Nevada’s burden in enacting ObamaCare

Life under ObamaCare is no longer hypothetical. On Tuesday the state Board of Examiners approved a $72 million contract to implement a Nevada health insurance exchange, required under the federal Patient Protection and Affordable Care Act.

The contract authorizes Xerox State Healthcare to set up the computer system and operations necessary to begin enrolling people by October 2013. Gov. Brian Sandoval wisely warned the program will need to become self-sustaining if it is to continue.

As a candidate, Gov. Sandoval opposed the federal health care takeover, the constitutionality of which was largely upheld by the U.S. Supreme Court two months ago.

The exchanges are supposed to allow Americans to sign up for coverage with their states to replace insurance benefits with existing private companies. Many of these companies can be expected to change their models - if not depart the business entirely - as the new law incrementally imposes new costs at the same time it curbs potential revenues, both for the insurers and for the doctors who sign up with them.

Gov. Sandoval signed legislation last year creating Nevada's insurance exchange. In doing so, he bowed to federal pressure, saying it was in the state's best interest to set up its own program rather than cede control to Washington, which could then charge the state as it saw fit.

But the Republican governor said he would oppose long-term funding of the exchange if it would take money away from other state programs or raise insurance premium taxes.

The new contract contains termination and other safeguards should the federal law be repealed by Congress, should federal grants be denied, or should the state decide not to continue the exchange program, says Jon Hager, executive director of the Silver State Health Insurance Exchange.

Good.

However, while Nevada has received $25 million and state officials hope to win approval within the next few days for an additional $50 million from Washington, the state would assume all operational costs as of Jan. 1, 2015.

Mr. Hager estimates the last two years of the contract will cost $36.8 million. And if you believe the costs can't go higher than that, by all means go to the nearest sports book and bet the New York Giants won't score more than 10 points against the Cleveland Browns on Oct. 7 - our local oddsmakers await you!

It's an old story: The federal government dangles a few years worth of subsidies to get the states signed up. Then, a few years down the road, once the program is on the books, any attempt to pare it back is guaranteed to bring cries of heartlessness, and the next round of tax hikes becomes the new normal.