END OF 2018 OPEN ENROLLMENT PERIOD (42 states)

Time: D H M S

What next for HC.gov and the State Exchanges?

The King v. Burwell decision this morning is huge. Everything--everything--about the 2016 Open Enrollment Period rested on this morning's decision. And yes, I'm even including the states which have their own exchanges, like California, Kentucky and Connecticut. While those states wouldn't be impacted directly, I guarantee that there would have been some peripheral consequences even for them.

For instance, would a sizable number of self-employed people have moved from, say, Virginia to Maryland due to the 60-90% rate difference they might see between the states? I know it's not easy to just pick up and move your whole family on a whim, but you could be talking about a $500+/month difference for those paying full price...and the difference between having coverage at all or not for those whose premiums had just been cut off. Now, thankfully, we'll never know.

Here's another one: While most people were pretty sure that the state exchanges which are "piggybacked" onto HealthCare.Gov would have been deemed kosher to continue providing tax credits, it was never 100% certain; there was always some lingering doubt about the status of Oregon & Nevada (which moved from their own tech platform to HC.gov), New Mexico (which was scheduled to leave HC.gov but never actually did so), Hawaii (which is in the process of following in OR/NV's footsteps but hasn't done so yet), and Delaware & Pennsylvania (which were planning on basically following New Mexico's lead but no longer have to do so).

However, with today's ruling (and especially the fact that the way it was ruled means that a future Republican President won't be able to monkey around with the subsidies without an actual law being passed to do so), it seems to me that all of the states, whether on or off of HC.gov, whether using their own technology/tech platform or not, should be able to decide which route to take of their own volition (ie, without the pressure of the King case breathing down their neck).

Most of them, of course, will stay right where they are now. Few of the 37 states currently being run via HC.gov are likely to move off of it (although Arkansas is a special case, which I'll address in a bit). As for the 13 states (plus DC) running their own full tech platform, at least a few of them will probably move onto HC.gov the way Oregon and Nevada did (and Hawaii is in the process of doing). Rhode Island's woes haven't been so much technical but financial, but they just passed a budget which (I think) means they'll be OK on their own. The two states which seem most likely to me are Vermont (serious technical and financing issues) and Minnesota (semi-serious technical, serious financing). If that happened, the tally would be 40 via HC.gov and just 11 running their own websites:

  • California, Colorado, Connecticut, DC, Idaho, Kentucky, Maryland, Massachusetts, New York, Rhode Island & Washington

And you know what? As I've said before, that's perfectly fine...now that it's safe to do so.

The main reason for pushing for 51 separate websites in the first place was mainly just an attempt to win over a few conservative "states rights" votes in Congress from Republicans and some conservative Democrats. There were some practical advantages to doing it this way as well (potential innovations from trying things different ways, plus a few states like Vermont and Massachusetts wanted to offer additional financial assistance beyond the normal tax credits/cost sharing provisions, and Hawaii already has an existing state law which is actually better than some of the provisions included via the federal exchange)...but on the whole, the sheer economy of scale advantages of one federal site make the downsides seem pretty small in comparison for most states.

Ironically, it turned out to be a good thing that there were over a dozen state-run websites last year, because many of them helped mitigate the worst of the damage during the early, ugly days of HealthCare.Gov (as you may recall, only about 25,000 people enrolled via HC.gov in October 2013, vs. over 75,000 across the state-run exchanges). However, it's almost 2 years later now, and HC.gov is operating pretty damned smoothly these days (yes, I know, the billing "back end" is still being worked on, but it's magnitudes ahead of where it was on 10/1/13).

From a sheer cost perspective, as I said back in April,

It's certainly more fiscally efficient (HC.gov has cost somewhere around $250-$300 per enrollee to date, as opposed to the several thousand dollars per enrollee that most of the state exchanges are costing....or, to use an extreme case, the $57,000 per person that Marco Rubio's Republican "Anti-Obamacare" Brainchild, "Florida Health Choices" has cost to date).

Overall...it seems to me that in addition to the economic economy of scale/efficiency advantages of running the exchange via HC.gov, it also simplifies the marketing of the exchange: Instead of promoting a bunch of different websites which no doubt confuses the heck out of some people, every state can just promote Healthcare.Gov, period.

Already, Pennsylvania Governor Tom Wolf, who was preparing to "establish" a "state-based" exchange along the lines of Oregon/Nevada, has stated that he's withdrawing his plans to do so now that the King case has become moot. I haven't heard anything about Delaware yet, but again, from a technology POV it doesn't make much difference; even if they stick with their plan, they'd still be operating off of HC.gov just as they have the past 2 years.

There is, however, one other special case: Arkansas is likely to continue ahead with their plans to move to a full state-based exchange, including their own website platform, just as Idaho did this year. I had a discussion about this with David Ramsey of the Arkansas Times (he's the go-to guy for all things healthcare related in AR), and it looks like they have a unique situation there involving their "Public Option" Medicaid expansion program which makes running their own full exchange more likely now:

@charles_gaba @philgalewitz state-run AR makes sense bc of PO (already conditional approval '17). Actually MORE likely now (politics easier)

— David Ramsey (@ArkDavey) June 25, 2015

@charles_gaba right--FULL/real state-run may make sense bc of PO. politics may've thrown off planned switch if plaintiffs won @philgalewitz

— David Ramsey (@ArkDavey) June 25, 2015

@charles_gaba exactly. For starters, http://t.co/CjcnqNEOem does eligibility but can't do PO enrollment. Not efficient. @philgalewitz

— David Ramsey (@ArkDavey) June 25, 2015

@charles_gaba assuming PO survives, AR's transition to state-run exchange will be interesting tech story

— David Ramsey (@ArkDavey) June 25, 2015

@charles_gaba tea party was gearing up to fight transition if king plaintiffs won. I THINK wind knocked out of that fight, tho who knows...

— David Ramsey (@ArkDavey) June 25, 2015

.@charles_gaba one factor: if states want to experiment w/1332 waivers, might be easier to do so w/state-run exchange

— David Ramsey (@ArkDavey) June 25, 2015

So, as far as I can tell:

  • 2016: 38 states on HC.gov, 13 on their own site (Hawaii moving onto HC.gov)
  • 2017: 37 - 39 states on HC.gov, 12 - 14 on their own site (Arkansas moving off HC.gov, VT & MN possibly moving onto it)
  • 2018 and beyond: ???

It's even conceivable--unlikely, but conceivable--that a few years from now, after 1) The ACA has become even more firmly entrenched nationally; 2) the software/technology for running a state exchange has become even more streamlined, simplified, faster, easier to use, cheaper, etc etc; and 3) (hopefully) some changed attitudes/changed administration officials (ahem), a few states on HC.gov now may even decide to go ahead and move onto their own "full" exchange/website after all...completely of their own volition.

I realize that sounds pretty crazy now (since there'd be no financial incentive to do so), but anything's possible...and with King out of the way, at least that's a viable option now.