Aaron McKethan on the State-Based ACA Exchanges

by Reihan Salam

Aaron McKethan, an executive at the health start-up RxAnte, argues that Republican governors ought to set up exchanges under the Affordable Care Act for the reason following reason: If they do not set up state-based exchanges, the federal government will expand its national insurance exchange. This seems unlikely, however, as the federal government will be obligated to establish state-based exchanges that are in compliance with state regulations governing medical insurers. Indeed, the impossibility of simply cloning one exchange model across all of the states in which the federal government will have to establish an exchange is a source of concern among those charged with implementing the ACA.

That said, McKethan offers a number of ideas for Republican governors who choose to establish state-based exchanges, e.g., he suggests that they should work to secure policy waivers that would allow them to tweak benefit design requirements and establish market-based payment incentives for high-quality care, among other things. He also floats a more ambitious idea:

If you want to be really aggressive, you could even try to secure a waiver to offer more affordable insurance options with lower actuarial requirements or more limited benefits than those currently required under Obamacare. This would be very hard for the White House to swallow given concerns about excessive cost exposure for low-income people. But if it means more states like yours will share the responsibility of administering insurance exchanges, perhaps this is a concession Washington would be willing to consider, especially given likely implementation challenges associated with setting up a larger-than-expected national exchange within very tight timelines. 

Ultimately, McKethan’s case rests on the notion that ACA is here to stay. Given its many vulnerabilities, however, it is not obvious to me that it is going to materialize in anything other than a radically revised form, which suggests that the reluctance on the part of Republican governors to embrace it is not unreasonable. Come 2014 or 2015, that may well change. 

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.