• • Tennessee Health Freedom Act
• • Obamacare Is Still Vulnerable
• • States Can Shut Down ObamaCare's Big Spending Plans (Michael F. Cannon)
• • Republican governors shouldn't help implement Obamacare

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President Obama has won reelection, and his administration has asked state officials to decide by Friday, November 16, whether their state will create one of Obamacare’s health-insurance “exchanges.” States also have to decide whether to implement the law’s massive expansion of Medicaid. The correct answer to both questions remains a resounding no.

State-created exchanges mean higher taxes, fewer jobs, and less protection of religious freedom. States are better off defaulting to a federal exchange. The Medicaid expansion is likewise too costly and risky a proposition. Republican Governors Association chairman Bob McDonnell (R.,Va.) agrees, and has announced that Virginia will implement neither provision.

There are many arguments against creating exchanges. 

First, states are under no obligation to create one.

Second, operating an Obamacare exchange would be illegal in 14 states. Alabama, Arizona, Georgia, Idaho, Indiana, Kansas, Louisiana, Missouri, Montana, Ohio, Oklahoma, Tennessee, Utah, and Virginia have enacted either statutes or constitutional amendments (or both) forbidding state employees to participate in an essential exchange function: implementing Obamacare’s individual and employer mandates. 

Third, each exchange would cost its state an estimated $10 million to $100 million per year, necessitating tax increases. 

Fourth, the November 16 deadline is no more real than the “deadlines” for implementing REAL ID, which have been pushed back repeatedly since 2008.

Fifth, states can always create an exchange later if they choose.

Sixth, a state-created exchange is not a state-controlled exchange. All exchanges will be controlled by Washington.

Seventh, Congress authorized no funds for federal “fallback” exchanges. So Washington may not be able to impose Exchanges on states at all.

Eighth, the Obama administration has yet to provide crucial information that states need before they can make an informed decision. Read more here.

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For several years, opposition to President Obama’s health care law focused on its mandate that forces individuals to purchase government-approved insurance. By upholding the mandate as a constitutional exercise of Congress’s taxing power in June, the U.S. Supreme Court maintained the provision that helped hold the law together. But if the mandate is the cement, the law’s expansion of Medicaid and establishment of subsidized health insurance exchanges is the house itself. It’s these two provisions that will be responsible for $1.7 trillion of spending over the next decade, according to the Congressional Budget Office. Together, they are expected to provide insurance to 30 million Americans and create the infrastructure that liberals hope to use to transition the nation, over time, into a fully government-run, or single payer, health care system. With the election over and Obama reelected, repealing the law is not going to happen over the next four years. So 30 Republican governors will have to make a decision about whether they want to help the federal government implement Obamacare, or keep the onus on the Obama administration.

One of the silver linings of the Supreme Court decision is that it gave states the ability to opt out of the Medicaid expansion. Medicaid is one of the programs that is crushing state budgets and if implemented as intended, Obamacare will add 18 million beneficiaries to the program’s rolls. Though the federal government lures states with a honey pot in the short term – covering all of the expansion through 2016, by 2020 the states will be asked to kick in 10 percent of the cost, amounting to billions of dollars of spending imposed on states nationwide each year. It would be to the long-term benefit of governors to opt of the expansion.

Separately, the health care law was designed to coerce governors into embracing exchanges on which individuals will be provided with federal subsidies to purchase insurance. If a state doesn’t establish its own exchange, the law specifies that the federal government will step in and set one up for them. Given that Republicans typically favor more state and local control, there’s a clear temptation for them to cave in, assuming that the lesser of two evils by implementing the exchanges themselves. But they should resist that temptation. Read more here.

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A president who says “I haven’t raised taxes” has authorized his Internal Revenue Service issue a “final rule” that will illegally tax some 12 million individuals, plus large employers, in as many as 40 states beginning in 2014. Oklahoma’s attorney general has asked a federal court to block this rule. Members of Congress have introduced legislation in both the House and the Senate to quash it.

At first glance, it might not seem that the IRS is up to anything nefarious. The rule in question concerns the Patient Protection and Affordable Care Act’s tax credits, not the law’s tax increases. The tax credits are intended to offset the cost of insurance premiums for low- and middle-income workers.

For many Americans, however, those tax credits are like an anchor disguised as a life vest. The mere fact that a taxpayer is eligible for a tax credit can trigger tax liabilities against both the taxpayer (under the act’s “individual mandate”) and her employer (under the “employer mandate”). In 2016, these tax credits will trigger a tax of $2,085 on many families of four earning as little as $24,000. An employer with 100 workers could face a tax of $140,000 if even one of his workers is eligible for a tax credit.
So it is significant that the PPACA explicitly and repeatedly restricts eligibility for tax credits to people who purchase health insurance “through an Exchange [i.e., government agency] established by the state” in which they live. That means that under the statute Congress enacted, a state can block those hefty taxes simply by declining to create an exchange. The PPACA directs the federal government to create an exchange in any state that declines to create one itself, and Health and Human Services secretary Kathleen Sebelius estimates she may have to do so in as many as 30 states. (Some experts put the number closer to 40.) However, because the statute withholds tax credits in federal exchanges, the creation of a federal exchange does not trigger tax liabilities. By our count, as many as 12 million low- and middle-income Americans would be exempt from those taxes, including 250,000 Oklahomans. Read more here.