Thursday, March 25, 2010

Can States Opt Out of ObamaCare?

Ben Domenech asks that question in his 3/24/2010 New Ledger article, "The Individual Mandate: Can States Opt Out?"

Short answer: In theory, "yes". In practice, "almost certainly no".

Domenech explains:
Here's the answer on how the exemption would work: you could only get an exemption approved by the Secretary of HHS if you prove you can cover more people with your non-individual mandate plan, while also meeting their new requirements for coverage (in other words, not by turning to a catastrophic + HSA plan or something along those lines).

In other words, it is hard to see all but a few rare circumstances where a state would apply for this exemption and move toward a pro-market solution. You would have to prove that you would have a greater number of people purchase a product than you would by legally requiring them to purchase that product.
Plus, Domenech notes:
Nor can states be made exempt from the tax increases for individuals and employers, the cuts in Medicare, the newly expanded unfunded liabilities in Medicaid, and a host of other aspects of this bill. Of course states could set up their own programs to cover people, but that would be a waiver almost no state would want to accept, given that they can't prohibit their taxpayer dollars from going to fund this reform elsewhere.
So any talk of an "opt out" is really a sham.