Implementing the Exchanges: federalism and path dependance

One example of path dependance in health care is our strong ties between employment and health insurance. Another is the complicated division of health care authority between state and federal governments. Obama promised no fundamental changes if you liked your health insurance, which is another way of saying he respected path dependence.

One prominent nod to federalism was the structure of the Exchanges, allowing states to set up their own if they wanted to. Federally-facilitated exchanges kick in only if a state failed to act.

Ironically, the very states who were most concerned about federal encroachment have failed to make the deadlines and will get federal exchanges. These are mostly Red States who sued to block ObamaCare. Many Blue States, such as California, New York and Massachusetts (who didn’t sue the federal government) successfully set up their state exchanges. From a recent GAO Report:



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