The Commonwealth Fund Blog

The Affordable Care Act's Health Insurance Marketplaces: A Progress Report

February 21, 2013

Tags: Affordable Care Act health insurance health insurance marketplaces


Sara CollinsTracy GarberBy Sara R. Collins and Tracy Garber

The Affordable Care Act has just passed a new milestone: All states have committed to what kind of health insurance marketplace, also referred to as an exchange, will be running in their states starting in January 2014.

States that want to run their own marketplaces starting next year had until December 14, 2012, to submit applications to the Department of Health and Human Services. States that wish to pursue a partnership marketplace with the federal government had until February 15, 2013, to submit their applications. Under this arrangement, the state might oversee the selection and management of health plans and assisting people with enrollment. The federal government would have primary responsibility for the remaining marketplace operations, including managing the marketplace, their websites and call centers, accepting applications, and determining eligibility for premium subsidies.

In states that chose not to run their own marketplaces or partner with the federal government, HHS will operate a federally facilitated marketplace in their state. States may elect either operational approach in future years, or even decide to shift from a state-run or partnership arrangement to a federally facilitated marketplace.

Stating in October of this year, people who currently buy coverage on their own or are without affordable health insurance through their employer or though Medicare will be able access these marketplaces to compare and enroll in private health plans or Medicaid. They also will be able to apply for subsidies to help them pay for the cost of their coverage.

The Congressional Budget Office estimates that by the end of next year some 9 million people will have enrolled in plans offered through their state marketplace, rising to 25 million by 2022. The majority of the enrollees will also receive premium subsidies.  

Status of State Action

Our interactive state map provides a picture as of February 2013 of what type of marketplace consumers can expect to be running in their states when open enrollment begins in October.1 It also shows how states are shaping their marketplaces.

Health Insurance ExchangesStates pursuing a state-run marketplace. Seventeen states and the District of Columbia have received conditional approval from HHS to operate a state-run marketplace in 2014. These states are: California, Colorado, Connecticut, Hawaii, Idaho, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Utah, Vermont, and Washington. HHS’ approval of these marketplaces is conditioned on the states addressing a short list of issues highlighted in the review process.

To establish a marketplace, states must give themselves the legal authority to do so. State legislatures can pass legislation for their governors to sign. In the absence of state legislation, governors might pursue other mechanisms to give them the authority to establish and operate a marketplace, such as an executive order. Of those that have received conditional approval from HHS, 11 states plus the District of Columbia have signed legislation in place establishing an insurance marketplace; two of these, Massachusetts and Utah, had exchanges in place prior to the passage of the Affordable Care Act. After HHS conditionally approved marketplaces in their states, legislatures in Idaho, Minnesota, and New Mexico introduced bills to establish a marketplace. Governors in Kentucky, New York, and Rhode Island issued executive orders establishing marketplaces in their states.

Utah established an exchange for small businesses in 2009. Although HHS granted Utah conditional approval for its marketplace, the state has since requested permission to continue to operate its existing small business marketplace but leave the operation of the marketplace for individuals to HHS. HHS has yet to make a formal decision on this request.

States choosing a state–federal partnership marketplace. Seven states have submitted applications for a state–federal partnership marketplace: Arkansas, Delaware, Illinois, Iowa, Michigan, New Hampshire, and West Virginia. With the exception of Iowa, governors in all states have indicated in their letters of intent to HHS that they would operate both the plan management and consumer assistance functions of the marketplace. HHS has granted conditional approval to three of these states: Arkansas, Delaware, and Illinois. Approval for these marketplaces is also conditioned on states addressing issues encountered in the review process.

