Resisting a state-based health care exchange prescribed by the Patient Protection and Affordable Care Act (PPACA) is one thing, but creating a civil action for those that dare try is another.
Such is the case in Missouri. The law is so unusual that it was the subject of a law school health policy class in Connecticut this past week.
Due to a new state law passed by voters November 6, known as Proposition E on the ballot, assisting a state-based exchange opens up officials to civil litigation and bars a state-based exchange absent enabling legislation. Newly-re-elected Democratic Missouri Gov. Jay Nixon said that it cannot set up a state exchange under the health care reform law, even though he wishes to maintain state control of his health insurance market.
“We believe that regulation of the insurance market is a power best left in the hands of the states,” Nixon stated in a Nov. 16 letter to U.S. Health and Human Services Secretary Kathleen Sebelius.
Nixon noted there was a big push in the Missouri General Assembly in 2011 to create a state-based exchange, which passed the Missouri House but ultimately failed in the full state Senate.
He called it unfortunate, and told Sebelius that “we continue to favor state, rather than federal, control of our insurance market.”
But Nixon is out of luck here, as some have pointed out. The new law bars all of the governor’s authority for establishing, administering, or operating a state-based health benefit exchange in Missouri. It bars any “department, agency, instrumentality or political subdivision of the state of Missouri from promulgating any rule, policy, guideline or plan to change any program, rule, policy or guideline to implement, establish, create, administer or otherwise operate a state-based health benefit exchange described in the federal health care act unless it has authority from the state legislature or a state petition, referendum.”
Second, the new law allows any taxpayer in Missouri or any member of the general assembly to bring suit against the state of Missouri or any official, department–including Insurance Commissioner John Huff –a nonvoting member of the federal Financial Stability oversight Council (FSOC) or any other member of the department, division, agency, or political subdivision which is in violation of the law and helps set up a state-based exchange.
Moreover, courts are given the power to award all attorney’s fees, court costs, and all reasonable expenses incurred by the taxpayer or member of the general assembly and have the violator pay.
Thus, if the insurance commissioner or any of his staff do any exchange work, perhaps including working with the NAIC, or SERFF if the end-product benefits Missouri future state exchanges, they can be sued by a taxpayer of the state (taxpayer as opposed to a citizen so presumably does not include retirees or those on maternity leave or students or the work-disabled or stay-at-home parents). They will also have to pay all fees if they are found to be in violation of the statute. The money cannot be paid from a legal defense fund and no extra money can be made to the department to help pay the fees.
Thus, the governor wrote to Sebelius, based on current state law and existing federal guidelines, “Missouri will be unable to proceed with a state-based exchange.”
Andrea Routh, executive director of the Missouri Health Advocacy Alliance and an NAIC consumer representative said that the final ballot language was written by a circuit court judge and only mentioned state-based exchanges so the people did not really know they were voting on a measure that “virtually ties the hands of state employees to assist the federal government in setting up the exchange for our state.”
The ballot language also mentionioned that the measure gives any taxpayer or member of the General Assembly a right to civil action if they think a state employee or state agency violates the provision of the statute and that any costs of the suits have to borne by the state agency involved with no new appropriations for such purpose, she wrote in an email.
“You can imagine the chilling effect that will have on state employees,” Routh said.
Missouri may be unique in the legal recourse now allowed taxpayers with respect to exchanges, but its population, if not its governor, is not alone in its sentiments.
In an article for the December 10 conservative Weekly Standard, Jeffrey H. Anderson, a senior fellow at the Pacific Research Institute, a limited government, free market think tank, represented the views of the many states that, as he wrote, “are wisely signaling that they aren’t interested in doing the Obama administration’s bidding on Obamacare. As a result, many if not most of Obamacare’s insurance exchanges — the heart of the beast — will have to be set up and run by the Obama administration at the federal level.”
More than a third of all states have already said they won’t set up the Obamacare exchanges and governors from Kansas to South Carolina to Texas have said they’ll refuse to set up the exchanges in their states, some over the wishes of the state insurance commissioner.
Anderson warned that federal exchanges aren’t empowered to distribute taxpayer-funded subsidies to individuals–only state-based exchanges are. Some states are accepting that the federal government will come in and try and regulate but remain wary of their reach, of the role of navigators competing with state agents, of impact on taxpayers, and of a bureaucracy they can’t fathom.
“In truth, Obamacare’s federal exchanges will be an extremely complicated technical endeavor to set up and run, as (among other things) they would involve compiling massive amounts of risk-selection data on individual Americans,” Anderson said.
But Gary Cohen, director of Center for Consumer Information and Insurance Oversight (CCIIO), the HHS arm charged with helping implement the exchanges, told insurance commissioners from states that are expecting HHS to come in and start an exchange that the federal government is going to be ready to enroll–and to enforce.
For his part, Nixon noted the Missouri General Assembly is back in session January 9.
However, work may still be done by soem interested in a robust federal exchange.