Michigan Creeps Closer to Obamacare 'Exchange'

Michigan Capitol Confidential ^ | 8/6/2011 | Jack McHugh

[MichCapCon]

If Michigan creates a state Obamacare insurance “exchange,” doing so could potentially undermine the state’s own lawsuit against the new federal health care law. Yet despite an item in then-candidate Rick Snyder’s 10-point plan to “reinvent” Michigan, promising a more “patient-centered model” of delivering health care, Gov.Snyder has not made a decision on whether to create an exchange, or alternatively, join a handful of other GOP governors who have refused to establish one. Kelly Niebel, a spokesperson for the Michigan Department of Community Health, told CapCon, "Governor Snyder has said we will follow the law, adapt accordingly as it changes and act in the best interest of Michigan."

Nevertheless, MDCH has undertaken a number of actions paving the way for a Michigan exchange, paid for by a $1 million federal grant authorized under the new law. (See “Michigan’s Obamacare Exchange ‘Work Groups,’” below.)

Under the federal Patient Protection and Affordable Care Act, if a state does not create an insurance exchange that meets all the rules imposed by federal agencies, the federal government will instead create one in the state itself. According to John Graham of the Pacific Research Institute, so far only 10 states have passed laws authorizing exchanges. In three states, enabling legislation has passed one house of the legislature. Two other states had exchanges before Obamacare became law (Massachusetts and Utah).

Republican Govs. Rick Scott of Florida, Nathan Deal of Georgia and Bobby Jindal of Louisiana have flatly refused to create state exchanges. Oklahoma Gov. Mary Fallin may also be in this camp. The cost to their states may be one reason for the slow progress and outright refusals. Those costs could be substantial: In 2009, the exchange created under Massachusetts’ “Romneycare” law cost $26 million in payments to vendors and $3.4 million in employee compensation.

Meanwhile, Michigan is one of 26 states that are parties to the Florida v. U.S. Dept of Health and Human Services lawsuit challenging the new law. In the first ruling on the case last winter, federal district court judge Roger Vinson declared the law unconstitutional, but then stayed the effect of his ruling because, among other reasons, he said, “the severity of that injury is undercut by the fact that at least eight of the plaintiff states have represented that they will continue to implement and fully comply with the Act’s requirements.” In other words, the Judge implied that since the states are proceeding to implement the law, including creating insurance exchanges, the actual harm is perhaps less than they have represented.

The impact could be significant according to Diane Cohen, Senior Attorney for the Goldwater Institute's Center for Constitutional law, which has filed its own lawsuit against the new law. Speaking to legislators today at the annual meeting of the American Legislative Exchange Council in New Orleans, she said, "Saying 'no' to a state exchange is absolutely critical to the success of our lawsuit and those pending elsewhere around the country."

As mentioned, Michigan’s Department of Community Health has already taken a number of actions to prepare the state for such implementation. Spokesperson Kelly Niebel described these in an email to CapCon:

“The Health Insurance Exchange Planning process began in February of this year with the establishment of five work groups focused on governance; finance, reporting and evaluation; technology; business operations; and regulatory and policy action… The work group process resulted in more than 50 consensus-based recommendations …. for the structure and composition of an Exchange governing board, potential financing options for the Exchange, an approach for certifying qualified health plans, and resolving gaps in technology infrastructure to support the Exchange, among many others. The work group process also resulted in the development of proposed legislative language for the establishment of an Exchange...”

(See “Michigan’s Obamacare Exchange ‘Work Groups,’” below.)

Although no exchange bill has been introduced yet in the Michigan Legislature, in a July hearing several Republican state senators expressed the opinion that the state has no choice. “(I)f we choose to do nothing, they will come in and run this health exchange,” said Sen. Joe Hune, R-Hamburg, as reported by the Gongwer news service.

However, it appears that a state exchange which meets extensive federal mandates would differ little if at all from one created by the federal government itself, except that its cost would be born by state taxpayers rather than national taxpayers (or lenders). An early read on these regulations was provided in July when the U.S. Department of Health and Human Services released its first round of state exchange regulations. The Wall Street Journal described the proposed rules as follows:

“The word ‘require’ appears 811 times in the 244-page rule and its 103-page supplement. ‘Must’ shows up 580 times—and this is merely HHS’s first batch of exchange mandates… The draft rules command that the structure of every exchange needs federal approval, much as in Medicaid, which in practice means an HHS veto of market-based innovation. State standards for the ‘certification, recertification, and decertification of health plans’ will also be subject to HHS. This means Washington will dictate rules about which insurers are allowed to sell plans in the exchange, and thus which insurers will continue to exist as viable commercial concerns. It also looks as if HHS will require the exchanges to enforce de facto price controls on premiums.”

In an email to CapCon, John Graham said this about Gov. Snyder’s decision:

“It would be a shame if Gov. Snyder implemented Obamacare when Republicans in Congress and other states have pledged to defeat it. If Obamacare is not repealed, one reason is that the President and its supporters will campaign next year on ‘bipartisan’ implementation in states where Republicans in power refuse to resist this unconstitutional take-over. Michigan’s taxpayers will be forced to finance the exploding operating costs of this new agency, which will operate under arbitrary and confusing rules promulgated by bureaucrats in Washington.”

[madison10]

I cannot even read this. It’s too depressing.

[cripplecreek]

Its not without opposition and a bill hasn’t even been introduced yet.

[Opinionated Blowhard]

Is Michigan trying to get rid of every single productive person in the state? They sure seem like they’re trying to.

[TBP]

Don’t do it!