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Chris Weigant

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Republicans Creating National Health Insurance Exchange?

Posted: 01/07/2013 7:29 pm

What with all the fiscal cliffery in the past few weeks, a few important news stories got short shrift from the chattering classes ensconced within the Beltway. With the pundits all now apparently ready and willing to chase the next shiny, shiny object in the budgetary battles (debt ceiling! platinum coins!) or perhaps to obsess over Chuck Hagel's nomination to Secretary of Defense, the story of Republican governors across the land ushering in a new era of federal control over health insurance was barely noted. This is a shame, because the irony of their stance is so downright amusing.

The Patient Protection and Affordable Care Act (otherwise known as "Obamacare") put Republican governors between an ideological rock and a very hard place for conservatives. After losing their court challenge on the constitutionality of Obamacare, each state's governor was faced with a clear choice: either set up a state-run health insurance marketplace (or "exchange"), or refuse to do so and pass the buck to the federal government, which will set up an exchange for states who opt not to create one on their own.

In political terms, this meant a choice between going along with Obamacare -- something Republicans swore they'd never do -- or going against one of the tenets of conservative ideology. Most people, if asked, would likely say that there are some things the federal government does best, and some things state governments do best. Conservatives, however, believe (as one of the pillars of their faith) that all government is bad, and the bigger it gets the worse it is. This means that the states will always do a better job at just about anything government is supposed to do than the big, bad federal government. The more local government is, the better it responds to The People, so all government should always devolve downwards in scope.

You can see the conundrum this sets up. On any new governmental program the feds propose, the best option for conservatives is to have the states run and administer it. This is basic conservative dogma. But when the government program is one that your party has spent the past few years likening to doomsday, it's hard to pivot to "getting with the program" in any sort of fashion.

Republicans, for the most part, still believe that Obamacare is going to be an unmitigated disaster. So most of them chose to opt out, and just hand the responsibility of administering their states' exchanges over to the equally hated federal government. This way (they must be thinking), when Obamacare collapses, they won't face any political blowback at the state level. So while it must have been tempting for Republican governors to jump at the chance to gain power at the expense of the federal government, most of them decided to just punt it back to the feds.

This isn't universal. At least four states led by Republicans have opted in and will set up their own exchanges. A total of 17 states (so far) have been approved to run their own exchanges. But more than half of the states -- most of them Republican-led -- have decided to punt. Just by looking at a map of which state falls into which category clearly shows this partisan divide.

Now, you can speculate why Republican governors decided to let a government program in their state be run by the federal government instead of taking the duty on for themselves. Perhaps they just dislike Obamacare (or Obama, for that matter) so much they don't want to have anything to do with his namesake health insurance program. Or perhaps they just expect the entire exercise to fail miserably, and they want no part in the upcoming disaster they see on the horizon. Or perhaps they have other reasons for opting out.

But no matter what the reason, these governors have now set up an interesting dynamic that could lead to a result they are likely not even anticipating: the creation of a truly national health insurance exchange. To put it another way: the federalization of the health insurance market. Since the federal government is going to be setting up exchanges in over half the states, they are obviously going to benefit from what the green-visored types refer to as "economies of scale." If you are tasked with setting up an exchange for one state, then setting one up for another state becomes easier. You learn from the process, and you don't have to reinvent the wheel 25 times. Whole layers of bureaucracy can be eliminated, due to duplication of efforts not being necessary. That's the theory, at any rate.

Republicans are betting the system won't work and will be hated by the public. They may, however, lose this bet. If the exchanges go through their startup period (where there are bound to be some problems) but then become widely accepted after the bugs are worked out, then Republicans will have cut themselves out of the picture entirely. Instead of their much-vaunted state governments being in charge of things, the federal government will be running the entire show.

In fact, if the federally run exchanges for the states that have opted out become successful enough, the remaining states which have set their own exchanges up may eventually be tempted to just hand their exchanges over to the feds as well. If the federal system is working, then why duplicate their effort at the state level?

By deciding to distance themselves from the whole Obamacare system, the Republicans may actually usher in an even bigger ideological nightmare for them: a truly national health insurance exchange. Now, it won't be the progressive dream of "national health" or even "the public option" -- not by a long shot. But a successful federal program operating in the majority of states would certainly pave the way toward either of those goals a lot more effectively than 50 separate exchanges, many run by Republican administrations.

Which is where things get ironic. What if Republican disdain for Obamacare brings about a truly federal system of health insurance exchanges? Republicans, throughout the whole health insurance debate, darkly warned of the federal government "taking over" the health insurance industry. But what will they say when they realize that the feds didn't need to "take over" anything, because Republican governors actually handed over these reins to the federal government in the first place?

 

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