Republican governors reject healthcare law's exchanges in Ohio, Wisconsin

Two Republican governors said Friday they will not implement a key part of President Obama's healthcare law.

Ohio Gov. John Kasich and Wisconsin Gov. Scott Walker said they will not set up state-based insurance exchanges, meaning the federal government will have to step in to run the new marketplaces in those states.

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Speaker John Boehner (R-Ohio) praised Kasich's decision.

“I’m proud of my governor, John Kasich, for taking a stand and resisting the federal takeover of healthcare in Ohio," Boehner said in a statement. "By declining to implement a government-run ‘exchange’ and preserving Ohio’s ability to regulate health insurance on its own, Gov. Kasich is protecting Ohio families and small businesses from some of the steep costs and red tape created by ObamaCare."

Kasich said he rejected a state-based exchange because the healthcare law does not provide enough flexibility to states.

"Despite the perception to the contrary, the law gives states little flexibility or control over how the exchange in their state operates, making it difficult for Ohio to set up an exchange that responds to the unique needs of Ohioans or the Ohio insurance market," his office said in a statement.

The statement outlining Kasich's decision includes a bold heading that says, "Ohio will not let the federal government take over any regulatory control of its insurance industry." But that's exactly what Kasich's decision does.

Although insurance will still be regulated primarily at the state level, the federal government will now have total control over all the functions of Ohio's exchange, such as the number of plans that can participate and whether to impose requirements above and beyond those spelled out in the law.

Despite the threat of greater federal involvement, GOP governors are under pressure from conservatives to reject state-run exchanges. 

Burdening the federal implementation effort is seen as the best chance to marginalize "ObamaCare" now that its implementation is assured following Obama's reelection.

Kasich and Walker apparently didn't need the extra time provided Thursday by the Health and Human Services Department. The deadline to make a decision on a state-based exchange was initially set for Friday, but HHS pushed it back a month at the request of GOP governors.

With Kasich and Walker now on the record, only six states have yet to say whether they'll create their own exchanges.