Gov. Butch Otter is pressing Idaho legislators to create an Idaho Health Exchange. He is doing so despite previously issuing an Executive Order to the contrary and the many drawbacks to doing so. The governor’s request would be taxpayer funded, but it also comes at the expense of state sovereignty.

A health insurance exchange is a government bureaucracy that enforces ObamaCare’s many regulations, channels billions in deficit-financed government subsidies to private insurance companies, and helps the IRS penalize individuals and employers who fail to purchase government approved health insurance.

Thus far, 32 states have rejected creating a state health exchange. If states do not enact an exchange, the federal government can do so. The federal government, however, currently has no funds available to enact these exchanges. Congress did not anticipate the widespread refusal by the states and did not include money in the ObamaCare funding to set them up. Many observers see this state refusal to establish health exchanges as the most viable way to derail ObamaCare in its entirety.

Even if you like the idea of handing over control of insurance to the federal government, there are problems with the governor’s desire to establish a health exchange. The governor’s prior acts make his current wish difficult to achieve. Governor Otter’s current position violates his own Executive Order 2011-03, which states “No executive branch department, agency, institution or employee of the state shall provide assistance or resources of any kind to any agency, public official, employee or agent of the federal government to implement or enforce the PPACA (Obamacare).”

His position also violates the Idaho Health Care Freedom Act, which the governor signed in 2010.  At that time the Governor proclaimed, “What the Idaho Health Care Freedom Act says is that the citizens of our state won’t be subject to another federal mandate or turn over another part of their life to government control.”  By attempting to now subject Idaho citizens to the federal mandates of ObamaCare, Governor Otter’s current position contradicts his prior position.

Many states are rejecting these exchanges because of the lack of state sovereignty and the cost of implementing them. State based exchanges will be state-funded, but not state-run.  The federal government will be in complete control of the state exchanges, including controlling who can participate, what plan the exchange can offer and the prices the exchange can charge.  States will not have the freedom to run the exchange their way, as Health & Human Services Secretary Kathleen Sebelius must approve the rules to run the exchanges.  Even after the state has spent millions to comply with the federal regulations, the federal government can change the rules any time they want. Worse yet, the federal government can make those changes without congressional approval, much less the state’s approval.

Under a state exchange, a small business 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, the law does not give the federal government the authority to impose these fines on businesses. In addition, federal exchanges lack the statutory authority to issue insurance subsidies and enforce the employer mandate.

All federal subsidies for the state insurance exchanges will cease by 2015, leaving the taxpayers of Idaho to pay for the exchange. And considering that the cost of Obamacare has already tripled from the original estimates, no one can begin to estimate just how much the tab for the exchanges will be.

Some governors have already recognized the problems that state health exchanges present. Gov. John Kasich of Ohio said, “[s]tates do not have any flexibility to build and manage exchanges in ways that respond to unique needs of their citizens.” Similarly, Wisconsin Gov. Scott Walker said, “Wisconsin taxpayers will not have meaningful control over the health care policies and services sold to Wisconsin residents.” Joining them in expressing concern about state sovereignty, Georgia Gov. Nathan Deal said he worried about both the lack of federal understanding of state issues and the cost, noting his concern regarding “the one-size-fits-all approach and high federal burden imposed on states.”

Gov. Otter used to share those governors’ concerns, with good reason. He should heed his prior comments about establishing a state exchange and stop pressing lawmakers to go against the state’s Health Freedom Act.


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