Federal Strategies to Induce Resistant States to Participate in the ACA Health Exchanges

• Date: 01 December 2016
• Author: Shihyun Noh
• DOI: 10.1177/0160323X16685371
• Published date: 01 December 2016
• Subject Matter: Articles

Article
State and Local Government Review
2016, Vol. 48(4) 227-235
Federal Strategies to Induce
ª The Author(s) 2016
Reprints and permission:
Resistant States to Participate
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DOI: 10.1177/0160323X16685371
in the ACA Health Exchanges
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Shihyun Noh1
Abstract
Initial state implementation of the Affordable Care Act health exchanges was marked by political
polarization. More than half of the states initially chose not to create their own health exchanges,
leading the federal government to adopt a new strategy: dividing the implementation of health
exchanges into a series of smaller tasks. States could choose which of four core functions of the
exchanges they would implement, with the federal government handling the remaining functions.
This strategy induced some resistant states to administer some core functions. Why did some states
take part in the exchanges while others did not? Ordered logistic regression analyses provide
evidence that both state political context and other factors affected this decision. The analyses also
suggest that state officials considered state workforce capacity and financial inducements from the
federal government and that they were influenced by divided government.
Keywords
political polarization, financial incentives, state administrative capacity, divided government, health
exchanges, the Affordable Care Act
The Patient Protection and Affordable Care Act
Children’s Health Insurance Program in 1997,
(ACA) of 2010 [P.L. 111–148] was enacted to
all Republicans in Congress opposed the ACA.
increase access to health-care services, reduce
Even citizens’ opinions on it were sharply
the cost of care, and increase the quality of care.
divided across partisan lines (Noh and Krane
The law established a health insurance market-
2016). Not surprisingly, implementation at the
place in each state, commonly called a health
state level also faced partisan opposition.
exchange, to facilitate the purchase of health
Initially, under the ACA, states could decide
insurance. Through their state’s health
whether to create their own exchanges or to
exchange, individuals can buy a plan from
competing qualified health plans. The ACA
allows eligible purchasers to receive advance
1 Department of Public Administration, State University of
payment of premium tax credits and cost-
New York College at Brockport, Rochester, NY, USA
sharing subsidies through the exchanges.
The enactment of the ACA was rife with
Corresponding Author:
Shihyun Noh, Department of Public Administration, State
political partisanship. Unlike other landmark
University of New York College at Brockport, Metro
pieces of health-care legislation, such as Medi-
Center, 55 St. Paul Street, Rochester, NY 14604, USA.
caid and Medicare in 1965 and the State
Email: snoh@brockport.edu

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228
State and Local Government Review 48(4)
leave the authority to the federal government.
The next section examines tools that the fed-
State officials’ political partisanship critically
eral government used to encourage states to
affected whether they chose to create an
participate in the ACA health exchanges.
exchange (Haeder and Weimer 2013; Rigby
State-level factors affect whether these strate-
and Haselswerdt 2013; Jones, Bradley, and
gies worked. Ordered logistic regression analy-
Oberlander 2014).
ses test the factors that affect the state decisions
Only fourteen states began to take steps
to participate in ACA health exchanges.
toward implementing a health exchange, pass-
ing laws, or issuing executive orders for estab-
lishing the exchange. Twenty-one state
Political Polarization and Federal
legislatures in which Republicans held the
Strategies to Induce States
majority of seats in at least one legislative cham-
Participate in the ACA Health
ber passed laws restricting state participation.
Exchanges
For example, they barred individual and
employer mandates or restricted the role of navi-
For decades, states have been responsible for
gators, in-person assisters, and certified applica-
regulating health insurance within their bor-
tion counselors who assist state residents in
ders, controlling the content, marketing, and
selecting plans in health exchanges (National
price of health insurance products (Longest
Conference of State Legislatures 2015).
2015). However, the ACA ‘‘create[d] a sea
These numbers, however, do not tell the
change in health insurance regulation, with the
whole story. To encourage resistant states to
federal government playing an even larger
establish their own exchanges, the Department
role’’ (Thompson and Cantor 2013, 98).
of Health and Human Services (DHHS) chan-
The federal government set basic policies
ged strategies in 2012 and broke implementa-
and specific requirements for the exchanges
tion into four core functions: eligibility and
and delegated responsibility for implementa-
enrollment, plan management, consumer assis-
tion to states. States had two implementation
tance, and financial management. States could
options: (1) they could establish their own
choose to manage any or all of these functions.
exchanges, called state-based exchanges
Of the thirty-six states that initially did not cre-
(SBEs), or (2) they could leave the task to the
ate their own exchanges, seventeen agreed to
federal government, called federally facilitated
handle plan management or consumer-
exchanges (FFEs). For an SBE, the state had to
assistance functions. The remaining nineteen
assume responsibility for four core functions:
states did not take on any functions. Conse-
eligibility and enrollment, plan management,
quently, state involvement in the health
consumer assistance, and financial manage-
exchanges varies (Noh and Krane 2016).
ment (Government Accountability Office
Beyond the political partisanship surround-
2013). Political partisanship strongly influ-
ing the ACA well established in the previous
enced which states implemented SBEs and
research, this study looks at how financial
which chose FFEs by default (Haeder and Wei-
incentives from the federal government, state
mer 2013; Rigby and Haselswerdt 2013; Jones,
administrative capacity, the size of a state’s
Bradley, and Oberlander 2014). By September
health-care workforce, and a state’s political
2012, sixteen states had announced that they
configuration have affected the implementa-
would create their own exchanges. Twelve of
tion of the health exchanges. Prior studies
these states had Democratic governors and four
have found that state implementation of fed-
had independent or Republican governors. The
eral programs is affected by various internal
remaining thirty-four states, twenty-nine of
and external inducements and constraints
which had Republican governors at the time
(Crotty 1987; Lester and Bowman 1989; Gog-
and five of which had Democratic governors,
gin et al. 1990; Allen, Pettus, and Haider-
took no action toward creating their own
Markel 2004; Woods 2006).
exchanges (National Conference of State

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Noh
229
Legislatures 2012; U.S. Department of Health
administration. As of 2013, among the thirty-
and Human Services 2014b).
four states that previously made no moves
When faced with state resistance, the federal
toward creating their own exchanges, three
government can use a variety of strategies to
with Democratic governors...