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Louis Jacobson
By Louis Jacobson January 3, 2017
Back to Create a National Health Insurance Exchange

Marketplace today is similar to original vision, but not identical

During the 2008 presidential campaign, Barack Obama promised to create a "National Health Insurance Exchange to help Americans and businesses purchase private health insurance."

A lot has changed since the last time we looked at this promise in March 2010. At that point -- shortly after passage of the Affordable Care Act -- we rated this a Compromise "because the law includes the state-based exchanges, not one national exchange." And much of what has happened since has even further complicated our challenge in rating this promise.

For starters, efforts by many Republican-led states to undercut the law had the ironic effect of turning the marketplace system into something more like what Obama had envisioned in his promise.

Despite talk of instituting a national exchange when the bill was being debated in 2009 and 2010, state officials won the argument, and the bill established a collection of state-based marketplaces. States argued that they were in the best position to implement the exchanges since because health insurance regulation occurred to a large degree on the state level.

However, many states -- primarily states with Republican leaders who opposed the law -- opted not to create their own exchanges. By default, residents in these states were left to sign up for ACA-affiliated coverage through the national platform, Healthcare.gov. Other states, including heavily Democratic states such as Oregon, also ended up relying more heavily than expected on the federal platform due to cost concerns and technical difficulties faced while constructing their own websites. (The federal website was infamously hobbled by technical difficulties at first, but eventually Healthcare.gov came to be seen as more reliable than what some states were producing.)

The end result was that the marketplace was a lot more national in orientation than the law had originally envisioned. Ultimately, less than a quarter of the 50 states' marketplaces are purely state operated today -- the ones in California, Colorado, Connecticut, Idaho, Maryland, Massachusetts, Minnesota, New York, Rhode Island, Vermont, and Washington state, plus the District of Columbia, according to the Kaiser Family Foundation.

By contrast, a majority of the states have deferred to the federal website -- 28 in all -- while another 11 have a hybrid that has both federal and state aspects. "It's become sort of a federal exchange as an unintended default," said Gail Wilensky, who headed Medicare and Medicaid for President George H.W. Bush. So while the end result is not a single national exchange, it has become much more like one.

But while the debate over whether the marketplace should be federal or run by the states had, over the past six years, become ancient history, the issue may be poised to take on new significance. If the Trump administration works with Congress to repeal the law -- as it has said it plans to do -- then the marketplaces might have been easier to salvage following repeal if there had been a stronger state role. As it is, a marketplace that is heavily federal is more vulnerable to a dramatic policy change at the federal level.

Ultimately, the final version did not fit the original proposal, so we rate this a Compromise.

Our Sources

Kaiser Family Foundation, "State Health Insurance Marketplace Types, 2017," accessed Dec. 21, 2016

Email interview with Craig Palosky, director of communications at the Kaiser Family Foundation, Dec. 20, 2016

Email interview with Gail Wilensky, who headed Medicare and Medicaid for President George H.W. Bush, Dec. 15, 2016