Say No To State Exchanges

Posted on November 29, 2012 | Type: Issue
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The Supreme Court has ruled parts of the federal health care law constitutional, and now states face the decision to set up a state-funded insurance exchange or let the federal government run an exchange in the state.  States have a choice – if a state declines to set up an exchange, the federal government will create one instead and even pick up the tab.

SIX KEY REASONS FOR STATES TO SAY NO TO EXCHANGES

There is no obligation to create an exchange. The federal law does not require the states to establish exchanges – now or ever. This is a costly federal mandate that the states have no obligation to fund. This is a federal law and the federal government should pay to fund it.

State exchanges will be state-funded, but not state-run. Under the health care law, the federal government will be in complete control of the exchange--from who can participate to what plans they can offer and prices they can charge. Estimates show it will cost upwards of $50 million annually to fund an exchange.

State exchanges will impose huge fines on small businesses. Under a state-funded exchange, businesses of 50 employees or more will be fined at least $2,000 per employee if they fail to offer comprehensive health insurance. If states say no to exchanges, there is no authority in the law for the federal government to impose these fines on businesses.

State exchanges will funnel millions of dollars in taxpayer subsidies to insurance companies. States should not facilitate taxpayer subsidies to private companies. As with fines on businesses, there is no authority in the law for the federal government to offer subsidies if a state declines to establish an exchange.

State exchanges will force taxpayers to share private medical information with the government. States that create exchanges will report to the IRS sensitive information about citizens' health care choices, including when people seek, change or drop health insurance coverage. The government will also have access to medical history information of any person who buys insurance through the exchange.

There's no rush to create an exchange. The Department of Health and Human Services still has not released comprehensive guidelines instructing states about how to set up exchanges, and the federal health care law makes clear that states may wait and decide to set up state exchanges in future years. Federal start-up funds will be available to states until the end of 2014, no matter when they make a decision about setting up an exchange.

More than 20 states have already said no to state-funded exchanges. To receive updates about how you can help stop state-funded insurance exchanges where you live, please sign up here:

Does my state plan to set up an exchange? Find out here.

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