Panelists Paint a Rosy Future of State-Based Marketplaces

The notion that if you’ve seen 1 state’s insurance exchange, you’ve only seen 1 state was clearly highlighted during a session at the America’s Health Insurance Plans’ Health Insurance Exchanges Forum, held in Washington, DC, on March 8. During the session, executive directors from the state exchanges in Nevada and California outlined their exchanges.

Over the past 5 years, the marketplaces have continued to evolve and innovate, said Trish Riley, executive director of the National Academy for State Health Policy. State-based exchanges played an important role in engaging and retaining consumers, she added, especially when it came to increasing the enrollment of Hispanics and the “young invincibles.” For example, in Washington, DC, assisters went to eateries and bars at 2 am to encourage young people to sign up.

However, there are challenges remaining.

“The marketplaces have been through hell and high water, really making sure that they have a sustainable model after federal funds dried up,” Riley explained. In addition, the presidential election isn’t the only one that could impact healthcare. There are a total of 12 governors whose term is up and 4 of them are in states with state-based marketplaces.

Bruce Gilbert, executive director of Silver States Health Insurance Exchange, the state-based marketplace in Nevada, explained that his exchange runs in a small state and it is a federally support state-based marketplace, which makes it very different from a state like California.

“We are all individual little snowflakes and all very different from one another,” Gilbert said.

There were 2 main drivers that led to Nevada setting up a state exchange and that continue to ensure that Nevada stays a state exchange:

1. The state was interested in maintaining local control of the insurance market.
2. The state believed it could do the job cheaper and be able to provide a less costly alternative to the federally facilitated marketplace.

As a small state exchange, one of the challenges that Nevada faces is reaching critical mass—does a small state have enough of a population to support the state-based marketplace—and the other navigating sustainability—proving the exchange has value. However, Gilbert said that Nevada doesn’t have to address these issues alone.

“States have historically tackled these challenges in a vacuum,” he said. “That’s not happening so much today. There’s a new strategy out there. State-based marketplaces have recognized that they have common issues and common interests. And most state-based marketplaces don’t have access to the level of enrollment and resources available to a state like California or New York.”

As a result, smaller state-based marketplaces are working together to develop economies of scale. This does not mean the formation of regional exchange. Instead, Gilbert sees states sharing services where it makes sense. Meanwhile, large state-based marketplaces will remain independent.

Gilbert has a positive view for the future of state-based marketplaces and believes more states will come on board and set up their own.

“I think that states which have shunned the idea of state-based marketplaces may eventually recognize that there are significant advantages to creating a state-based marketplace,” he said.

Those advantages include market control, lower operational costs which translates into lower premiums, and joining with other states to offer affordable alternative to continued participation with the federally facilitated marketplace.

California’s perspective as a state-based marketplace varies from Nevada’s because it is so much larger and covers so many more lives.

“I guess while all states are individual snowflakes, you might call us a snowball,” Peter V. Lee, Esq, executive director of Covered California, joked. “We are bigger.”

However, he added that California does have some of the same challenges, and that like Gilbert, he sees a rosy future for state-based marketplaces.

Lee said that in California, they aren’t concerned about churn in the marketplace. The way the state views its exchange is as something to help people in between jobs or on their way to retirement.

He said that research has shown that when people leave Covered California, they aren’t leaving to be uninsured: 85% went to get health coverage through an employer, Medi-Cal or Medicare.

“If people leave us to go get employer-based coverage, hallelujah,” Lee said. “That’s great.”

One unique proposal happening in California is the consideration of offering coverage on Covered California to undocumented citizens. The reason the state can do this is because they won’t be eligible for subsidies, which means it doesn’t use federal funds. The benefit of offering this is the fact that many people eligible for Covered California come from families with mixed citizenship status.

“They might have a father who is undocumented and a mother who is a legal resident and children who are legal residents,” Lee explained. “If that family is worried about stepping in to apply because of the father’s undocumented status, this change might make the families more apt to come in.”

To conclude the session, Lee and Gilbert considered the future of healthcare and the impact politics and the presidential election might have. Lee said that the last few years have been “fraught with overpoliticization” but no matter if the next president and Congress label something as a “repeal” of the Affordable Care Act, he does not believe they would actually take subsidies away from the millions of Americans who are eligible.

In fact, he believes that the country is likely to see more state-based marketplaces develop once states get beyond the idea of the politics of Obamacare because the states get to have so much control over the local health insurance market. Gilbert agreed with the statement and went on to add Medicaid expansion in the mix.

“When there’s talk of repeal and replace, you have to think about Medicaid expansion as well,” he said. “You have 30-plus governors that have gone ahead and accepted that money, and repeal and replace is going to be a pretty heavy lift.”