Red States Unswayed By Federal Health Exchange Plan

Some states opposed to the Affordable Care Act are still declining to move forward with its implementation, unmoved by new guidance for a federally-run insurance marketplace.
by | May 18, 2012 AT 7:00 PM

Following another apparent offer of state flexibility for health exchanges from the U.S. Department of Health and Human Services (HHS), officials from some Republican-controlled states remained stalwart in their opposition to the concept, even as the Obama administration described this week what an online insurance marketplace run by the federal government would look like.

A federally-facilitated exchange is the option for states that decide not to establish a state-run exchange, as created by the Affordable Care Act (ACA). HHS outlined Wednesday two separate models for a federal exchange: one in which the state would still retain some responsibilities (such as running consumer services and participating in the certification of insurance plans that are sold on the exchange) and the other in which the federal government would run the whole show.

While 34 states (including 13 participating in constitutional challenges to the ACA) have taken more than $1 billion combined in federal money to develop a state exchange, several states have doubled-down on their opposition to the ACA and the exchanges specifically, calling them bad policy and refusing to take any steps to create their own marketplaces.

Officials from Florida, New Hampshire and South Carolina (three such states) told Governing that the HHS model for a federal exchange did little to influence their perspective. For now, they're content to let the feds tackle the exchange effort in their states.

“There’s just no reason for us to drop everything right now and invest in an exchange,” said Tony Keck, South Carolina’s director of health and human services, in an interview. A state committee already decided in December that building an exchange wasn’t in South Carolina's best interest, according to The (Columbia, S.C.) State, and the state garnered national headlines when Gov. Nikki Haley announced the state would not seek further federal funding for an exchange. South Carolina also declined the remaining $700,000 of its $1 million federal planning grant after the committee concluded its work, according to state officials.

The HHS guidance, and the offer of a state-federal partnership, didn’t change South Carolina’s conclusion about the exchange, Keck said. He noted that the proposal included the possibility that states could, if they were unsatisfied with a federal exchange after its first year of operation, start planning their own. In the meantime, the state will concentrate on the influx of new Medicaid enrollees under the ACA and other aspects of the law. HHS can handle the exchanges for now, Keck said.

“We want to spend our time on improving health, not being the back office of the insurance industry” by running the exchange, Keck said. Implementing the exchange would also require the hiring of hundreds of new employees. “That’s just not smart,” he said.

Like South Carolina, Florida elected to "return" its $1 million federal planning grant (which 49 states received). Legislation to establish an exchange or an exchange study group has stalled in the state legislature, according to the Kaiser Family Foundation, which tracks state efforts to implement the exchanges. The state is also leading the constitutional challenge to the ACA that is currently before the U.S. Supreme Court.

This week’s federal guidance hasn’t altered that perspective, said Lane Wright, press secretary for Florida Gov. Rick Scott, in an email. The governor remains confident that the law is unconstitutional and will be overturned, and until the legal case is resolved, the state will take no further action to implement the ACA, Wright wrote.

“We don’t want to waste precious state resources on a law we feel is unconstitutional and will stifle job growth,” Wright told Governing.

The New Hampshire House went one step further than Florida and South Carolina, passing a bill this week that would actually ban the state from creating or participating in a health exchange, according to the Associated Press. That followed the decision by Democratic Gov. John Lynch last year to let two bills opposing the implementation of the ACA to become law without his signature, according to the Kaiser Family Foundation. New Hampshire, like Florida and South Carolina, also declined most of the $1 million planning grant it initially received.

The bill passed this week would rule out a partnership exchange, said State Rep. Andrew Manuse, who sponsored the legislation, in an interview.The overall intention of the bill is to “do absolutely nothing and make it harder for the federal government to implement this,” he said

Manuse’s hope is that either the Supreme Court will overturn the ACA or Congress will repeal it and pass a new law. Either way, an exchange as currently conceived – federal-run or state-run -- would be rendered moot. “The bill’s purpose is very clear, regardless of what HHS does,” he said. “The goal is to get this law repealed and replaced.”