What Now, Obamacare?

If it be now, ‘tis not to come; if be not to come, it will be now; it if not be now, yet it will come; the readiness is now

Shakespeare (1564-1616), Hamlet

The most important single central fact about a free market is that no single exchange takes place unless both parties benefit.

Milton Friedman (1912-2006), American economist

November 12, 2012 -  Conventional wisdom has it that President Obama’s re-election victory cleared the way for implementation of Obamacare.   The first major barrier to fall  was the Supreme Court decision declaring the mandate constitutional.  Now  that Obama has won,  there is no more cause for procrastination.  Nothing concentrates the mind like a deadline, and that deadline is now December 14 for state health exchanges, designed to cover 23 million more Americans.

HHS Secretary Sibelius has given states until December 14 to make up their minds whether to create their own exchanges or have  the government will do it for them.  The goal is to have the exchanges running in every state by January 1, 2013 when the bulk of Obamacare kicks in.

As of now, that deadline may be unrealistic.   Eleven states- Alaska, Texas, Louisiana, Florida, South Carolina, Kansas, Missouri, South Dakota, Virginia, New Hampshire, and Maine – have decided not to establish exchanges; 16 have established them, 4 are planning to do so, 14 are studying their options;  in 6 there is no activity.

Exchanges are supposed to be a mechanism to more people to buy insurance by making side-by-side comparison for prices, what’s covered, and what to pay out of pocket .  The federal government  expects that 23 million  more people will be covered through exchanges.  Many states, particularly those 30 states with Republican governors,  are balking because they say they cannot afford federal intervention, and besides, they get no benefits, and they could run these exchanges cheaper and better.  These different perceptions have all the makings of political controversy.

 One central fact people forget about the Presidential election is that the country is still split down the middle.   Although Obama won a resounding electoral college victory,  the popular vote margin was just 50% to 48%,  and the majority of states, but not the majority of the population,  favored Romney.   This is important because 30 of 50 states have Republican governors, and the majority of these governors oppose Obamacare and the setting up of health exchanges.

Governor Sam Brownback of Kansas,  expresses the tthe attitude of dissenting states,  “My administration will not partner with the federal government to create a state-federal partnership insurance exchange because we will not benefit from it and implementing it could cost Kansas taxpayers millions of dollars."

Many states are simply waiting for  HHS to give them the rules for the exchanges - to spell out what a federally run exchange would look like.

Other states have  asked if they can do a hybrid, with the state running part and the federal government running part of the exchange.

The federal government hasn’t published those rules. They are currently awaiting approval at the Office of Management and Budget. "We intend to issue further guidance to assist you in the very near future," Sebelius wrote the governors."This administration is committed to providing significant flexibility for building a marketplace that best meets your state's needs," Sebelius added.

This sounds to me like another Obamacare SNAFU – Situation Normal All Fouled Up.  President Obama may get his way, but in the end,  it will not be pretty, and he will have to demonstrate federal exchanges are of some benefit to the states.

Not to warry.    Health exchanges are simply another giant progressive step towards the Welfare State (Robert Samuelson,  "It's the Welfare State, Stupid, Washington Post,  November 12, 2012).

Tweet:  Obamacare dictates that all states must declare how they will implement health exchanges by December 14, but 11 states has said they will not do so.