Establishing an exchange is an important step states can take to to reduce federal oversight, create a more streamlined process customized to their residents’ needs, and find potential cost savings and economic benefits. States, rather than the federal government, are in the best position to respond to and address the distinctive needs of their own markets, citizens, and communities. The State-Based Exchange (SBE) transition represents not only a change in technical infrastructure but also a broader commitment to state-led innovations and residents’ personalized care.
GetInsured has seen firsthand the benefits of state autonomy and flexibility in addressing the unique needs of health insurance markets and consumers around the country and specifically with our clients in Virginia, Georgia, Idaho, Nevada, Minnesota, Pennsylvania, Washington, and New Jersey. Although each state’s outcomes differ according to their residents’ needs, they share the following advantages.
Reduced Federal Oversight
While having more control over the health insurance markets their citizens need, states with an SBE have reasserted a traditional role in overseeing their respective health insurance markets and defended against potential federal encroachment on state authority. States operating their own SBEs are given latitude under federal law to design and implement exchanges within federal standards. They also have closer oversight and regulation of the insurance plans being offered and can ensure they meet state-established standards, which are often higher than federal minimums. In addition, SBEs can establish their own Special Enrollment Periods (SEPs), allowing states to choose their own SEP policies and determine how long, or short, their open enrollment periods will operate.
Increased Revenue
SBEs can channel their FFE user fee payments back to their own states and can often operate their exchanges at lower costs than the federal government. Federal platform fees (2.25% of premiums in 2024) are passed along to consumers in the form of higher health insurance premiums to cover the cost of federal marketplace operations. By establishing its own exchange, a state could reduce this consumer burden by charging lower user fees and/or reinvest these savings back into state-specific initiatives and identify efficiencies like reinsurance programs or state subsidies that benefit all involved.
The move to an SBE increases revenue by providing jobs in customer service, administration, and technology. In addition, they encourage consumers to buy ACA plans sold by private insurers, whose revenue growth puts money back into their own communities. As more consumers sign up for plans, the market becomes increasingly profitable, encouraging competition and bringing consumer prices down. SBEs, overall, leverage the efficiency of the market to increase revenue for the state and for local businesses and communities.
Personalized Consumer Support
When SBE call centers are staffed by their fellow residents who are aware of state-specific issues, consumers receive a personalized experience that results in greater consumer satisfaction and confidence. SBE states also can react more quickly than the FFE to local market changes or health care needs and innovate and test approaches to policy, enrollment, and outreach – all of which increase consumer support.
Enhanced Data Collection & Analysis
Instead of waiting for their monthly FFE error report, states can collect and manage data in real time, potentially leading to policy decisions, improved health outcomes, and more efficient operations. Eligibility and enrollment processes can be more attuned to residents’ needs, and access to data can lead to more targeted outreach and education campaigns and allow states to quickly adapt to policy changes or emerging health care needs. In addition, SBEs can gain an increased understanding of network adequacy issues as well as other potential gaps in a state’s healthcare landscape. In addition, SBEs can serve as a platform for future market- and consumer-oriented reforms, all of which are based on real-time data the SBE provides.
Conclusion
States are at the forefront of finding creative and innovative ways to address the crises facing America’s health care system today such as high costs and lack of choice. In the current health care environment, it is more important than ever that states take authority over their health insurance markets, assist in shaping federal regulations and policy, and work with other states with similar policies.
