1. Fighting ObamaCare at the State Level
Christie Herrera
Director, Health and Human Services Task Force
American Legislative Exchange Council
Presentation before the Galen Institute/American Action Forum/Institute for Policy Innovation Forum
Tuesday, November 30, 2010
Thank you for joining us this morning, and thanks to the Galen Institute, the American Action Forum, and the Institute for Policy Innovation for hosting this important discussion.
The elections of November 2 not only brought a repudiation of the Patient Protection and Affordable Care Act, but it also brought with it hundreds of new conservatives to state elected office. From ALEC’s perspective, these two factors will continue to fuel state pushback of ObamaCare.
And so, in my brief time with you this morning, I will discuss what anti-ObamaCare efforts we’ll likely see from state legislatures in the 2011 session and beyond—including legislative tactics, lawsuits, and opportunities for oversight.

2. ALEC’s Freedom of Choice in Health Care Act
ALEC spurred the introduction of the Freedom of Choice in Health Care Act in 42 states
Six states enacted it statutorily: VA, ID, AZ, GA, LA, MO
Two states enacted it via constitutional amendment: AZ, OK
One state has an active petition initiative: MS
Serves as basis for Virginia’s Commonwealth v. Sebelius
Virginia: First state to pass with D-controlled chamber
Louisiana: First state to pass with D-controlled legislature
Missouri: 71% pulled the lever for Prop C, including 1 in 6 Democrat primary voters
ALEC’s model Freedom of Choice in Health Care Act is the primary legislative vehicle for state pushback of the individual mandate, until it takes effect in states have either introduced or announced this model in 2010, and we expect similar action in the 2011 session and beyond.
If passed by statute, as six states have already done, the legislation can provide a state-level defense against ObamaCare’s excessive federal power.
Specifically, the measure can provide standing to a state participating in any current lawsuits against the federal individual mandate; allow a state to launch additional, 10th-Amendment-based litigation if the current lawsuits fail; and empower a state attorney general to litigate on behalf of individuals harmed by the mandate.
If enacted as a constitutional amendment, as Arizona and Oklahoma have done, the measure will not only help defend against the individual mandate, but it will also prohibit a Canadian-style, single-payer system, AND a state-level requirement to purchase health insurance, if ObamaCare is repealed.
More importantly, many states that passed ALEC’s Freedom of Choice in Health Care Act did so with bipartisan support. Virginia was the first state to pass the measure with a Democrat-controlled chamber. Louisiana was the first state to pass it with a Democrat-controlled legislature. And in Missouri, one in six Democrat primary voters pulled the lever for Prop C, Missouri’s statutory referendum. 2

3. More States Will Sue Over ObamaCare
Commonwealth v. Sebelius (VA)
Florida v. U.S. DHHS: 16 AGs (FL, SC, NE, TX, UT, LA, AL, CO, PA, WA, ID, SD, IN, ND, AK, MI) + four govs (MS, AZ, NV, GA)
Kinder v. Geithner (MO)
GOP picked up nine governor/AG seats in states that have not yet sued (IA, KS, ME, NM, OH, OK, TN, WI, WY)
WSJ: Conservative Democrat AGs in two states might be inclined to sue (WV, NC)
New Jersey: Only state with Republican governor/AG that has not yet sued
In addition to the ongoing legislative efforts against the individual mandate, I think we’ll see more states suing over ObamaCare.
22 states have already joined one of three lawsuits against the federal individual mandate and other provisions of ObamaCare, including the employer mandate, the health insurance exchanges, and the Medicaid expansion.
And GOP governor or AG pickups in nine states will likely lead to more state plaintiffs being added to the lawsuit next year. The Wall Street Journal also identified West Virginia and North Carolina as states that may be inclined to consider litigation because of conservative Democrat AGs.
Unfortunately, my home state of New Jersey is the only state with a Republican governor AND attorney general that has not yet taken legal action. I’d echo the Wall Street Journal’s statement on the matter, which is, “Join the cause, Governor Christie.” 3

