Since the launch of the Affordable Care Act, we have seen federal administrations come and go. Yet throughout the changes and enhancements to the law over time and across party lines, one thing has remained constant – and that is, exchanges or state-based marketplaces (SBMs) have and will continue to provide states with the autonomy and flexibility to address the unique needs of health insurance markets and consumers around the country in a way that HealthCare.gov cannot.
Jessica Altman, Pennsylvania’s insurance commissioner sums it up well: “When we talk about bringing something back to state control, that is a real narrative that can appeal to both sides of the aisle. There is nothing political about making health insurance more affordable.”
Due to numerous variances in state populations including income, education and health status, as well as the mix and geographic location of doctors, hospitals and clinics, and the level of insurer competition, there truly is no one-size-fits-all federal solution when it comes to operating a health insurance exchange. A state must also consider its ratio of agent/broker penetration in the market, in addition to the ever-changing regulatory environment.
The flexibility and cost savings that state-based marketplaces provide empowers state governments to drive real and lasting change in their healthcare markets. New Jersey and Pennsylvania, the two most recent states to move off the Federally Facilitated Marketplace (FFM), also known as HealthCare.gov, saw a decrease in premiums, an increase in health insurance enrollments, and a large reduction in operating costs during their first open enrollment period alone as an SBM.
According to a recent study published in the Journal of Health Politics, Policy and Law, “almost across the board, states with their own exchanges have achieved higher enrollment rates than their federal peers, along with lower premiums and better consumer education and protection.”
All of this considered, we expect to see states continue to make the move from the FFM to their own SBM; Maine and New Mexico are in the process of making the transition, and states like Virginia are getting ready to start the procurement process.
In a testimony earlier this year to the Tennessee Legislature Health Insurance Subcommittee, Randy Pate, who most recently served as Director of the Center for Consumer Information and Insurance Oversight (CCIIO) in the federal Centers for Medicare & Medicaid Services (CMS), said, “I can tell you firsthand of the importance of states in regulating their own health insurance markets. States, rather than the federal government, are in the best position to address issues unique to their markets and to their citizens. States are more responsive to the specific needs of their communities and are better able to protect the interests of consumers. And states are at the forefront of creativity and innovation in addressing the crisis facing America’s healthcare system.”
Making the move off HealthCare.gov is no small task, so for states considering the transition, below are the first steps to get the ball rolling:
1. Map out your marketplace.
Under federal law, states operating their own SBMs are given significant latitude to design and implement exchanges within federal standards. For example, SBM states are given full control over Qualified Health Plan (QHP) certification and in conducting outreach and marketing efforts. States can also decide how they want to determine Medicaid eligibility. These are just a few of the many decisions a state will need to make. Thinking about how you want your exchange to look and operate will help you set the blueprint for everything that comes next.
2. Determine what type of technology build is best for your state.
Better technology and lower costs make it easier than ever for states to establish and operate their own SBMs, saving taxpayers and enrollees money. But choosing the right platform is critical to meeting budget and design needs. States can choose from custom, open-source, accelerators, and SaaS platforms, to name a few. It’s important for all stakeholders of the marketplace to understand the risks and benefits of each type of solution.
While popular back in 2013, custom solutions have proven in most cases to be too costly and time-consuming to be sustainable. States that have recently migrated have managed to do so at a fraction of the cost of earlier exchanges, with significantly lower operating costs. In my experience, software-as-a-service (SaaS) solutions have proven to be the most beneficial to states, as they provide policy flexibility, lower costs, shorter implementation timelines and shared enhancements.
3. Consider how you want the SBM to work with Medicaid.
An important consideration for how your state marketplace will run is how applicants who are likely eligible for Medicaid or Children’s Health Insurance Plan (CHIP) are handled. Some SBM states are known as “Determination States.” In these states the SBM makes the final Modified Adjusted Gross Income (MAGI) Medicaid or CHIP eligibility determination. In other states, known as “Assessment States,” the SBM makes a preliminary assessment of Medicaid eligibility, with the final determination made by the State’s Integrated eligibility determination system based on the Medicaid eligibility rules. When taking control of a state’s health insurance market with an SBM, exchange-owned eligibility (a Determination State) is a best practice. Regardless of the path the state chooses, this is an important structural decision to be made when thinking of setting up an SBM.
While there are many issues to keep in mind when transitioning from HealthCare.gov, the three considerations above will help state governments set up a strong foundation for successfully moving forward with a state-based health insurance exchange.
Ultimately, the state has the power to craft a solution that really works for its residents. According to New Jersey Commissioner of Banking and Insurance Marlene Caride, “the beauty of [a state-based exchange] is we can tailor it to New Jersey residents and have the ability to help [them] when they are in dire need.”
About Chini Krishnan
Chini Krishnan is Co-Founder and CEO of GetInsured, the company that revolutionized public sector healthcare with SaaS-based technology. Today, GetInsured is the leading provider of health insurance enrollment technology for the state governments of California, Idaho, Minnesota, Pennsylvania, Nevada, New Jersey and Washington. GetInsured technology has enabled more than 15 million enrollments to date.
