The recently adjourned Maine Legislature made a great decision this session and wisely delayed setting up a health insurance exchange until the Supreme Court rules on the constitutional challenges to the federal health law. A decision is expected in June.
To date, the federal government has given over a billion dollars to entice states—many of them challenging the law—to establish health exchanges that will facilitate the federal takeover of health insurance regulation. Even though a state-created exchange is not required by the law, 17 states have moved forward with implementation.
The majority of states, like Maine, are still either studying options, have rejected exchanges outright, or are waiting to see if the overall health law is constitutional.
For officials in these states, the risks of setting up a health exchange at this time outweigh the benefits.
While the current narrative from proponents of the health law is that states must aid in the federal takeover in order to preserve flexibility, others see little flexibility in the 2,700 page and law and accompanying HHS regulations. Instead, they recognize that every aspect and decision, from operation to implementation, must be approved by federal bureaucrats in Washington.
At the same time, it remains unclear whether the federal government has the time and resources to implement exchanges without state help. The law technically does not provide Washington with any more money to set up a federal exchange in states that haven’t volunteered to implement the law—federal officials have implicitly admitted this through budget requests for additional funds to set up federal exchanges
Additionally, even though exchange provisions under the law were intended to serve as the mechanism to distribute new subsidies, the law allows for those subsidies to flow through state-created exchanges, not federal exchanges. Even if these serious issues are resolved, it is still unlikely that the federal government could get exchanges up and running by their own 2014 deadline.
Meanwhile, questions remain as to just how much an exchange would cost the state of Maine and who exactly will pay for it. The federal government provides grants to states to get their exchanges up and running, but that money will run out in 2015. After that, states that volunteered to set up exchanges for the federal government will assume the burden of operational costs. In states that have passed exchange legislation, lawmakers are considering new taxes to help pay for operation.
With the uncertainty surrounding the health law, serious questions as to its flexibility, and new costs to the state, the Maine Legislature recognized that now is not the time to risk taxpayer dollars, state or federal—especially by voluntarily implementing the same law it, and 25 other states, argued was unconstitutional just last month in the U.S. Supreme Court.
Christie Herrera is director of the Health and Human Services Task Force at the American Legislative Exchange Council, a nonpartisan, nationwide association of state lawmakers.