Published for Commentary Magazine, February 21, 2013

ObamaCare survived both the Supreme Court challenge to its constitutionality at the beginning of 2012 and the election close to year’s end. With these obstacles to its existence vaulted, the health-care plan can not be repealed before its full implementation begins in 2014. Even so, this disastrous piece of legislation is actually facing its greatest challenge yet. The Obama administration must now begin putting the practical pieces of its byzantine law into effect.

ObamaCare, all 2,700 pages of it, is being activated in two phases. First is the imposition of new rules and regulations on insurers, a process that has already begun. It is now clear that the law will not curb rising health-care costs, as its advocates heatedly and repeatedly promised during the year leading up to its passage in 2010. Led by the president, they claimed the new law would reduce health-insurance rates by $2,500. Since its passage, rates have instead gone up by more than $3,065—a spread in excess of $5,500 per family. Even more requirements will mean even higher costs. And more requirements are coming.

The second phase is more troublesome. The law calls for the establishment of 50 health-care “exchanges,” one per state. The battle over the development of these exchanges will dominate the health-policy debates in 2013, and the ultimate disposition of that battle will tell us most of what we will need to know about the future of innovation and access to medical care in our system.

What is an “exchange”? Exchanges are, quite simply, organized marketplaces aimed at facilitating the purchase of insurance. While the ObamaCare law calls for them to be state-run and regulated heavily by the federal government, they could also be quasi-governmental or nongovernmental. Exchanges are not insurers themselves, but they work with private insurers and give insurers a platform for selling their products while making it easier for individuals to purchase insurance.

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