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Legislative divides may sink state-based health insurance exchanges

This article first appeared in the St. Louis Beacon, Nov. 26, 2012 - On the surface, President Barack Obama’s re-election seemed to be a death knell to opponents of the Affordable Care Act, and the measure's mandates for health-insurance exchanges.

In some other states, some prominent GOP officials – such as Florida Gov. Rick Scott – seem to see the writing on the wall and have been softening their opposition to certain provisions of the ACA, more commonly known as "Obamacare."

But so far, not in Missouri. In fact, some Missouri Republicans -- notably state House Speaker Tim Jones, R-Eureka, and others in the state Senate -- are firming up their resistance when it comes to the state setting up a health-insurance exchange, an internet portal aimed at helping uninsured Americans purchase health insurance at lower rates.

If the state declines to set up an exchange, the federal government plans to do so. Gov. Jay Nixon, a Democrat, already has sent a letter to Health and Human Services Secretary Kathleen Sebelius informing her of the state's decision (although he made clear that he disagrees with the Republican opposition).

The leading Senate opponents include state Sen. Scott Rupp, a Wentzville Republican who was a key player in the Senate battle that blocked the creation of the health exchange. The idea had sailed through the House in 2011.

This time, House leader Jones already has said his chamber has no plans to bring up the proposal again. He reaffirmed his stance in a recent interview.

Comparing the options of a state versus federal exchange, Jones said, "I really feel we're in a position of choosing between a horrible choice and a destructive choice."

Jones said he sees no benefit to setting up a state exchange, and also suspects that the federal government won't have the money to follow through with the federal exchanges.

But beyond all that, Jones cites statewide votes in 2010 (Proposition C) and Nov. 6 (Proposition E) said he said made clear that Missouri voters oppose all aspects of the Affordable Care Act.

Jones asked: "Why participate in something Missouri greatly opposed in the first place?"

'Illusion of choice'

But just in case the House mood changes, Senate critics are getting ready. Rupp laid out some of his concerns in a recent interview with the Beacon.

Rupp said he made a presentation on the issue to the Senate’s Republican caucus earlier this month. And he noted that GOP members aren't clamoring for the state to set up an exchange.

“I think that the Senate as a whole – the Republican caucus in the Senate as a whole – is pretty lockstep on this. And so, I don’t think you’re going to see any movement on our side of the building toward this,” Rupp said. “I don’t see there being any level of enthusiasm for us to move forward on this issue as a caucus as a whole.”

Among other things, Rupp said that businesses could be at risk for certain penalties if the state sets up its own exchange. But he joined others in saying states don’t have as much clout in controlling what's in an exchange, as some have claimed.

“I don’t believe there is any legitimacy to the argument that the states can control this,” Rupp said. “Everything has to be approved by Sebelius and the federal government. If they don’t like the way it looks, they can turn it down. If they think you’re charging too much, they can turn it down. So everything defaults back to them. So I think it’s an illusion of choice.”

Jones in the House offered similar sentiments. He also cited a lawsuit now underway in Oklahoma, where state Attorney General Scott Pruitt is contending that the ACA-related rules issued by the Internal Revenue Service go beyond the language in the legislation.

The IRS rule states that employers who do not offer qualified healthcare coverage and who have at least 50 employees would incur a $2,000-per-employee penalty (exempting the first 30 workers) if at least one full-time workers qualifies for a federal subsidy to purchase coverage offered through a state or federal exchange.

The Affordable Care Act's language, says Pruitt in his suit, doesn't mention the federal exchanges when it refers to the subsidies. His suit also contends that the federal exchanges violate states' rights.

Jones argues that the Pruitt lawsuit, if successful, could block the implementation of the federal exchanges -- or, at minimum, curb their success by blocking use of the insurance subsidies or the employer penalties.

Debate on the exchanges heated up in Missouri earlier this month when Nixon stated that the state wouldn’t make the initial Nov. 16 deadline to set up a state-based exchange. The federal deadline has been extended, but Nixon and GOP legislative leaders agree that the new deadline doesn't change the situation in Missouri.

