Tomorrow is an important day for Obamacare. It’s the deadline for states to declare their intentions about setting up their own health insurance exchanges for residents to purchase insurance under the new regime.
If a state does not set up an exchange, the federal government will come in and set it up, according to the law. So far, 22 states have said they are not going to set up state exchanges. Only six states have received conditional approval from the Department of Health and Human Services (HHS) to operate their own exchanges.
Why leave it up to the federal government? Well, to begin with, it’s an extremely costly undertaking. Heritage health care experts Nina Owcharenko and Ed Haislmaier explain:
[T]here will be no steady flow of federal dollars to the states. The law specifies that starting in 2015, any state implementing a state exchange must develop its own revenue source to fund the exchange’s annual operations. That puts the long-term costs squarely on the states. Moreover, the recent announcement by the Department of Health and Human Services (HHS) that it will levy a 3.5 percent administrative fee on coverage sold through the federally run exchanges indicates there are significant costs if a state agrees to run its own exchange.