Health Insurance Exchanges: Where Do We Go From Here?

By Ashley Huderson

One key aspect of the Affordable Care Act (ACA) is the national individual mandate requiring most Americans to have health insurance. Depending on an individual’s circumstances, coverage can be obtained in a variety of ways, including through employers, government health programs, or state-based health insurance exchanges. These exchanges are designed to set up a more organized and competitive market for buying health insurance. They will serve as the instruments through which millions of low- and moderate-income individuals as well as small business owners receive premium and cost-sharing subsidies to make private health coverage more affordable.

Many states hesitated to take action in enforcing the new law because of the uncertainty regarding the constitutionality of the individual mandate. According to the law, these exchanges must exist in every state by January 2014. Prior to the deadline, states must declare their exchange plans (i.e., whether to participate in a state-based exchange, a state–federal partnership, or, by opting out of participation, allow for a federal-based exchange) by November of this year.

So what needs to happen between now and January 2014 for states to successfully implement exchanges? What happens if states don’t meet the deadline? What are the potential challenges states will face in light of establishing exchanges?

Timothy Jost, holder of the Robert L. Willett Family Professorship of Law from Washington and Lee University; Michael Hash, acting director of the Center for Consumer Information and Insurance Oversight and director of the Office of Health Reform at the U.S. Department of Health and Human Services (HHS); Krista Drobac, director of the National Governor’s Association Health Division; and Brian Webb from the National Association of Insurance Commissioners were panelists aiming to address these questions at the July 2012 Alliance for Health Reform briefing, “Health Insurance Exchanges: Can States and the Federal Government Meet the Deadline?”

There were two common themes to the briefing:

1) Most states “just weren’t ready” to meet critical deadlines needed to establish these exchanges;

2) There wasn’t enough information or guidelines to help states make a decision or troubleshoot establishing exchanges.

These concerns led to such questions as, “What happens if states haven’t made a decision on whether or what type of exchange they will establish?” “Are states locked into the type of exchange system they choose now, or can they change?” “How much will it cost states to set up health insurance exchanges?” and, “How big a role will the federal government play in helping to establish and maintain these exchanges?”

Though he offered no clear cut answers or protocols, Hash attempted to reassure participants about the federal government’s ongoing engagement. He pinpointed several areas in which HHS was working with states to establish exchanges by providing implementation information, releasing implementation schedules, and releasing a mock exchange application in May 2012 to serve as a blueprint for state exchanges.

Overall, there is much work for states and the federal government to do in order to prepare for the January 2014 deadline. Issues such as whether to expand Medicaid, implications of the November federal elections, and how pressure to reduce the Federal Budget Deficit will affect the states’ health care funding are still major factors up for consideration. One thing is clear, though: With the Supreme Court’s decision to uphold the ACA, there will be exchanges in every state in 2014. What remains foggy is the road states will use to get there.

—Ashley Huderson is an intern in the Health Care Affairs department at the Association of American Medical Colleges (AAMC). She has a certificate in Health Policy through the Robert Wood Johnson Foundation (RWJF) and is a Ph.D student at Meharry Medical College. She can be reached at

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