This is a Good Thing

Map courtesy of the Kaiser Family Foundation

Notwithstanding the statements of the Obama administration that it was essential that the states should run their own health insurance exchanges, it's good news that the Federal Government will run 26 of 50 of the exchanges:

Friday was a very important day for health policy days. It was the last day for states to tell the federal government whether they wanted any part in running the Affordable Care Act health exchanges come 2014.

The federal government did not get many takers. Some of the most closely watched states, including Florida and New Jersey, decided to leave the entire task to the federal government. All told, the federal government will run 26 of the state health exchanges. It also will partner with seven states, where state and federal officials take joint responsibility for the marketplace. Seventeen states and the District of Columbia will take on the task themselves. Here’s what that looks like in map form, via the Kaiser Family Foundation.

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The big question moving forward is: Does this split matter? Is it better or worse for the federal government to be running the majority of the state health exchanges?

In the health policy world, there are essentially two schools of thought on this. The first is that states opting out of the exchanges is horrible for the Obama administration. All along, Health and Human Services has urged states to move forward on their own. Now, HHS has the massive task of setting up 26 separate state exchanges.

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That is the pessimist’s take on the federal government’s very big workload. But there’s also an optimist’s take, one that suggests that federal oversight of most Affordable Care Act marketplaces will ultimately strengthen the health overhaul.

Remember, House Democrats originally wanted one national health exchange, where everyone in all 50 states could purchase coverage. That idea was nixed in the Senate bill, which aimed to give states a larger role in setting up the Affordable Care Act.

In a way, all these states turning over their exchanges to the federal government brings Obamacare a little closer to the more liberal House bill, which had the federal government running one big marketplace. It allows the White House to have more control over setting up its signature legislative accomplishment. It also creates some economies of scale, as HHS can develop one template exchange that all 26 states it handles will use.

I'm not sure why the Obama administration was so big on the state run exchanges.

My guess was that they are worried about the inevitable teething problems, and wanted as many opportunities as possible to spread the blame around.

The state based insurance system has resulted in a lot of oligopolies in healthcare, and has allowed the insurance corporations to purchase legislators and regulators, so I see this as an unalloyed good.

It moves us away from the inevitable race to the bottom that will occur in state based systems.