For example, although the law sets baseline standards such as essential benefits that insurers must offer if they wish to sell plans on the exchanges, states can add any mandates. A state could require insurers to prove that their policies are achieving certain outcomes - high child immunization rates, for instance. Or it could allow virtually all comers into its exchange in hopes that doing so would keep costs lower.
States will also have to decide whether they will run the exchanges or outsource their oversight to a private entity.
Similarly, although the law requires states to review "unreasonable" premium increases, it will largely be up to each state to determine what that review process entails. States could require insurers to offer detailed justification and seek preauthorization for any rate increases. Or they could ignore all but the most substantial rate increases, and even then, simply require that insurers file reports detailing their reasons for the rise.
State approaches to insurance regulation differ substantially, and the range was evident in the variations among recent state applications for federal grant money that the law provides to help them develop their new rate review processes. Five states - Alaska, Georgia, Iowa, Minnesota and Wyoming - did not even request funding.
States will also be in a position to exert pressure on the federal government when it comes to the law's requirement that insurers spend 80 to 85 percent of the premiums they collect to pay medical claims or otherwise improve their customers' health. If a state thinks the requirement would cause too many insurers to drop out of its market, it can ask the Department of Health and Human Services for a waiver. Iowa and Maine have already done so, and other states are likely follow.
HHS has the final say. However, it could prove awkward for Secretary Kathleen Sebelius to turn down insurers backed by state governments.
Regardless of what regulations state governments choose to set, their willingness to commit the staff and resources needed to carry them out could also vary considerably.
"Having rules on paper and enforcing rules are not synonymous," said Alan Weil, executive director of the National Academy for State Health Policy, a nonpartisan group that has been monitoring and facilitating state implementation efforts.
In other words, it won't stop states from taking federal money...but there's the distinct possibility they will set up a program that will do nothing to provide oversight or cost controls for exchanges, or that they will simply put all existing insurers into the state in the exchange and then refuse to enforce anything, or just get a waiver and ignore the provisions altogether.
When health care costs continue to skyrocket in those states, the Republicans will blame "the failure of Obamacare." Frankly, it's a good plan. Americans are not interested in whom to blame, but only in results. And when the results are health insurance providers can jack up rates as high as they want in these states and blame Obama, the Republicans are going to have a lot of capital towards a real repeal effort in 2012.