In it, but not of it. TPM DC

ALEC's New Obamacare Obstruction Plan Won't Work

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AP Photo / Susan Walsh

Heading into the 2014 legislative session, the American Legislative Exchange Council is pushing new model legislation that aims to undermine the federal health care reform law. The only problem is: It's probably illegal.

Here's what the bill says: If an insurance company accepts tax subsidies that trigger Obamacare's employer mandate -- in other words, if an employee at a company with more than 50 employees goes onto an Obamacare exchange to purchase insurance and gets financial help through the law -- then that insurer would be prohibited from continuing to do business in that state.

The effect is that if an insurer is doing business with the Obamacare exchange, it's putting itself at risk of being banned from operating in a state with this law in place. That would either force insurers to pull out of the exchanges or to decline to accept subsidies, which would unravel the foundation of the exchanges -- or actually take their business out of the state.

“You cannot build the healthcare system based on the free market unless you have subsidies. If they are taken away, the whole thing collapses,” Wendell Potter, a former health insurance executive, told The Guardian.

It's not inconceivable that ALEC could get some momentum behind the legislation. Though it's faced some challenges amid controversies about its financial backers and positions, it's still among the largest ideological coalition of state legislators, claiming 2,000 members (out of about 7,400). Bills with very similar language have already been proposed in Ohio and Missouri, according to The Guardian.

But the bill's drafters seemed to forget one important fact: A few exceptions notwithstanding, state laws can't be written to override federal laws.

"States can't outlaw federal legislation," Tim Jost, a Washington and Lee University law professor who supports Obamacare, told TPM. "I think this would be preempted." Industry officials also say they believe the proposed legislation is likely illegal.

ALEC officials did not return TPM's repeated requests for comment.

The other problem for ALEC and its ideological cohorts is: People will have obtained health coverage through Obamacare by the time these bills would be debated in the coming months. More than two million have enrolled in private insurance, according to the Obama administration.

Proposals like this, Jost said, will therefore become more politically difficult if it means people will lose their coverage or the financial help that assisted them in purchasing it.

"I think the question at some point is going to become: Several hundred thousand people are going to be insured in your state," Jost said. "Are you really going to try to pass a law that would take it away?"

About The Author

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Dylan Scott is a reporter for Talking Points Memo. He previously reported for Governing magazine in Washington, D.C., and the Las Vegas Sun. His work has been recognized with a 2013 American Society of Business Publication Editors award for Best Feature Series and a 2010 Associated Press Society of Ohio award for Best Investigative Reporting. He can be reached at dylan@talkingpointsmemo.com.