Another example is “conservative” complaints that, with Obamacare here to stay (misconception number one; although its repeal has gotten harder), the states perforce must set up state health insurance exchanges, rather than leaving that to the Federal government.  One example is from Douglas Holtz-Eakin, Congressional Budget Office Director under President Bush the Younger, who has

repeatedly warned GOP officials that they will be “outfoxed and overrun” if they leave the exchanges to Obama administration officials.

He warned that the administration could impose too many regulations, ultimately ruining the exchanges and opening the door to a “Washington takeover of health care.”  He added, “If conservatives allow it to happen, they will be consenting to an unprecedented and potentially irreversible intrusion into states’ economies and health-care systems.”

Holtz-Eakin misunderstands, though.  With the Feds retaining the rules by which the exchanges will be allowed to operate—including what coverages must be offered and the rate bands within which they must be offered—and declining to discuss costs, a “Washington takeover of health care” is already in progress.  State-run exchanges, whose function is controlled by the Federal govenrment already represent “an unprecedented and potentially irreversible intrusion into states’ economies and health-care systems.”  That’s the primary misconception in this context: that the states have any useful control over “state-run” exchanges.

Moreover, any Federal funds allocated to state-run exchanges will be on the one hand, by design inadequate to cover the total cost of the exchanges and on the other hand are easily withheld or cancelled outright, leaving the whole of the expense to the states’ citizens to cover.  But this risk simply draws the states further into dependency on the Federal government.

The upshot is that these exchanges contribute to placing the states into the same relationship to the central government as counties are relative to their states: “merely as districts to facilitate the purposes of domestic order and good government,” in John Jay’s words.

The states are right to decline to share the costs, and they are right to decline voluntarily to participate in the continued derogation of their position vis-à-vis the Federal government.