Opinion

States still have power to reject Obamacare

Photo of Dean Clancy
Dean Clancy
Vice President of Public Policy, FreedomWorks

President Obama’s re-election may have seemed like a final victory for Obamacare, especially after the Supreme Court’s inexplicable decision last June to uphold the controversial law’s mandate on virtually all Americans to purchase health insurance. But we who cherish health care freedom aren’t giving up.

If the grassroots freedom movement has taught us anything, it’s that real change happens from the bottom up. The next big battleground in the three-and-a-half-year-old Obamacare fight is the states.

The flashpoint? Health insurance “exchanges.” Will states establish them, as the law assumes? Or will they lay down their tools, bringing implementation of the 2,801-page law to a halt, in those states? Freedom activists across the country are working hard for the latter outcome — by urging their states to opt out. Half the states may end up doing so.

Then what, Mr. President?

An exchange is an integral part of Obamacare’s infrastructure, the mechanism for distributing billions of taxpayer dollars in premium subsidies to private insurance companies and enforcing the employer mandate that requires businesses to cover their employees or face financial penalties. Health care’s answer to the DMV, an exchange will bring us all the “blessings” of less freedom, higher costs, and more government control of our health care choices.

States are tasked under Obamacare with setting up and running the exchanges. But here’s the kicker: If they don’t, the law can’t work. Thanks to a quirk in the law’s drafting, only state-established exchanges are “valid.” In states that decline to set up an exchange, while the feds can certainly come in and set one up, it will be illegal for that exchange to distribute health insurance premium subsidies to individuals or enforce the employer mandate. In which case, the system stops.

This means that, in order to stop Obamacare, all a state needs to do is … nothing.

The administration has announced it will simply disregard this little inconvenience in the statute — which has already caused the state of Oklahoma to sue.

Why did Democrats draft the law that way? Because an exchange will cost between $10 million and $100 million to operate each year. Democrats underestimated the willingness of states to shoulder that burden.

HHS has requested that states declare whether they intend to set up an exchange. When most states failed to do so by November 16, HHS moved the deadline back to December 14.

HHS officials must be sweating. If enough states refuse to play along, Democrats will face a dilemma: Find additional funds somewhere to fund a bunch of (possibly impotent) federal exchanges — or negotiate with the law’s opponents.

Mr. President, call your office.

As of now, only 24 states have announced they’ll create their own exchange or participate in a scheme cooked up by HHS, called a “partnership” exchange, which looks an awful lot like a federal exchange by another name.

Twenty states have said they won’t create an exchange. That leaves six states undecided as of this writing: Arizona, Idaho, New Jersey, North Dakota, Pennsylvania, and Tennessee.