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January 2016 St@teside

The Evolving Marketplace Models

January 31 marks the end of the third open enrollment period. The U.S. Department of Health and Human Services reports that, as of December 26, 2015, nearly 11.3 million individuals have already enrolled in qualified health plans through both and State-Based Marketplaces (SBM). The uninsured rate remains at historically low levels with 11.9% of U.S. adults reported to be uninsured in the fourth quarter of 2015.

While tremendous progress has been made since the Affordable Care Act (ACA) was signed into law in 2010, few could have predicted the various paths that states have taken to get here, especially with regard to the health insurance marketplaces. The ACA originally envisioned two marketplace options – states would either set-up an SBM or default to the federal platform. However, as states worked to overcome numerous challenges in implementing the ACA over the past several years, we have seen the marketplaces evolve to now include four distinct models: SBM, SBM on the Federal Platform, State Partnership Marketplace, and Federally-Facilitated Marketplace. 

A recently released brief from the State Health Reform Assistance Network, “A Look at Different Marketplace Models: How Can They Help States Achieve Their Goals?,” explores these four marketplace models. It describes seven common goals that states aim to achieve through the use of marketplaces, and examines each model’s suitability for pursuing these goals.

With several marketplace models available to states, states have the opportunity to reassess their current marketplace model. A recent AcademyHealth blogpost explores this opportunity as states continue to pursue policy goals beyond just boosting enrollment. It notes that "additional health care policy goals beyond robust enrollment may be more attainable under an SBM." For example, “it is easier for an SBM to work with its state department of insurance and to be operationally more flexible to actively encourage the participation and retention of health insurers to increase health plan competition than it is for other models that don’t know local markets as well."

The blogpost also acknowledges that it will be difficult for states currently using the federal platform to build a state-based platform since the federal funding to establish SBMs is no longer available. However, it notes that "as more commercial firms have developed improved technologies to support exchanges, that option may become more attractive." Oregon, which is currently an SBM on the federal platform, is already exploring this option. In December 2016, Oregon released a request for proposals for technology solutions for both the individual market and Small Business Health Options Program (SHOP).

While we cannot predict where we will see additional innovations and variations in the marketplace models, we can safely say that their continued evolution will be something to watch in the coming years.