Whither Health Insurance Exchanges Under The Affordable Care Act? Active Purchasing Versus Passive Marketplaces

Two models have dominated the policy literature on health insurance exchanges, with many hybrids borrowing elements of each. At one end of the policy spectrum, the insurance exchange can serve as a “marketplace” or “clearinghouse” where buyers and sellers transact with minimal regulation of the product features and prices. At the other end of the policy spectrum, the exchange serves as an “active purchaser” of health insurance on behalf of its clients, the individual consumers. This blogpost discusses what it means to be an active purchaser, and offers a case study comparing Covered California, which uses an active purchaser model, to two other exchange models and some early indications of the benefits of active purchasing.