Obamacare's Unintentional Gift to the States
If ever there were an issue to which the adage, “When life gives you lemons, make lemonade,” applies, Obamacare is certainly it.
States will be required to decide by the end of the week whether they are going to set up state exchanges or leave the task to the federal government. Several states have already declared their intention not to create exchanges, but always in the context of avoiding a hardship or expense.
There is another major advantage, however, to refusing to establish a state exchange, stemming from a particular flaw (one among many) in the Affordable Care Act’s language that establishes penalties for failure to comply with the Act’s provisions, but only if a state creates an exchange.
As one Wisconsin Republican Party official explains (emphases mine):
By refusing to take part in the state health exchange Wisconsin can attract companies from other states because it will be less expensive to do business here.
States have the option of joining a state or federal health exchange. If the state health exchange is refused, it defaults to the federal health exchange and the feds have to pay for it and cannot penalize or charge the state anything.
If over 30 states refuse this state health exchange, it will force Congress to reopen Obamacare.
Let us pray that 30 states reject the exchanges. Whether they do or not, however, those states that reject exchanges can help themselves by actively touting (through advertising and public relations) the advantages of moving businesses from a state exchange state to a federal exchange state. Depending on how many businesses accept such offers, some, if not all, of the state-exchange states will become very angry – to the point, one hopes, that they will deluge Washington with demands to repeal Obamacare.
Allow me also to hazard a guess that at least some of the states refusing to create exchanges are also right-to-work states, creating an even greater incentive for businesses to relocate there.
We can be sure that at least some of the states that do create exchanges will be blue states that voted for Obama – and by extension, for Obamacare. By this writer’s reckoning, they will be getting exactly what they deserve.
The first priority, of course, is to repeal Obamacare. But if the states that opposed Obamacare can simultaneously reward themselves and punish those states that supported the ACA, well, that is very sweet icing on the cake.
It behooves states that reject the exchanges to also persuade states that are still on the fence, emphasizing not just the bureaucracy and expense their states would avoid, but also the jobs and tax revenues they would gain by refusing to create exchanges and actively soliciting businesses to leave the state-exchange states.
Finally, to the extent this migration constitutes a move from blue states to red states, it's worth noting that the distribution of electoral votes among the states may move with it.
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Comments:
May '11
Re: Obamacare's Unintentional Gift to the States
Erick Erickson has pledged to oppose for reelection or POTUS any governor that sets up an Obamacare exchange. I think this is a great idea.
Oct '10
Re: Obamacare's Unintentional Gift to the States
Can we let this go, all ready? The state exchanges are perhaps the best idea for meaningful health reform to come from conservatives. The individual mandate may be questionable on libertarian grounds, but the exchanges are not.
Frankly, this has been one long, pathetic, shameful political game. Somehow, we Republicans decided to attack our own ideas in ObamaCare, not the regulations and the effects of those regulations. We should have campaigned on the fact that ObamaCare destroys jobs and increases structural unemployment and social exclusion, not that it contained a few conservative ideas the public dislikes, but we secretly do.
Edited on November 13, 2012 at 9:00pmOct '10
Re: Obamacare's Unintentional Gift to the States
How about this: I propose we purge Erick Erickson on grounds of putting hyper-cynical political ploys above good public policy.
Nov '10
Re: Obamacare's Unintentional Gift to the States
Joseph, explain. How are state exchanges a good idea? How will a federal exchange work? I am somewhat ignorant and would like to get schooled up.
May '11
Re: Obamacare's Unintentional Gift to the States
nah, try eliminating coverage mandates, allowing purchase of insurance across state lines, tax credits for purchasing insurance so you no longer have a need to go through your employer
turning insurance companies into public utilities is not a good idea
Oct '10
Re: Obamacare's Unintentional Gift to the States
Among other things, the original purpose of setting up exchanges was to circumvent state and federal regulations. The exchanges would be less regulated and more competitive than existing arrangements. Obviously ObamaCare exchanges are not like this, but states that want to try and pursue this vision by lobbying the federal government for waivers (let's call them "libertarian waivers") should be free to do so.
Oct '10
Re: Obamacare's Unintentional Gift to the States
Ningrim
nah, try eliminating coverage mandates, allowing purchase of insurance across state lines, tax credits for purchasing insurance so you no longer have a need to go through your employer
turning insurance companies into public utilities is not a good idea · 1 minute ago
"Eliminating coverage mandates" — Doesn't do a thing about the drivers of health inflation. It's a good idea, but politically unlikely.
"Allowing purchase of insurance across state lines" — Perhaps the most useless idea to come out of this stupid political fight.
"Tax credits for purchasing insurance so you no longer have a need to go through your employer" — Don't most Republican plans with this feature still have exchanges?
Oct '10
Re: Obamacare's Unintentional Gift to the States
I believe I've said "state exchanges" all along. Basically, exchanges solve the information asymmetry of third-party payer healthcare. They aggregate data on health outcomes for different plans and insurance companies, allowing consumers to clearly compare different health plans and find the one that best suits their needs. Exchanges also make the individual and small business health insurance markets solvent, by giving insurance companies access to more effective reinsurance mechanisms.
Edited on November 13, 2012 at 9:16pmFeb '11
Re: Obamacare's Unintentional Gift to the States
Creating state exchanges will give the HHS a tool with which to regulate states as it pleases. While leaving that to the feds may save a lot in subsidies - currently being fought out is whether the law permits the federal exchanges to provide subsidies (as the IRS maintains that it does). You may be willing to Obamacare as the solution - or as the sad reality - but I am neither willing to accept increased government control of healthcare nor accept the reality that is Obamacare.
