Federal Government Will Run Health Insurance Marketplaces in 26 States

The federal government will run health insurance exchanges under the Affordable Care Act in 26 states, while seven states will partner with the federal government and 17 states and the District of Columbia will run their own marketplaces, the Washington Post reports (Somashekhar, Washington Post, 2/15).

Open enrollment in the exchanges is slated to begin in October, with the marketplaces launching in January 2014. Under the ACA, states must create health insurance exchanges to provide coverage options for individuals and small businesses. States could choose to operate their own exchange, ask the federal government to run an exchange for them or partner with the government to operate an exchange (California Healthline, 2/15).

Friday was the deadline for states to declare if they wanted to partner with the federal government on an exchange. Just prior to the deadline, six GOP governors -- in Mississippi, New Jersey, North Carolina, Ohio, Tennessee and Virginia -- rejected a partnership, confirming that the federal government will run health insurance exchanges in their states (Radnofsky, Wall Street Journal, 2/15).

Of the 26 states that will have the federal government run an exchange for them, 24 have Republican governors. Meanwhile, four Republican-led states opted for a state-run exchange.

Reaction

According to the Post's "Wonkblog," some observers say that states opting for federally run exchanges are moving closer in line with House Democrats' original health reform bill, which included a single national insurance exchange. The provision later was replaced by state-run marketplaces in the Senate version (Kliff, "Wonkblog," Washington Post, 2/18). Proponents of the ACA have said the federal government might be more successful in implementing the law's provisions.

Dena Mottola Jaborska, director of organizing at New Jersey Citizen Action, said, "We're perfectly happy for the federal government to take the lead on this because we know they will do everything in its power to make it successful" (Washington Post, 2/15).

Dan Mendelson, CEO of consulting firm Avalere Health, added that federal control will give the exchanges "[c]onsistency and control."

Joel Ario of Manatt Health Solutions, who previously led the Obama administration's health exchange office, said larger insurers might end up "favoring the efficiencies of a national approach."

Meanwhile, some Republicans who oppose the ACA believe the federal government will not have enough time to set up exchanges for so many states. Senate Finance Committee ranking member Orrin Hatch (R-Utah) on Thursday said, "I have a hard time understanding how the administration expects to have exchanges up and running by Oct. 1" (Cheney/Millman, Politico, 2/15).

Last week, during a Senate Finance Committee hearing, Center for Consumer Information and Insurance Oversight Director Gary Cohen assured lawmakers that the federal government will be prepared to run health insurance exchanges in states that choose to have the federal government run their marketplaces. He said, "We are on track. We will be ready for people all across the country to receive high-quality affordable health insurance starting Oct. 1" (California Healthline, 2/15).

Future of Exchanges

Some experts predict that states eventually will play a part in exchanges, even if they opted for a federally run marketplace. Ario said, "In the end, federal and state officials will want consumers to have a positive experience and will find ways to cooperate regardless of model."

Meanwhile, there are indications that states' decisions on the exchanges are not binding. The Obama administration has said that states can change their minds and opt to run their own exchange in the future (Politico, 2/15).

Christine Ferguson, director of the Rhode Island Health Benefits Exchange, said, "I'd be surprised if in the longer run every state didn't want to have its own approach" (Alonso-Zaldivar, Modern Healthcare, 2/17).