State Politics and the Creation of Health Insurance Exchanges

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Health insurance exchanges are a key component of the Affordable Care Act. Each exchange faces the challenge of minimizing friction with existing policies, coordinating churn between programs, and maximizing take-up. State-run exchanges would likely be better positioned to address these issues than a federally run exchange, yet only one third of states chose this path. Policymakers must ensure that their exchange-whether state or federally run-succeeds. Whether this happens will greatly depend on the political dynamics in each state.

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