As the Beacon reported earlier, the legislature could still set up a so-called “partnership” exchange with the federal government by mid-February. It’s also possible for legislators to set up a state exchange in another year.

Nixon said both at his press conference and in his letter to Sebelius that he would prefer the state set up its own exchange.

“A federally facilitated exchange is not the ideal approach,” Nixon said earlier this month. “Regulating the insurance market is a power best left in the hands of the states. We can perform those duties more efficiently and effectively and provide better service for consumers.”

But in this instance, legislative action is critical. With the passage of Proposition E, a health-insurance exchange could only be set up by the General Assembly or through a vote of the people.

Nixon's staff said this week he is saying nothing more on the issue, beyond the letter to Sebelius.

Legislative stumbling blocks

But regardless of what Nixon says on the issue, the legislative realities that stalled the issue in the first place haven't changed.

Back in 2011, state Rep. Chris Molendorp’s legislation to set up a state-based exchange passed unanimously in the Missouri House – not a single Republican voted against it. But the Belton Republican’s bill got bottled up in the Missouri Senate, with conservative Republican lawmakers leading the opposition. Since then, legislators haven’t acted.

That opposition in the Missouri Senate hasn’t dissipated. Since Nov. 6, state Sens. Brian Nieves, R-Washington, and Rob Schaaf, R-St. Joseph are on record with their opposition to the state's setting up its own exchange.

Schaaf told the Riverfront Times that the federal government has "very strict rules how it would be set up, they have veto power over whether your exchange is acceptable or not, [thus] limiting the state's ability to innovate anyway.” 

Rupp added: “I think it’s something that we’ve spent a great deal of time and effort looking at. It’s not a reactive, ideological position. It’s something that we’ve investigated. We’ve educated ourselves. And once we’ve done that, that’s how we came to this conclusion.”

One vocal dissenter is state Rep. Jay Barnes. The Jefferson City Republican attorney told the Beacon that Republicans are making a big mistake by forgoing the state’s chance to set up an exchange.

“I started reading the regulations that were being proposed by the federal government. As an attorney, I realized the power of the regulatory state to use the administrative process to potentially ruin private industry,” Barnes said in an interview. “I read those regulations and came to the conclusion that if the wrong person were at the helm as a regulator discharging the exchange, they could decimate free-market health care in whatever state it is that the federal government had control over.

“And I don’t want that happening in the state of Missouri,” he added.

But Barnes isn’t getting a warm reception; he conceded that opposition in the state Senate will likely be too fierce to overcome.

“I think that they’re well-intentioned,” said Barnes, referring to Senate opposition. “But given the review of powers that Missouri would be ceding to Kathleen Sebelius and Barack Obama, I think they’re making a big mistake. And the prospects of success lie with the ability to persuade those who are opposed to look at the underlying regulations and the authority that they are considering giving away for the first time in our state’s history.” 

Count Rupp though as one senator who's not persuaded.

"I think you will have a federal exchange in our state, because that’s what the law is and we can’t stop that," Rupp said. "We just don’t need to violate Proposition C – the Health Care Freedom Act – by taking steps as a state to help create one. And then we don’t want to expose the risks of those penalties for employers by creating one."

Jason is the politics correspondent for St. Louis Public Radio.
Jo Mannies has been covering Missouri politics and government for almost four decades, much of that time as a reporter and columnist at the St. Louis Post-Dispatch. She was the first woman to cover St. Louis City Hall, was the newspaper’s second woman sportswriter in its history, and spent four years in the Post-Dispatch Washington Bureau. She joined the St. Louis Beacon in 2009. She has won several local, regional and national awards, and has covered every president since Jimmy Carter. She scared fellow first-graders in the late 1950s when she showed them how close Alaska was to Russia and met Richard M. Nixon when she was in high school. She graduated from Valparaiso University in northwest Indiana, and was the daughter of a high school basketball coach. She is married and has two grown children, both lawyers. She’s a history and movie buff, cultivates a massive flower garden, and bakes banana bread regularly for her colleagues.

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