The ACA Marketplaces: A Case Study in Federalism and Public Policy Implementation

• In Event: Affordability of Healthcare: Perceptions and Policy Responses

Abstract

The appropriate balance of power between the national government and state governments in the United States has been a topic of debate since the nation’s founding. The Patient Protection and Affordable Care Act (ACA) is an interesting case study in federalism/intergovernmental relations and policy implementation, because the state-federal balance varies by state based on which type of insurance marketplace the state has chosen to implement.

The ACA is a particularly complicated policy with multiple program components, and it appears to follow what has become a typical pattern of shared government and cooperative federalism in modern America. The ACA required each state to establish a health benefit exchange (marketplace), but it also provided flexibility so if a state did not elect to build its own (or was determined to not be adequately prepared to run its own), the federal government would step in and implement the exchange.

The implementation of the ACA has resulted in the creation of three marketplace types: federally-facilitated, state-based, and hybrid. The hybrid implementation uses the federal HealthCare.gov website but leaves more decisions to the states than in the federally-facilitated marketplace states. In the end, twice as many states chose to use the federal website compared to states that created a state-based marketplace and website. This trifurcated approach to implementing the health insurance marketplaces, where residents are either served by a federally-facilitated, state-based, or hybrid marketplace, provides a unique situation for comparison and analysis relating to federalism and public policy implementation.

The power and prerogative of states, colloquially referred to as states’ rights issues, are key to understanding why the ACA was drafted in such a way that it allows both state and federal implementation. In many states, political leaders who opposed the passage and implementation of the ACA also adhered to an ideology or political party platform that preferred less federal government interference and more state control.

In the implementation of the health insurance marketplaces, the most conservative states refused to cooperate in developing their own state-based marketplaces and defaulted to a federal marketplace. As a result, the states ideologically most likely to defend their state’s power to implement the marketplaces ended up with a more liberal national administration in charge of their exchanges.

This study informs the implementation of future national policies and programs requiring intergovernmental relations. It examines the implementation of the ACA’s health insurance marketplaces in all 50 states and the District of Columbia, comparing states that used the federally-facilitated, state-based, and hybrid marketplaces during the first five open enrollment periods and plan years. It answers: among the three types of marketplaces, was one type more successful than the others at enrolling residents in health insurance? What factors may have played a role in success or failure? Key factors that may have contributed to the success or failure of the marketplaces are explored, such as: the bureaucracy, political disposition, resources (grants and technology), and communication.

Author

• Amber Joy Joiner, University of Nevada, Reno