is I expect Tennessee didn't develop a marketplace BECAUSE it didn't care much about making the ACA work, any part of it.

JasperL said:

I'm curious if the results aren't just that developing an exchange indicated some actual, you know, interest in getting people signed up. I know Tennessee has been hostile to the ACA from the beginning, and despite losing $billions in Medicaid money I'm paying taxes to send to other states, still hasn't expanded Medicaid. Point is I expect Tennessee didn't develop a marketplace BECAUSE it didn't care much about making the ACA work, any part of it.

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There's definitely multiple factors at work. The state-based exchanges at this point (i.e., under this administration) are doing a better of getting sign-ups and keeping premiums down than the feds, as the article notes. And there's a not insubstantial user fee in states using the federal exchange. And I suspect some of the trauma of the initial state rollout disasters has passed and some states that want to oversee their own markets are ready try again and get Trump's HHS out of the picture. But it's been a long road.