Nationwide in 2024, over 20 million consumers received health insurance through the Affordable Care Act (ACA) Marketplaces—government-operated entities with websites for purchasing coverage, often with income-based premium subsidies. The 2024 open enrollment period was the third consecutive year of record Marketplace enrollment, reaching 21.4 million, an increase of almost 7 million people since the 2022 open enrollment period. Marketplace coverage plays a large—and swiftly growing—role in Texas’s coverage landscape: more than 3.4 million individuals had enrolled in Texas’s Marketplace in the 2024 open enrollment period, an increase of 37 percent since 2023 and nearly double the 2022 figure (CMS 2024).
During the 2023 legislative session, Texas lawmakers introduced two bills to transition the state’s Marketplace from the federally facilitated Marketplace (FFM) to a state-based Marketplace (SBM).1 Under a transition, Texas would join 21 other states and the District of Columbia that currently have SBMs or are in the process of establishing them.2 Transitioning to an SBM requires building the new entity and taking over a range of functions, including eligibility determination and enrollment, coordination with Medicaid, customer service, enrollment assistance, marketing and outreach, health plan management and certification, financing, and oversight and compliance.
Running an SBM gives states flexibility to customize Marketplace policies and practices within federal guidelines. Other states have used this autonomy to support health coverage through means like state-funded supplemental premium subsidies and facilitated enrollment. A range of evidence suggests SBM states have been successful in expanding coverage. However, there is no guarantee an SBM in Texas would play out the same way. SBM states are self-selected and have generally embraced the ACA and other policies supporting coverage. The flexibility from an SBM could be used to support coverage or the opposite. In short, an SBM is what a state makes of it.
In this study, we set out to summarize and analyze perspectives on a potential Texas transition to an SBM, including risks and benefits, best practices to mitigate risks to coverage if Texas elects to establish an SBM, and other potential measures to improve coverage.
