The exchanges, authorized under the Affordable Care Act, are one-stop marketplaces for consumers aimed at making the purchase of health insurance as easy as buying a book on Amazon.com. The idea is rooted in conservative market-based principles, but Republicans argue that the regulations under Obamacare provide them too little flexibility. If a state declines to build an exchange, the law requires the federal government to craft one for them.
As the Obama administration sees it, Chaney has been committed to utilizing ACA resources to build a state-based exchange. But the stonewalling by Bryant -- who has refused to authorize a coordination strategy with other agencies he controls -- left the federal Department of Health and Human Services no choice under the statute but to turn down the state's application.
"With a lack of support from your Governor and no formal commitment to coordinate from other State agencies, we do not see a feasible pathway to conditionally approving a State-based Exchange in Mississippi for 2014," HHS official Gary Cohen wrote to Chaney in a letter Friday explaining the agency's decision.
The commissioner of insurance in Mississippi is a statewide elected office. Chaney, in his second term as commissioner, is a Republican.
Chaney told reporters that he was "sorely disappointed" by the outcome and warned that the "effect on this state is going to be draconian in nature." His spokesman did not immediately return a request for further comment.
One of the ACA's eligibility requirements for a state exchange is demonstrating "a coordination strategy with other agencies" that enables the exchange to carry out its activities.
Bryant, whose office did not immediately comment, recently voiced his fierce disapproval of the ACA and his opposition to a state-run exchange in an interview with Kaiser Health News. He argued it would drive too many people into Medicaid, which he does not intend to expand as the law permits, fearing that contrary to the law's requirement the state would pay the cost.
"This is a bait and switch," Bryant told Kaiser Health News.
Bryant is among many Republican governors who have used their power to block a state-run exchange, which reflects the wishes of conservative advocates. Others include Chris Christie of New Jersey, Bobby Jindal of Louisiana, John Kasich of Ohio. The White House wants states to embrace the exchanges so they have an incentive to make the law work.
In the HHS letter to Chaney, Cohen wrote that "we are impressed by the work you have completed to date" and encouraged him to apply for a federal-state partnership exchange by the Feb. 15 deadline. He called Mississippi an "excellent candidate" for that model.