Half of states leave health insurance exchanges to the federal government

The deadline for states to commit to creating their own health insurance exchanges under Obamacare was Friday, with half the states ultimately refusing to do so, leaving the federal government with that job. That includes some of the country's most populous states.

New Jersey, Ohio and Florida, several of the biggest states that had not declared their intentions, officially said no late in the week.

"I have determined that federal operation of the Exchange is the responsible choice for our state," New Jersey Gov. Chris Christie, a Republican, wrote in letter Friday to Kathleen Sebelius, secretary of the Department of Health and Human Services.

For consumers, it should make little difference whether the new Internet sites are run from state capitals or Washington, D.C. But federal regulators hoped states would shoulder some of the work and stakeholder groups such as hospitals and insurers wanted states to help as well. The exchanges will open for business Oct. 1. [...]

Twenty-five states, most Republican-led, have said they will let the federal government run the marketplaces, also known as exchanges. And seven governors from Arkansas, Delaware, Illinois, Iowa, Michigan, New Hampshire and South Dakota have sought approval for the third option'a partnership with the federal government.  Three of those'Arkansas, Delaware and Illinois'have already received conditional approval. A report by the Charleston, W. Va., Gazette said West Virginia also decided late Friday to opt for a partnership with the federal government.

Setting up a system for 25 states puts a strain on the federal government that wasn't really planned for in the development of the law. It means a massive ramp-up to Oct. 1, one that has to deal with all the varying existing state regulations and create a mega-exchange. More significantly, it's a massive technological challenge. Because it will essentially be a huge database behind the online interface the public will use, all of the disparate state database systems will have to be reconciled. It's all about who's eligible and at what subsidy level, including Medicaid eligibility. So the large exchange will have to merge tax files, immigration status, Medicaid rolls, and more from the varying states. By not participating, these mostly Republican governors are attempting to throw the ultimate monkey wrench into the mix, still hoping to kill the law.

On the other hand, there tremendous opportunity, if the feds can make this work by Oct. 1. A robust, national health insurance marketplace could ultimately be cheaper and more efficient. It could be the model that shows a national health care system works, taking us one step closer to a public national health care system.