18 First Steps Forward For State Exchanges

Since the passage of the Affordable Care Act, 18 states have taken the first step toward building an Exchange by passing Exchange enabling legislation or issuing an executive order to study the merits of creating an Exchange. The State Refor(u)m team has developed a new resourcedeconstructing these provisions. We’ve sliced each piece of legislation or executive order into 18 categories ranging from policy goals to transparency requirements and arranged them in an excel spreadsheet for easy reference and comparisons.  Please customize it and use it as you see fit, and then come back to the site and tell us how you used it and if it helped you.
One commonality that struck us is that nearly every state requires the Exchange or other authority to make findings and recommendations before deciding on all the details. All these states generally hope to answer three key questions: What type of governance structure should we have? What impact will our Exchange have? And how can the Exchange best serve consumers in our state?  We take a closer look at each of these questions below.
What type of governance structure should the Exchange have?
A few states signal intent to create an Exchange, but are seeking recommendations on how to structure and govern it before taking additional steps toward implementation:

• Georgia asks an advisory committee to make recommendations on whether to create a state-based Exchange at all by the end of this year.
• Alabama and Virginia both plan to create an Exchange, but establish a study commission to make recommendations on the type of entity, make-up of the governing board, and functions to be exercised.

Even some states that establish the Exchange entity have not finalized their decisions on governance or structure of the Exchange:

• Washington establishes a non-governmental, public-private partnership but asks the governing board whether it should consider a regional, multi-state Exchange.
• Maryland makes its Exchange a public corporation, but asks the board to consider whether the Exchange should become a non-governmental non-profit.

What impact will the Exchange have?
Several states are asking themselves what to expect after the Exchange becomes operational:

• California asks its Exchange board to examine cost shifting or cost increases on other programs because of the Exchange.
• Alabama and Virginia ask advisory committees to assess potential effects of the Exchange on relevant markets.

States are also cognizant that Exchanges could suffer from adverse selection and are looking into ways to mitigate that risk:

• Connecticut calls for its Exchange to report on the effect of adverse selection and provide recommendations to mitigate it, including requiring similar regulation of plans both inside and outside the Exchange.
• Maryland requires a study and recommendations on the feasibility and desirability of selective contracting, regulation of plans outside the Exchange, and additional rules to mitigate adverse selection.

How can the Exchange best serve consumers?
A number of states are seeking recommendations on how to structure a Navigator program to conduct outreach and enrollment campaigns. States are also developing additional ways to aid individuals:

• Colorado is asking its Exchange to assess the needs of its rural residents so that they are provided with plan choice, affordability, and access.
• Hawaii is seeking ways to ensure continuity of care for individuals transitioning between plans.

States are also looking into ways to structure a SHOP Exchange that benefits both employers and employees:

• Maryland is considering whether to use a defined contribution model or to allow employers to choose a plan for employees.
• Georgia is looking for ways to ensure affordability for employers.

Many states are asking for benefit design recommendations and reviewing existing mandated benefits and a basic health plan option. Some states are also considering additional types of plans:

• Maryland is asking how to regulate dental plans.
• Vermont is seeking findings and recommendations on whether residents should be allowed to purchase supplemental plans.

Finally, several states are also studying whether to combine the individual and small group markets and whether to define a qualified small employer as no more than 100 employees, rather than no more than 50 employees, after 2016.
As it explores Exchange implementation, what key questions is your state asking and what ideas and answers are emerging? Let us know at State Refor(u)m!