• 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:



    • I live in Texas and I doubt seriously there will be a federal exchange implemented here. There is the practical matter of setting up the exchange, which so far as anyone one can tell, HHS is not doing. Then there is the matter of the latest round of lawsuits aimed at preventing the penalties and corresponding subsidies in federal exchanges. If the plaintiffs prevail and there is no alternative funding mechanism established by Congress, then there will be no federal exchanges.

    • Jardinero1, you are wrong. The federal exchange will be selling plans in the Texas market in a few months. Now, there is a question of how well it will be implemented there without a local outreach program — but it will certainly be available. They do not need Texas’ permission to do so. It is giving federal dollars directly to citizens to help them buy insurance at private companies. The state government need not get in the way other than to run the department of insurance.

    • Another aspect of this is that the Federal Government pays for a lot of health care even while a lot the regulation is at the state level. So excessive state regulation is a bigger cost to the federal government than to state. A state regulation drives up healthcare costs it is a cost to Federal tax payers and sometimes more jobs to the state.

    • “Ironically, the very states who were most concerned about federal encroachment have failed to make the deadlines and will get federal exchanges.”

      I don’t see why you think it ironic. Those states didn’t believe in Obamacare and do not believe it will work. If that is what they think why would they suddenly change and support it. States like Florida seem to feel that after a few years the exchanges will negatively effect the budget and thus over road a conservative governor’s desire rejecting the exchanges. Those are the people that represent the state of Florida and they don’t want it. If federalism is what one claims they must accept the decision of Florida and other similar states.

      • The states opposed the Medicaid expansion; the Exchanges are private insurance markets. I think it surprising that these states would entirely defer to the feds on a core state function like insurance regulation. Most of these states have historically fought to keep health insurance regulation local, not federal.

        • We seem to have a different definition as to what represents a private insurance market. If a government is determining overall premiums, coverage, etc. and not permitting other types of insurance to compete in the same territory then no insurance being offered is truly private.

          What it seems you would prefer is that these states convince themselves that government mandates and controls are really private enterprise. I don’t think they will agree.

          Whether the exchanges are good or bad for the state is another story.