There are countless unknowns still swirling around the Affordable Care Act. Its ultimate price tag is anyone’s guess. Thanks to the Supreme Court’s decision to make the ACA’s Medicaid expansion optional, there’s no way to predict how many uninsured people will gain new coverage. But one of the biggest mysteries shrouding the law is whether state or federal authorities are better suited to manage the insurance exchanges that will regulate and organize individual and small group health insurance policies once the law is fully in effect in 2014.
In a move that boxed in Republican governors who rail against federal intrusion, the authors of the ACA left the crucial job of exchange management to the states. At the same time, the ACA says the federal government will run exchanges for states which don’t set up their own. This clever gambit left red-state governors with a Sophie’s choice of sorts. They could set up insurance exchanges and participate in the implementation of one of the most divisive laws in modern American politics. Or they could refuse, and invite the federal government into their insurance regulatory apparatus, which has historically been governed at the state level.
The Democrats in charge of the Department of Health and Human Services would be happy either way. Controlling more exchanges would be beneficial to advancing their regulatory priorities; ceding control to states would probably save money on IT costs over the long run. (The exchanges will be run through web sites, on which individuals and small groups will be able to compare plans and buy insurance policies.) Either way, the ACA insurance regulations written by the feds would have to be followed.
So which undesirable path have Republican governors taken? Well, some opted to run their own exchanges, concluding it would be better retain some power over how Obamacare plays out in their states. Others have said they can’t in good conscience endorse, even implicitly, any element of the controversial health care law. And in the wake of Barack Obama’s re-election and the high likelihood Obamacare is here to stay, some Republican governors still haven’t been able to decide which choice is better for them politically, as well as for their state budgets and populations in the long run.
Those waffling governors have said they needed more time and more information from the federal government on how exactly exchanges are supposed to work. So this week, HHS Secretary Kathleen Sebelius extended the deadline that states have to make their decisions until Dec. 16. In the meantime, GOP leaders have begun making decisions. Republican Gov. Scott Walker has decided to let the feds set up the exchange in Wisconsin; Republican Gov. Rick Scott has indicated he may reconsider his staunch opposition to a Florida-run exchange. In Mississippi, Republican Gov. Phil Bryant opposes a state-run exchange, but the state insurance commissioner is moving forward on one anyway. (For a relatively up-to-date look at which states have opted in and out of running exchanges, see the Wall Street Journal’s map here.)
In a rare moment of consensus, several liberal and conservative health-policy watchers are saying fed control is the better way to go. Jon Walker, a writer at the liberal web site Firedoglake, says more federal control will be more efficient, and argues exchanges would be better run by officials invested in the success of Obamacare. Michael Cannon, of the libertarian Cato Institute, opposes Obamacare, but cites as-yet-unknown costs for states if they choose to run exchanges; he says the feds have so much control over the insurance regulatory apparatus that state control won’t mean much anyway. It’s a rare example of consensus from both sides of the political spectrum on the issue of health care reform.