Friday, November 16, 2012

Ga. gov. rejects Obamacare exchange

Gov. Nathan Deal announced today that Georgia will not set up a state health insurance exchange as mandated by the Affordable Care Act. The governor cited unknown costs, lack of flexibility, and lack of state control in his decision to reject the exchange. The Supreme Court ruled last June that the federal government could not compel states to create the exchanges or expand Medicaid as the Affordable Care Act attempts to do.

Michael Cannon of the Cato Institute notes that there are many incentives for states not to create the exchanges. Cannon says that while exchanges are created by the states, they would be controlled by the federal government. The exchanges would compete with private insurers and would likely drive many out of business. Although the law allows the federal government to implement exchanges for states that refuse, Cannon says that congress did not appropriate any funds for federal exchanges. This makes their implementation in a divided congress unlikely. Cannon argues that since federal insurance subsidies are offered through state exchanges, if all states rejected the exchanges it would reduce the federal deficit by $700 billion over ten years.

Cannon also says that rejecting the exchanges would be good for the states because “defaulting to a federal exchange exempts a state's employers from the employer mandate — a tax of $2,000 per worker per year” on companies with more than 59 employees. He notes that avoiding the mandate tax would create an environment that would attract more businesses to the state.

The Affordable Care Act’s costs for businesses were illustrated last month when the Orlando Sentinel reported that Darden Restaurants, the operator of Olive Garden, Red Lobster, and Longhorn restaurants, was testing a system of not offering full-time schedules to its employees in several restaurants. Darden, one of the nation’s 30 largest employers, said that its goal was to limit part-time employees to 28 hours per week. Under the Affordable Care Act, employers must provide insurance to employees who work more than 30 hours per week.

Deal rejected the one-size-fits-all nature of the exchanges in a press release. “We have no interest in spending our tax dollars on an exchange that is state-based in name only,” he said. “I would support a free market-based approach that could serve as a useful tool for Georgia’s small businesses, but federal guidelines forbid that. Instead, restrictions on what the exchanges can and can’t offer render meaningless the suggestion that Georgia could tailor an exchange that best fits the unique needs of its population.”

Deal said “I remain committed to common sense health care solutions that empower consumers to take responsibility for their own health, motivate the private sector and drive efficiencies for consumers, employers and governments alike. I continue to hope that we might finally engage in a serious conversation about restoring meaningful flexibility to states around health care programs.”

Other states also announced that they would not form exchanges today as well. According to The Hill, governors John Kasich of Ohio and Scott Walker of Wisconsin both formally announced that they would not comply with the federal mandate.

According to the Center for Budget and Policy Priorities, as of Nov. 9 only 14 states had enacted exchange laws. Another five states had legislation pending. Seven states, not counting Georgia, Ohio, and Wisconsin, had formally declined to form state exchanges.

According to Rasmussen, the Affordable Care Act remains unpopular almost three years after its passage. The most recent survey, taken on Nov. 4, showed 50 percent of Americans still favored repeal. A Kaiser Foundation poll from October showed that only 38 percent held a favorable view of the law.

Originally published on

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