One More Reason Why States Should Decline to Implement ObamaCare's Insurance Exchanges

Last year's health care overhaul calls for every state to set up its own, individual health insurance exchange. In states that don't, the law gives the federal government, through the Obama administration's Department of Health and Human Services, the power to step in and do it for them. What it doesn't do, apparently, is set aside any dedicated funding for the administration to do so. From Politico:

While sorting out the policy kinks in setting up a federal exchange, HHS must tackle another problem: There is no money to pay for it.

A quirk in the Affordable Care Act is that while it gives HHS the authority to create a federal exchange for states that don't set up their own, it doesn't actually provide any funding to do so. By contrast, the law appropriates essentially unlimited sums for helping states create their own exchanges.

The lack of funding for a federal exchange complicates what is already a difficult task. HHS will likely be operating exchanges in states like Louisiana and Florida that oppose the ACA on principle and have said they will not comply with the exchange provisions. But HHS also will likely be responsible for several other states that may want to set up exchanges, but will be unable to enact laws and set up the infrastructure under the short time frame specified by the law.

Now, the HHS may still have creative alternatives—shifting money from one place in its budget to another, or delaying contractor payments until after the exchanges are built. But at minimum, it's going to complicate the job of building a federally run exchange. 

Practically, this means that states opposed to the law and its exchange requirements have even more reason to refuse to set up the exchanges. Think of a state like Missouri. Voters in the state are on record as being deeply opposed to the law's individual mandate to purchase health insurance. And state officials have indicated that the reason they favor building the exchanges is to avoid federal intervention. ("If we don't act, the federal government will, and that's the last thing Missourians want," state GOP Rep. Chris Molendorp told the St. Louis Post-Dispatch in July.) But without any dedicated funding, the threat of HHS muscling is, at the very least, somewhat reduced, and states that have declined to comply have a much better chance of successfully avoiding the exchanges entirely.  

More on why states looking for ways to oppose the law should avoid the exchanges here and here.