Oct '10
Re: Obamacare's Unintentional Gift to the States
I am very tired of a group which claims to be conservative or libertarian voicing their opinions as a derivation of Republican interests. To the degree that they are coincident, it's nice to see the GOP benefit. Otherwise, I don't give a rip about their fortunes.
Obamacare, insurance exchanges and the rest of that claptrap is simply a violation of the freedom which once was American. Far too many people are simply too young to have experienced the freedom that we grew up assuming we would always have.
Are we conservatives or Republicans? I know my answer.
May '11
Re: Obamacare's Unintentional Gift to the States
How is increasing the choices of plans available useless?
Coverage mandates inflate premiums.
Sep '11
Re: Obamacare's Unintentional Gift to the States
How is increasing the choices of plans available useless?
Coverage mandates inflate premiums.
I agree. New York state requires insurance companies to cover acupuncture and other various treatments that some people may never use or want. Why not allow a NY resident to buy a cheaper policy from Texas that doesn't require such things?
Please explain why that is useless.
Jun '12
Re: Obamacare's Unintentional Gift to the States
Ningrim
Coverage mandates inflate premiums. · 1 hour ago
My favorite example of this is Utah's requirement that all health plans must cover adoption up to $5,000 -- that's for the adoptive family, not for the birth family, who is covered by existing maternity benefits.
Given that adoption is a good thing to encourage, is health insurance for the adopting family really the best place to do this?
Oh... and there's already a federal subsidy that covers the same things Utah's mandate does. The State of Utah's own website says so, or did a few months ago when I wrote the blog post above.
Now, how much of a Utahan's health insurance bill is to pay for the costs of the insurer covering that mandate?
May '10
Re: Obamacare's Unintentional Gift to the States
DutchTex
I agree. New York state requires insurance companies to cover acupuncture and other various treatments that some people may never use or want. Why not allow a NY resident to buy a cheaper policy from Texas that doesn't require such things?
Please explain why that is useless. · 47 minutes ago
This.
Why should I not be allowed to purchase a plan that fits my needs/wants to a T, simply because they are in another state? How is this limit in any way beneficial to anyone?
Shall we limit the purchase of other goods/services to the state of residence as well?
Oct '10
Re: Obamacare's Unintentional Gift to the States
See, that's a reasonably principled answer. If only more "conservatives" talked this way.
Jun '12
Re: Obamacare's Unintentional Gift to the States
Benjamin Carter
Shall we limit the purchase of other goods/services to the state of residence as well? · 0 minutes ago
Given that the Terms and Conditions page says that Ricochet is based in Burlingame, California, would that mean all us non-Californians would have to stop using this service?
Aug '10
Re: Obamacare's Unintentional Gift to the States
DutchTex
How is increasing the choices of plans available useless?
Coverage mandates inflate premiums.
I agree. New York state requires insurance companies to cover acupuncture and other various treatments that some people may never use or want. Why not allow a NY resident to buy a cheaper policy from Texas that doesn't require such things?
Please explain why that is useless. · 57 minutes ago
Or--to better highlight the sheer absurdity of not allowing health insurance to be sold across state lines--why not allow a NY resident that lives a stone's throw from Pennsylvania to buy a cheaper policy from Pennsylvania? They're paying something like 3x the cost because their homes aren't a mile or two further south. Cutting costs by three times is not useless.
Oct '10
Re: Obamacare's Unintentional Gift to the States
Ningrim
How is increasing the choices of plans available useless?
Coverage mandates inflate premiums. · 1 hour ago
In reverse order, eliminating coverage mandates would provide a one-time cost savings, without solving the underlying problem of health care inflation, as opposed to absolute health care costs.
As for selling plans across state lines, it would require a total federal preemption of all state-level health regulation. State governments would never stand for it. Think about it: out-of-control spending may be enough to annoy Texans, but imagine if the Feds said Texas couldn't tailor its healthcare system to fit the needs of Texan residents. You can see how such a move could very well lead to secession movements across the country. Healthcare is a big deal for state leaders.
Oct '10
Re: Obamacare's Unintentional Gift to the States
Hegesias
Or--to better highlight the sheer absurdity of not allowing health insurance to be sold across state lines--why not allow a NY resident that lives a stone's throw from Pennsylvania to buy a cheaper policy from Pennsylvania? They're paying something like 3x the cost because their homes aren't a mile or two further south. Cutting costs by three times is not useless. · 8 minutes ago
If you linked the risk pools of the two states, most likely their premiums would converge; New Yorkers would pay slightly less, while Pennsylvanians would pay more. Most likely Pennsylvanians would pay a lot more; like I said above, this would require a federal preemption of state regulations, and there's no guarantee the federal government wouldn't create even more coverage mandates than even New York has.
Re: Obamacare's Unintentional Gift to the States
Some scholar at some think tank might have proposed a state exchange, but it is in no way a "conservative idea." In any case, Obama's "state" exchanges are federal exchanges in all but name.
The real conservative position is to let insurance companies offer any policy they want, to anyone, and for consumers to be able to buy any insurance they want, from anyone. Whatever minimum benefits Obamacare mandates, I am sure that at least one insurance firm in the U.S. will offer it and if we can buy insurance across state lines, anyone, anywhere, will be able to buy it. If the "Obamacare minimum" policy is truly wanted and popular, additional firms will offer it and compete on price.
State exchanges are nothing less than the federal government's way to keep people such as myself "trapped" in community rating states. (New York, in my case.) And which, I'm sure, most if not all "blue states" are.