Oregon and Massachusetts made news recently by deciding to quit trying to set up state-run exchanges under the Affordable Care Act, saving themselves substantial sums of money. A report on CNBC suggests others may be close behind, but it doesn’t really say why. That reason is big news.
The Affordable Care Act encouraged states to set up their own exchanges by promising and then delivering substantial federal grants to fund state efforts through December 31, 2014, but made no provision for clawing back that cash from states who took it and then failed to perform.
In our first two examples of taking the money and running, Oregon received $304 million in federal grants and Massachusetts got $180 million. Both stood to be on the hook for tens of millions a year each in additional annual costs to keep their program running perpetually.
Or they could just quit and let the federal government take on the responsibility, the work and the cost. Nearly three dozen states refused initially to take the bait and avoided the entire charade by never attempting to set up their own exchanges. In two states, Kentucky and Rhode Island, Obama-supporting governors tried to create state-run exchanges at their first opportunity by issuing executive orders. Both could soon wind up following Oregon and Massachusetts for fiscal reasons, with efforts underway in each state. In Rhode Island, a bipartisan bill (HB 7817) has been filed in the legislature to defund the exchange, with sponsors citing the same tens of millions of dollars in annual costs as being beyond the state’s means. In Kentucky, an overwhelmingly bipartisan vote last month defunded their exchange and in HB 235 pointed out Gov. Steve Beshear failed to gain required legislative approval for his executive order under state statute KRS 12.028. Beshear says he will continue to run the “Kentucky Health Benefit Exchange” in violation of state law and without necessary funding until he is forced to stop. Two lawsuits have been filed against him in the state (13-SC-000652 and 13-SC-000667) and currently await state Supreme Court action.
Full disclosure: I filed the two lawsuits against Kentucky’s Governor for illegally attempting to force Kentucky into ObamaCare.