States opting for a federally facilitated marketplace. Twenty-six states have indicated that they will neither operate their own marketplaces nor apply for a state–federal partnership. Of these, 11 states—Arizona, Georgia, Missouri, Nebraska, New Jersey, Ohio, Oklahoma, Pennsylvania, South Carolina, Virginia, and Wisconsin—have submitted a letter to HHS stating that they would not operate their own marketplace, and 14—Alabama, Alaska, Florida, Indiana, Kansas, Louisiana, Maine, Montana, North Carolina, North Dakota, South Dakota, Tennessee, Texas, and Wyoming—have made a formal announcement or have not submitted applications. HHS did not approve Mississippi’s application for a state-based marketplace as it was submitted by the state’s insurance commissioner but not endorsed by the governor.   

Looking Forward

It is critical that federal and state officials press forward in their work to prepare the marketplace for open enrollment that will begin in October of this year, regardless of the type of marketplace that states select. HHS is supporting this effort with multimillion dollar grants so far to 34 states and the District of Columbia for marketplace development (Exhibit 1). HHS awarded 11 states and the District of Columbia Level II establishment grants for more advanced marketplace planning. There will be three more opportunities in 2013 and four in 2014 for states to apply for grants.2 The Commonwealth Fund will update this blog post and map as implementation of the state insurance exchanges moves forward across the country.

1. The map and blog content are based on analysis by Sara Rosenbaum, Nancy Lopez, Taylor Burke, and Mark Dorley of George Washington University; the National Conference of State Legislatures, Federal Health Reform: State Legislative Tracking Database (Washington, D.C.: NCSL), available at; and press reports, including and


Post Comment Read or Post Comments

Kristy Taylor of Palm Beach State College says:
December 29, 2012

I agree with perspective of the authors that the set up of these exchanges are a vital part of increasing accessibility to the system. The health insurance exchanges where created to improve accessibility and the portability of health insurance by allowing the private market to present the information to consumer in an easily accessible manner (Adrion et. al., 2009). With the onset of the mandatory insurance mandate initiative, it is important that consumers have access to insurance and are able to make informed decisions. As the blog posting pointed out, it is expected that by 2022 over 25 million people will have used the exchanges in order to help them enroll in an insurance plan. The concept of insurance exchanges is not new, and was used as the basis for Massachusetts’s own state based healthcare reform plan (Adrion et. al., 2009).

One issue that may arise as a result of the implementation of the exchanges of a nationwide basis is the effectiveness of their integration on such a larger scale. There has been little research done on strategies that states should undertake to ensure the long-term sustainability of participation in their exchange programs; the insurance mandate signed into law as a part of the Affordable Care Act is an important element in the sustainable necessity of the exchanges (Fracchia et al., 2011). In addition the exchanges may help to reduce administrative costs, high-value health plans, and a more transparent system ( Kingsdale, 2010). The exchanges will cater to the needs of the consumer by providing options based on interests and affordability, but it will also be useful in helping consumers to determine tax credit eligibility (Kingsdale, 2010).

Ultimately, these exchanges are vital for the sustainability of the healthcare insurance reform bill, because they offer a one-stop shop for consumers and small employers who are seeking affordable healthcare options. If employers opt to drop coverage for their employees altogether, they employee will be able to shop for affordable healthcare options via the exchanges at group rate pricing (Adrion et. al., 2009).

John Swaney of Drexel University College of Medicine says:
May 31, 2012

Benjamin Franklin wrote, "we must all hang together, or assuredly we shall all hang separately." Exchanges seem to be a totally logical way to "hang together" in order to obtain affordable health insurance rates for otherwise uninsureds ; separately, individuals have no leverage. Why is this so difficult?

John Swaney of Drexel University College of Medicine says:
May 30, 2012

Benjamin Franklin wrote, "we must all hang together, or assuredly we shall all hang separately." Exchanges seem to be a totally logical way to "hang together" in order to obtain affordable health insurance rates for otherwise uninsureds; separately, individuals have no leverage. Why is this so difficult?

Steven Valles of american action forum says:
January 24, 2012

This information is really interesting what I think is the most interesting are the states not yet on the exchange plan. I believe they are stalling until all other options are officially dead.

Sarah Thomas of NCQA says:
June 28, 2011

I really like this map!