The States and Obamacare

Current counts show that 19 states have rejected the opportunity to create a state Health Care Insurance Exchange as a part of the Patient Protection and Affordable Care Act (PPACA).

At the health care council meeting of the Midd...

At the health care council meeting of the Middlesex Chamber of Commerce with Kevin Counihan,CEO of CT Health Insurance Exchange (Photo credit: Aldon)

Those states are;

Alabama, Alaska, Florida, Georgia, Indiana, Iowa, Kansas, Louisiana, Maine, Missouri, Nebraska, New Hampshire, Ohio, South Carolina, South Dakota, Texas, Virginia, Wisconsin and Wyoming.

Current states with Republican governors who’ve not publicly indicated their decision;

Arizona, Idaho, Michigan, Mississippi, Nevada, New Jersey, New Mexico, North Dakota, Oklahoma, Pennsylvania, Tennessee and Utah.

If only half of the remaining Republican governors opt out of the state Health Care Insurance Exchange program, that means half of the states are not seeing the value in the federal proposition.

In a perfect world and proposal, the state run Health Care Insurance Exchange purports that the states will have increased control over the insurance marketplace.  However each state exchange falls under the bureaucratic eye and ultimate approval of the federal government.  If the state exchange doesn’t meet the requirements, the federal government will step in and impose the proper regulations and requirements.

The current economy, and growing federal debt of $16 Trillion raises the question of how this new bureaucracy is to be funded.  According to the federal government, “Necessary Exchange costs will be fully funded by Health and Human Services (HHS) until 2015.  After January 1, 2015, Exchanges must be self funded.”

Minnesota’s exchange is expected to cost $54 million beginning in 2015.  That cost is more than the previous expected $30 – $40 million.  Then in 2016 the cost is expected to rise to $64 million.  Since the exchange’s need to be self sufficient, states will need to create ways for the exchange to pay for itself.  Funding options proposed include,  user fees  and selling ads.  Additional taxes on liquor, tobacco and gambling are also a funding option.  Some estimates for states who create exchanges, is that those states will have to increase taxes anywhere from $10 million to $100 million per year to cover their operating costs.

The Obama administration is certainly desirous of having all of the states create the exchanges, as then the federal government won’t have to administer a state exchange.  If the Obama administration has no “skin in the game,” regarding the state exchange, they also have abdicated any responsibility for what happens within the state exchange.

Dennis Smith, Secretary of Health for Wisconsin has stated, “We have no other plan that we are taking because we think the reality is the federal government cannot meet its deadlines for implementing PPACA,  No one knows what a federal exchange looks like. The two major components that an exchange is supposed to do, which is determine eligibility and to complete the business transaction to pay premiums to health care plans that millions of Americans are supposed to pick, nobody knows what those look like. The administration has failed to release a credible business plan where objective observers could conclude that they’re going to pull this off.”

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