Twenty-Six States Leave ObamaCare Exchanges to Federal Government

Following the Februrary 15th deadline for states to notify the federal government of their decision regarding who will run the new ObamaCare insurance exchanges, more than half of the states have decided to leave the exchanges to the federal government.

The exchanges are purported to be online marketplaces where consumers can shop for insurance policies that are regulated by the federal government and apply for federal subsidies.

The federal government alone will run the exchanges in 26 states, while 16 states will run their own exchanges. In addition, in order to coax states into taking some responsibility for the exchanges, the Department of Health and Human Services (HHS) developed the concept of a hybrid approach, or “partnership” that supposedly would give joint responsibility for an exchange to both the federal government and a given state.

Six states, four led by Democrat governors and two by Republicans, have agreed to the “partnership” model. Only West Virginia, as of Friday, had not confirmed its decision regarding the exchange in that state.

Of the 16 states that will run their own exchanges, 12 are led by Democrat governors, three by Republicans, and one--Rhode Island--by an Independent.

Michael Cannon, Director of Health Policy Studies at the Cato Institute, has said that the states should flatly reject the ObamaCare exchanges for several reasons:

  • States that refuse to create exchanges will spare employers from being taxed if the health benefits they offer do not meet the federal government’s definition of “essential” coverage.
  • In blocking the employer tax, states rejecting the exchanges would also block ObamaCare’s HHS mandate.
  • Refusal to create exchanges would reduce the federal debt, preventing the Obama administration from providing billions in subsidies to private insurers.
  • A state’s refusal to create an exchange gives every large employer in the state, including the state government itself, the ability to fight the White House’s attempt to usurp Congress’ legislative powers in court.

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