Health Exchanges: Federal, State, or a Partnership

Federal or state Exchange? The question of who should run the marketplace for individuals and small businesses to shop for and buy affordable, high quality insurance has been an ongoing debate in health reform circles for a number of years. And a main decision point under the ACA is whether a state will create and run its own Exchange or have the federal government run the Exchange. To date, 12 states have passed laws to create their own Exchanges. Advocates in other states face a difficult calculation about what will be best for consumers – a federal or state Exchange – because so much is unknown about what a federal Exchange would look like. So far, HHS has provided few details.

Recent proposed regulations from HHS rejuvenated the discussion about federal Exchanges. HHS announced a “partnership model,” where states could split certain Exchange duties with the feds. With little detail in the regulations, states spent a few weeks dreaming about only working on parts of the Exchange that appealed to them, and leaving the rest for HHS to deal with. This lack of information about the partnership models made advocates, who are concerned with the seamlessness of enrollment for consumers, rightfully nervous.

Last week, the Center for Consumer Information and Insurance Oversight (CCIIO) unveiled further information on Exchange partnerships through this PowerPoint at a meeting of state officials. And the good news is that CCIIO is providing striking clarity on the Exchange: either a state creates an HHS-compliant Exchange by 2013 or the federal government will run the Exchange.

Under the federally-run Exchange, a state has a few options for partnerships. For each of these, HHS would run the enrollment and eligibility functions for the Exchange, and therefore the coordination with Medicaid.

1. State Consumer Assistance Partnership: A state would maintain control and oversight of the Navigator program and other direct assistance to help people enroll in health insurance, including outreach and education. But HHS would oversee the website and call center for the Exchange.
2. Plan Management Partnership: States will oversee the health insurance plans in an Exchange, including information and monitoring about the health plan options. HHS would coordinate on oversight of health plans and consumer complaints.
3. States could choose both the Consumer Assistance and Plan Management Partnerships.

HHS was clear that, at this point, a state does not have an option to run only a Small Business Health Options (SHOP) Exchange, and have HHS run the individual Exchange, an idea explored by some states. A few things remain unclear about the federal partnership models, including how financing these Exchanges will work. More information from HHS can be found here.

We think these models could work for states, but Community Catalyst is interested to hear what you think: are the new partnership models going to be good for consumers?

-- Christine Barber, Senior Policy Analyst