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November 16, 2012

Most Republican States Won’t Build Exchanges and That Is a Good Thing

Posted in: healthcare

Map showing party affiliation by Governors, current

Now that we have approached what should have been the deadline for states to say whether or not they plan to build state exchanges to comply with the Affordable Care Act, it is clear most of the Republican controlled states will not. The administration’s last minute decision to push back the deadline by another month to try to encourage more states to create exchanges seems unlikely to succeed.

Frankly, I consider this a positive development. I’ve always thought the idea of the ACA being based on state run exchanges instead of one run by the federal government was extremely stupid.

If states want to go beyond what a federal exchange would do, like California’s exchange which will be an active purchaser or D.C.’s which will combine all the small markets, only then does it make sense for a state to make the investment in building their own system. On the other hand, there really is no point in a state taking all the effort to build an exchange that only meets the minimum federal standard and will be basically identical to having a federally run exchange.

Financially this should be far more efficient. Creating one of these exchanges is an incredibly expensive IT investment but adding more people to an existing system should be a rather small cost. It should be much cheaper for the federal government to just build one system and use it in 30 states, rather than make 30 states waste money building 30 different systems.

On a practical level having governors opposed to Obamacare not involved in running the exchanges should produce better outcomes. I would much rather the exchange I’m using be run by the Obama administration, which is heavily invested in trying to make the law work, than have it run by Republican governors, who are ambivalent about the law’s success.

Politically it is seems as close to a win-win as you can get in the situation. Republican officials who think the law won’t work get to wash their hands of it, Democrats get to try to prove it can work, and regular people will still have access to an exchange.

Attempts by some liberals to try to shame Republican governors into creating state-based exchanges are misguided. Republican controlled states deciding to have the federal government run their exchanges seems like the least bad of the possible outcomes.

Map from Wikipedia under Creative Commons license.

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