What will happen to state-run insurance exchanges?

Adam Allington Jun 26, 2015

The Supreme Court upheld a key part of the Affordable Care Act on Thursday, enabling health insurance subsidies to all qualifying Americans.

The ruling firmly establishes the legality of Obamacare, but quite a few states had already moved forward in creating their own insurance exchanges.

The states that set up their own exchanges — mostly Democratic ones — were really trying to get out ahead and help support Obamacare, says Larry Levitt, a senior vice president at the Kaiser Family Foundation.

“But, it turned out that creating these exchanges was a whole lot more difficult than people thought, especially creating the IT infrastructure,” says Levitt. “Now [that Healthcare.gov is] working quite well, and it’s probably better than most state-based marketplaces.”    

Levitt says now that the health care law is here to stay, those states may want to think about letting Healthcare.gov take over.

Christine Eibner, a senior economist at RAND specializing in health care policy, says whether these state exchanges remain or go, at least now they can start making decisions.

“You know, I think it just creates a lot more certainty,” Eibner says. “Now it frees up states and the federal government to begin, if they want, to make changes or adapt their websites or move forward with decision-making; there’s not uncertainty anymore.” 

State-run exchanges are also expensive. They were initially established with the help of federal grants.  That money is no longer available, and state exchanges are supposed to be paid for through subscriber fees. 

 Therefore states with smaller populations, such as Hawaii or Vermont, may find it more cost-effective to switch over to the federal exchange, Levitt says.

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