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Obamacare is not ready: Alaska declined to create an exchange, for good reasons

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Posted: Monday, August 12, 2013 12:00 am

Community Perspective

As governor of Alaska, I have a responsibility to carefully review federal policies and consider how they will impact the 49th state.

After suing the federal government over Obamacare’s individual mandate, I said “no” to our state designing and building a health insurance exchange to meet Obamacare’s provisions. I challenged the federal government to build and pay for Alaska’s exchange itself. That was the right choice.

Obamacare promoters sold a few states on constructing their own health insurance exchanges with the promise of covering state costs with federal tax dollars. But many believe the federal government will eventually cut those promised insurance exchange grants to states, resulting in states shouldering more of the cost of designing and implementing these exchanges.

The health insurance exchanges are expensive. Colorado has spent more than $109 million in startup costs to launch its first year and anticipates its insurance exchange will cost about $25 million per year to operate. Oregon has spent more than $200 million to get partially through its exchange design and build, and Washington, still not halfway complete with its insurance exchange, has spent more than $150 million.

The state-run exchanges are turning out to be highly problematic in other ways. The state of Georgia has requested an emergency extension on the Obamacare exchange rollout, and New Hampshire, with its population of 1.3 million, was only able to enroll one insurance company in its exchange. In Connecticut, Hartford-based Aetna has pulled out of that state’s exchange, as it did earlier in Maryland. The rollout complications keep compounding every day.

In 2012, I announced the state of Alaska would not shoulder the financial burden to create such an exchange. There were far too many unknowns. I was concerned about whether the federal government would actually meet its obligations under Obamacare by paying what it promised. Our administration also raised concerns about the potential for escalating costs.

Alaska wasn’t alone in saying “no” to the health exchange bait-and-switch. Twenty-seven other governors ultimately made the same choice.

On Oct. 1, the federal government is supposed to have the enrollment mechanism for the health insurance exchanges up and running. However, full implementation has been delayed and is fraught with operational challenges.

The result is that the federal government is failing to fully meet its own deadlines under Obamacare’s provisions.

We’ve already seen the president unilaterally postpone a lawful deadline mandating businesses comply with Obamacare, as well as scrapping salary verification for individual subsidies, in favor of relying on applicants to self-report their income and eligibility. And now the Government Accountability Office is suggesting that security testing for the “data services hub” to support new health insurance marketplaces is more than a month behind schedule. This testing is necessary to certify the hub can safely route tax information and other confidential data between the exchanges and federal agencies.  

For those states that chose to build their own health insurance exchanges, costs are already skyrocketing past the earlier estimates. Further, many are beginning to worry that the federal government, short on money and long on inefficiency, might renege on what it promised under Obamacare, leaving some state treasuries to shoulder more of the costs — now and in the future.

Because we kept Alaska out of designing and building a government health insurance exchange, Alaskans will not see our state treasury bear the additional costs of maintaining and operating the underfunded federal mandate that is Obamacare.

Sean Parnell, a Republican, became Alaska’s 10th governor in 2009 and was elected in 2010.

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