Monday, December 10, 2012

Implementing ObamaCare

There have been numerous articles and media stories about the implementation of ObamaCare since Obama’s reelection. Many articles are mystified by the fact that many states are refusing to implement the law. One article points out that if a state does not implement the law, then the federal government will set up health insurance exchanges in these states anyway, essentially increasing their Medicaid payrolls. However, since each state has different Medicaid laws and requirements, the federal government simply cannot implement a federal program that fits all states. For instance, a state may require obese people on Medicaid be put on a diet and lose weight to continue to receive coverage. Since the federal government wrongfully assumed (arrogance) states would set up the exchanges at their expense, the federal government could easily exceed its 1 billion dollar budget to set up these ObamaCare health insurance exchanges. This has led to the speculation that the government may set up fees to sign up for ObamaCare exchanges to cover these extra costs (another tax).

The only way for people to enroll in these healthcare exchanges is online. I find it odd that the only way poor people can sign up for healthcare is if they have internet access. I am sorry, but people whose healthcare is being subsidized by the federal government should not be paying for internet service – this is a luxury. In any event, the exchange sites will be very complicated – they need to verify the identity of the user; they need to ensure the programs meet federal standards; they need to check the tax status of the user to see if they qualify for credits; they need to sort insurance programs to find those that fit the needs of the user; and so forth. This is a big and expensive task.

Another article points out if all states implemented ObamaCare health insurance exchanges, 21 million people will be added to state Medicaid payrolls and cost the states about 76 billion over 10 years (the federal government will pick up most of the cost of covering these people). The article then stipulates if all states decided not to implement ObamaCare, then it would cost the states 68 billion over 10 years because 5.7 million people will be added to state Medicaid payrolls since ObamaCare legislation will encourage more qualified people to sign up (or face a fine). Hence, the article points out that states will “only save” 8 billion over 10 years. Well, 8 billion is enough money to eliminate the budget shortfall in 15 states! This is not a trivial amount of money for states already in debt. Also, as the article points out, many liberal states such as New York, Vermont, Delaware, Connecticut, Maryland, Maine, Massachusetts, and Iowa got great deals and these states will actually save money by implementing ObamaCare. Whereas, the other 42 states in the union will see their Medicaid costs go up by 10%! These 42 states could save over 10 billion dollars over 10 years by not implementing ObamaCare. This point simply highlights another flaw with the legislation since it treats each state differently. It is obvious that the objective of ObamaCare was to punish conservative states and have them pay a bigger tab to implement the law.

It is wise for cash strapped states not to implement ObamaCare (they can always opt to join later). They can monitor the fiscal ramifications for states implementing the law. They can see how much it will actually cost both the state and federal government. They can see if Medicaid expansion projections are accurate (chances are they are underestimated). I predict what states, who opt out of ObamaCare, will learn very quickly is that they will save much more money than these articles point out. If Massachusetts’ RomneyCare was the blueprint for ObamaCare, we can see Massachusetts vastly underestimated the costs of insuring its residents. In fact, all entitlement programs end up costing the government billions more than original CBO projections.


  1. >>”...people whose healthcare is being subsidized by the federal government should not be paying for internet service – this is a luxury.”

    No problem, Patrick. They can do it on their smartphones when they’re having their coffee at Starbucks.

    States can try and thwart Obamacare but Obama and co-horts will only find a way to punish by other means. Once the federal gov’t controls so much of the treasury, the states have very little power.

  2. CW, You are probably right - Obama seems to use executive order quite frequently to circumvent congress.