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Why Republican governors want to leave Obamacare to the feds

Florida Gov. Rick Scott has said his state will not operate a health insurance exchange.

Republican governors in Florida, Kansas and Virginia all announced yesterday that they would not set up health insurance exchanges. That means the federal government will  have to take on the task itself. 

Republican governors' refusal to set up health exchanges often gets read as intransigence, a refusal to make the Affordable Care Act work. They often get derided as working against their own interests, inviting in the same federal intrusion they purport to oppose. 

But there's another way to read what Republican governors are doing right now, one that suggests that they're making a very smart decision that could ultimately strengthen the Affordable Care Act rather than detract from it. 

Just for a minute, put yourself in the shoes of a Republican governor who has done very little to prepare for the health-care law. You think Obamacare's the wrong direction for America and see public opinion data suggesting that half of the country agrees with you.

You waited out the Supreme Court decision, hoping they'd overturn the law, then the election, hoping the law would get repealed, and, all of a sudden, the law is here to stay and you barely have any time to implement it. 

You could slap together a health insurance exchange at warp speed, hiring all the consultants you can find in the next few weeks. This decision is risky: If the health insurance exchange malfunctions (and it might, given the time constraints), the blame lands squarely at your feet. It's also time- and energy-consuming.

That's the challenge that Pennsylvania insurance commissioner Mike Consedine worries about when he weighs the possibility of building an exchange. 

"Our worst fear is rushing to build something for the sake of building it and having it not be functional," he told me in an interview this week. "The whole idea is helping consumers make smart choices. And we'd actually be doing the exact opposite."

That's option one. Option two is leave the task to the federal government. They already promised that they'll make sure every state has an insurance exchange standing by Jan. 1, 2014. They have a huge interest in making sure these exchanges work really, really well: This is, after all, the Obama administration's signature legislative achievement. 

We don't quite know how well the federal exchange will work, but that's almost irrelevant to a governor. If it functions really well, then the health law rolls out smoothly. Perhaps the state even takes control of the exchange within a year or two. If it bombs, the finger-pointing is directed toward the federal government -- and not at the governor. 

As Ben Domenech tweets this morning, "Governors seem content to let Feds do the work of creating exchanges."

That's not true of all governors: You do have about 15 states that have committed to running their own exchange. Part of the drive there is support of the health-care law, but it's also about having control over the new marketplace. California, for example, wants to build an exchange that is an "active purchaser," meaning it only sells the plans it thinks are really, really high quality. If it relied on the federal exchange, it probably wouldn't have that option.

The District of Columbia has set up an exchange that specifically prohibits any individual plan sales outside the new marketplace. Oregon created a consumer advisory committee within its exchange. 

There are definitely benefits to more control over an insurance exchange. But for a state coming to the process late in the game, they could easily be outweighed by the many possible downsides.



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Ezra Klein · November 9, 2012

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