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Fri Feb 22, 2013, 05:01 AM

Why Republican governors want Medicaid expansion but not exchanges

Medicaid is a government-run program, and the exchanges are market-based. They're just recognizing that government does better at funding health care than the market. On to single payer?


These same governors have, however, also eschewed another big Obamacare component: The exchanges. The three most recent Medicaid expansion converts—Florida’s Rick Scott, Michigan’s Rick Snyder and Ohio’s John Kasich—have all rejected the idea of setting up the marketplace, leaving it to the feds to do the work, instead (Michigan is splitting the difference and will run its market in partnership with the feds).

Why embrace one part of the health care law — a single-payer system that will stretch President Obama’s law to cover millions more Americans — while ditching the other more market-oriented aspect? It likely has to do with the big consequences for a governor who chooses not to expand Medicaid—versus the tiny reward with setting up a very complex insurance marketplace.

There’s not a lot riding on governors’ decision to build a health insurance exchange. The marketplaces certainly are important to the Affordable Care Act: They’re the online portals where millions of Americans will ultimately purchase health insurance, the key vehicle for delivering the health law’s insurance expansion.

Building a health exchange is a huge undertaking. Between connecting disparate government computer systems and creating a seamless shopping experience, industry analysts say that this process should take two or three years.

If governors cram it into 10 months, and the final product comes out subpar, they would likely take the blame. But if a governor doesn’t go through with building one, the federal government swoops in. It has promised that every state will have an insurance exchange by Oct. 1, the date that the new markets will open for enrollment.

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