Attorney Richard Wilbourn’s Comments to the MS Dept. of Insurance’s Advisory Board on Obamacare and Implementation of State Health Care Exchanges
July 11, 2012, Jackson, MS
I. Seventeen states are not moving forward or barely moving to implement exchanges. Some like New Jersey have announced that they are going to take a “wait and see” posture to figure out what other states are doing and to identify all possibilities.
II. Of the 17, five states (Wisconsin, South Carolina, Florida, Louisiana and Texas) have announced they positively will not implement a state exchange. Gov. Rick Perry has said, “If anyone was in doubt, our state has no intention to implement so-called state exchanges or to expand Medicaid under ObamaCare. I will not be party to socializing health care and bankrupting my state in direct contradiction to our Constitution and our founding principles of limited government.” Meanwhile, Mississippi is aggressively moving forward with implementing its exchange. Last week, NPR did a segment on how Mississippi is moving ahead to implement a state run exchange. (Read quote.) So while this NPR report praised Commissioner Mike Chaney and gave him a nice quote, the real goal of the segment was to bash Governor Bryant for announcing Mississippi will not adopt the ObamaCare expansion of Medicaid.
III. That begs the question. Why is this board and the Insurance Commissioner taking us in one direction when the Governor is taking Mississippi in the complete opposite direction? You can’t have it both ways. One is acting conservatively. One is not. One is embracing ObamaCare. One is not. Moreover, the lack of a united front from two Republicans is causing a lot of headaches in the Governor’s office. There are many conservatives who are not happy about that.
IV. Why then are we moving forward with a state run exchange in Mississippi? The reason we have all heard from our Insurance Commissioner over and over is because if Mississippi doesn’t implement an exchange the federal government will do it for us and a federal run exchange will be worse and less flexible than a State run exchange.
The current evidence simply doesn’t support the claim that the feds will set up an exchange if Mississippi does not do it:
1. There is no money appropriated for the Dept of Heath and Human Services to implement exchanges.
2. The DHHS is very reticent to itself set up ObamaCare exchanges because: A) the law’s language authorizing the federal subsidy for the exchange only explicitly authorizes it for State run exchanges. Now DHHS has promulgated a rule that ignores this distinction but DHHS doesn’t really want its rule to be tested in Court because it very well might lose. Of course, without the federal subsidy, no exchange will work. Mississippi enacting and running its own exchange completely removes this risk to DHHS. B) Moreover, this distinction is a very big deal because it is that same language that gives the IRS the right to collect the penalty/tax from employers who do not provide their qualified employees the ObamaCare mandated health insurance. Of course, that tax revenue is desperately needed to pay for ObamaCare. (Another way to think about it is this board’s recommending that Mississippi continue setting up an ObamaCare exchange probably has the same effect of the Commissioner of Insurance enacting one of the largest taxes on employers ever. There is the very real chance that not President Obama but Mike Cheney will be blamed for the $2000 to $3000 per employee employer tax that Mississippi employers are going to be hit with but which Louisiana, Texas and Florida employers will probably not have to pay.)
3. DHHS has not taken one single concrete step in any of the 17 states that are not moving forward on exchange implementation to punish those states or to implement a federal exchange. To the contrary, they keep extending the various progress deadlines and increasing promises of expense reimbursement to bribe states to implement the exchanges for DHHS.
Even if I’m wrong and somehow the Feds find funds to set up a Federal exchange, it’s not going to be materially worse than a Mississippi run exchange. Kathleen Sebellius must approve every aspect of Mississippi’s exchange. She has complete veto power. If she insists that all policies being offered by the exchange cover sex change operations, then they must. Texas Governor Rick Perry put it very well when he said,
“I stand proudly with the growing chorus of governors who reject the ObamaCare power grab. Neither a ‘state’ exchange nor the expansion of Medicaid under this program would result in better ‘patient protection’ or in more ‘affordable care.’ They would only make Texas a mere appendage of the federal government when it comes to health care.”
This is going to be no different than Medicaid. Sure Medicaid is run but the States but no one argues they are in control or even have any real measure of discretion. Ten years from now, when the regulations covering health insurance exchange are as thick as the Jackson telephone book, there will be no difference between a federal run exchange and a state run one. The only difference is does Mississippi willingly cede control of the health insurance market to the federal government or resist, with the very real possibility of success, a federal takeover.
V. Even if I’m wrong, what’s the hurry? Wouldn’t it be prudent to at least adopt New Jersey’s wait and see approach? Wouldn’t it at least be prudent to give the governor, Lt. Governor and Speaker of the House some time to coordinate and work out the State’s official position on whether to embrace ObamaCare (by that I mean Commissioner Chaney accepting the Federal government’s $20 million without a fight) or to resist it. You the members of this board need to discuss this issue. The Tea Party asked to speak at the beginning of this meeting so that afterwards, you would have a chance to ask questions and discuss among yourselves our concerns. Instead we were put at the end of your meeting and told only one of us could speak to you. Unless one of you says you want these issues on the agenda, the next time you show up at this meeting, the staff will just move you along like we in the Tea Party were never here and these concerns were never raised. It’s your job to ask questions, be willing to ask to slow this process down. Get more information. It’s your duty to find out if what I’m telling you has merit. 17 states and 5 in particular think these exchanges have serious flaws.
VI. Another consideration is the perverse incentives of the exchange system. California tried to create a similar system in the 1990’s. It performed so badly, they had to dismantle it in 2006. The main reason it did not work is because an adverse selection. Over time, more and more of the sickest people ended up in the exchange while healthy individuals could find cheaper insurance outside of the exchange. Eventually, the insured’s remaining in the plan were so sick, the subsidy to get insurers to continue to participate was prohibitively expensive.
That will happen here. And as it does, the State of Mississippi will have to pressure insurers to participate in the exchange by using the threat that if they don’t, they will not be able to sell insurance to the normal patient population outside of the exchange. Is the Department of Insurance ready to enforce the major ObamaCare provisions that are supposed to prevent adverse selection? Is the Department of Insurance ready to accept the blame when this effort to reprogram human nature fails?
VII. For the past two years there was a specific State appropriation provision for the Dept of Insurance authorizing expenditure of funds for the implementation of ObamaCare. That provision was removed this year. We would appreciate being told what authority the Dept. of Insurance has to use regular Dept of Insurance personnel and resources to create an ObamaCare exchange.
VIII. Thursday, July 12, Michael Cannon from Washington DC will speaking about ObamaCare at the Capital Club here in Jackson, MS. The MS Center for Public Policy is sponsoring his talk 11:30 to 1 p.m. talk. The meal is $15. I urge each of you ad all members of the MS Tea Party nto attend his talk since it relates specifically to the work of this Advisory Board.
THE MS TEA PARTY STANDS SHOULDER TO SHOULDER WITH OUR GOVERNOR AND LT. GOVERNOR IN OPPOSING THE IMPLEMENTATION OF OBAMACARE IN MS. WE ASK YOU AND THE DEPARTMENT OF INSURANCE TO RECONSIDER THE DIRECTION YOU ARE TAKING OUR STATE – IT IS ONE THAT IF NOT CHANGED, WILL ULTIMATELY LEAD TO LESS FREEDOM AND LESS PROSPERITY FOR ALL MISSISSIPPIANS.
WE WOULD BE HONORED TO HAVE THE OPPORTUNITY TO SPEAK WITH ANY OF YOU ONE ON ONE IN MORE DETAIL ABOUT THE THINGS I HAVE ADDRESSED TODAY. THANK YOU FOR YOUR VOLUNTEER SERVICE ON THIS ADVISORY BOARD.
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