Governors Block Exchanges

The health law calls on states to set up bureaucracies, called Exchanges, through which the law’s massive new health insurance subsidies will be distributed. Gov. Bobby Jindal, newly-elected chairman of the Republican Governors Association, wrote a letter to the Department of Health and Human Services that oversees the Patient Protection and Affordable Care Act (PPACA) explaining in detail why Louisiana will not be creating an ObamaCare state Exchange or participating in Medicaid expansion.

“The full extent of damage the PPACA causes to small businesses, the nation’s economy, and the American health care system will only be revealed with time. The State of Louisiana has no interest in being a party to this failure,” Jindal wrote.  His position is a model for other governors, and we should encourage others who are still wavering to follow his lead.

In his weekly column on November 16th House Speaker John Boehner wrote: “Obamacare has to go”–but we know he needs support from Governors.

At least 21 states have said they definitely or probably will not set up state exchanges, with Ohio, Wisconsin, Maine, Nebraska, South Carolina, Georgia, and Indiana most recently joining the opposition.  As Governor John Kasich of Ohio stated in his letter to HHS: “At this point, based on the information we have, states do not have any flexibility to build and manage exchanges in ways that respond to unique needs of their citizens or markets.”

Here are quotes from some other governors:

Quote from Gov. Scott Walker

“The Patient Protection and Affordable Care Act (PPACA) gives states three options in building health insurance exchanges: an exchange built and managed by an individual state subject to federal mandate; a partnership plan requiring the state to perform functions on behalf of the federal government; or a federal exchange developed by the federal government. While the three options differ in who initially builds and operates the exchange, all three options are identical in that they are governed and controlled by federal policy. No matter which option is chosen, Wisconsin taxpayers will not have meaningful control over the health care policies and services sold to Wisconsin residents. If the state option is chosen; however, Wisconsinites face risk from a federal mandate lacking long-term guaranteed funding. In Wisconsin, we have been successful in providing health insurance coverage to over 90 percent of state residents without the creation of an exchange and absent federal regulation. We have a long history of being a leader on health reform issues, and with more guidance and greater state flexibility, our competitive market system would have ensured health insurance coverage to the most vulnerable Wisconsinites without federalization of our market. Unfortunately, operating a state exchange would not provide the flexibility to meet our state’s unique needs or to protect our state’s taxpayers.”

Quote from Gov. Dave Heineman

“On the key issues, there is no real operational difference between a federal exchange and a state exchange. A state exchange is nothing more than the state administering the Affordable Care Act with all of the important and critical decisions made by the federal government. The Affordable Care Act is being totally dictated and totally controlled by the federal government. In addition to our concerns that the State of Nebraska would not have any significant control of a state exchange, I am even more concerned about the cost of an exchange…It is simply too expensive to do a state insurance exchange…The bottom line is a state insurance exchange is really controlled by the federal government, and the cost of operating a state insurance exchange is very expensive.”

Quote from Gov. Nikki Haley

“Under the PPACA, the federal government is required to establish exchanges and gave individual states the choice to participate, Yet, as we worked through the process of analyzing the options available to South Carolina, it became abundantly clear that state ‘participation’ was in name only…the law’s state-based exchange programs are not state-based at all. Instead, they simply pass along to the state the burdens of a new and cumbersome bureaucracy. The law fails to give South Carolina any flexibility and decision-making authority that would enable us to truly construct the program in a manner that would offer the most meaningful benefit to our citizens.”

Quote from Gov. Nathan Deal

“I remain concerned with the one-size-fits-all approach and high financial burden imposed on states by this federal mandate…We believe that a well designed, private free-market approach to small business exchanges could be beneficial to small businesses but the regulations promulgated by your administration take those options away.”

The federal government must set up the exchanges if a state refuses, and administration officials fear they will run out of time and money in meeting the October 1, 2013 start date, possibly leading to a delay in implementing the law.

Any state that sets up an ObamaCare state exchange will be deciding to help implement a law that many governors are on the record as strongly opposing.  They will have to fund the exchanges, either by raising taxes or diverting money from other state projects, and they will be responsible for the intrusive and highly unpopular actions the exchanges must take. Two of the most grievous examples are:

 1. Be forced to raise taxes or cut spending elsewhere to run this monstrous new bureaucracy
2. Assess and collect fines levied on employers related to insufficient coverage options

And while they may believe a state exchange gives them flexibility, the health overhaul law is so highly prescriptive in their duties that they will become little more than contractors to the federal government.

I encourage you to contact your governors, state legislators, and other state officials to strongly encourage them not to set up a state exchange or expand Medicaid.

Thanks for considering these ideas.

Former Attorney General Edwin Meese chairs The Conservative Action Project.