Just Say “No” to ObamaCare

Last summer’s hope that “constitutionally conservative” Chief Justice Roberts would join a majority in ruling against the legality of ObamaCare went awry when Roberts’ surreal constitutional parsing showed he was really just another political hack who, like David Souter, had fooled conservatives who had supported his nomination.

Next stop: repeal. But repealing any law is difficult if only one party wants it off the books even if that party holds a favorable balance of power in the Congress and White House. With the reelection of Obama and the Democrat retention of the Senate, a legislative dissolution of this budget-buster became impossible.

Now, as ObamaCare moves toward a pivotal stage in its deployment – the establishment of state insurance exchanges – the last but perhaps most promising opportunity to defeat Obama’s fatally flawed healthcare system hijacking rests with the state governors. The governors have the power to starve the beast and 17 have written HHS Secretary Sebelius to tell her that they have decided to just say “No” to ObamaCare, while another 11 are strongly leaning that way. Still other governors have refused to have their states set up exchanges but have not ruled out partnering with the feds in their creation. Finally, Utah may be joined by a few states in setting up exchanges that don’t meet federal specifications but suit the needs of their citizens, thank you very much.

So even as Boehner the Weak was waving the white flag of surrender after the election, conceding that ObamaCare was now the law of the land, Kathleen the Terrible knew that she was standing in a cow pie, revealing as much by announcing a deadline extension for deciding what most governors had already decided. La Terrible knew that ObamaCare is nearly impossible to roll out without the cooperation of the states.

The law was written in anticipation that the states would go along in funding, building, and operating these exchanges. But now that half the state governors have said their states aren’t going to play and many of the others aren’t going to go it alone or are going to do their own exchange thing, what can the feds do? The dolts who wrote ObamaCare obviously hadn’t expected this to happen – as evidenced by provisions they put in the law that will make creation of state exchanges by the feds very difficult.

So what’s the big deal if the feds just elbow their way in and build the exchanges themselves?

For one thing, Congress didn't appropriate money for operating federal exchanges, which is one reason Kathleen the Terrible is so anxious to keep the door open so the states will get stuck with the operating tab. The state exchanges were designed as a vehicle so ObamaCare could distribute credits and subsidies allowing eligible people to buy insurance. As the law is written, the feds can’t provide subsidies to people or specify the insurance they must buy using federally-managed exchanges as the vehicle. Oops.

Why is this?

Because the states – not the feds – regulate insurance in their state under the aegis of their state insurance commissioners. State insurance commissioners specify what an insurance product must cover and how it may be sold when insurers do business with the citizens of their state or an intermediary such as an employer. An insurance exchange is just a different type of intermediary whose regulation, products, and distribution would fall under the purview of the state. Insurers are regulated by the state whether they sell through employers, exchanges, or direct to the insured. Thus it fell to the states to create and manage (allegedly) the exchanges as the specific vehicle to distribute ObamaCare credits and subsidies to purchase insurance products whose minimal coverage was specified by the feds. While the states would operate and “regulate” these exchanges, policy-setting would be done by Kathleen the Terrible. If anyone believes that isn’t a backdoor to controlling the exchanges, my “This Week’s Special” is the sale of the Brooklyn Bridge.

ObamaCare can’t compel states to set up exchanges – which would be unconstitutional – but it did specify that federal insurance credits and subsidies to qualified buyers (those over 133% and under 400% of the poverty line) can only be sold through ObamaStores – i.e. “state-based exchanges” set up by states for the purpose of distributing the ObamaCare brand. A fed-created, fed-managed exchange isn’t “state-based” (and is unconstitutional, unless John Roberts is the presiding judge) so if a state chooses not to get sucked into this money pit, fed credits and subsidies, the lifeblood of ObamaCare, can’t be distributed in that state. Double oops.

The feds, incidentally, have said they are going to ignore this bit of constitutional trivia and muscle the subsidies through anyway, but Oklahoma’s governor said, “Oh no you’re not,” and sued in Federal Court. Other than John Roberts, a non-nuanced reading of the law by an ubiased judge will rule against the feds meaning the exchanges can’t function if the governors opt out. Triple oops.

