The AMA backed an “open marketplace” structure for health insurance coverage and encouraged the states to move in that direction.  The open marketplace is a key component of the federal healthcare overhaul passed in 2010.

The marketplaces are intended to be competitive marketplaces of insurance plans that would allow uninsured and small business to join together and thereby negotiate better rates.

The option that the AMA dismissed is called “active purchasers” and in this model the state negotiates on behalf of those who participate. 
It is reported that U.S. health regulators have given much flexibility in establishing the exchanges, which are due to be functional by 2014.  Few states have moved in this direction though, as the healthcare law remains in the courts.  The Supreme Court will hear testimony on the case in March 2012.

For states that do not have a marketplace operation in place, the law requires that the federal government step in with its own plan, but they have not as yet completed their model.

The AMA supported the open marketplace model over “active purchasers”, "with strong patient and physician protections in place, to increase competition and maximize patient choice of health plans.  "The AMA is concerned that an “active purchasers” system would lead to a highly concentrated market that would restrict the doctor’s ability to negotiate with the insurers.

Some consumer groups have advocated the the ‘active purchaser” model saying that yes, there will be fewer choices, but they will be of higher quality.