Building ObamaCare's Insurance Exchanges Won't Be Easy

In my article on the new, state-based health insurance exchanges last week, I noted some of the difficulties states are likely to have with implementation. Today, Politico points to another potential trouble spot:

The biggest obstacle for Medicaid programs, according to a recent study by the nonpartisan Kaiser Family Foundation's Commission on Medicaid and the Uninsured, is setting up the new eligibility processes for the state insurance exchanges. People will be able to go to an exchange to determine in one swoop if they're eligible for Medicaid, for the law's tax subsidies or for buying insurance through the exchange.

The recent fight between insurers and California's state government over the passage of its exchange regulations made it clear that the creation of these new insurance marketplaces will entail a fair amount of political controversy in addition to implementation headaches. It will be most interesting to watch the politics play out in conservative states. Those states will be tasked with building and running exchange sunder fairly strict HHS scrutiny, a prospect that won't appeal to a lot of conservative governors or their voters. But the most obvious alternative they have is to step aside and allow the federal government to run the exchange directly, which may be even less appealing.

Much more on how ObamaCare will play out at the state level here.