Wednesday, July 23, 2014

Who's going to pay up

Tuesday's ruling on Obamacare subsidies raises the question - who's going to pay?
Will states pay to build their own exchanges for their residents to get money?
Or will those residents have to pay the full freight of their new insurance policies?
The big question is, first, how many states decide to create exchanges? I’ve heard from several people today who thought it was obvious that most of the 36 states now on federal exchanges would simply withdraw and build their own in order to keep the subsidies flowing. This seems quite possible, because voters hate losing stuff, and especially subsidies. And state legislators do love them some free money.
On the other hand, that outcome is hardly inevitable. Law professor Jonathan Adler pointed out in a conference call yesterday that Ohio would have to amend its constitution to allow the government to establish a state exchange, and barriers in some other states are high as well. State exchanges cost millions to build and to run. States can still apply for federal money to build exchanges, Adler said, but the annual operating costs have to come out of either user fees or tax revenue. In lower population states, or poor states, that might be enough to keep legislators on the sidelines.

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