In the last two years, four states—Nevada, New Mexico, New Jersey, and Pennsylvania—have decided to create State-Based Exchanges. Up until now, those states have sent their residents to healthcare.gov for their health insurance needs. What is notable is how different these states are. While New Mexico has about 43,000 people who get their health insurance through healthcare.gov, Pennsylvania has 350,000. New Jersey and Pennsylvania are mid-Atlantic states, while Nevada and New Mexico are Western states. New Jersey has a high population density. New Mexico is mostly rural. Pennsylvania and Nevada have large population centers with vast rural regions in between. Carrier participation has ranged from two (in Nevada) to eight (in Pennsylvania). What this shows is that if these four very different states all can support a State-based Exchange, any state can. Here is why all should be considering it:
Cost. Healthcare.gov costs too much. At 3% of premiums, the residents of larger states, in particular, are sending way too much money to the federal government. Pennsylvania has estimated that it can keep $50 million in the Commonwealth each year by moving to a State-Based Exchange. It is using these savings to partially fund a reinsurance program that it estimates will decrease premiums by 5-10% for Pennsylvanians. Even smaller states like Nevada and New Mexico have determined that they will save money by moving to a State-Based Exchange.
Control. Health insurance has traditionally been regulated by states. Having a State-Based Exchange allows for more local control, consistent with this tradition. States that have their own Exchanges can decide on the length of open enrollment. While the federal government limits open enrollment to 6 weeks, many States with their own Exchanges have extended it to 10 weeks or longer. Similarly, States that have their own Exchanges can better serve their customers because they control the relationship with the health insurance carriers. States can prioritize how they address customer service issues and can quickly deploy new functionality to address customer service concerns unique to their marketplace. States can also target marketing and outreach resources to meet their specific needs. Indeed, though the federal government promised to use some of the 3% it is collecting to fund healthcare.gov for marketing and outreach activities, whether the money is actually spent and how is subject to political considerations. The current Administration, for example, declined to spend on marketing and outreach for the last open enrollment.
Improved IT. Lastly, States now have better options for their IT platforms. The initial rollout of the Exchanges was famously flawed by bad IT. Companies like IdeaCrew, Inc., emerged to help states recover from these IT disasters. We now have 6 years of experience of supporting State-Based Exchanges. IdeaCrew offers the only built-to-purpose Exchange platform. When the original vendors hired to build DC’s Exchange failed, IdeaCrew rolled up its sleeves with DC’s expert Exchange staff and worked side-by-side with them to build a new Exchange platform. That fully ACA-compliant platform has been the technology behind the successful DC Health Link since 2015. We also deployed it as the technology solution for the Massachusetts Health Connector’s SHOP marketplace in 2017. The IT vendors that were responsible for the original Exchange troubles have left the market or had their impact marginalized substantially. In their place, new high-performing, Agile firms such as IdeaCrew have been building affordable, flexible, successful Exchange platforms. This means that States are in a far-better position today to succeed at launch than the original State-Based Exchanged were in 2013.