Barack Obama is facing a fresh offensive against his troubled healthcare reforms as Republican legislators backed by corporate sponsors prepare an attempt to effectively destroy the Affordable Care Act at state level.
With Obamacare still in crisis from its botched technical rollout, the signature reform of the Obama presidency faces threats from state-based politicians who have devised a strategy to scupper the federal health insurance exchanges.
The move is the latest in a sustained effort by conservative states, mainly in the South and Midwest, to resist key elements of the changes that are designed to extend healthcare to millions of uninsured Americans.
The idea for the new attack is the brainchild of the American Legislative Exchange Council (ALEC), a group that acts as a dating agency for Republican state legislators and big corporations, bringing them together to frame rightwing legislative agendas in the form of “model bills.”
A new ALEC proposal, approved by its annual meeting in Chicago in August and published as a model bill for adoption by state assemblies across the nation, would scupper the federal health insurance exchanges set up under Obamacare. The Health Care Freedom Act, as ALEC calls its model bill, threatens to strip health insurers of their licenses to do new business on the federal exchanges should they accept any subsidies under the system.
ALEC justifies the measure as a way to protect local employers from the “employer mandate” – the provision in Obama's act that penalizes employers with more than 50 workers who do not offer any or sufficient healthcare cover for their employees. However, health insurance experts say that were the model bill to be taken up widely by Republican-held states, it would seriously disrupt the federal exchanges, and in turn put the whole health reforms in peril.
Legislation with almost identical language is already being debated in the state assemblies of Missouri and Ohio.
“You cannot build the healthcare system based on the free market unless you have subsidies. If they are taken away the whole thing collapses,” said Wendell Potter, a former health insurance executive and critic of the health industry.
Lisa Graves, the executive director of the Center for Media and Democracy, which monitors the activities of ALEC, called the model bill “a blatant effort to nullify the federal healthcare reforms. If this is successful it would ultimately deny an untold number of Americans help under the ACA.”
The threat posed by ALEC’s model bills to Obamacare is not academic. Over the past five years, ALEC has been a prominent thorn in the side of the administration, particularly over its healthcare reforms. The council has circulated a 32-page guide for state legislators called “Repealing Obamacare,” as well as launching numerous model bills targeted at various aspects of the legislation.
An earlier ALEC model bill, Freedom of Choice in Health Care Act, was taken up by Republican-controlled legislatures across the U.S.. It sought to undermine the ACA by blocking one of its core components – the “individual mandate” that makes health insurance compulsory for most Americans. ALEC’s challenges were seminal in pushing the case up to the U.S. supreme court that eventually ruled in the administration’s favor by defining the mandate as a tax.
Similar legal challenges, potentially also going all the way up to the supreme court, are expected should ALEC’s new model bill targeting federal health insurance exchanges become law in any state.
As a group that exists to facilitate an exchange of ideas between conservative politicians and big corporations, it is no surprise that ALEC’s healthcare priorities reflect the interests of both the health insurance and the drug-production industries. The Center for Media and Democracy points out that in 2012 the council’s health and human services taskforce was privately chaired by an executive of Guarantee Trust Life Insurance.
ALEC’s Chicago conference in August was sponsored among others by PhRMA, a lobby group that represents leading U.S. pharmaceutical and biotechnology companies; drug companies such as Celgene, Takeda Pharmaceutical and Eli Lilly, and the tobacco giant Reynolds America.
Thirty-four states have so far refused to set up their own local exchanges under the ACA. The exchanges are a pivotal element of Obamacare because through them poorer families can shop for affordable health insurance with the help of federal subsidies in the form of tax credits.
In the absence of co-operation at state level, the Obama administration has been forced to step in and create its own network of federal exchanges in those 34 states. It is these federal operations that are now within ALEC’s sights.
Ethan Rome, executive director of a coalition that supports Obama’s reforms called Health Care for America Now, said that the ALEC proposal was such a frontal assault on the federal exchanges that it represented “a form of state-based repeal of the ACA. This would make it virtually impossible for federal exchanges to function because insurers would no longer participate – and that would have the effect of bringing down the federal exchanges one state at a time.”
Sean Riley, who heads ALEC’s health and human services task force, said the aim of the model bill was simple: to protect businesses from the penalties applied under the ACA on employers who do not provide health insurance. “The [employer] mandate not only deters small business growth, but has led numerous public and private sector employers to restrict employee hours. Because the mandate’s fines are triggered by the availability of exchange subsidies, removing their availability – as the model intends – would remove the mandate, freeing employers to grow.”
ALEC’s health and human services taskforce will be reconvening in December at the council’s next nationwide summit in Washington. A range of potential new model bills relating to Obamacare are to be discussed, including what a proposal that according to ALEC would “protect consumers from potential fraud relating to exchange navigators under the ACA.”