Now for the quadruple oops! Since the law was written in anticipation that the states would go along in setting up the exchanges, and since every one of the 50 states is a different insurance market with different eligibility rules for Medicaid, Kathleen the Terrible has no off-the shelf, one-size fits all solution she can snap in place when the governors say they aren’t going to set up exchanges and saddle their taxpayers with the operating costs ‘til the Lord comes back. Those operating costs will reflect policies made in Washington. That’s potentially 50 different exchanges Ms. Terrible would have to establish if all states opted out, although about 17 foolish state governors have said they plan to play (which they’ll regret when the time comes to pay.) The HHS has neither the competence nor the bandwidth to create and operate exchanges in multiple states.

Recall that these exchanges were laughably promoted as making the purchase of insurance through an exchange equivalent to booking an airline flight online or finding a partner on Match.com. Well, that’s because the troglodytes who wrote this law have never held a real job, least of all one that dealt with IT solutions. HHS still runs its end of the Medicaid program with pencils, paper, and pneumatic tubes! They didn’t anticipate how nightmarishly complicated it will be to build a portal that will adjudicate an application with the applicant’s Social Security number and tax return, process the personal information provided, sidetrack the application when information is missing, prompt what information is needed, wait perhaps weeks or more until the missing information is supplied (correctly), match the applicant’s attributes to a menu of insurance choices, process payments and subsidies for the applicant (every year) – and do all of this with a person who is very likely computer-illiterate. The lights would dim when this thing is turned on, if it could ever be built, and the Mother-of-All-Databases would have to be compiled in every state that is compliant with the state’s Medicaid eligibility rules.

As easy as booking an airline flight or using a dating site, eh? Ask an accountant how hard it is to get a client to provide all of the information needed to complete a long-form tax return. Ask reasonably intelligent taxpayers who file long forms how hard it is to comply with their accountant’s information requests. Then multiply that complexity by several thousand fold and that’s how hard building and operating one of these websites in one state will be. California alone has estimated it will need 25,000 service reps speaking 13 languages to operate an exchange. And the front-end complexity is just part of the problem. Kathleen the Terrible, the ruler of the most dysfunctional agency of the federal government, has to build the “back office” software to manage this agglomeration of hodge-podge state exchanges in order to keep track of what they are doing – and she has to have this entire infrastructure operational on January 1, 2014 on a budget of just $1 billion dollars! Lotsa’ luck.

The state governors aren’t fools – at least those who chose to opt their states out aren’t – and they refuse to let their states be dragooned into serving as implementation contractors and permanent blood donors for a federal program that barely made it into law without one bipartisan vote, is hated by the country’s citizens, narrowly escaped being declared unconstitutional, and will likely spend its days on life support, like every other entitlement program, while it drives the country toward an economic eschaton. The dissenting governors have the good sense to know that operating one of these exchanges will be an administrative nightmare with its “easy as booking an airline flight” website for eligibility screening, subsidies and payments, and insurance product matching. These exchanges are a brave new world where no one has ever gone before, and they don’t want to be first.

The governors further know their state’s taxpayers could be saddled with up to $100 million in additional state taxes annually to operate these exchanges because there is no federal assistance to operate them after the first year. They know that regulations are still being secretly written to administer exchanges in compliance with the caprices of Washington Morlocks who have only written 13,000 pages thus far and are still writing. So they would be signing a blank check. They know their state’s insurance commissioner will “run” the exchanges in name only and that the real power will reside with the feds. ObamaCare is going to fail, and when it does, the governors will become co-conspirators unless they opt out.

The governors also know that opting their state out will protect their business communities – especially the small businesses that employ most of the state’s workforce. Defaulting to the fed exchanges, assuming they are ever built, exempts employers from the $2,000 per employee mandate-disguised-as-Roberts-tax. Therefore, each state’s business community should pressure its governor to shield them from the Obama Death Star mandates or face political extinction if the gubernatorial spine gets wobbly.

