The Illinois Policy Institute’s Fact Finder series specifically aims to debunk myths about public policy issues that affect Illinois. Download the full report here.
The Affordable Care Act, commonly referred to as ObamaCare, permits states to establish health insurance exchanges. These exchanges will operate as new bureaucracies to oversee the purchase of government-approved health insurance. States electing to create these exchanges must comply with federal rules that will dictate virtually all aspects of the exchanges’ operations.
If Illinois chooses to establish an exchange, the state will bear the full cost of running it. Illinois simply cannot afford to pay for this new, complex and burdensome bureaucracy. State officials estimate the exchange could cost Illinois upwards of $90 million per year. Worse yet, by moving forward with implementation Illinois could risk wasting valuable time and taxpayer money on a new bureaucracy that the Supreme Court ultimately strikes down or the federal government refuses to approve.
While a number of people are urging the state to immediately create an ObamaCare exchange, the reasons are based on myths, not facts. In this report, we respond to those myths.
Myth: If Illinois does not build an ObamaCare exchange, the federal government will build its own and operate it here in Illinois.
Fact: Nobody knows what will happen if Illinois refuses to implement an exchange. While Congress supplied funding for the states to set up health insurance exchanges – though not to run them – it did not provide the federal Department of Health and Human Services with the resources necessary to establish a federal exchange in every state that refuses. The federal government did not anticipate that state governments would resist more unfunded mandates and, as a result, will likely not be ready to implement federal systems by the deadlines. In fact, the Obama administration recently confirmed that it does not have the resources to establish the federal exchanges. The administration is now asking for another $1 billion, half of which has already been spent. If states refuse to foot the bill for new federally-controlled bureaucracies, they may never exist at all.
Myth: An exchange administered by the state will ensure the state has greater flexibility than if the federal government administers the exchange.
Fact: Although the state exchange would be run by state officials, Illinois would have no more freedom or flexibility than under a federally-imposed exchange. Federal rules will dictate virtually all aspects of the exchange’s operation. If the federal government wishes to modify those operations, it can simply amend the rules and force states to comply. If the state wishes to modify those operations, on the other hand, it would need special permission from federal bureaucrats. Indeed, the federal government itself concedes that states will surrender their sovereignty under this arrangement, as ObamaCare exchanges disturb the “distribution of power and responsibilities” between the state and federal governments.
Myth: If Illinois does not act now, it will miss the federal deadlines and lose the opportunity to implement an exchange.
Fact: The federal government has already extended the deadline to apply for exchange planning grants and will likely extend the deadline further. Some state legislatures are not even in session this year and are not moving forward on establishing an exchange. Even if the federal government establishes an exchange in the state, ObamaCare permits Illinois to create its own exchange at any time.
Myth: The Supreme Court case only concerns the individual mandate and the exchanges will move forward regardless of the Court’s ruling.
Fact: The Supreme Court is deciding several issues concerning ObamaCare, including whether to strike down the entire law. If the Court strikes down the entirety of the law, the money and effort expended to create the exchange will have been wasted. Even if the Court upholds the law – or part of the law – legal challenges to the exchange provisions and their related federal rules are already being prepared.
Illinois lawmakers have a choice. They are not required to set up an ObamaCare exchange and gain nothing by moving ahead. The state will be forced to pay millions of dollars every year for a new bureaucracy over which it will have absolutely no control. Lawmakers will take the blame when the exchange and the other components of ObamaCare prompt higher premiums, which even the chief architect of the law predicts will happen. The state will also take the blame for new taxes on job creators that are only enforceable through state exchanges.
Illinois has no responsibility – or money – to pay for a new bureaucracy under federal control. The state faces serious problems. It doesn’t need another distraction that wastes valuable time and taxpayer money.
Download the full report here.
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