Republican governors are caught between a rock and a hard place as they grapple with how to handle the state-based insurance marketplaces required by the health care reform law. The Obama administration announced Wednesday that 10 states will be getting federal grants to lay the groundwork for these exchanges — four of the states have Republican governors, who have apparently decided to bite the bullet and proceed with building them.
Here’s the predicament: The Affordable Care Act gives states the option to set up their own exchange by 2014 — essentially a regulated marketplace where consumers can pool together to buy insurance plans that must provide a package of essential benefits. If states don’t set up an exchange, the federal government would be required to take over. From a policy standpoint it’s a no-brainer: take the money and use the flexibility to your advantage. But that’s politically tedious because as GOP governors or heavily Republican legislatures can’t be seen as abetting the law that conservatives hate, even if the fallback option would be less desirable on a substantive level.
The Department of Health and Human Services has now awarded $229 million between 10 states: Arkansas, Colorado, Kentucky, Massachusetts, Minnesota, Nevada, New Jersey, New York, Pennsylvania and Tennessee. The states may use the money to hire early staffers and consultants to establish an early administrative infrastructure for an exchange. “We’re taking important actions that will give states more resources and more flexibility, and ensure transparency thanks to the Affordable Care Act,” said HHS Secretary Kathleen Sebelius.
Four of those states have GOP governors, who are united in favor of repealing the Affordable Care Act: NJ’s Chris Christie, NV’s Brian Sandoval, PA’s Tom Corbett and TN’S Bill Haslam. The move to suggests those Republicans have opted to build the marketplaces at the risk of taking fire from the right. Obama health official Steve Larsen told TPM on a conference call that the administration believes all of the states receiving the grant are committed to setting up their own exchanges.
Other states with Republican governors that have accepted substantial federal grant money for building state exchanges include Idaho, Arizona, New Mexico and Mississippi. Some GOP states say they want to wait until the Supreme Court rules on the law’s constitutionality before they proceed. And others want to duck the statute entirely.
A clear example of this GOP dilemma was recently unearthed by South Carolina’s local Post and Courier, where the state’s Republican Gov. Nikki Haley, a rising star in the party, explicitly told her staff that she wants to use her $1 million federal planning grant to find a way to prevent an exchange from being set up at all. In private emails obtained by the Post and Courier, Haley fretted that, despite an official’s suggestion that exchanges have their “roots in conservative principles,” the politics of building one would too perilous.
There is, however, a complication in the administration’s fallback option: the money. The law fails to specify a set funding mechanism for a federally-established state exchange. So HHS would have to find the money in its budget or request additional funds through the regular appropriations process. And Congressional Republicans may be motivated to block that money in their efforts to derail the Affordable Care Act.
In the long run, of course, the GOP quandary remains whether to utilize the available resources in the best interest of the states they govern or to try and botch federal implementation in an effort to make President Obama’s signature accomplishment look like a failure.
