Gov. LePage of Maine, like a number of other Republican governors, has declined to create a health care exchange for the state. [You can see a chart here that shows what different states are doing on the exchanges.]
What are these exchanges?
When the Affordable Care Act was being crafted in Congress, legislators and the president emulated the model developed by the conservative Heritage Foundation and Republican Gov. Mitt Romney.
Private insurance companies would continue to operate, but they would no longer be able to deny coverage, they would be more heavily regulated, and they could not have as high a rate as profit.
And individuals in the private insurance market (i.e., not those receiving coverage through an employee or government program) could shop for insurance on a site that allowed for easy comparisons of coverage and price.
If you go to the Massachusetts Connector — their health exchange — you can see how it’s put together. Here’s what their homepage looks like:
Since the creation of Obamacare, other states will have their health exchanges.
Why did the federal government create state exchanges?
It may seem a bit odd that a federal law created state exchanges. However, this was done for several reasons.
Some legislators thought that it would be more politically palatable to those who prize states’ rights to have state exchanges rather than one federal exchange. Others believed that the policy would work better if exchanges were closer to the people, and would better enable publicity for the exchanges, aimed at state residents.
However, it turns out that many governors who don’t like the ACA have not been won over by the capacity to create a state exchange.
By opting out of the state exchange, their states will have an exchange set up and run by the federal government.
Why didn’t LePage consent to a state exchange?
Gov. LePage has never approved of Obamacare. His Republican Attorney General (who will soon be replaced by the new Democratic-controlled Maine Legislature) signed on to a suit that claimed it was unconstitutional.
Thus part of why he is opposed to the exchange is that he just doesn’t like the law’s approach to health care.
Some months ago, LePage even compared the implementation of the law to actions of the Gestapo in Nazi Germany. Even after he backed down, his comments were highly hyperbolic. This line of argument is basically that Americans’ fundamental freedoms and health care are threatened by this health law.
In his letter to federal authorities opting out of the exchange, LePage makes a few more arguments.
One is that the states won’t have adequate flexibility to design the exchange and it’s just carrying out the federal government’s wishes. In fact, there are variations among the exchanges being planned now. For instance, the exchanges’ governance structures vary, with some run entirely by a state agency and others incorporating medical providers and insurance company representatives on a governing board.
Another is that there aren’t enough specifics about the way the exchanges should work. Yet this hasn’t stopped the work of states now creating exchanges.
LePage also says the exchanges will be a fiscal burden and has unanswered legal questions. There are federal grants to help set it up, though.
The Maine Wire, sometimes known for some rather creative lines of press criticism, today provided a clue on the legal claims, when it published a piece by a national group that contended the federally run exchanges don’t have the legal right to provide subsidies to individuals buying insurance through the exchanges. This article said GOP governors should not adopt state exchanges so that they could sue to stop them.
By not implementing the state exchange, governors such as Rick Perry in Texas or Bob McDonnell in Virginia are effectively giving employers in those states the standing to sue against the new IRS rule.
In other words, it creates an avenue to fight against the implementation of the law. For employers that do not wish to be under Obamcare’s thumb, such a move at least gives them a fighting chance.
But if the exchange is implemented by the states, employers in those states will not have any chance at all to challenge the law.
If courts do rule that federal exchanges in fact do not have the legal authority to disperse the insurance subsidies, the law would effectively be gutted. States that want to gut the employer mandate would be able to do so.
Finally, Gov. LePage claims a state exchange shouldn’t be set up because it would be one step toward greater government involvement. As he puts it, “[T]he ACA masquerades as a free-market idea when in reality it is a stepping-stone to a single-payer system.” Of course any such shifts would have to make their way through Congress and be signed by the president and are not on the political horizon anytime soon.
So how much does this matter?
To some extent, this probably doesn’t matter much, although it could slow things down and the state would have less say.
According to an article in the Washington Post:
Experts say the federal government has an interest in persuading as many states as possible to agree, at minimum, to a partnership. That’s because the aspects that the states would handle are labor intensive and customized to each state — making them more difficult for federal authorities to deal with. These tasks include deciding which health plans can be sold on the exchanges and monitoring plans’ compliance, as well as providing outreach and assistance to consumers.
It’s always hard to know how legal claims will be treated by the courts, but it seems unlikely they carry merit, since the law gives the federal government authority to run exchanges should states decline. A central element of those exchanges are the subsidies, so the argument that the federal government can’t run them likely will be treated as a political matter to be determined by the president and Congress.
Ultimately the federal government will create an exchange for Maine and will run it. Moreover, future Maine governors will be able to make new choices.