This year, we will deal with the additional burden of a number of unwieldy and vague federal health care mandates forced upon the states by Obamacare. One such mandate is state-based health insurance exchanges.
Health insurance exchanges are groupings of government-regulated and standardized health plans where individuals may purchase federally subsidized health insurance. This is undoubtedly a major step toward a complete takeover of health care by the federal government. Under Obamacare, each state must set up its own exchange or default to a federally run exchange.
Last month, Gov. Nikki Haley informed the Obama administration that our state would not establish a state-based exchange. South Carolina is not alone in refusing to set up an exchange. To date, 25 states have “opted out” while only 17 states have “opted in.”
I believe the governor was correct in opting out and I have introduced legislation that will ratify her decision and prevent the state from establishing a state-based exchange in the future.
First, the offer of local control is a false choice. Some argue the state would be better off running its own exchange and keeping the federal government out of our business. Unfortunately, this is not a real option because, even if South Carolina were to establish an exchange, our state would ultimately answer to burdensome federal rules – which still are not set two and a half years after the law was passed.
While we don’t know what the final rules will look like, the federal bureaucrats have made it clear that they reserve the right to reject any state proposal at their discretion. Doesn’t this sound like conformity, and not choice? All the state would accomplish by setting up an exchange would be to agree to pay the huge cost of administering it. That’s a bad deal for South Carolina taxpayers.
Secondly, Obamacare’s health exchange mandate on states is too expensive. The Obama administration has already handed out $2 billion in startup money to the states. That is more money borrowed from countries like China and added to our nation’s $16 trillion national debt. However, the law states that the exchanges must be self-sustaining by 2015 – meaning it would be up to taxpayers to foot the final bill.
Estimates on the annual cost to administer a state exchange range from $15 million in Rhode Island to $300 million in California. More money spent on creating yet another government bureaucracy means less money for other core government functions (roads, education, public safety) or cutting taxes.
In all likelihood, South Carolina would be required to follow the lead of other states that have created exchanges and raised taxes to pay for them. Oregon, Nevada and Connecticut will increase their insurance premium taxes by up to 5 percent on policies sold in the exchange (never mind that increasing the cost of health insurance, to some degree, defeats the purpose of the exchange). Other states are considering a premium tax on all policies sold in the state.
Finally, the way Obamacare was written appears to only allow subsidies for individuals in state-run exchanges, and not federal exchanges. This important distinction may allow South Carolina to shield its employers from the Obamacare “employer mandate” penalties ($2,000 per employee per year) and all individuals from the “individual mandate” by opting out of the exchange.
If other states follow suit, not only would these states essentially be repealing a hefty portion of Obamacare, but they would also collectively prevent up to $500 billion in deficit spending by the federal government. This would almost assuredly force Congress to reconsider the entire law.
As state government leaders it is simply not responsible to place our taxpayers on the hook for an unknown price tag, to run yet another government bureaucracy, which will have to follow rules that have yet to be written.
For this reason, I have introduced H. 3096, the State Health Care Freedom Act, which will ensure that South Carolinians do not spend any more of their hard-earned money assisting the federal government in its takeover of health care. Passage of H. 3096 is the first in a series of shots to cure the impact of Obamacare’s bad medicine on South Carolina.