Research & Commentary: ‘Second Chance’ Health Insurance Exchange Partnerships

Published November 17, 2011

Several state legislatures are declining to create the health insurance exchanges mandated by President Barack Obama’s Patient Protection and Affordable Care Act (PPACA). Thus the Department of Health and Human Services (HHS) has announced three potential partnerships as a “second chance” for states that oppose implementation of a health insurance exchange.

According to partnership proponents, states can manage the participation of health insurance plans, aid patients attempting to navigate the insurance exchange, or control both. Those opposing the partnership model say it is a political tactic rather than a policy change. In none of the proposed partnership models is the state given significant authority over its health care system. Instead, the federal government will have full authority and oversight over the health insurance exchange, and state participation will be defined by federal rules.

A letter to HHS from Illinois Gov. Pat Quinn (D) and Iowa Gov. Terry Branstad (R) on behalf of the National Governors Association states, “Under the proposed partnership models, states would be required to cede many operations that have been traditionally handled at the state level, such as Medicaid eligibility, regardless of whether they implement a state-based exchange, implement a state-federal partnership model or turn over responsibility for the exchange entirely to the federal government.”

Whether state-crafted, federally implemented, or a “partnership,” a health insurance exchange under PPACA will be, by law, federally monitored and controlled. State officials should resist setting up these health insurance exchanges.

The following documents offer additional information on implementing health insurance exchanges under PPACA.

HHS Proposes A “Second Chance” For State Exchanges
Heartland Institute Legislative Specialist Kendall Antekeier discusses the federal-state partnership model as first proposed to Montana legislators. Montana Rep. Tom Berry (R-Roundup) states, “We were all kind of mystified because we never heard of a partnership with the federal government before. When we asked, ‘What is it?’ they couldn’t answer.”

HHS Pushes Federal-State Partnerships For Insurance Exchanges
Kaiser Health News describes the arguments for and against state involvement in federal-state health insurance exchange partnerships, noting, “Exchange legislation efforts have failed in 16 states—a demonstration of the widespread opposition to the law.”

Policy Tip Sheet—State Health Insurance Exchanges
Kendall Antekeier of The Heartland Institute outlines policy messages and provides facts on state health insurance exchanges in a one-page policy tip sheet. Antekeier writes, “Some states already have experimented with health insurance exchanges, and their experience shows exchanges rarely succeed in providing consumer-centered, cost-efficient health care.”

State Insurance Exchanges: The Case Against Implementation
Benjamin Domenech, a research fellow at The Heartland Institute and managing editor of Health Care News, explains why states should avoid implementing health insurance exchanges: “Some state policymakers … have attempted to find a middle path between compliance and resistance; … the middle path is treacherous: it offers no protection against future decisions by the federal bureaucracy, collaborates with an unconstitutional framework, and risks undercutting court cases across the country.”

National Governors Association Letter—Health Exchange Partnership Models–human-services-committee/col2-content/main-content-list/november-2-2011-letter—health.html
Comments by the National Governors Association to U.S. Health and Human Services Secretary Kathleen Sebelius on the health insurance exchange partnership models. The governors write, “The decision to implement health insurance exchanges requires a number of complex policy decisions amid aggressive timelines. States can only make suitable decisions if provided with complete and timely information.”

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 and other topics, visit the Health Care News website at, The Heartland Institute’s website at, and PolicyBot, The Heartland Institute’s free online research database, at

If you have any questions about this issue, contact Kendall Antekeier at 312/377-4000 or [email protected].