Running the exchanges would be an administrative nightmare for states, requiring a complicated set of rules, mandates, databases and interfaces to establish eligibility, funnel subsidies, and facilitate purchases. All of this would have to take place under broad and often incoherent statutory requirements and federal regulations that have yet to be written.
The exchanges would create unsustainable pressures on each state’s insurance market, treating similarly situated people differently by providing far greater subsidies for those in the exchanges than those in employer plans — yielding perverse incentives that distort consumer and employer decisions and increase costs.
States would endure all this simply to become functionaries of the federal government. The idea that creating state exchanges would give states control over their insurance markets is a fantasy. The states would be enforcing a federal law and federal regulations, with very little room for independent judgment.
James C. Capretta and Yuval Levin in The Wall Street Journal.