Exchange Implementation Illustrates Obamacare’s Nationalization of Health Policy

Exchange Implementation Illustrates Obamacare’s Nationalization of Health Policy
March 1, 2013

Loren Heal

Loren Heal (loren.heal@gmail.com) is a research programmer at the University of Illinois at Urbana-... (read full bio)

With more than half of the U.S. population residing in states that have declined to create the insurance exchanges mandated by President Obama’s health care law, some supporters of the law have expressed concerns about the ramifications of an uneven implementation by the federal government. But opponents of the measure argue the implementation process will instead illustrate the truly nationalized nature of Obama’s plan.

“Do states rejecting Obamacare exchanges realize they're totally sticking it to their own citizens?” wrote Jonathan Cohn of The New Republic, an outspoken supporter of Obama’s law, in a November column criticizing the more than thirty governors who have declined to implement state exchanges.

But Jonathan Ingram, director of health policy and pension reform at the Illinois Policy Institute, says the real reason states have rejected the exchanges is they don’t want to bear the responsibility for implementing a program they can’t actually direct.

“There's no such thing as a state-run exchange, only a state-funded one,” said Ingram. “Federal rules and regulations will dictate all aspects of how these new bureaucracies operate. The law is explicitly clear that states can't do anything not approved by federal bureaucrats. The federal government can change these rules at any time and force states to comply.”

Ingram says states are looking out for their citizens’ interest by insulating them from the costs of implementation.

“It's clear that the majority of states have no intention to be ready in 2014. Only 17 states have actually signaled their intent to set these things up, and none of them have more than conditional approval at this point,” Ingram said. “They understand the only real difference between a federal exchange and a state exchange is which group of taxpayers ultimately has to pay for it.”

One Big Federal System

According to Citizens' Council for Health Freedom President Twila Brase, states that declined to implement exchanges realized it was “a misnomer to call the exchanges state-based.” Instead, Brase notes, the rules governing the exchanges’ operation will be made at the federal level.

“At the end of the day, we look at the exchange as a national exchange, with fifty little extensions into the states, and the federal hub is the superstructure of the national exchange,” said Brase. “This was all a very big charade, to talk about state exchanges and federal exchanges, when really what’s being created here is a national exchange with fifty web portals and state bureaucracies that have to follow the feds’ lead.”

Brase says the state-based implementation of exchanges was designed to disguise the truth about the federally run exchange system.

“It’s all one big federal system,” said Brase. “States are really just choosing not to create the web portal in their state. All we’re really talking about here are just web portals with different names and bureaucracies behind them, bureaucracies that might be state or federally based, but are all federally controlled.”

“The whole idea of trying to parse this out into state exchanges and federal exchanges is just an illusion, meant to deceive the public into thinking that there is some big [state] control here, that there is any state power, that there is not a really big, national system being created when in fact there really is,” Brase continued.

Deadlines Difficult to Meet

Despite repeated insistence by U.S. Health and Human Services Secretary Kathleen Sebelius that the exchanges will be implemented in time to function in January 2014, Ingram is skeptical federal bureaucrats will be able to meet that deadline.

“It's an open question whether the federal government will have the capacity to get more than thirty exchanges up and running in the next year or so. Federal bureaucrats have been very slow to actually share information with the states on the nuts and bolts of how they expect the exchanges to operate,” said Ingram. “It will definitely be a tall order for them to manage to pull through on time.”

Josh Withrow, a legislative affairs specialist at FreedomWorks, echoed Ingram.

“It doesn’t look likely that the Obama administration will meet its implementation deadlines. HHS clearly is desperate given the amount of work to be done, as states are not seeing any advantages to their citizens of implementing exchanges,” said Withrow. “I think the recently announced changes in deadline and nomenclature, renaming what the law calls an ‘exchange’ as a ‘marketplace,’ is an outward sign of their desperation.”

Free States or Obamacare States?

Brase says states will experience Obamacare’s nationalized system very differently if current legal objections to implementation are upheld by the courts.

“We think there are going to be Free states and Obamacare states,” said Brase. “The Obamacare states have the exchanges, and therefore have all of the penalties, the individual mandate penalty, the employer mandate penalty. But if you don’t have an exchange, you don’t have those penalties for a large majority of the people.”

A lawsuit brought by the state of Oklahoma advancing this argument is still pending review. In the meantime, Brase advises states to avoid implementation of a state or “partnership” exchange.

“Under a partnership exchange—another charade, because there’s no such thing in law—citizens will have to pay fees,” Brase said. “If states build their own portal, they have to pay for it every year, but if they force the federal government to build it, the feds have to pay for it.”

Loren Heal (loren.heal@gmail.com) writes from Illinois.

Loren Heal

Loren Heal (loren.heal@gmail.com) is a research programmer at the University of Illinois at Urbana-... (read full bio)