The federal Affordable Care Act calls for the creation of health insurance exchanges. States can create their own exchanges. But the federal government will step in with its own exchange if a state does not create one.
A story in today’s Richmond Times-Dispatch reports that Virginia Governor Bob McDonell “wants Virginia to operate its own health insurance exchange, but only if the U.S. Supreme Court upholds the federal mandate that all individuals have health insurance.” According to the story, “McDonnell said he hopes the Supreme Court will strike down the individual mandate, rendering an exchange unnecessary, but he made clear that he wants Virginia to operate the exchange if the law stands.”
The story suggests a direct connection between the constitutionality of the mandate and the need to create health insurance exchanges. But the need to create health insurance exchanges will most likely remain even if the Supreme Court holds that the mandate is unconstitutional. The only way that the health insurance exchanges go away is a holding that the mandate is inseverable from the provisions of law that govern the creation and operation of health insurance exchanges. Unfortunately, severability doctrine–which governs such determinations–is murky and manipulable. The uncertainty about the health insurance exchanges is a direct result of this faulty doctrine. (For my attempt to address the problems with severability doctrine, see Partial Unconstitutionality, 85 N.Y.U. L. Rev. 738 (2010).)