Stakeholders call on Michigan legislators to transition to a state-based exchange marketplace


James Sklar


On February 2nd, 2023, Michigan’s House Health Policy Committee held its first meeting of the legislative session, which focused on creating a state-regulated health insurance marketplace.


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Joseph Sullivan, insurance legislative liaison from the Department of Insurance and Financial Services spoke to the committee about transitioning to a state-based health insurance exchange marketplace and away from the currently used federal government-operated marketplace, Sullivan informed the committee that the main focus of this transition is to meet the needs of Michigan and get more people insured, which leads to better health outcomes.

“The marketplace right now is like buying a house versus renting a house,” Sullivan said. “Renting the house right now is what we are doing from the federal government.”

Next, Sullivan explained to the committee how the original goal of the ACA was for each state to establish its own state-based exchange, and how now, there is more energy and motivation to make this switch. Sullivan described how DIFS have seen states that have transitioned be more successful from an enrollment, fiscal, and operations perspective.

There are three types of marketplaces states can utilize: a state-based exchange; a state-based exchange federal platform, which is a hybrid approach; or a federally facilitated exchange. As of right now, Michigan operates as a federally facilitated exchange, paying an approximate 2.75% fee rate per member on their premiums . There is no flexibility with Michigan’s current plan.

Gov. Gretchen Whitmer and DIFS Director Anita Fox announced that a record number of Michiganders signed up for comprehensive health insurance on the federal Health Insurance Marketplace for 2023. As of right now, 322,273 Michiganders have signed up for a new health plan on, which shows an upward trend of 7% increase from 2022, and roughly 21% increase from 2021.

Sullivan said the benefits of making this switch include Michigan being able to make decisions about its own residents instead of the federal government, having the flexibility and quickness to make adjustments for constituents as needed, improved outreach and targeting, potential for increase enrollment, improved customer support, No Wrong Door provision, and better funding for navigator coordinators.

Sullivan explained why DIFS might want Michigan to transition now because the risk has been minimized. This is because there’s already a successful road map paved by other states regarding vendors and companies who have the operating systems Michigan can utilize. DIFS has had preliminary discussions with CMS and other states on how to make this process work.

If Michigan were to switch to a full state-based model, the 2.75% fee per member, which is assessed under the current system, would allow Michigan to keep that fee and choose how to maximize and invest that savings. However, if the state went to a hybrid model approach, Michigan wouldn’t get to keep the savings, and Michigan would not get to personalize their own website because it would still be under

Sullivan explained DIFS would like to replicate Pennsylvania’s exchange and laid out an aggressive timeline of having a hybrid model for 2024 and full-state based exchange in 2025. Before this transition can occur, state legislation is required along with getting approval with CMS.