In addition to the lawsuit against Obamacare filed by
Michigan and 25 other states, a separate case has been filed by The Goldwater Institute Center for Constitutional
Law. Diane Cohen, a senior attorney at the Goldwater Institute, recently told legislators at an American Legislative Exchange
Council meeting, "Saying 'no' to a state exchange is absolutely
critical to the success of our lawsuit and those pending elsewhere around the
The Goldwater Institute has just published “Ten
Reasons Why Arizona Must Reject Exchanges.” These apply just as much to
Michigan and to the proposed state exchange that Michigan politicians are calling a “MIHealth Marketplace.” The Institute's arguments strengthen the case for postponing action at least until the U.S. Supreme
Court rules on the law next June, and if necessary, until presidential election voters pronounce their verdict next November.
Here are the 10 reasons the Goldwater Institute cites in a "policy memo" (the citations are omitted):
"1. The federal government controls exchanges. 'An
Exchange may not establish rules that conflict with or prevent the application
of regulations promulgated by the Secretary [of Health and Human Services
(HHS)].' Further, the Secretary and the General Accounting Office will
have continuing oversight over exchanges.
"2. The federal government controls the doctors and other
providers that are allowed to participate in an exchange-offered plan. The Act
mandates that only providers who 'implement such mechanisms to improve
health care quality as the Secretary may by regulation require' may
participate in a 'qualified plan' offered on the exchange.
"3. The federal government controls health insurance plans
and benefits. The Act prescribes the minimum essential benefits that must be
included in a plan and gives authority to the HHS Secretary to prescribe more.
HHS is also required to establish the criteria for the certification of health
plans as 'qualified.' As a result, only HHS-approved plans may be
sold in the exchange.
"4. While federal mandates remain, federal funds cease at the
end of 2014. Both PPACA and the proposed regulations prohibit federal funds for
state exchanges after January 1, 2015. No federal grants will be awarded after
January 1, 2015. States must ensure that the exchanges are self-sustaining by
January 1, 2015, and must find other sources of funding, through 'assessments and user fees,' 'provider taxes,' 'State
revenues,' or other sources.
"5. [States] will surrender [their] 10th amendment sovereignty by
establishing an exchange. The HHS proposed regulations themselves acknowledge
that a state’s submission to an exchange has an adverse impact on federalism
principles. In compliance with Presidential Executive Order 13132, which
requires agencies to assess whether their rules will affect federalism, HHS
reported that the proposed exchange regulations have 'Federalism
implications due to the direct effects on the distribution of power and responsibilities
among the State and Federal governments.' However, HHS determined that the
federalism implications are 'substantially mitigated' because PPACA 'does not require States to certify an Exchange.' Therefore, when a
state chooses to establish an exchange, it voluntarily surrenders its
"6. The state must enforce the individual mandate and
penalty. State exchanges are responsible for determining whether an individual
is exempt from the individual mandate and for granting certification for those
who are exempt. The exchange must also 'support and complement rulemaking
conducted by the Secretary of the Treasury' with respect to the law.
"7. The state must turn over names of individuals who do not
comply with the individual mandate. Obamacare requires the exchange to give to
the U.S. Treasury the names and taxpayer identification numbers of individuals
who have changed employers and ceased coverage under a qualified health plan
during a plan year. The same would be true for an individual unsuccessfully
seeking an exemption from the mandate via the exchange or otherwise subjecting
himself to the exchange, but then choosing not to purchase insurance.
"8. The state must report citizen information to the federal
government. Exchanges must record and report to HHS on a monthly basis all
individuals who terminate their enrollment in insurance obtained through the
"9. So-called state 'flexibility' is belied by the
law. Despite a provision in the Act titled 'State Flexibility in Operation
and Enforcement of Exchanges and Related Requirements,' the law in fact
confers no flexibility to the states, only more authority to the HHS Secretary
over the state exchanges. For example, the Act provides that states can
establish exchanges, but only as 'prescribe[d]' by the HHS Secretary.
The Act also allows states to adopt exchange laws and regulations, but only
those that 'the Secretary determines implements the standards within the
"10. States are only as flexible as federal law permits them
to be. Yes, states can choose whether the exchange will be run by a state
agency or a non-profit established by the state, but both are subject to
federal approval, regulation, and perpetual oversight. ... States also have
so-called 'flexibility' to decide whether to open exchanges to all
insurers, or to limit the number and participation to only those plans that
meet unspecified 'exchange criteria.' But all this 'flexibility' essentially allows is the creation of a state and
federally-controlled market where the state determines which insurers
participate and which plans and coverage are available. ..."
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