Affordable Care? The Impact of State Participation in Health Insurance Exchanges on Premiums

Abstract

The Patient Protection and Affordable Care Act (ACA) of 2010 initiated many policies to address high uninsurance rates and rising healthcare costs. One policy, the health insurance exchanges (also called marketplaces), was introduced to facilitate the purchase of qualified health plans by individuals not covered by an employer or public program by creating a platform for consumers to explore and compare plans. The health insurance exchanges established in 2013 have been the subject of media attention, given the various technological problems that have afflicted the enrollment processes. However, premiums in these new individual insurance markets have received less attention. In this paper, I examine how premiums vary with state involvement in the health insurance exchanges through exchange governance, plan management authority, and plan management strategy. By better understanding the possible impact of exchange policy variations between states, it may be possible to consider what level of state involvement is needed for the health insurance exchanges to function optimally. The results of this analysis suggest that states governing their own exchanges have lower premiums than partnership or federally facilitated exchanges.