Federally-Facilitated Exchanges and the Continuum of State Options

This report explores three ways that states can comply with the Affordable Care Act requirement of establishing a health insurance exchange in their state: (1) establishing one on their own; (2) defaulting to a federal exchange; or (3) creating a hybrid exchange.

On behalf of the National Academy of Social Insurance, the authors evaluated the considerations and eventual implications associated with each option to help states determine which model may work best for the unique needs of their residents.

In 2014, it’s estimated that 12 million Americans—most with federal subsidies—will access their health coverage through exchanges. By 2019, that number is expected to grow to 28 million. While the core responsibilities are the same regardless of the exchange model, the differences lie in the amount of flexibility and autonomy states gain with each. State exchanges offer the greatest independence in functions like coordinating plan enrollment, eligibility, financial management, plan management, and consumer assistance. States cede much of this autonomy with the federal exchange model. As its name implies, the hybrid exchange (also referred to as a partnership exchange) allows states to retain responsibility for certain core functions, while importantly, also providing a interim pathway for an eventual state exchange.

The authors conclude that regardless of the model, success can only be achieved through intensive collaboration between individual states and the U.S. Department of Health & Human Services.