11.19.2012 1

Obamacare implementation craters under state objections

By Rick Manning — The national health care law jumped back into the headlines last week as a deadline for states to decide whether to establish individual state health care exchanges approached and then was extended by the Obama Administration to December 14. 

The delay was requested by the Republican Governor’s Association whose members had posed questions of the Obama Administration about the law over the past few months that remained unanswered.

Over the past week, the list of states not participating in the system has grown to nineteen as the states of Wisconsin, Ohio and Nebraska chose to join sixteen others in rejecting the state health insurance exchange that is called for under the Obamacare law.

Governor Scott Walker of Wisconsin announced his choice in a letter to U.S. Health and Human Services Secretary Kathleen Sebelius on Friday writing, “No matter which option is chosen, Wisconsin taxpayers will not have meaningful control over the health care policies and services sold to Wisconsin residents.”

Walker’s letter continued by stating, “If the state option is chosen, however, Wisconsinites face risk from a federal mandate lacking long-term guaranteed funding.”

Other governor’s from around the nation weighed in against the state exchanges with Ohio Governor John Kasich announcing, “Turning down a state-based health exchange and saying no to federal regulation of Ohio’s health insurance industry and Medicaid eligibility determination is the best approach for Ohio.”

Maine Governor Paul LePage wrote to Sebelius explaining why his state won’t implement the state exchange saying, “In the end, a state exchange puts the burden onto the states and the expense onto our taxpayers, without giving the state the authority and flexibility we must have to best meet the needs of the people of Maine.”

The state health care exchanges are a creation of the Obamacare law where the state would create a massive database of health insurance options that those without insurance could access.  The state is given the option under the law to either create the exchange or to leave it up to the federal government to provide it.

Another under-reported aspect of the law is that the statute itself only allows the state exchange to levy penalties against employers who are accused of not following the requirements of the law.  After the law passed it was discovered that federal exchanges do not have the authority to impose penalties. Upon this discovery, the IRS hurriedly wrote regulations claiming that power contrary to what the law allows.

Employers in states without a state exchange will have the option of contesting any penalties in court with a reasonable likelihood of success due to the IRS’ extra-legal regulations.

The probable net effect is that states whose governors refuse to enact state exchanges will put their states at a significant economic advantage over those businesses in states with one.  The promise of lower health insurance costs will help employers in these states who want to expand without worrying if hiring an additional employee will throw themselves into new Obamacare taxes.

Currently, nineteen states are rejecting the state exchanges, sixteen states are enacting them, three are attempting a state/federal exchange hybrid, and twelve will decide before the new December 14 deadline.

The undecided states are:  Arizona, Arkansas, Florida, Iowa, Idaho, Michigan, New Jersey, Oklahoma, Pennsylvania, Tennessee, Utah and West Virginia.

Rick Manning is the Director of Communications for Americans for Limited Government.

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