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JOHN E. SUNUNU

Obamacare’s tricky state ‘partnerships’

Government loves deadlines. Creating them must give someone a sense of efficiency — at least until they’re ignored. Spending cuts finally kicked in on March 1. Taxes are due April 15. Under the Affordable Care Act, as Obamacare is officially known, deadlines for creating health insurance exchanges crash like waves on a beach. States had until Dec. 15 to announce their own exchange; regulators were supposed to certify those plans by Jan. 1. When just 17 states opted to run their own pools, the government set a new Feb. 15 deadline to join a federal “partnership” overseeing the program.

Like the word “deadline,” “partnership” means different things to different people. In nature, bald eagles mate for life, often building and expanding the same nest for decades. The partnership between the elephant and dung beetle is much less majestic. And in any partnership between states and the federal government, we know who plays the elephant — and who’s left to pick through what it leaves behind.

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Obamacare proponents were quick to denounce the 26 Republican governors who refused to set up any form of state exchange. Politics surely played a role in their decisions, and why not? The health care bill passed on a party-line vote in the Senate. Governors never asked for this responsibility, and they have legitimate practical concerns as well.

Normally, giving states power over insurance pools would appeal to these Republicans, who might appreciate a better chance to manage costs in an area historically regulated by the states. But this is different. The Affordable Care Act creates vast new federal regulations and enforcement powers — but also unknown expenses for states.

When Governor Chris Christie vetoed the bill to create a state exchange in New Jersey, he cited costs as his top concern. In Ohio, the accounting firm KPMG estimated $63 million in start-up costs and an operating tab of $43 million per year. Ultimately, the costs for administration, information systems, and customer service might be less than that — or much more. After grinding through years of cuts and shortfalls, few state officials are eager to take on this kind of financial uncertainty.

The federal health care law also creates political uncertainty. No one knows how well the exchanges, however much they cost, will work. Under community-rating standards, premiums are likely to increase for younger and healthier participants; consumers may not like the four specific plans mandated by the government; and customer service — something few government-run agencies do well — might fall short of expectations. Governors know this, and no politician wants to take the blame for the failure of a program they had no role in creating.

Unfortunately, failure is an option. Including the “partnerships,” the federal government will be operating health insurance exchanges for 33 states comprising roughly two-thirds of the 30 million people anticipated to be eligible. In other words, Washington bureaucrats must create an effective, user-friendly online system to serve 20 million customers spread across the entire country. They have nine months to complete the job. Hope springs eternal.

The partnership between the elephant and dung beetle is far from majestic.

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Some on the left, and in the media, have smugly noted the contrast between governors’ reluctance to set up exchanges with the recent decision in Ohio and other Republican-led states to participate in Obamacare’s Medicaid expansion. In the rush to claim hypocrisy, these commentators miss the point. The same fiscal concerns are at work in both cases.

States already manage Medicaid services and reimbursement. So they can readily estimate the incremental cost of additional participants. More important, the feds promise to cover all the additional costs for several years and 90 percent after that. States are effectively given the opportunity to add $1 in new services for a budget outlay of just 10 cents. That’s a difficult financial proposition even for opponents of Obamacare to refuse.

That new Medicaid spending — close to $1 trillion over 10 years — comes on top of the subsidies given to the state exchanges. These benefits, projected to average $4,780 per person, are available to families earning up to $90,000 per year. But there’s a catch: The federal health law provides for subsidies to those “enrolled . . . through an exchange established by the state.” Should the courts uphold that language and deny subsidies to the 26 states without exchanges, the employer mandate becomes invalid as well. Without the employer mandate, the law becomes ineffective.

Obamacare supporters might wave away such concerns as mere “challenges.” Opponents would call them a house of cards waiting to come down. Either way, we’ll know soon enough. There’s a deadline to be met.

John E. Sununu, a former Republican senator from New Hampshire, writes regularly for the Globe.
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