Research & Commentary: Colorado Health Insurance Exchange

Published January 9, 2012

Though several states have rejected federal funding for health insurance exchanges required by President Barack Obama’s health care law, the state of Colorado has accepted an $18 million federal grant to begin implementation of an exchange.

Lawmakers in favor of state implementation of health insurance exchanges claim federal imposition of a state exchange—the expected consequence for states that haven’t implemented them if Obama’s law survives court challenges—will limit state authority over health care.

Opponents argue a state health insurance exchange and a federal exchange would be essentially the same. As outlined by the Patient Protection and Affordable Care Act (PPACA), all health insurance exchanges must be approved by the federal government, and the federal government, not the state, will have complete authority and oversight over all health insurance exchanges. If a health insurance exchange does not meet all federal requirements, the law gives the federal government full authority to commandeer the exchange.

As noted by the Citizen’s Council for Health Freedom, “the reality is that control over the exchanges will reside in Washington, not the states—it is forming a federal exchange with a veneer of state flexibility.”

The following documents offer additional information about state health insurance exchanges.

The Minnesota Health Insurance Exchange Act—HF 497; Why Minnesotans Should Say No
The Citizen’s Council for Health Freedom argues Minnesota should not implement a health insurance exchange, conveying arguments that apply to all states.

State Insurance Exchanges: The Case Against Implementation
Health Care News Managing Editor and Heartland Institute Research Fellow Benjamin Domenech provides several reasons states should avoid implementing a health insurance exchange. He writes, “Any exchange created to pass muster with HHS Secretary Kathleen Sebelius and the current rules within Obama’s law will be fundamentally flawed.”

Policy Tip Sheet—State Health Insurance Exchanges
Heartland Institute Health Care Legislative Specialist Kendall Antekeier outlines the arguments against state health insurance exchange implementation and provides facts about previously attempted exchanges. Antekeier writes, “If a state moves forward with implementing an exchange, it could invest valuable time and taxpayer dollars in developing a system only to discover it does not comply with final federal regulations.”

Should Virginia Create a Health Insurance Exchange?
Michael Cannon of the Cato Institute explains why Virginia and other states should not craft an insurance exchange. Cannon notes, “Creating its own exchange will not allow Virginia to control its own health insurance markets. In the end, there is no such thing as a state exchange.”

Obamacare Exchange Scheme Could Destroy Insurance Marketplace
Health Care News reports on how health insurance exchanges are expected to impact the insurance market: “In practice, they [health insurance exchanges] are delivery mechanisms for bureaucracy and could spur a public takeover of the health care system.”

Consumer Power Report: Don’t Go Exchanging
Health Care News Managing Editor and Heartland Institute Research Fellow Benjamin Domenech explains the “threat of an instituted ‘federal’ exchange—where a state presumably would have no input during the process—is a more hollow threat than ever before.”

Research & Commentary: Lessons from Massachusetts and Utah Insurance Exchanges
This Heartland Institute Research & Commentary outlines two states’ experiences with health insurance exchanges, finding they have not produced the desired results but instead increased state health care costs. Heartland Institute Senior Fellow Peter Ferrara is quoted explaining how the Massachusetts exchange increased costs by 42 percent in less than three years.

Research & Commentary: Exchange Regulation and State Implementation
Health Care News Managing Editor and Heartland Institute Research Fellow Benjamin Domenech outlines the exchange regulations distributed by the U.S. Department of Health and Human Services and discusses the risks for states in implementing exchanges.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at, The Heartland Institute’s Web site at, and PolicyBot, Heartland’s free online research database at

If you have any questions about this issue or the Heartland Web site, contact Heartland Institute Health Care Legislative Specialist Kendall Antekeier at [email protected] or 312/377-4000.