Beginning in 2013, states will begin rolling out health care insurance exchanges as required by the Affordable Care Act (ACA). To this point most legislators, policymakers and health care experts have discussed the state-based and federal insurance exchange options at length. However, there is another form of insurance exchange that states are beginning to explore: the “partnership”.

In a state-federal partnership, states will divide obligations with the federal government. For this partnership model there is no requirement for a 50-50 split of labor, and the states are actually more of a facade whereby the consumers (individuals and employers) merely interact with the state. The federal government, on the other hand, will essentially perform all functions of the exchange management except customer service and plan management. Moreover, states have the choice to run either one or both of those functions. According to former head of insurance exchange planning at HHS Joel Ario, “States that choose this option are ceding the more technical aspects of exchange activity to the federal government but can retain control
of insurer oversight and consumer assistance.”

In the state-federal partnership model, the federal government will operate everything from consumer eligibility and enrollment to financial management and risk corridors. This essentially means that the federal government will take on most responsibility for the exchange, while granting states many of the perks they would receive if they had created a state-based exchange.

If the federal government is left to the heavy lifting, what exactly will the states portion of labor entail? The states can choose to be responsible for plan management, meaning they will be charge of qualified health insurance plan certification and reinsurance, data collection and basic supervision. The states can further choose to be in control of customer service functions such as in-person assistance. Nonetheless, even in this case, the federal government will oversee the websites and call centers where the heavy lifting will occur.

To date, only a few states have revealed that they intend to participate in a state-federal exchange. Illinois, whose Governor Pat Quinn announced its intention to run a partnership exchange in July of 2012, has already received $39 million for the state, and this sum does not even include Medicaid expansion. Arkansas has been making significant progress on their partnership since 2011. For its hard work, the federal government has given the state nearly $9 million in grants.

Nicole Fisher is the senior policy director at Health Systems Innovation Network where she focuses on Medicare, Medicaid and health reform. She is a PhD student at the University of North Carolina in the Health Policy and Management Department. This post appeared at Wright on Health.

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