Michigan: State-based exchange passes MI Senate (again), makes it one step closer to becoming reality

Long-time readers know that I've long been an advocate of more states breaking off of the federal ACA exchange (HealthCare.Gov) and establishing their own versions instead. While there are certainly benefits to utilizing the federal exchange (standardized interface, user experience, branding & marketing), there are also numerous benefits to states operating their own platforms.

In the early days of the ACA, in addition to the infamous technical meltdown of HealthCare.Gov, many of the state-based exchanges (SBEs) of the time included horror stories in which the 1.0 versions of SBEs either failed miserably, cost an insane amount and/or both. The most famous examples include...

• Massachusetts: Ironically, the state which had been operating their own health insurance exchange portal and whose healthcare reform law was largely the blueprint for the Affordable Care Act had a nightmare experience overhauling that same website for the new federal regulatory framework. This was laid out in explicit detail by a guy named Ed Lyons, who wrote the definitive MA "Health Connector Autopsy" back in 2014.

Massachusetts scrambled to completely overhaul their site, however, and had a completely new version up and running in time for the 2015 Open Enrollment Period (OEP)...which has been running pretty smoothly ever since. Maryland had a similar experience (serious technical issues the first year; SBE scrapped & replaced in time for year two).

• Oregon: The saga of Cover Oregon, which cost a whopping $250 million and failed to enroll a single person throughout the entire first Open Enrollment Period is legendary (literally every one of the ~68,000 Oregonians who signed up at the time did so via paper applications processed by hand)...so much so that John Oliver devoted a segment of Last Week Tonight to the embarrassing spectacle.

Cover Oregon was shut down immediately after the end of the 2014 OEP, but unlike Maryland or Massachusetts, the state just scrapped the entire idea of operating their own exchange and moved back to the mothership for the 2015 OEP, where they've remained ever since...although a decade later, they're finally giving it another shot starting this fall.

• Hawaii: And then there's the debacle of the Hawaii Health Connector, which managed to stick it out for two years before finally shutting down entirely. I wrote about the HI mess extensively at the time.

Since the early days of the ACA, however, the cost and difficulty of establishing a SBE have plummeted thanks to a combination of lessons learned and better technology. I won't go so far as to call setting up shop a simple "out of the box" software installation process, but it's certainly far easier and less expensive than it used to be.

As a result, after having anywhere between 13 - 16 states operating their own exchanges for most of the 2010s, starting in 2019 a nine more states have taken the plunge, including:

• Nevada for the 2020 OEP (which had, similarly to Oregon, botched their first version and moved to the mothership back in 2015)
• New Jersey for 2021
• Pennsylvania for 2021
• Kentucky for 2022 (Kentucky actually had an SBE which operated perfectly fine for years before having it shut down by GOP Governor Matt Bevin in 2016...they re-launched a new version of the "kynect" exchange under new Dem Governor Andy Beshear in 2021).
• New Mexico for 2022
• Maine for 2022
• Virginia for 2024
• Georgia for 2025 (This was the surprise twist ending to a multi-year battle between GOP Gov. Brian Kemp and the Biden Administration: Kemp had gotten approval from the Trump 1.0 Administration to completely scrap having ANY official ACA exchange at all (they wanted to privatize the whole thing), but this was rescinded by the Biden Administration; eventually Georgia went completely the other way and established their own SBE instead.)
• Illinois for 2026

In addition to Oregon moving to their own exchange this fall, Oklahoma also made a similar announcement earlier this year which somehow escaped my attention (I'll do a separate writeup about that soon). This means that within the next two years, 23 states will be operating their own exchanges.

As I said above, there are several major (and a few minor) advantages to states operating their own exchanges:

• It gives them the technical ability to offer their own supplemental financial assistance to enrollees. This is something which you really have to have an SBE to do, since trying to tie state subsidies into the federal system would be a logistical and security nightmare. This is why every state which currently does so (CA, CO, CT, MD, MA, NJ, NM, VT & WA) operates their own exchange.

• It gives states greater control over offering Special Enrollment Periods (SEPs) during the off-season if they wish

• It keeps the money used to operate the exchange (generally via user fees from the participating carriers) within that state

• It also gives the state more flexibility on things like marketing, outreach and so on.

In any event, that brings me back to my home state of Michigan. Various state legislators have tried to establish an SBE for the Wolverine State several times in the past, but it always fell through for one reason or another...so I'm trying to be cautiously optimistic about this latest development. Via Democratic Michigan State Senator Darrin Camilleri's website:

Senate Passes Legislation to Establish State-Based Health Insurance Exchange, Lower Healthcare Costs

Part of Senate Democrats’ Healthcare You Can Afford Agenda, this legislation would help provide more inclusive and cost-effective insurance to Michiganders

LANSING, Mich. (June 18, 2026) — Today, Michigan Senate Democrats passed a core piece of their Healthcare You Can Afford Agenda, Senate Bills 973–978, which would establish a state-based health insurance exchange (SBE).

Michigan was one of the first states to expand Medicaid in 2014 and has recently fought back against cruel healthcare cuts at the federal level — both bipartisan and bicameral efforts. By moving away from the federally managed marketplace, the legislation passed today would provide the state with greater flexibility to be more creative, more inclusive, and ultimately more cost-effective in the types of insurance products available to Michiganders.

