Oh by the way, those state-run ObamaCare exchanges are in huge financial trouble

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Published by: Dan Calabrese on Friday May 01st, 2015

Who saw this "unexpected and serious challenge" coming?

If ObamaCare is working marvelously, as Democrats and the media would have you believe, someone might want to inform the states who jumped right in and set up ObamaCare exchanges. They're having major financial challenges running the exchanges, the Washington Post reports:

Many of the online exchanges are wrestling with surging costs, especially for balky technology and expensive customer-call centers — and tepid enrollment numbers. To ease the fiscal distress, officials are considering raising fees on insurers, sharing costs with other states and pressing state lawmakers for cash infusions. Some are weighing turning over part or all of their troubled marketplaces to the federal exchange, HealthCare.gov, which is now working smoothly.

The latest challenges come at a critical time. With two enrollment periods completed, the law has sharply reduced the number of uninsured and is starting to force change in the nation’s sprawling health-care system. But the law remains highly controversial and faces another threat: The Supreme Court will decide by the end of June whether consumers in the 34 states using the federal exchange will be barred from receiving subsidies to buy insurance.

If the court strikes down subsidies in the federal exchange, the states that are struggling financially might be less likely to turn over all operations to the federal marketplace because they want to make sure their residents don’t lose subsidies to help them buy insurance. If the court upholds subsidies for the federal exchange, some states may step up efforts to transfer operations to HealthCare.gov.

"Everyone is looking at all the options,” said Jim Wadleigh, executive director of Connecticut’s exchange, considered one of the most successful of the state marketplaces. While states are “trying to find ways to become self-sustaining,” he added, it is an open question whether they will succeed.

States have received nearly $5 billion in federal grants to establish the online marketplaces used by consumers to enroll in health plans under the ACA. The federal funding ended at the beginning of the year, and exchanges now are required to cover their operating costs.

So it is any time the states take on the administration of a massive new federal entitlement, with the promise of short-term federal money to help set it up. At first it's "free money," but it soon becomes a burden the states have no capacity to sustain over the long term. The same thing is going to happen with the Medicaid expansion, by the way. That first three years of federal support only has about a year to go.

But back to the state exchanges, how do you like the idea that they might all shut down and turn things over to the feds? That becomes pretty complicated if King v. Burwell doesn't go the White House's way, but you have to think that the long-term vision was to see it go this way all along. Democrats never want to turn anything over to the states if Washington can control it, but sometimes they'll feign a willingness to let the states run things even as they structure it in such a way that they know the states will end up looking to the feds to take over.

By the way, if the exchanges end up imposing new fees on the insurers, who do you think will pay for that? Of course. We've already blown way past Obama's initial promise that ObamaCare would cut the average family's annual health premium by $2,500. Now they think they're keeping their promise because the increase in your premium is lower than it might have been in some alternate universe. Now? Get ready to be hit again. It's all in the service of universal coverage.

Just remember: Some of us told you all along that the main proposition of ObamaCare was economically impossible. You cannot give everyone coverage, have everyone pay the same regardless of pre-existing conditions, have see the price go down. That. Cannot. Happen. Any more than the sun can set in the east. These exchanges were established by politicians who don't understand the economics of health care or anything else, but understand how to buy votes.

Actually, they don't even understand that. ObamaCare has been a political millstone around Democrats' necks since they passed it. Yes, Obama was barely re-elected in 2012 but Democrats were shellacked in the 2010 and 2014 mid-terms, and ObamaCare was the leading issue both times. This thing is a disaster in every way, and the Republicans who now control Congress should stop being terrified about the political consequences of repeal and start working on a market-based successor to this turkey immediately.

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