Deciphering State & Federal Exchange Development as October 2013 Approaches

With Friday the 15th having passed by, the status for different states regarding their Exchange development capabilities have become a lot clearer. Nearly half the states have defaulted to the federal government-run Exchange option while others have chosen to develop the Exchanges themselves or in partnership with the federal government.

Obama Administration and healthcare observers have opined that states are in a better position to manage the marketplaces themselves since they better understand their local communities. States have better relationships with state agencies and local counterparts like community centers that are central to the Exchange’s outreach. This viewpoint is also endorsed by insurers, doctors and hospitals who understand that the dynamics of working in the local environment cannot be fully comprehended by the federal agencies. It seems that some states overlooked the amount of current and expected grants that are being forwarded to states to develop their Exchanges. As a result, many of them defaulted on the creation of an Exchange, choosing the federal route instead.

There are a lot of discussions happening between the state and government agencies, discussing about how the Exchanges will function. More importantly, many states have already started searching for insurance software vendors, realizing that the online marketplaces would need to be fueled by the best in insurance software solutions. Further, different states have met different levels of success and challenges on their path to creating state Exchanges. For instance, Idaho remains the only state to have received conditional approval despite not having hired an insurance software vendor or solution provider for creating the state’s Exchange website.

States that have opted for the partnership or hybrid model are still contemplating the challenges they will come across considering that they would need to sensitize the federal agencies about the local community patterns within a state. Some states seem to have chosen the hybrid model assuming that it was the midway solution between creating an Exchange independently and being forced towards a federal Exchange.