4. Legislation and Oversight in the States
ALEC’s Freedom of Choice in Health Care Act (until 2014)
Resolution supporting PPACA’s repeal (KY)
Moratorium on PPACA rulemaking (AZ, WI)
Federal waivers on “medical loss ratio” (AK, IA, ME, FL, SC)
Calls for Medicaid “opt out” (TX, WA, AL, SC, WY, NV)
Calls for public employee “opt out” (TN)
Ongoing interim committees to study PPACA’s impact
Involvement in the federal rulemaking/comment process
State legislators have a tremendous opportunity to fight ObamaCare through legislation and oversight. Here are some things that, I think, we’ll see from the states in 2011:
* First, legislators will continue to promote ALEC’s Freedom of Choice in Health Care Act until the individual mandate takes effect in 2014.
* Legislators will also continue to introduce resolutions supporting the repeal of ObamaCare, which sends the repeal message to members of their state’s Congressional delegation. In the 2010 session, 23 states filed resolutions opposing the Patient Protection and Affordable Care Act in whole or in part. The first repeal resolution filed for the 2011 session, Kentucky House Joint Resolution 8, came from Representative Jim Gooch, a conservative Democrat.
* More legislators and governors will also consider a moratorium on ObamaCare rulemaking, so that states may focus their limited regulatory resources on core functions of government. Arizona Governor Jan Brewer and Wisconsin Governor-Elect Scott Walker have already pursued this option.
* Several states have already called for Medicaid “opt out,” which highlights the unintended consequences of ObamaCare’s expensive mandatory Medicaid expansion. This—coupled with the new “maintenance of effort” rule that requires states to maintain current Medicaid eligibility until 2014—means that legislators will be forced to make some tough budgetary choices. That is, states can only balance budgets by raising taxes or slashing spending for other state funding priorities, such as K-12 education or law enforcement.
The Heritage Foundation estimates that states could save nearly $1 trillion by opting out of the Medicaid program, and that nearly every state would come out ahead even if they retain a state-only program for long-term care services. If a state were to opt out of Medicaid, the state would save money; beneficiaries would likely qualify for more generous subsidies within the exchanges; and doctors—who are paid about 60 cents for every dollar of care they provide in the Medicaid program—will get more generous, Medicare-level reimbursements in the exchanges. Texas is leading the opt-out charge, but officials in several other states have said that the option is on the table.
* More states may also make public calls for “public employee opt-out” to focus attention on the unintended consequences of ObamaCare’s employer mandate. The states collectively employ 3.8 million workers, and in 2014 would be subject to this mandate along with businesses that employ more than 50 full-time workers.
Last month, Tennessee Governor Phil Bredesen announced in the Wall Street Journal that his state could save $146 million per year by terminating state employee health coverage in 2014 and shifting those workers into the new health insurance exchanges. The savings even took into account the $2,000 per-worker penalty AND giving state workers new subsidies to avoid new out-of-pocket costs in the exchanges.
* We’ll also see legislators use oversight powers and hold public hearings, or establish standing legislative committees, to examine ObamaCare’s implementation and impact. Since ObamaCare was enacted, Congress has exercised little oversight over HHS Secretary Kathleen Sebelius and her implementation of the new law. State legislators will likely fill this void by holding regular, public hearings and inviting HHS officials and members of Congress to explain the law and its implementation.
* Finally, states will continue to participate in the ObamaCare rulemaking and comment process. In October, the state of Utah submitted its own response to the federal request for comments (RFC) on implementing health insurance exchanges. In the RFC, Utah—which had already established a loosely-regulated exchange on its own—petitioned the federal government to use maximum flexibility as it certifies in certifying state-designed exchanges. 4

5. A Bold, New Health Reform Agenda
High-Risk Health Insurance Pool Act
Protects the medically-uninsurable and those with pre-existing conditions by allowing them to purchase affordable coverage through a high risk pool
Rescission External Review Act
Safeguards against excessive insurance company rescissions and provides for an independent review
Avoids needless and time-consuming litigation
Health Care Choice Act for States
Allows people to purchase quality, affordable health coverage across state lines
Finally, I think we’ll see states push forward with a bold, new health reform agenda that brings about true security, affordability, and access within health care. The 10th Amendment affirms that states have a big role to play in policy matters “not delegated to the United States by our Constitution, nor prohibited to it by the states.” Health care is no exception.
State legislators must move forward with a pro-patient, market-driven health reform agenda, and in the process, create an irresistible health policy momentum that Congress and the White House cannot ignore.
Here are some ALEC model bills that will help bring about security, affordability, and access in health care.
Health Care Tax Relief Equity Act
Equalizes the tax treatment of health insurance by allowing a state income tax deduction for individual insurance premiums
Patients First Medicaid Reform Act
Establishes medical savings accounts for Medicaid beneficiaries, and allows them to use the accounts to purchase a high-deductible health policy and pay for out-of-pocket expenses

6. Contact Us! Christie Herrera
Director, Health and Human Services Task Force
American Legislative Exchange Council
(202)