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May 2015 St@teside

Evolution of State-Based Marketplaces

The Affordable Care Act’s health insurance marketplaces have helped enroll more than 11 million people in insurance coverage since the beginning of 2014, though state-based marketplaces have seen their fair share of challenges, including leadership changes and tightening budgets. After two open enrollment periods, states continue to evolve and adapt to ensure the marketplace works for their own residents.

Connecticut has proven to be an example of success for state-based marketplaces, with solid financials and a technology platform that worked well enough that it has been used by other states. The state is also charging a much lower assessment on its insurance plans than and other marketplaces: the federal marketplace charges 3.5 percent while Connecticut currently assesses only 1.35 percent (with proposals to raise the assessment to 1.65 percent by 2017).

In contrast, New Mexico, facing sustainability issues and difficulty with their technological platform, has talked with CMS about moving to a model that allows them to lease the federal system but still remain a state-based exchange. This would allow the state to operate at a lower cost, but still retain governance and many of the key functions of the marketplace. Expect to hear more about New Mexico’s plans in the coming months, especially following the decision in King v. Burwell expected at the end of June.

Pennsylvania, which previously opted to use the federal platform, is now proposing to move forwardwith a state-based model in the event that the decision in King v. Burwell affects the availability of tax subsidies for more than 380,000 residents. In a letter to U.S. Health and Human Services Secretary Sylvia Burwell this month, Governor Tom Wolf states he will “assume responsibility for running the Marketplace, but will leverage” to provide the necessary technological functions to allow enrollment in coverage.

While nationwide the exchanges have achieved a level of success, these examples provide a glimpse into variability of choices and opportunities still remaining at the state level. With the loss of federal funding in 2016 and the potential ramifications of the looming King v. Burwell decision, state-based marketplaces will continue to be an area of policy focus. As Kevin Counihan, current CEO (and former Connecticut exchange CEO) has emphasized, leveraging and disseminating best practices from successful state-based marketplaces will be of critical importance as the policy landscape continues to evolve.