By treating workers in employer insurance plans radically different than workers in exchanges, governors know, or ought to know, that ObamaCare causes similar people to be discriminated against simply because of where they buy their insurance. Exchanges will provide subsidies unmatched by employer-based insurance. Depending upon the uncompleted regulations-in-process, employers could be subjected to penalties simply because employees opt out of employer plans in favor of more lucrative government-subsidized plans. The ObamaCare exchanges have the potential to distort the entire private insurance market in a state as never before.

Under the ObamaCare subsidies, a family of four earning 400% of the federal poverty level – i.e. $88,000 – will receive $5,000 to purchase insurance in 2016. One dollar above that threshold the subsidy drops to zero. These kinds of perversities exist at various points along the income eligibility scale in determining the amount of the subsidy the insured is qualified to receive. Governors know – or ought to – that this is a disincentive to work, as most welfare programs are, and entitlements never work to the economic well-being of a state or its citizens.

Finally, governors know that if they allow the feds to set up their state’s exchange, they can later replace it with their own exchange if for some reason they don’t like the fed-run exchange. So there is really no reason to commit to build an exchange at this time. Whereas, until the feds have had their day in court and resolved whether ObamaCare subsidies can be distributed through fed-run exchanges, there is good reason to wait. Who knows? Maybe Boehner the Weak will refuse to appropriate funds to allow ObamaCare to operate exchanges, which it’s currently unfunded to do.

Hey, by the way, didya’ notice which healthcare industry stocks rallied after Obama’s reelection? Well, as governors opt out, the folks who are rending their garments, heaping ashes on their heads, and wearing sackcloth are the health insurance industry lobbies and lobbies for hospital chains and associations – potential beneficiaries of ObamaCare subsidies. They are turning blue because the holdout governors are going to spoil the deal they had with the Prince of Darkness and interrupt their new subsidy revenue stream. They were hoping that state-based exchanges would become a reality because hospitals and insurers have more power at the state and local level than nationally, making state-based exchanges more manipulable. It’s doubtful that will be the case if the fed builds exchanges.

Every day closer to January 1, 2014 that Kathleen the Terrible gets without the vital pieces of the ObamaCare delivery system in place increases the risk of failure of this ill-designed entitlement program. ObamaCare has “Titanic” written all over it. Why would a smart governor get aboard a ship this doomed to sink?

State sovereignty under the US Constitution prevents the feds from forcing a state to participate, and absent state-based exchanges, the feds are powerless to roll out ObamaCare as the law is currently written. The feds have already lost the lever to suspend all Medicaid payments to states that refuse to expand Medicaid under ObamaCare – the one thing Roberts got right last summer. So the feds should also lose their appeal allowing them to strong-arm the distribution of ObamaCare credits and subsidies in opt-out states if the Supreme Court judges consistently – a big “if.” A legislative remedy to patch these holes in the ObamaCare law will never make it through Congress today because the Democrats lack the bullet-proof majorities they had in 2010.

Therefore governors have the ability to shoot ObamaCare with a silver bullet and drive a stake through its heart if they have backbones. Refusing to set up insurance exchanges will effectively repeal a large part of ObamaCare, and the Republicans have 30 of the 50 governor’s mansions. Unfortunately some Republican governors have opted in and will build exchanges – Susana Martinez of New Mexico among them. Her promising career in the party may be sacrificed when the fiscal future of her state is jeopardized by this ill-conceived program.

No one can dispute that the healthcare system in America needs repair. Its cottage industry business model has been outgrown by modern medical practice and healthcare delivery methods. But all improvements to the healthcare delivery system should happen at the state level, not at the federal level, and they should be tailored for the needs and fiscal resources of their respective states. If healthcare system improvements are administered at the state level, close to the communities they serve, voters can penalize mismanagement by their legislatures and governors as the Founders envisioned.

ObamaCare’s one-size-fits-all is not the solution.