Brewer refuses to create health exchange

Governor Jan Brewer notified the Obama administration that the State of Arizona will not pursue the creation of a state-based Health Exchange. Instead, Arizona will participate in a federally-operated Exchange, according to the guidelines of the Patient Protection and Affordable Care Act.

“This decision comes following an extensive research and outreach process during which my team of health advisors conducted public hearings and met with HHS, patient advocates and representatives of Arizona hospitals, health providers, insurers, tribal groups and other members of the health care community,” said the Governor in a statement released Wednesday.

The Governor struggled with the decision claiming that her “opposition to the Affordable Care Act (ACA) is unwavering;”  however it is widely known that her closest advisors are lobbyists for the healthcare sector and fought to have the Governor proceed with the creation of an Arizona exchange. In her statement the Governor finally conceded to groups like the Goldwater Institute who threatened to sue the Governor if she proceeded with the exchanges. She acknowledged what the Institute and others hae been arguing all along; “the State of Arizona would wield little actual authority over its ‘state’ Exchange. The federal government would maintain oversight and control over virtually every aspect of our Exchange, limiting our ability to meet the unique needs of Arizonans and the Arizona insurance market,” said the Governor.

“A state Exchange would be costly. Though the federal government has pledged to pay nearly all startup costs, states that form their own health exchanges are on the hook for operational expenses beginning in 2015. Those costs could total $27 million to $40 million annually for the State of Arizona, according to a recent study conducted by Mercer. Of course, these expenses would be passed along in the form of fees resulting in higher health premiums for Arizona families and small businesses. This would be an additional financial burden at a time when so many Arizonans are still struggling.

“Lastly, there simply remains too much we don’t know about how a State-based Exchange would function and its ultimate cost to taxpayers. Without clear federal guidance and instruction, I cannot in good conscience commit the taxpayers of my state to this costly endeavor.

“The State of Arizona has a long history of health care innovation. Our Medicaid program, AHCCCS, has been a national model of cost-efficient care for three decades, and our pioneering pursuit of integrated health is designed to improve the quality of life for Arizonans living with serious mental illness. In this proud tradition, I remain committed to working with legislators to enact State reforms that improve care and reduce costs for Arizona families, while maintaining a vibrant and competitive health care marketplace.”

Americans for Limited Government President Bill Wilson had urged Governor Jan Brewer not to implement a state-run health insurance exchange under Obamacare.

In a letter to the Governor, Wilson wrote that the Governor “hold[s] the fate of President Obama’s Affordable Care Act, also known as Obamacare, in your hands,” noting that if the exchange is not implemented by Brewer, employers in the state will be protected from the law’s employer mandate.

“Without the cost burdens imposed by the state exchange, your employers will enjoy a significant competitive advantage over their competitors in states which have exchanges,” Wilson wrote.

The letter references a study by the Cato Institute’s Jonathan Adler and Michael Cannon, “Taxation without representation: The illegal IRS rule to expand tax credits under the PPACA.”

In it, Adler and Cannon make the case that “An Internal Revenue Service (IRS) rule purports to extend these tax credits and subsidies to the purchase of health insurance in federal exchanges created in states without exchanges of their own. This rule lacks statutory authority.”

The study explains, “The text, structure, and history of the Act show that tax credits and subsidies are not available in federally run exchanges. The IRS rule is contrary to congressional intent and cannot be justified on other legal grounds.”

By not implementing the exchange, the state would effectively give affected employers the standing to sue against the new IRS rule and Obamacare, Wilson said in a statement.

Wilson said it was “up to Governor Brewer to at least give employers a chance of fighting against Obamacare,” and concluded that if the exchange had been implemented by the state, “they will not have any chance at all.”

While grandstanding as part of his bid for the Governor’s mansion, Arizona House House Minority Leader Chad Campbell, called the Governor’s decision irresponsible political grandstanding. At the same time he acknowledged that Obamacare provides few consumer choices, and “exchanges are one of the key areas in the Affordable Care Act that provides local people the flexibility to make decisions about what is best.”

View Governor’s refusal letter here.

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