North Carolina’s policies offered on its federally-facilitated exchange come with some of thehighest premium increases in the nation (mostly for males) compared to pre-Obamacare plans within the non-group market.  Using this information, supporters of the law make a popular claim that if North Carolina had opted for a state-based exchange, the state would possess more control over the operations of its health insurance marketplace.  More flexibility could then leverage more insurers to participate in the non-group market, effectively driving down the cost of premiums through healthy competition.

Sounds logical.

From a policy point of view, however, this may not be the case.  Under federal law, whether a state decides to go forward with a state or federal exchange, Health and Human Services Secretary Kathleen Sebelius must give final approval.  Michael Cannon, director of health policy studies at the Cato Institute, outlines why:

Three provisions of the PPACA give federal officials complete and total control over state-funded exchanges.  First, the Act empowers the Secretary of HHS to impose on state-funded exchanges, ‘such…requirements as the Secretary determines appropriate’.  Second, the Act specifies that states ‘may not establish rules that conflict with or prevent the application of regulations as promulgated by the Secretary.’ Third, the Act grants the secretary final authority to approve or reject a state-based exchange.