GOP state leaders fumble by ceding control of health exchanges to federal officials, critics say

Republicans frequently denounce the health-care law as a dangerous overreach of federal power. But now Washington’s role is expanding, and some conservatives charge that Republicans have only themselves to blame.

The vast majority of Republican-led states, faced with a Friday deadline to submit plans for running the insurance exchanges at the heart of the law, have opted instead to relinquish much or all of their control to the federal government.

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Just 18 states and the District say they plan to operate their own exchanges, which are slated to begin enrollment in October. In an additional 32 states, the exchanges will be run either entirely by the federal government or a federal-state partnership.

“If you believe in states’ rights and you believe in state control, why would you cede that control?” asked Robert Laszewski, a prominent insurance industry consultant.

A longtime critic of the health-care law, Laszewski argues that Republican state leaders have allowed their ideological and political differences with President Obama to override pragmatic considerations, to the detriment of their residents.

“There’s a lot of cut-off-your-nose-to-spite-your-face going on,” he said.

But several governors, including New Jersey Gov. Chris Christie (R), have complained bitterly that the administration has been slow to answer questions on critical issues including the cost of running the exchanges.

“I will not ask New Jerseyans to commit today to a State-based Exchange when the federal government cannot tell us what it will cost, how that cost compares to other options, and how much control they will give the states over this option,” Christie said in a statement last week after vetoing a bill passed by the Democratic-controlled state legislature that would have established an exchange.

Under the 2010 law, the online exchanges are supposed to function as a sort of Travel­ocity for health insurance — allowing shoppers to compare policies and buy affordable coverage. By 2016, an estimated 23 million Americans are expected to get their coverage through the exchanges, many with the help of federal subsidies.

With dozens of states deciding not to set up their own exchanges, at least for now, the federal government might need more resources to do the job itself. Administration officials said they don’t have any estimates on how many more employees or how much more money they might need.

But there’s no question that federal officials will wield substantially more power.

The states that run their own exchanges, for example, will decide whether to allow all health plans that meet the law’s minimum standards to be sold on the exchange or to limit the selection to a few that regulators think offer the best value.

In the federally run exchanges, federal officials will make that call.

Similarly, states that set up their own exchanges will determine what type of oversight body is needed and the extent to which insurers and consumers are represented.

Such decisions could be crucial to the fate of the exchanges: Regulate insurers too lightly and consumers could get stuck with skimpy coverage. Impose too many requirements on health plans and premiums could soar.