The weak version is state-based. It's open to only the unemployed, the self-employed and small businesses. Risk adjustment, if it exists at all, is crude. With such a limited pool of applicants, insurers aren't driven to compete, and the efficiencies of scale and competition are minimal. It never really grows, and instead exists as a marginal policy to mop up those who aren't covered by employers. Sort of an outlet shopping model for health-care, accessible only to the few able to get there.
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In the bills that passed three House committees and the Senate Health, Education, Labor, and Pensions (HELP) Committee, the exchange would be a "prudent purchaser." In other words, it would have a staff that bargained with insurers to bring down premiums--and that made sure all plans lived up to strict guidelines for coverage and customer service. In effect, any insurer that wants to offer coverage through the exchanges has to get the equivalent of a "Good Housekeeping Seal of Approval" from the administrators. This is precisely how it works in Massachusetts.

By contrast, the Senate Finance bill envisions much weaker exchanges. Instead of choosing which plans to make available, the exchange administrators would, by law, have to accept any plan that meets a relatively minimal set of standards.

Jon Kingsdale, who runs the Massachusetts exchange, calls that a recipe for "policy disaster," as consumers faced a dizzying array of more expensive, less regulated choices. link

If not, here it is:

State Option to Ensure Access to Affordable Coverage

Goal: To make sure that there is adequate competition in insurance marketplaces and to ensure that affordable health insurance choices are available to Americans.

This amendment gives states the authority to increase competition in health insurance markets by implementing one of the following mechanisms listed below. This would allow a state to offer a state public option; however, both the executive and state legislature would have to agree.

The state would have the option of implementing one of the following mechanisms:

1. Participate as grantees in the CO-OP program and apply for seed funding.

2. Open up that state's employee benefits plan.

3. Create a state administered health insurance plan with the option of banding together with other states to create a regional insurance compact.

Regardless of the mechanism chosen, the state would be bound by the same insurance regulations and benefit requirements as private plans in the exchange. The mechanism would have to be completely self financed, aside from initial seed funding, and would be required to have a reserve fund in the same manner that private plans have. The mechanism could not explicitly require doctors to participate, nor use provider participation in Medicare or other public programs to force participation. Additionally, the state could not use Medicare or Medicaid style price controls or rates - they would have to negotiate rates.

The state mechanism would only be open to individuals who were eligible to acquire coverage through the exchange.

This amendment would go into effect upon implementation of the exchanges

When we have an opt-out plan on the table, that would be the time to weigh its pros and cons; as it is, there is no such plan, so it seems like it would be more productive to assess Carper's idea, since that is the one that is getting more and more support.

As I read it, the states could create their own plan, but they wouldn't have to; perhaps the same states that would opt out of BTD's plan would be the states that would choose not to have a plan.

If states did want to have their own public component, what are the chances they would want to create one out of whole cloth, i.e., from scratch?  But, let's say that all 50 states did decide to go this route.  How do 50 different state plans do anything to help reform the system?  How would 10 regional plans do that - and how would multi-state plans cope with the various differences in state coverage mandates?

The kicker for me, though, is that when all is said and done, if you don't otherwise qualify to participate in an exchange, you won't be able to participate in whatever plan your state creates.

So, we still are not talking about that many people, which means it is unlikely that any state plan would have any downward effect on premiums, or expand access and increase affordability.