Policy Tip Sheet – State Health Insurance Exchanges Post SCOTUS

Published July 17, 2012

In this policy tip from Heartland, the author asserts that in the wake of the U.S. Supreme Court decision upholding most of the Patient Protection and Affordable Care Act (PPACA), states will be pressured to establish federally regulated and approved health insurance exchanges by 2014. If a state opts not to create its own exchange, PPACA provides the federal government will implement one for the state.

To date, 15 states have begun the process of establishing an exchange. Many others have resisted moving forward, for the following reasons:

1. No matter the type of exchange, states will not have full authority over their own health care systems. As stated by the final HHS exchange rules, “The Affordable Care Act does not contemplate divided authority over an Exchange.”
2. The final exchange rules still do not explain all the necessary requirements. With incomplete information, states that move forward with implementing an exchange risk investing valuable time and taxpayer dollars only to discover their exchange does not comply with federal regulations.
3. The threat of a federally run exchange is hollow: PPACA does not provide the federal government with adequate funding to set up or operate federal health insurance exchanges.
4. Implementing an exchange will result in high administrative and operational costs, and those costs will rise soon after initial implementation. Federal funding for exchanges is expected to run out by 2014, making state spending increases inevitable.
As the federal government continues to take control over health care from the states while cutting funding, state officials should resist setting up health insurance exchanges.