New Jersey and Pennsylvania Approve Legislation to Launch State-Based Insurance Marketplaces

State-based marketplaces (SBMs) give states more control over their local health insurance markets and consistently outperform states that use the federal marketplace with higher enrollment, more insurance plan choices for consumers, lower premium rate hikes, and a younger consumer base. These accomplishments are especially notable given recent federal policy actions that have unsettled insurance markets and contributed to a national rise in uninsured rates.

SBMs’ success coupled with the evolution of new and lower-cost marketplace management technology is prompting a growing number of states to convert to the SBM model. Nevada recently decided that converting from the federal platform to an SBM offered the state more control to provide insurance plans to consumers at a lower administrative cost and recently New Jersey and Pennsylvania have gone even further, enacting laws to move off the federal marketplace to create their own SBMs to be operational by January 2021.

Both states will finance their programs by converting the current federal assessment on health plans to a state-administered fee. New Jersey Gov. Phil Murphy signed A5499, which empowers the state’s Department of Banking and Insurance to set up the SBM within the agency and to coordinate with Medicaid to assure integrated eligibility for both programs. The law also creates an advisory committee to guide the work. New Jersey’s creation of its own marketplace follows successful efforts last year to enact an individual mandate that requires insurance coverage and the creation of a reinsurance program to help lower premium costs by providing funds to offset the impact of high-cost enrollees.

In Pennsylvania, Gov. Tom Wolf last week signed HB 3, which enjoyed bipartisan support, that creates a new, quasi-independent state agency to administer the SBM. Pennsylvania expects its state-based exchange will save the state money in the long term. The savings will be used to fund a portion of a state reinsurance program, which could reduce insurance premiums by up to 10 percent. The state expects to seek a Section 1332 waiver to enable it to develop its reinsurance program.

As a result of these two states’ actions, 20 states will soon operate an SBM or an SBM that utilizes the federal platform. Learn more about how states can create SBMs from marketplace leaders here.