More States Reject Obamacare Mandates: Ceding Power to the Feds?

While it is encouraging to see a growing number of states reject Obamacare’s mandate for a state-regulated health insurance exchange, it does raises an important concern. Some, like Yale law professor Heather Gerken, think that governors who reject that mandate are simply ceding more power to the Feds, because if they refuse to set up the exchange, the Feds will just step in and do it for them. Given the choice between having a state-run exchange and a federal-run exchange, even some conservatives are saying they would prefer the state-run one (the “lesser of two evils”), because there’s apparently no viable choice for “neither.”

Under Obamacare, exchanges will be required in all states by 2014. The Secretary of Health and Human Services Kathleen Sebelius has extended the deadline to December 14 for states to decide whether or not they will set up an exchange for themselves.

By law, the exchanges will have to be managed by a government entity or a non-profit organization. These entities will be responsible for certifying insurance companies to be a part of the exchange. If insurance companies want to be on the list of options in order to get taxpayer-funded subsidies, they have to meet criteria, which will allegedly be decided on a state-by-state basis, unless a state refuses to set up their own exchange, in which case the Feds will have their own criteria.

So, pick your poison. More government control at the state level or at the federal level? More and more will soon be in favor of giving the state more control, given that we don’t seem to have much of a choice in the matter.

But, it’s not quite that simple. If a state decides to set up its own exchange, it doesn’t have the freedom to do whatever it wants based on its specific market demands. The Obama administration would never allow a state that much sovereignty. Each exchange still has to be approved by the HHS Secretary. Many exchange plans have already been rejected because they have to be set up exactly as the federal exchange would be. So, then what’s the point of offering states this “option” to set up their own exchanges when the federal exchange would be no different? The difference is in funding.

Obamacare provides federal funding only for state-run exchanges. There is no provision for federal funding of a federal exchange. Which is why governors should reject this mandate. And, according to American Thinker, if the Feds tried to implement a federal exchange in a state, they would be in violation of the very law they’re trying to force on everybody:

 “Section 1311 of the ACA provides for premium subsidies to insurance companies in state exchanges only.  No such funding mechanism exists for a federal exchange, leaving the feds unable to offer the billions of dollars of taxpayer-funded subsidies needed to purchase insurance company support. Let’s assume, for the sake of argument that the Obama administration decides to ignore the law (what a stretch!) and distribute subsidies on a federal exchange anyway.  This would create an actionable breach of the law, and those affected by it (employers within the state) would have standing to sue.  But that benefit is out the window if a state sets up an exchange.”

 Further, from the Cato Institute:

“Exchanges are the new government bureaucracies through which millions of Americans will be compelled to purchase ObamaCare’s overpriced and overregulated health insurance. Through these bureaucracies, insurance companies will receive hundreds of billions of dollars in taxpayer subsidies. Without these bureaucracies, ObamaCare cannot work.”

Now, it makes more sense why Romney was chosen to be the nominee. If Republicans got behind him and sympathized with RomneyCare, Republicans would be more likely to get on board with setting up state-run health insurance exchanges and thereby facilitating Obamacare. Politicians on both sides have appealed to “states’ rights” Republicans and have convinced them that it’s better to have a state-run program than a federal-run program (even though there would be no difference), and since Obamacare is the “law of the land,” we have to choose one or the other. That’s complete myth. It turns out, there’s no difference. This time, let’s not choose the “lesser of two evils.” Let’s reject both to fight off Obamacare.

[Note: This post was accidentally cut short. Now it is all up — 11:35am ET]