State Exchanges Death Watch: HHS Announces “State-Based Exchange on the Federal Platform”

November 21st, 2015

One of the consequences of the Court’s decision in King v. Burwell is that there is no incentive for states to manage their own exchanges. I predicted over the summer that several of the thirteen-struggling exchanges would a drop their exchanges altogether and opt for the federal exchange. This is especially apt because millions in federal funding, currently keeping the failing exchange afloat gets cut off.

On Friday, buried amidst 300 pages of rules, HHS announced what they are calling a “state-based exchange on the federal platform.”

The Hill reports:

The Obama administration on Friday proposed a new type of partnership between state and federal health marketplaces in an attempt to address the mounting financial pressures on state-run exchanges.

Under the new model, states would be allowed to use federal resources like call centers or website platforms while maintaining their own decision-making power.

The model, called “state-based exchange on the federal platform,” would allow states to “leverage the economies of scale,” the Department of Health and Human Services (HHS) wrote in its proposed rules.

States would “retain responsibility for plan management functions,” HHS said.

As I discuss in a Federalist Society White Paper I published before King was decided, states performed plan management functions long before the ACA came around.

Expect more states to opt for this model, and effectively merge into the federal