So much attention has been (rightly) paid to the decisions of states on whether to implement the Affordable Care Act’s expansion of Medicaid eligibility that it’s often forgotten states have another big choice under ACA: whether to set up the health care exchanges the law requires for selling the new private insurance policies it provides for, or to create a partnership with HHS to do so, or simply default to the feds and let them handle it all. As Sarah Kliff explains at WaPo’s Wonkblog, Friday was the deadline for state decision on the exchanges. Seventeen states (plus DC) will create their own exchanges; seven will partner with HHS; and a bare majority, twenty-six, will let HSS set up exchanges on their own.
As the partisan breakdowns indicate, the states deferring to the feds (24 of the 26 have Republican governors) are mostly doing so to avoid any political complicity with ACA implementation, particularly since there is not, in contrast with the Medicaid expansion, any large fiscal windfall for the states in setting up the exchanges (or, for that matter, any immediate consequences for beneficiaries).
While some ACA proponents fret HHS will struggle to take on the unfamiliar burden of insurance regulation in 26 states, others think the holdouts may be doing the Obama administration a very big favor, as Kliff observes:
House Democrats originally wanted one national health exchange, where everyone in all 50 states could purchase coverage. That idea was nixed in the Senate bill, which aimed to give states a larger role in setting up the Affordable Care Act.
In a way, all these states turning over their exchanges to the federal government brings Obamacare a little closer to the more liberal House bill, which had the federal government running one big marketplace. It allows the White House to have more control over setting up its signature legislative accomplishment. It also creates some economies of scale, as HHS can develop one template exchange that all 26 states it handles will use.
That could be especially important in states where opposition to the Affordable Care Act still runs very deep. When I’ve talked to Democratic state legislators, in states where a Republican governor has declined to build an exchange, they sometimes express a sense of relief. If they put an Obamacare opponent at the helm of a crucial health law program, it would be akin to foxes running the hen house. What better way to sabotage health reform, after all, than doing a shoddy job setting up the main vehicle for Americans to access health insurance?
That all makes sense. But it’s hard to suppress the feeling that ACA implementation is not going the way it was originally intended, since the Medicaid expansion was supposed to be mandatory and the federal exchange option was supposed to be a fallback for exceptional cases. With Republicans at every level of government mostly cheerleading for (and where possible working towards) ACA’s failure, it’s going to be a fragile process.