Should States Refuse to Implement ObamaCare's Health Insurance Exchanges?

Whether or not to follow through with ObamaCare's rate review regulations isn't the only tough decision states face about whether to follow the law's rules or let the federal government do it for them. States must make a similarly unpleasant choice when it comes to the law's health insurance exchanges. Via the St. Louis Post-Dispatch: 

One of the linchpins of the federal health care law passed last year is a requirement that each state establish an insurance exchange — a marketplace where individuals and small businesses can compare and buy private insurance plans.

The federal government will provide states with startup money to establish exchanges, which must be open for business by 2014. If a state declines to start one, the federal government can step in and do it.

With a January 2013 deadline to have an exchange plan ready, lawmakers in Missouri — particularly conservatives who have been outspoken in opposing the health care law — face a difficult proposition: set up the health care plan many of them oppose or do nothing and invite even more federal intervention.

"There really isn't much choice," said state Rep. Chris Molendorp, R-Raymore, who this year sponsored a bill to create an exchange in Missouri. "If we don't act, the federal government will, and that's the last thing Missourians want."

That's an understandable sentiment. But it may not be the best strategy. As I argued in March, states whose legislators oppose last year's health care law have a number of reasons to refuse to participate in implementing its requirements, particularly when it comes to the exchanges. For one thing, it's better policy: States authorities who follow the federal government's rules won't have much flexibility to set up their exchanges as they see fit. It's also better politics: Refusing to play ball with the federal government ensures that the federal government will have to take responsibility for the complex details of the law's implementation. Given that Missouri's residents voted overwhelmingly last year to reject one of ObamaCare's key features, the individual mandate to purchase health insurance, it's clear enough where the state's voters stand.

Finally, there's the constitutional question: Shouldn't states currently challenging the law's constitutionality—like Missouri—steer clear of implementing it?