While plenty of states opted out of launching their own state-based insurance exchanges following the passage of the Affordable Care Act (ACA), a collection of states is coming back around to the idea.
In a new report from Georgetown University Health Policy Institute’s Center on Health Insurance Reforms (CHIR), researchers interviewed stakeholders in those states to paint a picture of why they might undergo such a costly and complex process after many struggled to operate one following the initial rollout of the ACA.
The main reason? Cost savings, the report found.
At present, 11 states and the District of Columbia already operate their own insurance exchange.
But an additional six states are planning to launch their own within the next several years, with Nevada up first in time for open enrollment to begin Nov. 1. Maine, New Jersey and Pennsylvania are aiming to launch their exchanges in time for the 2021 plan year, and New Mexico is eyeing a 2022 plan year timeline. Oregon hasn’t set a tentative date for its exchange, though the state is also pursuing one, according to the report.
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Sabrina Corlette, co-director of CHIR and one of the report's authors, told FierceHealthcare that states' changing attitudes are a "confluence" of two main factors: It's cheaper to design and run an exchange than it was even five years ago, and they want greater control over their markets.
Nevada's efforts have "sparked a real shift in thinking cost-benefit analysis coupled with some of the Trump administration policies that have been coming out that impact the ACA," which has "states sort of seeking to have a little bit more control to ensure that those markets stay strong," she said.
The Centers for Medicare & Medicaid Services charges insurers a user fee of 3.5% of premiums to operate HealthCare.gov. That's money states could keep internally for their own operations instead of passing along it to the federal government. Corlette said some state officials also noted that funding from the feds to operate the exchanges has decreased even as they collect those fees.
For the states included in the study, HealthCare.gov user fees totaled $183 million in 2018 alone, the study found. Pennsylvania officials estimate that the money they're capturing from the fees will fund a reinsurance program, Corlette said.
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States also believe they can implement an exchange with less of a bureaucracy and can use lower-cost technology, according to the report. Nevada, for example, estimates that it will save $19 million through 2023 by moving away from HealthCare.gov.
State officials also told researchers that a key goal is greater autonomy in running their insurance markets. Stakeholders in a number of stages have urged the feds to allow greater customization on HealthCare.gov, but, so far, technical limitations remain.
Running an exchange themselves would also allow them to counter policy changes that they view as harmful, such as cuts to navigator funding, according to the report.
“There's been very inconsistent federal policy with respect to the ACA," Corlette said. "Some things you can control as a state others you cannot."
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That said, there are plenty of risks, too, for these states to navigate, according to the report. The transition requires significant lead time to ensure the platform is easy for both insurers—who are using it voluntarily—and potential members to use. Corlette said states looking to undertake such an effort need to understand it's a "heavy lift."
Failing to provide a seamless process could push insurers to opt out of participation and could drive down enrollment if enough customers are put off, the report said.
In addition, with policies around the ACA in consistent flux, a state must plan for potential instability, according to the report.
“At a minimum, states considering a shift … must be prepared for potential federal policy shifts and have sufficient operational and budget flexibility to respond to them,” the researchers said.