Limited Government and State Exchanges Don’t Match

The 97th Session of the Missouri General Assembly begins at noon on January 9, 2013. A number of important pieces of legislation will be considered. Many nonsensical pieces will be introduced and hopefully not entertained.

While many very important issues such as tax reform, tax credit reform, medical malpractice, right to work and others have already been mentioned prior to the beginning of the new session, healthcare still dominates the discussions. Missourians are more focused on this issue than any other right now in our state.

Legislative leaders and other members have expressed their intention that there will be no health care exchange and no expansion of Medicaid. Both of these are the right direction for our state and are in keeping with the will of most Missourians.

Some in the grassroots movement mistakenly believe that Proposition C and Proposition E took care of the issue and that is all legislators need to stay strong. They are very much in error in that thinking. There will be intense pressures from groups who will benefit from both of these actions. If we do not remain vigilant and supportive of those taking a stand against these big government actions we will find ourselves with one or both!

There is absolutely no question the Medicaid expansion is bad for the state. I’ve written three blogs so far about why and you can find them here. The state and federal government cannot afford the expansion. We have seen not only here in Missouri but across the nation that there is no real empirical or reliable data that Medicaid improves health outcomes. If the states do not expand Medicaid, the federal deficits would shrink by $900 billion over 10 years!

What may surprise people the most however is the belief among many well intentioned legislators that it is absolutely necessary to implement a state run healthcare exchange. I would respectfully disagree with them.

A recent conversation regarding exchanges caught me by surprise. Some legislators believe that by allowing the federal government to implement an exchange – something they are not funded to do – that they will be accused of implementing Obamacare in Missouri. I tried to explain that the grassroots in Missouri see implementation of a state exchange to be implementing Obamacare. We will be taking action to make sure that all legislators know that NOT implementing an exchange is the right way to go!

The CATO Institute has done a lot of work on exchanges and Medicaid expansion. In a recent article published in National Review Online, Michael F. Cannon gives about 13 arguments against creating exchanges. Let’s look at a couple of those arguments. I highly recommend you read Obamacare Still Vulnerable for the full details.

Implementing a state healthcare exchange will cost the state’s employers lots of money:

Twelfth, defaulting to a federal exchange exempts a state’s employers from the employer mandate — a tax of $2,000 per worker per year (the tax applies to companies with more than 50 employees, but for such companies that tax applies after the 30th employee, not the 50th). If all states did so, that would also exempt 18 million Americans from the individual mandate’s tax of $2,085 per family of four. Avoiding those taxes improves a state’s prospects for job creation, and protects the conscience rights of employers and individuals whom the Obama administration is forcing to purchase contraceptives coverage.

If job creation is the number one priority, why in the world would the legislature want to enact a measure that will result in higher taxes on the employers of the state? It doesn’t make sense economically or politically.

Another reason NOT to do a state exchange is the cost to the state and federal government to run them. It’s projected that most states will spend between $10-100 million to implement and run an exchange. Missouri doesn’t have the money and neither do the feds! Fact is according to the article, if all states declined to participate in the exchanges, the federal deficits would fall by roughly $700 billion over 10 years!

Missouri Legislators should study very closely whether or not the establishment of a healthcare exchange is in sync with limited government principles. Most Missourians already know the answer!

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