Policy Documents

Republican Governors Choose Paths on Exchanges

Benjamin Domenech –


One of the key requirements under President Obama’s health care law is that each state set up a functional health insurance exchange by 2013. The exchanges, based on those currently running in Utah and Massachusetts, are essentially government managed conduits, allowing for state bureaucracies to organize and regulate the way their insurers sell policies to consumers in a more standardized form. The federal government has provided incentives in the form of taxpayer funding for states to create the exchanges, setting up a key early policy decision for many Republican governors.

All Republican governors are on record as opposing the law, and nearly all have directed their states to challenge key aspects of the law in court. Yet these same governors must soon decide whether to implement an exchange, and whether to push for a sunset provision to be added to the legislation, requiring the exchange be rolled back should Obama’s law be repealed or struck down by the courts.

Most Governors Advance Exchange Plans

Spokesmen for newly elected Republican governors Robert Bentley of Alabama, Mary Fallin of Oklahoma, John Kasich of Ohio, and Terry Branstad of Iowa confirmed that they were currently planning to set up an insurance exchange as mandated by Obama’s law. Rob Nichols, press secretary for Gov. Kasich, expressed a typical rationale for organizing the exchanges at the state level.

“We cannot let the insurance exchange default to federal control, so we are moving forward with the planning that is required to make the exchange work best for Ohio,” Nichols said.

Spokesmen for Republican Governors Chris Christie of New Jersey, Jan Brewer of Arizona, Dave Heineman of Nebraska, Jack Dalyrmple of North Dakota, Rick Perry of Texas, Mitch Daniels of Indiana, Scott Walker of Wisconsin and Butch Otter of Idaho confirmed they were in the process of arranging boards and stakeholder meetings to determine how to set up an exchange. Yet many of these spokesmen, such as Jon Hanian, press secretary for Gov. Otter, stressed they had not yet reached a decision on the matter, noting that the planning process does not dictate an outcome.

“Elements of our working group have been meeting informally for several months to address issues related to the insurance exchange,” Hanian said. “The other two working groups are Health Care Delivery and Information Technology, and they have not met yet. In other words, we are still deciding.”

In some states, such as Oklahoma, the planning process was begun by Republican legislators prior to the passage of the federal law. In others, such as Wisconsin, the process is beginning with the creation of specific offices. In January, Gov. Walker announced the creation of an Office of Free Market Health Care, assigned, among other tasks, with developing “a plan for the design and implementation of a Wisconsin health benefit exchange that utilizes a free-market, consumer driven approach.”

Scott and Jindal Defiant

Yet not all Republican governors are planning to create the mandated exchanges.

The office of newly elected Florida Gov. Rick Scott, a former health care executive and a prominent critic of Obama’s law, confirmed that he does not currently plan to set up an exchange. And the office of Louisiana Gov. Bobby Jindal, a former top official in the U.S. Department of Health and Human Services (HHS) under George W. Bush and former secretary of health for his state, also confirmed the governor does not plan to set up an exchange.

Sunset Provisions Considered

Most of the other Republican governors, including Branstad, Brewer, and Virginia Gov. Bob McDonnell, are considering defying the law in a less direct manner by employing the use of a legislative sunset provision. Christie Herrera, head of the American Legislative Exchange Council’s health care task force, said the sunset provision helps state legislators who are trying to find a responsible path.

“Legislators are torn between refusing to comply with ObamaCare and moving forward with implementation, and rightly so.  Much of this law might be repealed, defunded or struck down by the Supreme Court,” Herrera said. “Some states might feel compelled to set up an ObamaCare exchange, fearing what they’ll end up with if they don’t comply with the new law.”

Herrera says a sunset clause would allow governors to roll back the exchanges in the event of such a repeal.

“Adding a sunset clause to any ObamaCare exchange legislation might bridge the gap between pro-exchange and anti-exchange state legislators,” Herrera said. “A sunset clause allows states to shed these massive, federally-dictated health insurance exchanges if that ObamaCare provision is repealed or struck down in court. It’s just the responsible thing to do.”

Barbour Embraces Exchange, Rejects Sunset

Virginia’s legislation directing the planning of the exchange currently has a sunset clause, and other states are looking at following suit. In fact, of all the Republican gubernatorial offices Health Care News contacted for this story, only Gov. Haley Barbour of Mississippi rejected the idea. Dan Turner, a spokesman for Gov. Barbour, noted that legislation to establish a health insurance exchange in Mississippi had previously passed in the state Senate three years in a row, only to die in the state House.

“Gov. Barbour began pushing for a health insurance exchange in Mississippi before President Obama was elected,” Turner said. “A key point to remember is that the health exchange Gov. Barbour wants is significantly different than what Obamacare envisions. The governor wants a market-based exchange with competition among providers, rather than a government-controlled exchange. As for a sunset? No.”

Yet Herrera maintains the exchanges will ultimately have a very limited window for such consumer-driven formats, instead taking their regulatory cues from HHS.

“Talk of state collaboration and market based solutions are predicated on the assumption that HHS Secretary Kathleen Sebelius will approve any exchange that deviates from the heavily-regulated structure set forth in ObamaCare,” Herrera said. “Most people believe that is very unlikely to happen.”

Benjamin Domenech (bdomenech@heartland.org) is managing editor of Health Care News.