Establishing California's health insurance exchange under the Affordable Care Act: governance and operating model

The Patient Protection and Affordable Care Act (ACA) requires states to establish health insurance exchanges to facilitate the purchase of qualified health care coverage. The ACA affords states flexibility in designing these exchanges. This thesis is an analysis of the alternatives for the governance and operating model of an exchange in California. Within the parameters of the ACA, I present four alternatives for the exchange governance and three alternatives for its operating model. I then compare the alternatives based on how well they avoid adverse selection, facilitate competition, and provide an enhanced consumer experience. The results showed that establishing an independent government agency that selectively contracts with participating health insurers is the optimal choice for California.