Since passage of the Patient Protection and Affordable Care Act (ACA) on March 23, 2010, the federal government and many states have devoted an extraordinary level of resources to planning and developing the systems, policies and protocols to implement Health Insurance Exchanges that will deliver on the promise of the ACA. Some states will stand up a State-based Exchange (SBE) on January 1, 2014, that requires at least conditional certification from the Department of Health and Human Services (HHS) on January 1, 2013. Others will not and will choose instead to rely on alternative Exchange models, such as the Federally-facilitated Exchange (FFE) or a Partnership Exchange, where the federal government will run an Exchange in the state, and the state may take on some Exchange functions at its option.

A report, “Federally-Facilitated Exchanges and the Continuum of State Options” authored by Deborah Bachrach and Patricia Boozang of Manatt Health and published by the National Academy of Social Insurance (NASI) with the support of the Robert Wood Johnson Foundation, describes the three options available to states in setting up Exchanges: State-based Exchange, Federally-facilitated Exchange and Partnership Exchange. This report explores and expands on the continuum of state-federal Exchange models articulated in late-November federal guidance that reflects HHS’s continuing movement in the direction of state flexibility related to Exchange implementation. To assist states and stakeholders, the paper lays out a framework for considering the various Exchange options, reviews how the core functions of an Exchange might be effectuated in the different Exchange models, and explores the advantages and disadvantages of each.