When the Affordable Care Act was signed into law by President Obama in 2010, the plan was for states to set up their own insurance marketplaces that would offer an easy way for non-seniors without employer-sponsored health insurance to buy health plans, most of which would be subsidized by the federal government based on income.
But two and a half years after implementation, only 13 state-run exchanges exist. Most state exchanges are run by the federal government, while some are federal/state hybrids.
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The main reason so few states pursued the vision articulated in the ACA is that most states are controlled by Republicans. As was the case with the ACA Medicaid expansion, most Republican state governments decided to not engage whatsoever with the new law.
While some GOP-run states embraced the Medicaid expansion, and even more have opted to accept the funds in the 30 months since the law went into effect, only states with Democratic governors chose to set up their own exchanges, with the notable exception of Idaho.
And unlike the Medicaid issue, few states have shown any interest is embracing more control of their marketplace; they seem content allowing the feds to deal with it. In fact, two states — Hawaii and Oregon — ditched their state-based exchanges after they encountered major technical problems on their sites. Both now have "state-partnership" marketplaces, which operate through the federally-run Healthcare.gov but are supported by additional state resources, including staff.
Many of the remaining state-run marketplaces are facing serious budget problems, particularly now that more than $5 billion in federal grants aimed at aiding their creation is drying up.
Roll Call reports that many state exchanges are funded largely through user fees, which are levied on those who purchase plans through the site either as a flat monthly fee or as a percentage of the premium.
The fees are probably high enough to annoy consumers, but they're apparently not high enough to cover the cost of operating the state marketplace. Some states are managing by increasing the fees, while others are dipping into their general funds. And many of them are lobbying the Obama administration for relief, even though the original plan was for them to be financially independent 18 months ago.
"They're trying to figure out how to balance all of the competing needs that they have for a well-run, well-functioning marketplace with, in some cases, some more limited dollars," Jennifer Tolbert, of the Kaiser Family Foundation, told Roll Call.
A natural topic of discussion for state exchanges is the amount of money they should be spending on marketing. While some states have judged that the period for significant marketing costs is over, California, for instance, has continued to aggressively promote its exchange in hopes of growing the membership. Although it has reduced its marketing expenses, the budget it unveiled in March showed that "outreach, sales and marketing" accounted for roughly a third of the $335 million budget.
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