By Richard Cauchi
Nov. 1 marks the beginning of the third year of health insurance exchange or marketplace sales to residents of all 50 states and D.C.
The federally facilitated option remains in place in 34 states, with the state's traditional insurance regulatory function varying from limited to active.
Sixteen states and D.C. remain approved to operate state-based exchanges. These official numbers have been relatively stable since the launch of exchanges in mid-October 2013.
However, two new factors may cause ripples and increased public awareness this time during the three-month “open enrollment” period from Nov. 1, 2015 to Jan. 31, 2016.
First, the U.S. Supreme Court’s June ruling in King v. Burwell means that federal tax-credit premium subsidies continue to be equally available in all 50 states. Second, the individual mandate that requires most Americans to have health coverage results in a potentially higher payment or penalty next year for those who fail to have health insurance. The cost of being uninsured for 2016 will jump to $695, or up to 2.5 percent of family income, compared to $195 in tax year 2013.
State legislators may find renewed discussion about whether they should change the way their state exchange is run. A new Commonwealth Fund brief provides a fresh look at a new option, initiated by four states--Idaho, Nevada, New Mexico and Oregon—that established their own health insurance marketplaces but operate them with support from the federal HealthCare.gov eligibility and enrollment platform.
Hawaii will be the fifth state to adopt this model, beginning in 2016. This is a reverse of the original “partnership” option that let states play a partial role, with the feds taking the lead.
The new twist sounds logical: These states retain control of their insurance marketplaces while saving costs associated with certain exchange operations. But can a hybrid design, not spelled out in federal law, make sense in other locations? Highlights from the Georgetown University authors’ findings, published Sept. 17, 2015, may help answer that question:
"Policymakers and stakeholders reported positive experiences with this [supported state-based marketplace] arrangement. … Simply put, after the early rollout problems were over, the federal site worked—which was not fully the case in the two states that suffered setbacks with their own technology."
Three current supported marketplaces, Nevada, New Mexico and Oregon, experienced an influx of sign-ups in year two that exceeded the average for states using HealthCare.gov. The data shows that Idaho’s enrollment via the federal platform in 2014 far surpassed observers’ projections.
"The federal platform has limitations. First, states lack authority over its design and layout and cannot control when the website is available for consumers to access. Federal policy and operational decisions directly related to the technology—use of consumer decision-support tools, for example, or flexibility regarding special enrollment periods—become the state’s own by default. While most respondents in the supported marketplace states do not currently feel constrained by federal choices, some expressed hope that the technology could be customizable over the longer term.
"The supported state-based marketplace model is one implementation path that may be attractive to states from across the exchange spectrum. For states that already run a marketplace, the supported model may reduce the operational and, ultimately, financial risk of doing so. Development and maintenance of an eligibility and enrollment platform have been the most expensive and among the most troubled aspects of exchange implementation. By leveraging existing federal technology, marketplaces can operate more leanly and direct their limited resources to other service priorities. For states now using the federally facilitated exchange, the option to keep the familiar interface—and avoid the costs of building or buying a new one—may mitigate the most significant financial obstacle to the creation of a state-based exchange."
The report discusses additional considerations about costs and controls related to operating supported state-based marketplaces.
Also see NCSL’s regularly updated report, State Actions to Address Health Insurance Exchanges.
Richard Cauchi is NCSL's program director for health insurance costs.