On paper, a supported state-based health insurance marketplace (SSBM) could be a match made in policy wonk heaven for many states implementing the Affordable Care Act (ACA). SSBMs—the after-the-fact-name of the hybrid operations that have emerged from well-documented exchange snafus in Oregon, New Mexico, and Nevada—seem to offer the happy convergence of local control over insurance exchange functions and marketplace oversight, with an outsourcing to the federal government of the information technology (IT).
Keep the federal government from interfering with policy decisions and let them take the IT risk: in the wake of a Supreme Court decision against the federal government in King v. Burwell at the end of June, would states embrace this option? Regardless of the outcome, is this where many states will end up in an evolved Obamacare world?
SSBMs Can Be Done, But They Take Work
Well, not so fast, according to attendees at a recent education session sponsored by the Milbank Memorial Fund with assistance from the University of Michigan Center for Value Based Insurance Design. The Fund convened representatives from 17 states to learn from three others that have outsourced their IT but remain a state-based marketplace in the eyes of the federal government, inoculating themselves against any Supreme Court decision in the King v. Burwell case that would only permit individual subsidies in state-run marketplaces.
The bottom line: SSBMs can be created, they offer many benefits for committed states—especially smaller state-based marketplaces—but they are not plug and play; they take focus, resources, political alignment, and time.
The advice from states that had been through the process of setting up SSBMs was clear: “You can definitely do this, but it takes work.” Priorities for focus are nontechnical areas — getting stakeholder alignment on the mission, the governance, the enabling authority, and the organizational location within or outside of state government.
Implementation Challenges
States with SSBMs reported implementation challenges that included having reliable consumer assistance and achieving meaningful integration with state Medicaid agencies to allow them to pick up appropriate costs. They noted that insurer-facing functions should not be duplicated with the insurance regulator in the state. Negotiations and most operational interactions with the Centers for Consumer Insurance Information and Oversight (CCIIO) were reported to be occasionally bumpy but generally quite constructive, with the exception of timely and accurate data flow back to the exchanges.
Advantages
Why do it? The states with SSBMs report significant political support for “our solution,” as opposed to one imposed by the federal government. Consumer assistance seemed to be better than what enrollees could get on the federal exchange. States with SSBMs were relieved not to have the risks of IT operation and upgrades. Finally, although the future federal charge for using some exchange operations remains opaque at best, these states stated they are saving money relative to the standard federally facilitated marketplace (FFM) surcharge of 3.5 percent on all in-exchange premiums.
States With State-Based Marketplaces
For small state-based marketplaces, SSBMs could be a good or even necessary bargain — witness Hawaii’s announcement last month that it would adopt the federal IT platform. While these states might have to give up complete local control and the vision of a fully integrated single enrollment and eligibility process for medical and social services, they would be free of the significant unknowns associated with IT.
Having in many cases been early leaders with a strong performance in the initial open enrollment period when the federal exchange foundered, these states might not find the transition to SSBMs easy; however, state legislators wary of funding obligations and CCIIO administrators concerned about viable options at open enrollment could force these conversations.
States Using The Federally Facilitated Marketplace
The route to an SSBM for a state with an FFM is rockier. Federal exchange planning grants have expired. Anti-Obamacare feeling may have peaked but still runs high, making the politics challenging.
A decision against the federal government in the upcoming Supreme Court case might make some FFM states pursue SSBMs to preserve federal subsidies, keep people insured, and prevent the collapse of the local individual market. A decision for the plaintiff may bring greater acceptance of the ACA and may spread the sentiment that motivated the initial SSBMs: “Better to do it ourselves than have it done to us,” especially at a lower cost than what CCIIO charges. Determining it was better to control their own future, the executive branches in Delaware and Pennsylvania recently announced plans for SSBM’s.
For states that do move in this direction, a strong insurance regulatory environment that prioritizes consumer protection and consistent oversight will be an asset, as will be solid Medicaid leadership that can take on operational responsibilities and leverage the enhanced federal match available. A clear articulation of bundles of services offered by CCIIO to support an SSBM would help too.
Hard Work, Planning, And Strong Leadership Required
Regardless of political hue, there is little dispute that health insurance—protection from financial risks and greater access to routine care—improves the health of populations. But in implementing that principle, agreement starts to dissipate. Some ambitious federal-marketplace states will continue to seek a greater bargain with the federal government under Section 1332 waivers — accountability for federal subsidies in exchange for greater freedom from national rules. Some will support the fight to rewrite or repeal the ACA.
SSBMs may indeed be a logical point of convergence of local control and national operations for other states. “It can be done,” we were told repeatedly at our meeting. But in addition to hard work and planning, it will take strong leadership for states to reconsider the conditions that
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