We’re a week into Affordable Care Act (ACA) marketplace open enrollment, and it looks like the three newest marketplaces, Kentucky, Maine, and New Mexico, are off to a solid start. These three states successfully transitioned this year from the federal marketplace platform, HealthCare.gov, to a full state-based marketplace (SBM). They join fourteen other states and the District of Columbia in operating a SBM. From initial deliberations in state legislatures and executive branches to final approval from CMS, the transition away from the federal marketplace has taken time, effort, and an up-front investment in the new state-run platforms and other SBM infrastructure.
All three states making the move to a full SBM have experience running certain aspects of the ACA marketplace; despite using the federal platform, as SBMs on the federal platform (SBM-FP) they oversaw outreach, consumer assistance, and plan management. And for Kentucky, this is the second time that they are rolling out a SBM—their marketplace, Kynect, was in place at the launch of the ACA’s marketplaces. Former governor Matt Bevin eliminated Kynect in 2016, but upon taking office in 2019, current governor Andy Beshear opted to relaunch the state website in time for this year’s open enrollment period. Governor Janet Mills in Maine first announced interest in moving to a SBM in 2019, and the state took the interim step of running a SBM-FP for 2021. Just this fall the state gained CMS’ approval to complete the transition to full SBM status, as CoverME. New Mexico’s SBM—beWellnm—was actually authorized during the 2013 legislative session, but until this year the state continued to use HealthCare.gov for the individual market due to the upfront costs of establishing their marketplace.
Why States Choose to Run Their Own Marketplaces
The now eighteen states with full SBMs have found advantages to locally run marketplaces. Many states transitioning to SBMs have cited cost savings as a primary reason; rather than sending money garnered through user fees to the federal government, SBMs can keep that revenue in-state to spend as they see fit, whether that’s marketplace operating expenses, state affordability initiatives, or marketing and outreach.
SBMs also have more control over outreach efforts, crucial for boosting enrollment. While states on the federally facilitated marketplace rely on national marketing campaigns to encourage enrollment, SBMs can tailor outreach and messaging to the communities in their state. They can also use data about the demographics of state residents who are eligible for tax credits but uninsured to design and implement targeted, community-based marketing and assistance efforts. Similarly, SBMs can tailor their communications so that they are culturally and linguistically appropriate to the populations they serve. Starting this year, residents of Kentucky, Maine, and New Mexico will see state-designed marketplace advertising campaigns that are grounded in research on local coverage needs. State-centered technology also provides greater flexibility for policy initiatives. SBMs can offer different or longer enrollment periods, offer additional marketplace subsidies, limit or standardize plans to optimize plan selection, and implement other programs to improve access to coverage.
Challenges to Transitioning and Running a State-Based Marketplace
Despite the benefits of running a SBM, transitioning off of HealthCare.gov is no easy feat. In addition to logistical and policy considerations and an upfront investment in the technology platform and other infrastructure, states have had to contend with a shifting federal regulatory landscape. All three states have had to contend with a worldwide public health crisis and a new federal administration during the homestretch of their transition. The Biden administration has announced several changes that have and are likely to continue to increase marketplace enrollment, but which require updates to SBM technology and operations. Further, Congress is now considering additional policy changes that would have a substantial impact on the ACA’s marketplaces and the consumers who rely on them. While SBMs may have additional flexibilities that states using HealthCare.gov lack,, implementing new federal policies often requires costly technology updates, increased call center and assister staffing, and changes to planned communications efforts.
Plan Year 2022 and Beyond
ACA marketplaces were created to help reduce the uninsurance rate, and both the state and federal exchanges have been successful in making progress towards that goal. Kentucky, Maine and New Mexico’s SBMs are launching at a time of uncertainty; during the COVID-19 pandemic, the marketplaces have served as a safety net for people losing income and employer health coverage, and the continuing public health crisis has demonstrated the importance of insurance and access to health services.
Additionally, a temporary pause on Medicaid eligibility restrictions will end with the expiration of the COVID-19 public health emergency. This will create an influx of marketplace enrollment. The three new SBM states must prepare for this shift at the same time they are launching themselves as SBMs, bringing to mind the old saying about flying the airplane while it’s being built. But the benefits of a state-run coverage solution include better coordination with state Medicaid agencies to smooth the path to coverage for those losing Medicaid eligibility. In addition, the American Rescue Plan’s (ARP) subsidy expansions have reduced the average enrollee’s monthly premiums by $67 and driven marketplace enrollment to its highest ever, at 12.2 million people. New federal policy proposals may mean even more changes to the marketplace landscape and SBM operations.
The three new SBMs are not alone in facing the challenges of launching amidst upheavals in public health and public policy; several states have successfully transitioned to SBMs in recent years. States currently in transition to a SBM, such as Virginia, and those considering making the switch, like New Hampshire and Illinois, should look to these new SBMs to see how they might mitigate the risks while also leveraging the benefits of operating their own exchanges.