State committee rejects health exchange; Snyder looks for partnership with federal government in creating one

A state House committee rejected a bill last week that would have created a state-run health insurance exchange, as is required by the Affordable Care Act.

The state House's Health Policy committee turned down the exchange by a 9-5 vote, meaning the federal government is now likely to play a large role in creating an exchange.

An opponent of the Affordable Care Act, commonly referred to as "Obamacare," state Rep. Kevin Cotter, R-Mount Pleasant, praised the committee in a statement to Central Michigan Life.

"I appreciate the work of my colleagues who serve on the Committee on Health Policy, along with the residents of Isabella and Midland County who contacted my office regarding this issue,” Cotter said.

The state-run health exchanges mandated by the health care law are Internet marketplaces designed to drive down premiums through competition, to create transparency when choosing insurance, and to increase access to health insurance for the nation's uninsured.

Under the law, states may choose to opt out of creating an exchange, in which case the federal government would either create one for the state or would work with the state in a partnership to set one up.

The federal government expects more than 25 million people to gain insurance through the exchanges, most of whom would receive aid in paying premiums. The exchanges are required to be up and running by October 2013.

The law requires all Americans to have health insurance by 2014 or else pay a penalty. A September report by the Congressional Budget Office estimates that six million people will opt to pay the penalty, which the CBO estimates will average out to $1,200 by 2016.

The committee's decision comes as a disappointment to Gov. Rick Snyder, who had previously hoped the exchange bill would pass by the end of the year. Under the plan, Michigan's exchange would have been run by a nonprofit corporation with federal funds until the beginning of 2015, when it would become a self-sustained operation.

Snyder's office told the Detroit Free Press that the governor is looking to create a partnership with the federal government in which the state would create the website and set up the technology needed to run an exchange.

“It’s fair to say that state control is our first preference. But we knew there was going to be some controversy and compromise required,” spokesman Kurt Weise said.

States have until Dec. 14 to inform the U.S. Department of Health and Human Services whether or not they will be setting up an exchange.

Only 17 states and Washington, D.C., have opted to create their own exchanges so far. Michigan is among six states pursuing a partnership with the federal government, while 17 states rejected any involvement in creating an exchange. Ten are still up in the air.

The Affordable Care Act, seen by most as President Barack Obama's signature legislative achievement, has been one of the most divisive pieces of legislation the country has seen in awhile. Polls show Americans deeply divided, mostly along party lines, on their support of the 2010 law.

The law survived a Supreme Court challenge from 26 states mostly in tact last summer when Chief Justice John Roberts, appointed by former President George W. Bush, joined the court's four Democratic justices in upholding the law, though they did rule that states could opt out of the law's mandated Medicaid expansion provision.