Governors can and should stop state based health insurance exchanges.

All governors should REJECT state based health insurance exchanges. Below are the multiple reasons why:

1.) The PPACA legislation (a.k.a. Obamacare) and the recent U.S. Supreme Court decision confirmed that states retain the right to either open a STATE based health insurance exchange or to refuse to do so. If states refuse (20 states now have) then Barack Obama’s administration will usurp our 10th amendment rights and open a FEDERAL exchange in each state.

2.) The PPACA legislation only authorized the I.R.S. to provide tax credits for for those who purchase health insurance in an Obamacare health insurance exchange IF that exchange is a STATE based exchange. NO SUCH AUTHORIZATION WAS GRANTED TO THE IRS IF SUCH AN EXCHANGE is a ‘fall back’ exchange – meaning a FEDERAL exchange.

3.) The PPACA legislation only authorized the I.R.S. to penalize (a.k.a. TAX) employers $2,000 or $3,000 per employee if they qualify for health insurance in an Obamacare health insurance exchange IF that exchange is a STATE based exchange. NO SUCH AUTHORIZATION WAS GRANTED IF SUCH AN EXCHANGE is a ‘fall back’ exchange – meaning a FEDERAL exchange.

And here’s the REALLY good part….

4.) There have been ZERO dollars appropriated by Congress to fund ‘fall back’ exchanges – meaning a FEDERAL exchange.

5.) Spending bills originate in the U.S. House of Representatives. Republicans, as of today, hold a 234 seat MAJORITY in the House.

6.) There are now 30 Republican governors nationwide. Each and every one of them need to be UNITED in resisting state based exchanges.

If no money is appropriated for FEDERAL “fall back” exchanges by the U.S. House of Representatives and Republican Governors stand STRONG and REJECT the establishment of STATE based exchanges. Then STATE based Obamacare exchanges will only survive in the ‘Blue states’.

Then the producers – tax payers and business owners – will begin a migration to “Red states” that have taken proactive action against state based exchanges. And, the “Blue states” will implode upon themselves as massive new costs related to opening and maintaining STATE based exchanges continues and massive new Medicaid enrollment occurs and with it, rationing of care. In the end, God willing, the vision our Founders had for us – where each state retains its sovereignty – will ultimately prevail.

Dean Clancy from FreedomWorks explains more. After you watch this go to www.BlockExchanges.com

As of May 28, 2013 here’s where the numbers stand:

exchanges

  • Committed to a state-based exchange: 17 states and Washington, D.C.
  • Planning for a partnership exchange: 7 states
  • No to state-based exchange. Defaulting to Federal Exchange: 27 states

It is crucial for all Governors and other state legislators to understand that Obamacare induces states (via lucrative Grants) to open ‘state based’ health insurance exchanges under section 1311.  If a state refuses to open a state based health insurance exchange then  section 1321 directs the Secretary of HHS to establish and operate exchanges in states that fail to create one.

Here’s the key point: The PPACA (a.k.a. “Obamacare”) authorizes tax credits only in exchanges “established by a state under Section 1311,” and withholds tax credits in states that do not establish a state based exchange.  And, instead decide to default to a Federal ‘fall back’ exchange under section 1321. Since the PPACA ties additional “cost-sharing subsidies”and penalties against employers to these tax credits authorized only in a state based exchange, no such penalties to employers would exist in a Federal ‘fall back’ exchange.

In order to ‘fix’ this ‘out’ that states would reserve under this exclusion. On the 2 year anniversary of the passage of the PPACA – May 23, 2012. The Internal Revenue Service finalized a proposed rule that offers premium-assistance tax credits through Exchanges “established under section 1311 or 1321 of the PPACA – “Affordable Care Act.” Those six characters—”or 1321″—constitute a dramatic rewriting of the statute. By issuing tax credits where Congress did not authorize them, this rule also triggers cost-sharing subsidies and imposes penalties on employers in a Federal “fall back’ exchange. This was an illegal act NOT authorized by Congress and it must NOT STAND.

If you are a business owner or a tax payer who lives in one of the aforementioned ‘undecided’ states. It behooves you to contact your Governor’s office and tell them not to open a state based health insurance exchange.

The burdens taxpayers and business owners will bear in a state that allows a state based exchange.

Besides the massive new burden these STATE based exchanges will place on business owners, there is also the massive administrative costs. Take the state of California for example, who agree early on to open a state based exchange. Their state based exchange will require a minimum of 850 ‘customer service reps’ and a FIRST YEAR start up cost of $706 Million. As is the case with nearly all government financial predictions, that annual cost number will most likely be far higher when everything is implemented and moving ‘Forward’ towards further California fiscal collapse. California is just one example of a state with massive, unsustainable health insurance exchange costs, there are others as well.

For example, the state of Massachusetts already developed a state -based health insurance exchange. In fact, the exchange in Massachusetts is the prototype that will be used to develop other health insurance exchanges under the PPACA. There’s only one problem, the cost to taxpayers. At last count, the Massachusetts health care overhaul initiated by Mitt Romney has cost taxpayers more than $8 Billion. The Federal tax credits provided to other states who make the catastrophic budgetary mistake to develop a state-based PPACA exchange should be equally staggering.

Insurance exchange
For example, when it comes to Medicaid, there are two kinds of recipients of this tax payer funded entitlement:

1.) ‘New Eligibles’ who will be newly eligible after the PPACA to enroll in Medicaid because of the PPACA’s increase in the eligibility for Medicaid to 133% of the Federal poverty level for an individual and 400% of the Federal poverty level for a family of four. From 2014 to 2017 the Federal Government (Taxpayers) will pay 100% of the cost to ‘insure’ these people and 90% of the cost afterwards. Until the printing press breaks or our credit line from China is forfeited.

AND

2.) “Old Eligibles” who were eligible for Medicaid before the PPACA but did not enroll for whatever reason. The Federal Government (Taxpayers) will pay only 57% of the cost to ‘insure’ these people.

Thanks to an article from the The New England Journal of Medicine we now know that 9 million or more than half of those who’s costs Governors were told would be covered at 100% by the Federal Government will actually only be covered at 57%!

That is a recipe for disaster for any state budget. Most especially since the biggest line item budget on most state budgets is already Medicaid. For the impact of the PPACA Medicaid expansion on governors, taxpayers and employers click here.

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2 Comments

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2 responses to “Governors can and should stop state based health insurance exchanges.

  1. Pingback: The TRUTH about Obamacare | Health Insurance Tips & Advice

  2. Pingback: Governor John Kasich is moving ‘Forward’ with Obamacare in Ohio. | C. Steven Tucker.WordPress.com

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