In the post below, I discussed the news that most states apparently are unwilling to establish health insurance exchanges, a key element of Obamacare. Accordingly, it will be up to the federal government to set up an exchange for individuals living in these states. But Congress didn’t allocate money for administering federal exchanges. Moreover, it can be argued that the law as written seems to prohibit federally run exchanges from providing subsidies to individuals.

But some analysts, including some conservatives, believe that governors will be making a big mistake if they don’t set up exchanges. Douglas Holtz-Eakin, for example, has warned Republicans that they will be “outfoxed and overrun” if they leave the exchanges to Obama administration officials. He warns that the administration could impose too many regulations, ultimately ruining the exchanges and opening the door to a “Washington takeover of health care.” “If conservatives allow it to happen,” says Holtz-Eakin, “they will be consenting to an unprecedented and potentially irreversible intrusion into states’ economies and health-care systems.”

This assumes that the Obama administration will find the money to set up the exchanges and that court challenges will fail. Moreover, if the feds “ruin” their exchange, wouldn’t it require new legislation to replace it with a full “Washington takeover of health care?”

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