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Tuesday, November 20, 2012
Capretta and Levin: Why ObamaCare Is Still No Sure Thing
The majority of state governors are Republicans, and they have the power to disarm the health-care law.
Champions of ObamaCare want Americans to believe
that the president's re-election ended the battle over the law. It did
no such thing. The Patient Protection and Affordable Care Act won't be
fully repealed while Barack Obama is in office, but the administration
is heavily dependent on the states for its implementation.
Republicans will hold 30 governorships
starting in January, and at last week's meeting of the Republican
Governors Association they made it clear that they remain highly
critical of the health law. Some Republican governors—including incoming
RGA Chairman Bobby Jindal
of Louisiana, Ohio's John Kasich, Wisconsin's Scott Walker and Maine's
Paul LePage—have already said they won't do the federal government's
bidding. Several Democratic governors, including Missouri's Jay Nixon
and West Virginia's Earl Ray Tomblin, have also expressed serious
Talk of the law's inevitability is
intended to pressure these governors into implementing it on the
administration's behalf. But states still have two key choices to make
that together will put them in the driver's seat: whether to create
state health-insurance exchanges, and whether to expand Medicaid. They
should say "no" to both.
At its core, ObamaCare is a massive entitlement expansion. Between
vastly increased Medicaid eligibility and new premium subsidies, it is
expected to bring 30 million more people onto the federal government's
entitlement rolls. The law anticipates that the states will take on the
burden of implementing the expansions, but states can opt out of both.
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.
They are on opposite sides of
ObamaCare, but President Obama and Louisiana Gov. Bobby Jindal met in
September in LaPlace, La., for a briefing regarding Hurricane Isaac.
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
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.
Governors know this. A group of them has already indicated that they
will not build the exchanges, and several more seemed ready to opt out
as the administration's deadline for state decisions approached on Nov.
16. Predictably, Health and Human Services Secretary Kathleen Sebelius
tried to head them off by extending the deadline to Dec. 14. She will
try to use the extra month to twist governors' arms. They should resist.
By declining to build exchanges, the
states would pass 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.
Congress didn't allocate money for administering federal exchanges,
and the law as written seems to prohibit federally run exchanges from
providing subsidies to individuals. The administration insists that it
can provide those subsidies anyway. But if the courts read the plain
words of the statute, then federal exchanges couldn't really function.
Thus states that refuse to create their own exchanges would
effectively be repealing a large part of the law—sparing their citizens
from the job-killing employer mandate and from assaults on their
religious liberty. In some cases people would even be spared from the
individual mandate to buy coverage, since in the absence of exchange
subsidies more families would qualify for exemptions from the mandate.
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.
In refusing the Medicaid expansion,
governors should notify Washington that doing so means freeing
themselves of ObamaCare's "Maintenance of Effort" requirements. These
would prohibit states participating in the Medicaid expansion from
reforming their Medicaid systems to reduce costs.
Instead of following the Obama
administration's plan, states should seek real reform. For example, they
should demand that Washington transform the federal portion of Medicaid
for non-disabled and non-elderly beneficiaries into a uniform block
grant, with state discretion over eligibility and benefits. The goal
should be to turn Medicaid into a premium-assistance program rather than
government-run insurance. Medicaid could then be used to help people
enroll in mainstream insurance plans. This is the way to help the
low-income uninsured get the same kind of coverage as other Americans.
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
Mr. Capretta is a fellow at the Ethics and Public
Policy Center and a visiting fellow at the American Enterprise
Institute. Mr. Levin is a fellow at the EPPC and editor of National
A version of this article appeared November
18, 2012, on page A19 in the U.S. edition of The Wall Street Journal,
with the headline: Why ObamaCare Is Still No Sure Thing.