States Take Different Paths on Health Insurance Exchange Legislation

States Take Different Paths on Health Insurance Exchange Legislation
December 29, 2011

Marc Kilmer

Marc Kilmer (mkilmer@mdpolicy.org) is a Maryland Public Policy Institute senior fellow... (read full bio)

As states across the nation wrangle with the challenge of choosing whether to comply with President Obama’s health care law, legislators, governors, and advisory boards are making key decisions with major ramifications in advance of the verdict from the Supreme Court expected in the spring of 2012.

Michigan Haggles Over Timing

Although Michigan Gov. Rick Snyder, a Republican, supports legislation establishing a health insurance exchange, it appears the state won’t be creating one any time soon. The legislation is tied up in the state House of Representatives and is unlikely to see quick action, according to Jack McHugh, a senior legislative analyst at the Mackinac Center for Public Policy. He says timing disagreements are giving the state pause.

“Although some in the grassroots disagree, there is a consensus in the political and business establishments that a state exchange would be less-bad than a federal one. The real debate here is over the timing,” McHugh said, noting there are two sides to the timing argument.

“On the ‘go fast’ side are the governor and legislative allies who view creating a state exchange as a huge management and IT challenge, so the sooner we can get started the better,” McHugh said, “On the ‘go slow’ side are those who view the PPACA as a massive usurpation of the federalist system embodied in our Constitution. In their view, state officials have a duty to ‘push back’ against this and to do nothing that risks further entrenching this destructive law. They say the state should wait at least until the Supreme Court rules in June, and if necessary until presidential election voters rule next November, even if that may mean greater implementation challenges and costs.”

Exchange in Limbo

House Speaker Jase Bolger (R-Marshall) appears to be on the “go slow” side. According to his press secretary Ari Adler, Bolger “feels there’s no rush to create a health exchange in Michigan” and “would like to see what the results of [the Supreme Court case are] before we have to take any action.”

State senators, however, are overwhelmingly on the “go fast” side. They passed the exchange bill on November 10 by a vote of 25 to 12. All 12 Senate Democrats voted for it, as did 13 Senate Republicans.

Currently the legislation is being considered by the House Health Policy Committee. The chair of that committee, Rep. Gail Haines (R-Waterford), has said “no one from my committee is clamoring to vote on this issue” and is holding informational hearings throughout December on the issue. There is no scheduled committee vote for this legislation.

Arkansas Goes Federal

There are certain deadlines states must meet, however, and in at least one case an independent advisory board found the current timeframe impossible. In December, Arkansas announced that problem as the reason it will not proceed with creation of a state level exchange program.

According to Arkansas Insurance Commissioner Jay Bradford, the Steering Committee formed to provide a recommendation on the matter—funded with a $1 million grant from the federal government—found the state would not be prepared to implement an exchange by the 2014 deadline.

“The Steering Committee and I believe insurance is local and local regulation is preferable. This committee and the work groups have been a committed and wise group of individuals that are clearly driven by what is best for Arkansans,” Bradford said in a statement. “Although disappointed with this outcome, I have accepted the committee’s recommendation.”

Arkansas now plans to make use of the still-theoretical Federal Health Benefits Exchange, which will be created in states that decide against forming their own exchanges as Obama’s law mandates.

North Dakota Rejects Exchange

Whereas Arkansas made its decision based on a board’s recommendation, in North Dakota legislators led the opposition to exchange formation, rejecting the implementation approach. By a 64-30 vote on November 10, the North Dakota State House of Representatives voted down legislation that would have established a state-run health insurance exchange.

Some legislators based their vote on a clear desire to repudiate Obama’s law. One of these, Rep. Wes Belter (R-Fargo), said, “I certainly am not going to legitimize Obamacare with my vote.”

Legislators who voted in favor of the bill characterized this view as shortsighted. Rep. Lee Kaldor (D-Mayville) explained his support of the legislation as being pragmatic.

“Whatever our feelings are about the politics of the health care affordability act, whether it was right or wrong, it passed,” Kaldor said. “Let's not let the politics of what's gone on in the last couple of years put us in a position where we confront ourselves with an untenable option.”

The vote was largely along partisan lines. Fifty-nine of the House’s Republican members opposed the bill while only 10 voted for it. On the other side of the aisle, only 5 of the 25 Democratic members voted against the legislation.

Exchanges a Waste of Time?

John Graham, director of health care studies at the Pacific Research Institute, said those who voted against the legislation took the wiser course.

“By declining to collaborate with the federal government on establishing Obamacare’s health benefit exchanges, North Dakota is making the right choice,” Graham said. “Why waste time implementing a federal law that may soon be proved unconstitutional or repealed, if the people elect a president and Congress in 2012 that will implement what the majority want?

“States which are implementing exchanges will soon find that they are creating new agencies that will look like ‘health-care DMVs’: Unwieldy, unresponsive, and beyond the control of their political creators,” he concluded.

Marc Kilmer

Marc Kilmer (mkilmer@mdpolicy.org) is a Maryland Public Policy Institute senior fellow... (read full bio)