A central provision of the Affordable Care Act is establishment of state-level health exchanges. While states are given the opportunity to develop and administer these private insurance marketplaces, their plans must meet certain minimum standards or risk preemption by the federal government. This policy design establishes a hybrid model of intergovernmental policymaking, which may serve to heighten conflict during implementation and further polarize states’ policies. Most notably, this hybrid approach may serve to heighten conflict during the implementation stage—particularly between the federal government and conservative states. So, while the experience of liberal states in the exchange implementation process resembles a more flexible and cooperative federalism, the same federal policy is experienced as coercive by conservative states. In fact, these states are left with two suboptimal choices: adopt the undesired minimum standards required by the more progressive federal policy or step aside and allow the federal government to operate the state’s exchange. This paper aims to better understand how states chose between these options, as well as how this hybrid model of federalism may serve to further polarize liberal and conservative states.

This paper will examine the significant variation in states’ progress implementing health insurance exchanges from early 2011 through open enrollment in 2013. We conceptualize states early implementation progress as a series of hurdles; and we model the timing of three key implementation steps in a conditional risk set duration model in which the likelihood of a particular state, at a particular time point, moving to a higher level of implementation is estimated as a function of: public support for the ACA in each state, party control of the state government, characteristics of the state insurance commissioner’s office and state insurance market, and other state demographic characteristics. Further, we pair this quantitative analysis with a more qualitative examination of implementation politics in outlier states. Together, these analyses will help highlight the range of state response to this federal policy design, as well as key characteristics of states that seem to be shaping their responses to the ACA.