In the coming days, the U.S. Supreme Court will most likely either invalidate the entire Obamacare law, uphold it all, or toss out the “individual mandate” and leave the rest intact.

Many observers are betting on that last, which means all the law’s other mandates, restrictions and subsidies will go forward, including the "gun to the head" choice for states to either create their own exchange to administer the law's massive subsidies, or risk a federal-run version that may impose additional insurance market disruptions.

This would place Michigan legislators right back where they were late last year, when the state House put off deciding on a Senate-passed exchange bill until after the Supreme Court Justices ruling.

The bill passed by the Senate last November is a curious conglomeration of two creatures alien to each other and to free market principles: The first is an "Obamacare exchange," essentially a government agency that will assign each person to either Medicaid or a government-approved insurance policy the individual selects, and which then gets information on the person’s income from the IRS to determine how much the government will subsidize.

The second is a so-called "Utah" or "Heritage" type exchange, which essentially allows individuals to benefit from the tax deduction employers are allowed to take for the cost of employee health insurance they provide (current law prohibits the same deduction if an individual or family buys their own coverage).

By going through the exchange, a business can kick-in a limited amount toward the cost of an employee’s health insurance. The individual chooses the coverage, can take the policy from one job to another and gets a tax deduction on the entire amount — the part the employer chooses to pay and the remaining portion the employee pays.

Gov. Rick Snyder has indicated he favors a "Utah" exchange, and the Senate-passed bill sets up the architecture for one as well as for an Obamacare exchange. The Beehive State created one of these a few years ago, but so far very few employers have used it. Many free market health care experts believe it just creates another layer of administration for companies, and represents an attractive nuisance for government regulators who will use the exchange to manipulate insurance markets, ultimately driving up prices and increasing bureaucratic control even further.

The two types of exchanges are mutually exclusive. If Obamacare survives, the "Utah" exchange in effect becomes a dead letter in all but name. Combining both entities into a single bill explains why much of the rhetoric from supportive Republican state senators was so disjointed. A Senator would say "the feds are coming, we have to do this" and in the next sentence wax lyrical about the "free-market innovation and consumer choice" the bill would create.

Importantly, the rationale for a "Utah" exchange largely rests on the preservation of a primary cause of America's health care system dysfunction, which is the tax deduction employers can claim for insurance provided to employees. While explaining how this dramatically skews markets and drives up costs is beyond the scope of this article, a hint is provided by imagining that auto insurance was tax deductible and provided by employers. (Example: How hard would you shop for tires if you only had to shell-out a $10 co-pay no matter what brand you bought?)

However, if Obamacare opponents are sincere about the promise implicit in their “repeal and replace” rhetoric, and intend to finally get serious about fixing our health care system’s dysfunctions, gradually eliminating tax deductions for health insurance is an absolutely mandatory prerequisite. Indeed, whether any particular proposal is serious is revealed by whether it includes this provision. (This would not preclude some form of taxpayer-funded health care subsidy for individuals, especially those with chronic or serious preconditions, but that too is beyond the scope of this article.)

So lets connect the dots. Gov. Snyder and some Senate Republicans want to create a Utah-type insurance exchange (they call it the "MI Health Marketplace") that depends on Obamacare going away, and on Congress never enacting serious reforms of the type necessary to genuinely fix America’s dysfunctional health care system.

The tip-off that this is their intention comes from a provision that is not in the Senate-passed bill: A "sunset" clause that says, "If Obamacare goes away so does this law." The Senate was explicitly urged to include this by the director the state chapter of the National Federation of Independent Business, among others, and very deliberately chose not to do so.

Notwithstanding the above, an argument can be made that a “Utah" exchange would be a useful here. Free market defenders won't buy it, but (unlike Obamacare) this would not be the worst sin the state could commit against the spirit of Milton Friedman.

However, any debate on creating such an entity should be put off until after Obamacare is resolved, very possibly not until after the November election and the convening of  new Congress. If that law lives to impose its health care rationing and unsustainable deficits on America’s long-suffering health care consumers and taxpayers, the issue is moot: Utah-type exchanges will become a dead letter.

But if the Patient Protection and Affordable Care Act disappears, it should not leave any illegitimate offspring behind in the form of a "MI Health Marketplace" enacted under cover of Obamacare's "gun to the head choice" exchange choice (call it the "state legislator mandate").

Save any Utah-type exchange discussion for later, preferably after another election cycle where the issue is debated in the open and included in voters' choices.

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See also:

Careful What You Wish for on Health 'Exchange'

Obamacare 'Exchange' Opposite of 'Free Market'

Ten Reasons to Reject State Obamacare Exchange

Obamacare Exchange: The People or the Insurers? 

Creating Health 'Exchange' Entrenches Obamacare

ObamaCare's Michigan Collaborators