Before last week’s Joint Labor Committee meeting in Casper, Governor Mead sent a letter to the chairs of the committee—Senator Charles Scott and Representative Elaine Harvey—strongly supporting Wyoming’s pursuit of a state-run health insurance exchange under Obamacare. The letter is rather cryptic as to how this will happen, and JP Eichmiller’s reporting on the meeting describes a game of hot potato between legislature and the Governor as to who will take responsibility (the letter is also available for download here). The letter has rightfully caused concern over Governor Mead’s use of executive orders or other circumvention of the legislature, and Wyoming Liberty Group continues to follow developments on this front.
One part of Governor Mead’s letter needs correction, and I provided that to the Governor in a letter last week. Governor Mead believes the following:
If, by January 2013, Wyoming is not substantially prepared for implementing an exchange, the federal government will move to operate an exchange in our state. This would require ceding substantial authority for individual and small employer insurance along with Medicaid eligibility and enrollment processes to the federal government.
This error is understandable; this section of Obamacare has been repeated so many times it’s practically a
chant. Sometimes it’s a threat: either we set up an Obamacare exchange, or the feds will do it for us. Nothing like friendly federalism from our comrades in DC, eh? Fortunately, although Obamacare includes this explicit provision, another section of the law makes any federal exchange unworkable. As I stated in my letter:
Section 1321 of the PPACA (codified at 42 U.S.C. § 18031) does indeed give the Secretary of Health and Human Services the power to establish and operate an exchange if Wyoming is not actively establishing one by January 1, 2013. However, § 1401 of the Act (codified at 26 U.S.C. §36B) limits the premium assistance tax credit for exchange enrollees to those exchanges “established by the State under [§] 1311 of the [PPACA]” (emphasis added). In short, if the federal government establishes an exchange in Wyoming pursuant to § 1321, lower-income individuals (those the exchange is meant to serve) will not qualify for federal subsidies and the exchange will be unworkable under the law.
This may have been an unintended oversight in drafting the PPACA, but the IRS may not create tax credits out of thin air. For this to be fixed, Congress would have to amend the PPACA. Since the November 2010 elections, the chances of this happening are slim to none.
This revelation came early last month, but has not garnered enough attention. Avik Roy provided excellent
coverage at the Forbes Blog, and law professor Jonathan Adler gives a full legal breakdown at the Volokh Conspiracy. It seems all eyes are focused on the individual mandate litigation, now knocking on the Supreme Court’s door. But even if the mandate is upheld by the United States Supreme Court, this omission in Obamacare provides states more ground upon which to successfully resist implementing the federal health care leviathan.
Governor Mead should pull his support for any kind of exchange and instead focus on market-driven policies, such as the interstate sale of health insurance.