On April 1, the Robert Wood Johnson Foundation released a brief examining multi-state health insurance exchanges.  Under health reform, states may jointly operate health exchanges for individual and small group coverage.  The brief offers reasons states would be inclined to operate multi-state exchanges and the challenges doing so would bring about.  The authors assert multi-state exchanges may be an effective means to create administrative economies of scale and promote effective risk pooling.

From the report:

Health insurance exchanges are a central component of the small group and individual health insurance market reforms in the Affordable Care Act (ACA). The ACA allows multiple states to jointly operate exchanges if they so choose. States might consider joining together to offer multi-state exchanges for four reasons. First, administrative economies of scale could be significant. Second, regional exchanges might make sense in large metropolitan areas that cross state boundaries. Third, states might establish multi-state exchanges to promote pooling across state lines. Fourth, multi-state exchanges could create the necessary critical mass of insured persons to establish stable risk pools by combining markets in small population states. However, multi-state exchanges are most likely to focus on shared administrative structures and efficiencies as opposed to risk-sharing. Cross-state risk-sharing would inevitably lead to one state population effectively subsidizing another and create a complex environment for policy decision-making.

Full report: Multi-State Health Insurance Exchanges (PDF | 178.19)

Robert Wood Johnson Foundation.  (2011).  Multi-state health insurance exchanges.  Blumberg, L.