The government cannot guarantee the security of data. From federal government agencies to state agencies, cyber attackers have been able to get to US citizens' private information through every level of government. Significant government data breaches, while uncommon, still happen. In June 2015, 21.5 million people were affected by a breach at the US Office of Personnel Management, and in October 2009, 76 million people were impacted by the government security breach at the National Archives and Record Administration.
The government cannot guarantee the security of data.
Having the government manage electronic identities is not smart because this info can get streamlined in one system. This will make it easier for cyber attackers to get access to the information of millions at any given time. If electronic identities are managed by several private companies, it would mean that not all the data would be stored under one system, thus making any potential security breaches less potent.
The state should not manage electronic identities because there is no guarantee that the data will be legitimately secure.