Enactment of the Patient Protection and Affordable Care Act (ACA) created a dilemma for Republican policy makers at the state level. States could maximize control over decision making and avoid federal intervention by establishing their own health insurance exchanges. Yet GOP leaders feared that creating exchanges would entrench a law they intensely opposed and undermine legal challenges to the ACA. Republicans' calculations were further complicated by uncertainty over the Supreme Court's ruling on the ACA's constitutionality and the outcome of the November 2012 elections. In the first year of operation, only seventeen states and the District of Columbia chose to design and implement their own exchanges; another six partnered with the federal government, and twenty-seven states ceded control to Washington. Out of thirty states with Republican governors in 2013, only four launched their own exchange. Why did many Republican-led states that initially appeared open to establishing exchanges ultimately reverse course? Drawing on interviews with state policy makers and secondary data, we trace the evolution of Republican responses to the exchange dilemma during 2010-13. We explore how exchanges became controversial and explain why so few Republican-led states opted for their own exchange, focusing on the intensifying resistance to Obamacare amid a rightward shift in state politics, partisan polarization, and uncertainty over the ACA's fate.