July 28, 2014


Only Blue States Need Apply : Courts could allow a system in which Obamacare only exists in part of the country. (Eric Schnurer, July 28, 2014, US News)

When the law was enacted, it was anticipated that all states would create such exchanges. After all, why wouldn't they? These were a cornerstone of the act, and, unlike the mandate and Medicaid expansion, quite uncontroversial. In fact, when Democrats like to point to the core of Obamacare being based on a conservative think tank's idea that Mitt Romney then implemented in Massachusetts, this is what they're talking about. Rather than setting up government-run or government-provided health insurance, such a system creates a free market of private providers, competing against each other, with the government providing merely the "marketplace" (here virtual) and standards for the competition, as governments have done in creating markets across the world for most of recorded history.

But a funny thing happened on the way to making health insurance affordable for every American: Republicans decided to offer massive resistance to any and every provision of Obamacare, including those that were, essentially, Republican. These exchanges, unlike the employer and individual mandates that became the catalyst for a libertarian resurgence, involve voluntary participation. And unlike the Medicaid expansion, they are aimed not at near-poor Americans but the middle class. In fact, everyone, even the wealthiest, can use the exchanges to shop for the best deal on insurance, although the most likely users are those forced into the individual market because their employers don't offer group plans. Voluntary, market-based, competition-enhancing, purely private, middle-class-oriented, Republican-designed - what's not to like? Well, basically, that they're part of Obamacare.

About one-third of states - largely those under Democratic control, in the Northeast or along the West Coast - elected to set up such exchanges, and another half-dozen (not coincidentally, the group next-most-likely to go Democratic in a presidential election) worked with the feds in doing so. But half the country - you can guess which half - refused to participate in construction of an exchange at all. The effect under the law was to leave this task to the federal government.

Most of the refusenik states also have rejected Obamacare's expansion of Medicaid to cover the near-poor rather than just the dire poor. Under the law as enacted, this was not an option: Medicaid expansion was mandatory, unless a state didn't want to take any Medicaid dollars (which all do). But the U.S. Supreme Court, in upholding Obamacare two summers ago, rewrote it (you know, what Speaker John Boehner now wants the Supreme Court to declare unconstitutional when Obama does it) to allow states to opt out of that, too. Near-poor in these states now can't get Medicaid coverage, but they also aren't eligible for the subsidies to make insurance affordable through the exchanges because Congress intended them to get Medicaid, not exchange-based, coverage, making them too poor for a government handout.

Small consolation to the citizenry, but letting these states keep their people poorer than the rest of us is federalism at its purest. Not that they will, States Try to Protect Health Exchanges From Court Ruling ( LOUISE RADNOFSKY
July 25, 2014, WSJ)

A number of states are scrambling to show that they--not the federal government--are or will soon be operating their insurance exchanges under the 2010 health law, in light of two court decisions this week.

The efforts are aimed at ensuring that millions of consumers who get insurance through the exchanges would be able to retain their federal tax credits if courts ultimately rule against the Obama administration. [...]
Among the 36 states, the level of federal involvement varies. That means states see gray areas to work with, if they want to, though the ultimate decision about their status would likely hinge on additional court decisions and determinations by the Obama administration.

For example, two states, Idaho and New Mexico, had intended to set up their own exchanges but turned to the federal government to handle their technology in May 2013. The Obama administration has described them as "federally supported state-based" exchanges and often issues data on their behalf, in which it groups them with the other 34 states with "federally facilitated" exchanges.

Two other states, Nevada and Oregon, are currently considered to be among the 14 "state-based" exchanges, but have had technological problems and are now looking to the U.S. to operate their technology for the coming year.

Idaho, Nevada and Oregon have issued statements in recent days saying they are state-based exchanges, regardless of who operates their technology. New Mexico didn't respond to inquiries.

Posted by at July 28, 2014 5:23 PM

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