Can a State Opt Out of Obamacare?

The Affordable Care Act (ACA), or Obamacare, is not only a law, it is a federal program that provides every American with affordable health insurance options based on their needs and their particular circumstances. Because it is available to every U.S. citizen, states cannot “opt out” of the program, per se. That said, some states have not entirely gotten on board with Obamacare yet, mainly due to the cost of transitioning and contentions regarding certain points of legislation. For example, several lawsuits were launched against the ACA, some of which are ongoing and some have been settled by Supreme Court (and lower court) rulings. So why are some states still balking?

While individual states cannot opt out of Obamacare, there are certain aspects of the law they can opt out of, or at least delay. For example, every state is required to offer a health insurance exchange for residents through which they can enroll. When Obamacare was enacted, every state was offered federal assistance in setting up these exchanges. Many took the assistance and set up their own state-run exchanges. Some partnered with other states in order to reduce the cost and effort involved. Others opted out.

This doesn’t mean they didn’t have to adopt state health insurance exchanges. They simply elected not to accept federal assistance in setting up their own exchanges. Because every state is required to have an exchange in place so that residents can take advantage of Obamacare, those that elected to forego federal assistance in setting up their exchange instead received exchanges created and managed by the federal government. They didn’t necessarily have to set up their own exchanges, but the trade-off was that they lost the ability to control the implementation and management of the exchange for their state.

Along those lines, there was one case that allowed states to opt out of a portion of the Obamacare plan. In the 2012 case NFIB v Sebelius it was ruled that states did not have to participate in the proposed Medicaid expansion if they so chose. Although states were initially required to join the federal government in funding the expansion of Medicaid benefits and services for needy Americans, the Supreme Court ruling allowed each state to decide whether or not they would contribute, regardless of whether they accepted federal funding or not. While many states ended up contributing state funds to the Medicaid expansion and providing additional benefits for low-income residents and other underserved groups, several states elected to opt out.

Residents of states that opted out of Medicaid expansion do have some recourse. If you have been denied Medicaid because your state opted out, you may be eligible for a hardship exemption. All you have to do is file an application to see what type of assistance or exemption you might qualify for.

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