State Republicans wary of health care law

Republican governors and GOP-dominated state legislatures were united in opposing President Obama’s health care law, but now that it’s in place, they are far more divided over how far to go in complying with it, especially with the U.S. Supreme Court poised to rule on the law’s constitutionality.

A ruling is expected late next month from the justices, who could uphold the law, strike it down entirely, or pick and choose what they allow to go into effect. That’s left some Republican-controlled states plowing ahead to set up state-run health insurance “exchanges” called for under the law, while others have balked at doing anything that would seem to embrace the law, though that risks the chance of the federal government coming in and taking over.

A central part of Mr. Obama’s health care law, insurance exchanges are intended to serve as state-level markets where Americans can compare insurance plans and collect tax subsidies to put toward buying coverage.

Last week, New Jersey Gov. Chris Christie and New Mexico Gov. Susana Martinez, both Republicans, vetoed bills passed by their Democrat-led legislatures that would have set up state exchanges.

“I am concerned that a hastily created exchange in New Jersey will impose unnecessary obligations upon [New Jersey’s] taxpayers,” Mr. Christie said in his veto message. He cited in part the fact that the Supreme Court review left the law “cloaked in uncertainty,” but his critics in Trenton charged that the governor was also hoping to preserve his chances to be prospective GOP presidential nominee Mitt Romney’s vice-presidential choice this fall.

But another top Republican, Indiana Gov. Mitch Daniels, signed an executive order last year to set up an exchange, and in Mississippi, then-Gov. Haley Barbour last year moved to set up exchanges through the state’s existing high-risk pool after legislators couldn’t agree on a plan themselves.

In Virginia, Gov. Bob McDonnell’s early efforts to get his state working on an exchange were stalled by his GOP colleagues in the Statehouse this spring. The opposite scenario played out in Alabama, where Republican legislators were disappointed when Gov. Bob Riley refused to support an exchange bill.

Even though the Alabama legislation included a sunset provision to undo the legislation should the Supreme Court strike down the law — and the state House passed it on a 92-0 vote in March — it died with the end of the session on Wednesday.

The outcome disappointed the bill’s sponsor, Alabama state Rep. Glen Wren, who called the GOP divisions “a fundamental difference of opinion” over how to treat the law before the court issues its decision.

“It was just a difference in approach — which again is no different from what’s gone on around the country,” he said. “There’s no standard by which philosophically and politically you can point to and say this is the template model for Republicans per se. It just doesn’t exist, and it’s been frustrating for me.”

But Mr. Wren fears that by sitting on its hands, Alabama will open itself up to more federal intervention. The Obama administration has said that if states fail to demonstrate adequate progress toward setting up an insurance exchange by January, the federal government may take over and operate it instead.

That’s a fear for many conservative state lawmakers, who are opposed to the Affordable Care Act for what they see as its federal encroachment on personal privacy but, because of their procrastination, who could also end up with more federal intervention if they fail to act.

The administration says it’s doing all it can to help states along, releasing long-awaited guidelines in March and awarding states hundreds of millions of dollars to get the exchanges started. Secretary of Health and Human Services Kathleen Sebelius announced Wednesday that six states will receive an additional $181 million in exchange grants.

But most Republican statehouses haven’t been willing to set up exchanges quite yet. Except for Colorado, where Republicans rule the House, all 12 state legislatures to pass exchange bills are led by Democrats.

Instead, lawmakers are willing to gamble that the court will strike down the law — and if it doesn’t, they’ll spring into action with just six months to show sufficient progress. Kentucky Gov. Steve Beshear, a Democrat, said earlier this month that if the law is upheld, he is prepared to sign an executive order establishing an exchange right away.

“While no one can predict what the Supreme Court will ultimately decide, it is imperative that the state prepare for any decision,” he said. “The steps we have taken to date, and the planning process we are putting in place, help ensure the state is able and ready to follow the law, if upheld, and also guarantees we don’t have the federal government running our insurance market.”

Cheryl Smith, a health exchanges consultant with the conservative firm Leavitt Partners, said she expects to see that response from other states in the aftermath of a decision upholding the law.

“I don’t know that Republican states are actually holding back so much as they are keeping all their options open,” Ms. Smith said. “I think in addition to a mad scramble, you will also see a redoubling of efforts to keep the feds out.”

Obama administration officials have emphasized flexibility in issuing rules for the exchanges, allowing states to choose how many plans to allow and how much assistance to accept from the federal government. But Ms. Smith said she expects that between five and 10 states won’t meet the conditions for approval by 2014.

Christie Herrera, director of the health task force for the American Legislative Exchange Council, said that for states holding back, she thinks it comes down to a matter of control. The administration is implementing other parts of Mr. Obama’s plan without any input from the states, she said.

“It’s basically the only tenet of Obamacare they can control,” she said. “They can’t really control the individual mandate, they don’t have control over the Medicaid expansion, but this they can refuse.”