States can refuse federal health benefits exchanges

From a recent newsletter by the Citizens Council on Health Freedom:

States Can Resist and Refuse  (many haveCCHF “status of legislation” map)

This is a summary of an article out this morning: “If court upholds health care reform, states could still resist,” J.Lester Feder, Politico Pro, March 12, 2012.

Although Obamacare gives the U.S. Department of Health and Human Services (HHS) the power to set up a federal exchange for states that refuse to set up their own, states have several sources of power against this incursion, according to the article:

  • “A federal exchange can’t function solo. It needs some help from a state’s Medicaid program and insurance department.”… “The exchange is very difficult to make work if there isn’t some level of cooperation,” said Joel Ario, who oversaw exchange policy at HHS before joining Manatt Health Solutions.
  • If the feds cut Medicaid funds to the states, it would be politically difficult and it would accomplish the exact opposite of what the law intends (expanded coverage).
  • If a state does not make the legally required changes to state programs, such as Medicaid, the federal exchange cannot work. As Mr. Feder notes, “To block the federal exchange [states] could just do nothing.
  • Even if HHS provided the federal exchange to a state, newly eligible Medicaid enrollees wouldn’t get benefits unless State officials added them to the rolls.
  • By declining to enforce new consumer-protection [sic] regulations to private insurance sold outside the exchange, the federal exchange could end up with all the people with the highest health costs — eventually forcing the plans in the exchange out of business.

Feder writes, “Cutting off Medicaid dollars would be both bad policy and bad politics. And usurping state powers would open HHS to massive accusations of a “federal takeover,” which could further inflame political attacks on the health care reform law.”

He also cites former Virginia Rep. Tom Davis, a moderate who says pragmatic Republicans, who have argued that their states should do exchange planning in case they lose in the Supreme Court, have already attracted challengers from the right. If the law is upheld, officials who cooperate could face primaries from those who promise to block an exchange at all costs.

Feder writes that Virginia Attorney General Ken Cuccinelli declines to rule out the possibility of civil disobedience. Says Cuccinelli: “It would be contrary to the law, yes,” [but] “It’s not like there’s criminal penalties out there. It becomes a power struggle.”

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