Consumer Power Report: Don't Go Exchanging
, We report on information that provides every incentive for states to reconsider their current positions in regards to the health insurance exchanges mandated by President Barack Obama’s law.It now appears the threat of an instituted "federal" exchange – where a state presumably would have no input during the process – is a more hollow threat than ever before. An excerpt from our upcoming piece:
Supporters of exchange implementation have argued repeatedly that states must act or risk losing control to a federally run exchange, operating outside state authority. Yet a closer examination of the law indicates such federally run exchanges would have several difficult budgetary hurdles to overcome.
While the text of Obama’s law grants HHS a nearly unlimited budget to fund state-created exchanges, the authority to create a federal exchange within the bill did not come with any funding at all. In a situation where a significant number of states declined to run exchanges themselves, HHS would have to go back to Congress for additional funding or find other means within its overall budget.
An additional drafting error in the law could prevent these federal exchanges from offering heavily subsidized premiums, their primary attraction to consumers. As first reported by Investor’s Business Daily , while Section 1311 of the law mandates the creation of state exchanges, and Section 1321 authorizes HHS to establish an exchange if a state refuses to comply, subsidies are available only to those consumers enrolled in "an exchange established by the state under (Section) 1311." No similar language in the bill authorizes the subsidizing of individuals within the federal exchanges.
As Vanderbilt’s James Blumstein tells IBD (and I discussed in this paper), the exchange-related provisions of the law were not written all-that-carefully. Nonetheless, federal agencies lack the authority to unilaterally revise statutory mistakes. (A point Cato’s Michael Cannon also makes here.) Congress may have wanted to make tax credits more widely available – just as it may have wanted those making less than poverty-level income to be eligible for exchanges as well – but that is not what Congress did.
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(read full bio) In the latest edition of , we report on information that provides every incentive for states to reconsider their current positions in regards to the health insurance exchanges mandated by President Barack Obama's law.
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