Megan McArdle argues that the small-state exchanges were never going to make it — too much overhead and not enough customers. So her question is, why did the Wiggleroom Administration twist so many arms in places like DC and Hawaii? Read:
But the administration went far beyond “option”: It aggressively pushed state exchanges, repeatedly extending the deadline to decide until long after it was too late for anyone, state or federal, to do a good job building one. I can understand why they’d push big states such as Texas and Florida to build exchanges. But why encourage the District of Columbia, Hawaii and Rhode Island to follow suit? Arithmetically, it was unlikely that any of them would insure enough people to become financially viable — and certainly not in the time frame called for by the law. Why not quietly point out the terrible math and suggest they go federal?
Yes, yes, I know: The federal government forgot to allocate itself development money in the draft bill, which meant that adding more states was a financial burden. But that’s not a great justification for wasting huge sums of federal and state money on exchanges that seem unlikely to ever be viable. And what were these little states thinking? The mind boggles.
A cynic might think that the whole operation was nothing but crony capitalism and featherbedding. The states’ job was to shovel out the money to favored businesses, hire loyal Dems, and then wait for the inevitable federal bailout.
How cynical are you feeling this morning?