Why ObamaCare Is Still No Sure Thing

| November 21 2012
Christopher Cook

“President Obama won re-election and Democrats maintained control of the Senate this month, but the states hold the future of ObamaCare in their hands. Knowing the harm the law would do to their citizens, to the economy and to American health care, governors should refuse to become its enablers.”  — JAMES C. CAPRETTA AND YUVAL LEVIN

We have written a fair amount of late on the subject of state “Obamacare” exchanges and why states should not set them up (here, here, here, here, and elsewhere). That is the focus of Capretta and Levin’s claim that the fight to stop Obamacare is far from over. The key lies in the states making two decisions. First, refusing to create a state exchange to implement the Affordable Care Act and second, refusing to expand Medicare.

The reasons for the former are numerous, but are boiled down nicely here:

Running the exchanges would be an administrative nightmare for states, requiring a complicated set of rules, mandates, databases and interfaces to establish eligibility, funnel subsidies, and facilitate purchases. All of this would have to take place under broad and often incoherent statutory requirements and federal regulations that have yet to be written.

The exchanges would create unsustainable pressures on each state’s insurance market, treating similarly situated people differently by providing far greater subsidies for those in the exchanges than those in employer plans—yielding perverse incentives that distort consumer and employer decisions and increase costs.

States would endure all this simply to become functionaries of the federal government. The idea that creating state exchanges would give states control over their insurance markets is a fantasy. The states would be enforcing a federal law and federal regulations, with very little room for independent judgment.

If the states do resist in this way, they put the onus back on the federal government, thus “pass[ing] the burden and costs of the exchanges to the administration that sought this law. And it is far from clear that the administration could operate the exchanges on its own.”

The reasons to avoid the Medicare expansion are similarly simple:

The Medicaid expansion, meanwhile, would throw millions of additional Americans into a system that is already bankrupting state governments and increasing costs in the private-insurance market. Medicaid’s payments for services are so low that many existing beneficiaries have trouble finding physicians and other health-care providers who will accept them as patients. Enrolling more people without reform will push the system to the point of collapse.

It is sometimes hard to fathom how it is that people can look at the budget numbers, the debt numbers, and the actuarial realities of Obamacare, Medicare, and the other major entitlement programs and not see the clear path to collapse we are on. The federal government seems bent on following that path, but that doesn’t mean that states must follow. Whatever Chief Justice Roberts may have gotten wrong in the Obamacare decision, he and a majority on the Court made it clear that states cannot be forced into this. Governors and state attorneys general should exercise their rights and refuse.

Obamacare is a disaster, but perhaps there is a bright side here. If states begin flexing their rights under our federalist system, we may see a return to what the Founders intended: A nation in which the federal government operates at the pleasure of sovereign states, rather than the reverse.

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