Christie and ObamaCare


Gov. Chris Christie today reaffirmed his decision not to create state-run health exchanges in New Jersey, as Obamacare requires, and instead let the federal government do it.

But what does that mean for the state of New Jersey? Not to mention the state of Obamacare as well.

Well, some conservative opponents of Obamacare say that by refusing to have the state create its own network, Christie and the other GOP governors may actually be helping to end Obamacare as we know it.

Here’s more from Michael Cannon of the Cato Institute:

Here’s another complicating factor: Most states have not yet set up an exchange. Many, especially ones with Republican governors or legislatures, may refuse altogether. By most estimates, as few as 15 states are likely to have exchanges in operation by the 2014 deadline.

ObamaCare gives the feds the authority to step in, setting up and operating an exchange in any state that doesn’t set up its own — but there is reason to doubt that they have resources to do so in so many states.

Anyway, federal subsidies are available only through exchanges that the states set up. The feds can’t offer subsidies through a federally run exchange.

Thus, if states neither expanded Medicaid nor set up exchanges, that would effectively block most of ObamaCare’s new entitlement spending.

One last wrinkle: It is those subsidies that trigger the penalty under ObamaCare for employers who fail to provide workers with insurance. So states that don’t set up exchanges could also escape the “employer mandate.”

That is, ObamaCare requires employers with 50 or more workers to provide health insurance or pay a fine…er, tax. But that tax only kicks in if at least one employee qualifies for subsidies under the exchange. Since subsidies can only be provided via a state-authorized exchange, a state that refuses to set one up could end up blocking the employer mandate altogether. At the very least, expect some employers to sue on this point, leading to yet another Supreme Court challenge.

And if, as expected, ObamaCare drives up the cost of insurance, many employers could end up dropping their current health insurance. So the end result of all this could be even more uninsured than before the law passed.
And more from the National Journal:

But, confident of their case, some health law opponents, including Jonathan Adler of Case Western Reserve Law School, Michael Cannon of the libertarian Cato Institute, and National Affairs editor Yuval Levin, are urging Republican-led governments to refuse to set up the online insurance purchasing exchanges, which would, as the argument goes, make their residents ineligible for the tax credits and subsidies. They say that this step also would gut the so-called employer mandate, which the law says will take effect in states where residents are eligible for such assistance.

The mandate requires employers with more than 50 full-time workers to offer health insurance policies for employees and their families that include a minimum set of benefits, or pay a tax of $2,000 per employee for failing to do so. The tax wouldn’t apply to the first 30 workers.

Health law critics theorize that by refusing to set up exchanges, states could also carve a hole in the provision that requires individuals to either obtain insurance or pay a tax as a consequence of choosing not to, which the Supreme Court upheld in June. And if states could disable both the employer mandate and part of the individual mandate, they could wreak havoc with the law’s overall operation.

Indeed, if lots of states also refuse to participate in the Medicaid expansion, as the Supreme Court ruled they can do without penalty, “the ACA may end up being fully applicable only in a portion of the United States,” says David Rivkin, a Washington lawyer who spearheaded the constitutional challenges that fell one vote short of striking down the entire measure last summer. Rivkin and some other ACA critics hope that by exploiting what they see as the law’s still-unresolved flaws, they can hasten its inevitable failure to work as advertised, and thus clear the way for Republicans to dismantle it.

The Obama administration and other ACA supporters dismiss these legal theories as far-fetched and view conservatives’ broader hopes of crippling the entire law as wishful thinking. They say states have no power to limit the subsidies, the employer mandate, or the individual mandate; and, that if they did, the effect would be to block their own citizens from receiving large federal tax breaks and obtaining affordable health insurance.

In explaining his decision, Christie said this: “My administration is committed to meeting our obligation to comply with the Affordable Care Act, but only in a manner that is the most effective and efficient for the residents of New Jersey, and the businesses that will carry the costs of this new program.
“In order to move forward in a manner that best meets that standard for our families and businesses, and that ensures that all New Jerseyans have access to the best healthcare options supported by the most effective insurance coverage, I have determined that federal operation of the Exchange is the responsible choice for our state.”

When he rejected the exchanges the first time, Christie said there were too many unanswered questions about what an exchange would mean for New Jersey.

But if Cannon of the Cato Institute is right, it could mean that New Jersey taxpapers would pay tens of millions of dollars less, because the burden would be shifted to the federal government, instead of the state.

And since just 17 or so states have agreed to sign onto the exchanges, that means that all those Medicaid costs that Cannon references for all those states wiykd be shifed to the federal government too.

Of course, there’s also the political implications: Christie preserves his GOP bonafides by refusing to create the exchanges. With all the suspicion out there after Christie hugged President Obama after superstorm Sandy, and with the bulk of Republican governors refusing to set up the exchanges, politically he had little choice.

Not to say that’s why he did it. But it will be interesting to see what impact all these states declining to set up exchanges has on the law itself, and if it weakens it.

With a Republican House, Democrats won’t be able to pass any new laws to fix any loopholes.

The fight may not be over yet.