ObamaCare: An Experiment in Federalism?

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When ObamaCare first passed, most everyone
assumed that every state would voluntarily create its own health
insurance exchange. The law also required states to expand
Medicaid, or face the possibility of severe federal penalties.
Neither is true anymore: A majority of states have signaled that
they will not create their own exchanges but will let the federal
government do it for them. And following last year’s Supreme Court
decision, which made the Medicaid expansion voluntary, at least 15
states have said or strongly hinted that they won’t expand
Medicaid, while 11 more remain undecided.Not surprisingly, many of the law’s supporters are unhappy with
the lack of commitment: They’re aggressively pushing wavering
states to expand Medicaid and build their own insurance exchanges,
and shaming the mostly conservative governors who aren’t
enthusiastically signing to implement the health law.I’m not sure they need to be quite so upset. On Medicaid, for
example, Aaron Carroll—who, to be sure, thinks states should agree
to the expansion sooner rather than later—points
out that when the program first came online, it took more than
a decade to reach full adoption. Only 26 states participated in the
program when it was passed in 1966, and the last state didn’t sign
up until 1982. I’m not convinced that ObamaCare’s Medicaid
expansion is a good deal for states, as supporters claim; but if it
is a good deal, then it will still be a good deal down the road,
and holdout states will eventually join in the program.Similarly, ObamaCare supporters have tried to stoke conservative
anxieties about federal power by pointing out that if states refuse
to run the exchanges, the federal government will do it for them,
thus increasing federal power at the expense of the state. States
have responded—correctly—that they don’t actually get that much
flexibility or authority under the law, except to follow federal
rules, but forget that for a moment: From the perspective of an
ObamaCare supporter, would increasing federal power over the law
really be so bad? I’d imagine that few of the law’s backers have
serious problems with increasing the scope of federal authority
over the law, especially when the alternative is to see parts of it
set up and run by conservative state officials. Meanwhile, states
that opt out now have the option to take over the exchanges down
the road: If it’s obviously better to be running—and paying—for
these insurance hubs, then states that don’t go for the expansion
up front can step in later. (Interestingly, one of the architects
of both RomneyCare and ObamaCare, and a leading proponent of both
laws, has
suggested that Florida should let the federal government run
its exchange, at least for the time being.)I’m no fan of ObamaCare, but we’re actually primed for a
potentially interesting experiment in health care federalism: Some
states will go ahead with full implementation. Others will decline
to participate in either the exchanges, the Medicaid expansion, or
both. And as a result, we’ll be able to see if it works, and how
well. If it’s worth doing, states that don’t play along now will
have clear incentives to do so down the road. 

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ObamaCare: An Experiment in Federalism?

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