More states may turn exchange duties over to the feds

The U.S. Supreme Court’s decision to uphold premium subsidies through the federal exchange could spell the end of states establishing their own Affordable Care Act marketplaces. It could even prompt more states to turn over control of their exchanges to the federal government.

Before the subsidy ruling, only three of the 34 states relying on HealthCare.gov as their enrollment platform—Arkansas, Delaware and Pennsylvania—submitted plans to the CMS to become state-based marketplaces. But with subsidies safe for now through the federal exchange, experts say it’s unlikely that more states will move forward with such plans.

“There is probably minimal incentive at this point to create an exchange from scratch,” said Sabrina Corlette, senior research fellow at Georgetown University’s Center on Health Insurance Reforms.

The irony is that during the drafting of the Affordable Care Act in 2009, House Democrats wanted one federally run exchange to serve the whole country, while Senate Democrats wanted to give states more flexibility by letting them set up their own marketplaces. While the senators ultimately prevailed, some observers presciently questioned the viability of every state running its own exchange.

After last week’s ruling, Pennsylva- nia’s Democratic governor, Tom Wolf, said his state would withdraw its proposal to establish its own exchange. “I am pleased to say that we will no longer need to rely on this plan,” he said in a written statement.

Delaware, which has a Democratic governor and Democratic-controlled Legislature, is still debating whether to switch from having a federal-state partnership exchange to a fully staterun marketplace. Under the partnership arrangement, the state retains oversight on plan premiums and benefits while HHS oversees enrollment and health information technology.

The court’s decision “has brought our anxiety down in that it won’t force us to choose to become a state-based exchange,” said Rita Landgraf, the state’s health and social services secretary. “But we still think it’s worth exploring which model is best for Delaware.” She said the state would decide by the end of July.

Arkansas’ Republican governor, Asa Hutchinson, announced Thursday that his state is still considering a staterun exchange.

The King vs. Burwell ruling may prompt Hawaii and Vermont, two states that have struggled with technology problems on their state-run exchanges, to rely on HealthCare.gov for enrollment, said Ceci Connolly, managing director of Pricewaterhouse-Coopers’ Health Research Institute.

Many states, such as Colorado and Minnesota, have struggled with how to fund their exchange’s operating costs. Under the ACA, state-run exchanges were supposed to be financially selfsufficient this year. That issue is leading a number of states to consider turning their exchanges over to the feds.

Some states may consider switching to a model known as a federally supported state-based marketplace. Under that arrangement, states essentially rent HealthCare.gov as their technology and enrollment platform but take on responsibility for most other functions. New Mexico, Nevada and Oregon have adopted that model.