“Michigan has always been a national leader in protecting access to affordable care, and establishing a state-based health insurance exchange is simply the next logical step in that work,” said Sen. Kevin Hertel (D-St. Clair Shores), Chair of the Senate Health Policy Committee and lead sponsor of the package. “Instead of relying on decisions made in Washington, we’ll have the flexibility with a state exchange to create a marketplace that works better and makes healthcare more affordable for the people of Michigan.”

Taking effect in 2010, the federal Affordable Care Act (ACA) created a health insurance marketplace where Americans could compare plans and choose an option that works best for them and their family — often with subsidies to reduce the cost. However, as the Trump administration has deliberately chosen to let critical cost-saving tax credits expire, while also ripping away billions of dollars from state Medicaid budgets, states have a greater incentive to take control of their own insurance marketplaces and protect access to affordable coverage.

“As Majority Vice Chair of the Senate Health Policy Committee, I’m committed to ensuring every Michigander has equitable access to quality healthcare that doesn’t break the bank,” said Sen. Sylvia Santana (D-Detroit), sponsor of Senate Bill 974. “A state-based exchange will help lower healthcare costs, improve public health, and reduce gaps in care for those who need it most.”

Twenty states currently operate their own SBEs, including Georgia and Virginia, which have launched their exchanges in the last two years. Several more states are currently considering establishing an SBE or are in the process of transitioning, including Oregon and Oklahoma. By managing their own marketplaces, these states have seen enrollment rates increase, while premium costs decrease for individuals. In Colorado, they were able to decrease premium prices by a whole 23% with their state exchange.

OK, while I applaud this legislation passing, I have to stop Sen. Camilleri right there to correct a major factual error in this press release: NO, Colorado did not "decrease premium prices by 23%" via their state ACA exchange. That's not even what the article he links to in the press release claims.

What actually happened in Colorado is that the preliminary 2026 rate filings had been set to jack up gross premiums by 28% on average, but thanks to the state legislature quickly passing emergency legislation to generate ~$100 million in state-based financial subsidies (to backfill a chunk of the federal subsidies which expired in December), the insurance carriers re-submitted their 2026 rate filings to increase their average gross premiums by 23% instead of 28%.

In other words, the amount of the increase went down by around 18%, which isn't at all the same as the actual premiums dropping by 23%.

It's also important to note that the drop from +28% to +23% was due to the state beefing up their subsidies, not because they had a state-based exchange (although it is true that for technical reasons, the only way that any state has the ability to offer state-based subsidies to ACA enrollees is if they have a state exchange to begin with).

Put another way: There's several major advantages to an SBE, but no, it's extremely unlikely that doing so is going to lead to premiums dropping by 23%. My friend & colleague David Anderson co-wrote a study on the actual impact of other states moving to their own platform and concluded that it didn't really have much impact one way or the other on premiums or enrollment. The other advantages I mention above still apply, however.

Moving on...

“Inclusive, quality healthcare should be accessible to everyone, not a privilege reserved for those who can afford it,” said Sen. Erika Geiss (D-Taylor), sponsor of Senate Bill 975. “By creating a state-based health exchange, we’re not only lowering costs and improving health outcomes — we’re also advancing health equity for every Michigander.”

Under the federal exchange, the Centers for Medicare and Medicaid Services impose a user fee on insurers, collecting a percentage of the premiums from plans sold through Healthcare.gov. By establishing a state-based exchange, Michigan would instead be able to keep that revenue in-state, giving us the flexibility and resources to better meet residents’ healthcare needs, expand coverage, reduce administrative costs, and improve outreach to underserved communities.

“Through our ability to implement more targeted, data-informed outreach while also making strategic investments in our state-based exchange, we can better reach uninsured residents and connect them with affordable coverage — ultimately building a healthier, stronger Michigan for everyone,” said Sen. Paul Wojno (D-Warren), sponsor of Senate Bill 976.

“Healthcare should be affordable, accessible, and tailored to the needs of the people it serves,” said Sen. Darrin Camilleri (D-Trenton), sponsor of Senate Bill 977. “This transition away from the federal exchange gives us greater ability to design a more efficient, equitable healthcare system that upholds those core tenets and ensures no one goes without the care they need and deserve.”

“No hardworking family should have to choose between going to the doctor and paying their bills,” said Sen. Veronica Klinefelt (D-Eastpointe), sponsor of Senate Bill 978. “With a state-based exchange, we have more opportunity and resources to make coverage more accessible, so that every resident can find quality, affordable coverage that fits their needs.”

This legislation now heads to the Michigan House for their consideration.

On the one hand, Michigan GOP House Speaker Matt Hall is kind of an ass. On the other hand, moving to SBEs has had wide bipartisan support with minimal controversy in other states (both red and blue), so it's possible that this will make it through the Michigan House and be signed into law by Gov. Whitmer this year after all. If so, the exchange would be ramped up throughout 2027 and go live in time for the 2028 Open Enrollment Period, which starts on November 1, 2027.

If so, that would make 24 states (including DC) with operating on their own platforms.