Health insurance exchanges are critical components of the 2010 Affordable Care Act.
Each state is required by the ACA to establish an exchange by 2014. A state must ratify enabling legislation by June to qualify for federal grants to establish an exchange. If a state does not have approved plans in place by January 2013, that state will surrender authority to design its exchange to the federal government.
Alternatively, a state could choose to use its own funds to establish an exchange after the January deadline. This is a very costly option. Exchanges must be fully operational by January 2014.
Tennessee is one of seven states (Idaho, South Dakota, Nebraska, Kansas, Kentucky, and Delaware are the others) that have not passed enabling legislation. Our state has obtained some federal funding to begin the planning of an exchange. Governors of South Carolina, Florida, Louisiana, and New Mexico have vetoed legislation that would permit the establishment of exchanges in their states.
An exchange is a regulated marketplace for insurance products. The Federal Employee Health Benefit Plan has used a similar plan for decades. The concept was further developed in the Massachusetts Health Care Plan which then-Governor Romney signed into law in 2006. The Bay State exchange was called a “connector.”