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"2) If a State does set up an exchange and realizes they can't handle the additional financial burden can they end the exchange and allow HHS to run it?"

The problem is two fold

1) If the states agree to set up their own exchange, they must ALSO accept 'expanded Medicaid' program. In this, those now 'qualifying' , and that is about 15-20 million nationwide, will be subsidized 100% for the first 3 years after signing up, then only 90% for the next 3 years. And then? No one knows?

So, in 3 years, the states could be saddled with tens of millions of dollars of new Medicaid costs, over which it has no control (those folks will be signed up via new Federal standards, not state standards). It could also force the states to expand their existing payments to Medicaid, which is already 25% of many state budgets.

So, in reality, states might have to raise their own taxes in 3 years by 20-50% to cover the 'new' Medicaid and to cover the existing Medicaid people who will likely now be 'guaranteed' new platinum level benefits by the feds through mandates.

Many states are now restricting Medicaid as it is killing their budgets.

So smart governors realize that this is a pig in a poke that might force them, with no recourse, to raise their state income tax and other taxes to get 50% more revenue in less than six years, years after years. In other words, cost shifting from the feds.

If the don't set up state exchanges, they are not obligated to do the 'expanded Medicaid'. Uncle Sam would be forced, if it wants it, to pay 100% forever on it through a mandate. Or simply could not force the states to do it.

That's the bottom line

2) There are no requirements yet as to what must be provided. Just guidelines. It's a pig in a poke.

Spend tens of millions or hundreds of millions on computer systems, hiring thousands of people to do the software, do the phone answering systems, set up hundreds of offices everywhere in the state, and get insurance companies to give you 'quotes' that meet the non-existing fed standards, plus of course, your own state insurance requirements. Handle billions in payments, and complains about medical insurance coverage, late payments, non-payments.

Just how are states going to withhold money from everyone? Some states have no income way to garnish paychecks for your mandatory monthly payment......

Massive new systems?

Sorry, the states looked at the benefits and cost and opted out.

The feds will 'step in'..and that will be interesting. Will the feds automatically take the payments out of your paycheck for your health insurance to be sure you pay it? Will it do it from your SS check until you reach Medicare age? How about your disability check or other check?

It's a nightmare.......

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