Sen. DeMint, R-SC, tells governors to Just Say No to Eexchanges, Photo, Courtesy AP

Oppose any creation of a state health care exchange mandated under the Patient Protection and Affordable Care Act, (PPACA) senior members of Congress told the nation’s governors in a letter soon after the Supreme Court ruled the act constitutional. 

In a letter to the National Governors Association (NGA), 12 Republican Senators and 62 Representatives, led by Sen. Jim DeMint-SC and Rep. Michele Bachmann-Minn., and Rep. Jim Jordan-OH. In the House, there are currently a majority 240 Republicans, and in the Senate, a minority 47 Republicans.

After stating a goal to fully repeal “this government takeover of healthcare,” the GOP Congressional team wrote, “most importantly, we encourage you to oppose any creation of a state health care exchange mandated under the president’s discredited health care law,” the letter stated. Although it was upheld in practices by the High Court, Republicans in Washington are arguing that the individual mandate violated the Commerce Clause, as was indeed ruled, and will be implemented instead as a “punitive tax on the middle class.”

 Rather than a mandate, the Congressional team says this ruling’s wording “presents us with a critical choice. Do we allow this reprehensible law to move forward or do we fully repeal it and start over with commonsense solutions?” 

As many have written, most recently on political behavior adhering to acknowledged party positions in a piece in The New Yorker’s June 25 issue, the mandate was a brainchild of conservative healthcare expert Stuart Butler of The Heritage Foundation in 1989 as a rebuttal to the single-payer system, with the comparison not to having the government have people eat broccoli but to require passengers in automobiles to wear seat belts. 

A few years later, Rep. John Chafee, R-RI, set sail, along with major Republican sponsors, with the idea, and it was this previous incarnation of the current mandate bill was seen as a lost chance after President Clinton’s efforts failed.

The Republicans in Congress are hedging their bets for control of Congress and/or the U.S. presidency in the upcoming November elections and hoping the exchanges won’t ever have to face the light of day when they are now slated to activate, in January 2014. 

They are also in effect baiting the U.S Department of Health and Human Services (HHS) to come make a health care exchange in the states, rather than letting a state waste its money for the same benefits.

The DeMint team is telling governors that it is in their best fiscal interest to refuse to begin an exchange by saying they will help lower the cost of doing business in their states if they refuse to create an exchange.

“Resisting the implementation of exchanges is good for hiring and investment,” they write. That’s because the law’s employer mandate permits federal premium assistance to citizens f states who create a state-based exchange.

However, the IRS recently finalized a regulation that does allow federal assistance to states that have not created exchanges. 

HHS officials said on a recent call after the Supreme Court decision that subsidies would indeed be available for states with federal exchanges.

So, what’s the point, the letter implies, in setting up a state exchange? It will just be a waste of state resources and will result in higher premiums for citizens, they argue.

DeMint’s home state of South Carolina was in the spotlight late last year over  state exchange grants awarded when questions were raised  by Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Tom Harkin (D-IA) into allegations of whether Gov. Nikki Haley improperly used a $1 million grant awarded to South Carolina for the purpose of planning their state health care exchange.

Among at least half the states who have made no progress on exchanges, many have flat-out refused to participate, or have sent back grant money, and this set of Congressional Republicans are urging them to continue on this course. Some have used money for studies that have languished.
If they do nothing, the federal government would be regulating a large part of their health insurance market, and states would have much less control. Also, HHS has said it doesn’t really want to come in and run exchanges.

However, a private exchange IT developer said that HHS’s Center for Consumer Information and Insurance Oversight recently indicated it still does not have the necessary service level agreements in place with the federal agencies (IRS, Treasury, etc) necessary to complete the development of the Federal Data Services HUB.

Additionally, there was a six month delay getting the contract signed with the IT vendor who is building the HUB.  

One of the big IT pieces of the exchanges is the HUB, an integral piece for a state-based exchange, the state/federal partnership exchange and even for a federally facilitated exchange.

“These issues indicate to me that the HUB will not be ready in time for states to do enough testing and verification and could ultimately delay the development of any exchange model,” said this person, Daniel Schuyler with Leavitt Partners in Utah and helps guide the firm’s health insurance exchange practice.

However, the plea may be moot, at least for now. According to a variety of state sources, if states have not already started a state-based exchange process, it is likely very late for them to start to have all the IT infrastructure in place. They could opt for a federal-state partnership–the blueprint for any exchange is due two weeks after the general election, or Nov. 16. 

As a way to give more flexibility for laggard, if not reluctant state in its approach to creating a state-based exchange, HHS said last week that a federal exchange could later evolve into a state exchange–if not tomorrow, at some point past 2014, giving exchanges the ability to transfer authority back to the state level.