When the Affordable Care Act was first implemented, many (mainly Republican) states refused to set up health insurance exchanges, putting pressure on the federal government to run the exchange. The hope was that it would fail having to coordinate coverage for more than half the nation. When the exchanges largely functioned as they should, a lawsuit was filed claiming that the federal exchanges were not legal under the law. The suit eventually made it to the Supreme Court where the Court ruled that the exchanges were indeed legal and could continue. This prevented tens of thousands of Americans from losing their coverage.
It has also opened the door for more states to shut down their failing exchanges and rely on the federal government's.
The initial rollout of the federal exchange was less than smooth. Delays and technical issues had the healthcare.gov site down and forced an extension of the initial enrollment period. As national attention focused on the federal website, the 14 states that chose to run their own sites were having varying degrees of success. All together these states, along with the District of Columbia, represented less than a third of the U.S. population. In the early months of open enrollment, however, these same states accounted for nearly half of all Medicaid enrollments and 75 percent of the private insurance signups. This was due in large part of the state run website exchanges outperforming the federal one.
Kentucky, the lone red state that decided to run its own exchange, had one of the most trouble-free experiences. Due to its simple interface, it far outpaced large exchanges in the number of enrollments, averaging almost 1,400 enrollments per week for private insurance and enrolling 29,000 in Medicaid in its first month of operation. As the exchanges got larger across the states, more problems would present themselves, largely due to the volume of visitors and issues regarding the exchange of data with insurance providers.
Still, for many states, the roll out was less than spectacular. The federal government spent more than $4 billion to help states set up their exchanges. There were myriad reasons why different state exchanges failed, but all were some combination of politics, poor planning, poor technological design (including hardware and software), and contractors that were not up to the herculean task of setting up a health exchange.
As a result, three of the states, Oregon, Nevada and Massachusetts, shut down their exchanges while they tried to rectify the problem and sent their residents to the healthcare.gov website. Massachusetts has plans to reopen its exchange in the next enrollment period. Now nearly half of the remaining states are considering whether they want to continue their own exchanges and how. While some are continuing to have technical issues, for most it's due to costs from not having enough enrollees.
Hawaii and Colorado have not had enough enrollees to maintain the costs of the exchange. Hawaii will now join the federal exchange along with Oregon and Nevada for the upcoming enrollment period. Colorado is also considering dismantling theirs, but is looking at other solutions. For smaller states the costs can be prohibitive if there aren't enough people to use the exchange. Several are looking at options to reducing costs such as creating regional exchanges or pooling resources for administrative tasks such as call centers.
For larger states, like California which has one of the most successful enrollments and exchanges in the nation, they are much better off maintaining their independence, control costs, and offer a better range of plans. However, with the federal government handling enrollment for most of the nation, there it could be more effective for most states to use their exchange. This, of course, is exactly what opponents did not want.
After all, it would not be a huge leap to go from handling signups through one central system and having people pay directly to the government, instead of insurance companies, when they signed up. That would also give the government more buying power and control over the types of plans offered, lowering costs even further. Not to mention, they could make the rules as to what would be covered.
In other words, in a bit of karmic retribution, opponents' efforts to stop Obamacare has led to further consolidation with the federal government and may have just opened the door to their worst nightmare – a single payer healthcare system.