Are Your State Politicians Serious About Defeating Obamacare? A "Litmus Test"

Last month’s elections demonstrated convincingly that the American people are already fed up with Obamacare, the March legislation that gives the federal government control over our access to medical services. Anti-Obamacare Republicans took the majority in the House of Representatives and increased their numbers in the U.S. Senate.

Most people believe that President Obama will not listen to the American people and repeal his own legislation. This makes final defeat of Obamacare unlikely before a future president takes office in January 2013, at the earliest. The federal government, however, relies on states to do Obamacare’s dirty work.

Both October’s Health Policy Prescription, and the November 3 Capital Ideas explained how critical it is that states exert all their powers to prevent Obamacare from gaining traction over the next two years. Fortunately, Republicans took control of legislatures and governors’ offices in 20 states last month, up from nine. This single-party rule should make blocking Obamacare relatively easy. Even in states where power is divided between the parties, almost every state should be able to succeed in keeping Obamacare at bay until it is slain.

Unfortunately, some state politicians who proclaim that they want to defeat Obamacare are actually facilitating it, and falling under the influence of lobbyists for special interests that will profit from Obamacare. State legislators are being lured into negotiations to draft legislation that will establish state-based “exchanges” that will limit people’s choice of health insurance under Obamacare.

After the election, I was speaking to a Republican legislator who asserted a commitment that Obamacare would be repealed. The legislator also related discussions with business interests keen to participate in Obamacare exchanges. They include IT (information technology) vendors and consultants, health insurers who believe that they can dominate the exchanges to the detriment of smaller competitors, and brokers who hope to get paid by government to serve as “navigators” in the exchanges.

The U.S. Department of Health and Human Services must approve states’ proposals by January 1, 2013, in order that the exchanges can be up and rolling by January 1, 2014. This state legislator expressed a sense of urgency about meeting the deadline. To my query about why the state would want to establish a program governed by a law that will not exist when the program comes into effect, this state legislator had no response.

Since the election, I have heard similar stories from many states, and it gets worse. Many state legislators appear to believe that they can rescue their state budgets from exploding Medicaid spending by quickly establishing Obamacare exchanges.

This comes from a December 2009 policy analysis by Dennis G. Smith and Edmund F. Haislmaier of the Heritage Foundation. They pointed out an unintended consequence of Obamacare: If states drop Medicaid and direct their low-income residents into Obamacare exchanges (which will be fully subsidized by the federal government), this would result in more than one trillion dollars of budgetary savings to states during the years 2013 through 2019.

This, however, was a warning about the national fiscal consequences of Obamacare, a prediction, not a prescription. Although any conservative should cheer a state’s reduction of its Medicaid budget, simply exploiting Obamacare to transfer liabilities to the feds hardly solves the national challenge of health spending that is out of control. The perverse incentives resulting from such a “reform” would surely dissipate a state’s will to defeat Obamacare after the next electoral cycle.

States will have to bear the long-run administrative and bureaucratic costs of running the exchanges. These costs will quickly run into tens of millions of dollars annually. An iron law of public spending is that every dollar of expense to taxpayers is a dollar of revenue to businesses that profit from the growth of government. Once these contracts are signed, it will be very difficult to get these businesses to join a coalition to defeat Obamacare.

Some conservative governors allegedly intend to establish state-based exchanges in order to provoke a hostile response from the Administration, and a denial of certification by Secretary Sebelius. According to the script, this will “prove” that Obamacare cannot work.

But the American people already know that Obamacare cannot work. Nor can Obamacare be outsmarted. It must be defeated. If your state politicians are collaborating with corporate lobbyists to establish exchanges, they are not serious about achieving this worthy goal.

(This was originally published in PRI's Capital Ideas series.)