Doing Our Part: How States Can Shut Down Obamacare


Last week we saw the not-at-all lamented demise of the Arkansas health insurance exchange. Following, we were treated to a spasm of recrimination from various quarters on the Arkansas left, accusing those who opposed the exchange of having doomed the Natural State to a future of grim slavery under the heavy boot-heel of a federally-run exchange.

But is that true? Will the feds, in fact, be running the Arkansas health benefits exchange?

Not so fast! The short (6 minute) interview at the top of the page with Michael Cannon, director of health policy studies at the libertarian Cato Institute, casts doubt on that claim. Cannon argues that, should states decline to establish exchanges, it puts the feds in a bind, as they’re not authorized to offer “premium assistance” (tax credits, subsidies, etc., needed to make Obamacare viable) in federal exchanges under section 1321 of the law. The short of it is that the inability to provide premium assistance will drive up costs and undermine the exchange as people decline to participate in the system. That’s some section, that section 1321.

Cannon covered this issue in more detail in a Wall Street Journal op-ed  last month, co-authored with Jonathan Adler, explaining how the premium assistance glitch could serve to undermine the entire law:

The law encourages states to create health-insurance exchanges, but it permits Washington to create them if states decline. So far, only 17 states have passed legislation to create an exchange.

This is where the glitch comes in: ObamaCare authorizes premium assistance in state-run exchanges (Section 1311) but not federal ones (Section 1321). In other words, states that refuse to create an exchange can block much of ObamaCare’s spending and practically force Congress to reopen the law for revisions.

The Obama administration wants to avoid that legislative debacle, so this summer it proposed an IRS rule to offer premium assistance in all exchanges “whether established under section 1311 or 1321.” On Nov. 17 the IRS will hold a public hearing on that proposal. According to a Treasury Department spokeswoman, the administration is “confident” that offering premium assistance where Congress has not authorized it “is consistent with the intent of the law and our ability to interpret and implement it.”

Such confidence is misplaced. The text of the law is perfectly clear. And without congressional authorization, the IRS lacks the power to dispense tax credits or spend money.

Oh, Obamacare, you are a disastrous gift that keeps on disastrously giving, in all your rickety, shoddily designed, half-assed glory. Don’t ever change! Just please go away, forever.

How States Can Shut Down Obamacare (Cato Institute Daily Podcast)

Another Obamacare Glitch (Wall Street Journal)

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One thought on “Doing Our Part: How States Can Shut Down Obamacare

  • December 20, 2011 at 12:28 pm
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    Whine and moan all you want about “Obamacare” but the fact remains that we do not have an efficient system of health care. According to the CIA World Fact Book, the United States ranks 50th in the world in terms of life expectancy yet we spend more on health care than any other country on the planet (Canada is ranked 12th by the way with a 3 year longer life expectancy).

    It’s too bad that when the Republicans were in power they didn’t do anything about the 50 MILLION Americans that were uninsured (1 in 6). Instead, they doubled the national debt and grew a mere 3 million jobs (compared to Clinton’s 23 million over the same period of time).

    Is “Obamacare” the perfect solution? No, but at least it’s a start. The status quote was unacceptable regardless what the insurance industry propaganda tells you.

    Take the time to verify everything I said. Know the facts.

    Then, set your prioroties straight: Country first. Political party second. Not the other way around as the author would have you believe.

    Reply

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