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Letter to Gov. Butch Otter on implementing a health exchange in Idaho and Medicaid Expansion

Letter to Gov. Butch Otter on implementing a health exchange in Idaho and Medicaid Expansion

Mitch Coffman
July 7, 2012

Dear Governor Otter:

I’m writing this letter to encourage you to continue your opposition to the Patient Protection and Affordable Care Act (PPACA). It is our belief that the state has not fully exhausted its legislative and legal remedies, and we believe there are opportunities ahead—but only if states continue their opposition to the creation of a federally-compliant state health insurance exchange and expansion of Medicaid.

The state’s continued opposition to a health insurance exchange is the only way to protect Idaho businesses from thousands of dollars in penalties for not supplying health insurance to their employees. Under the clear wording of the statute, the PPACA insurance subsidies and tax credits are only available through a state exchange.[1. Oct. 4, 2011, Hoffman testimony to the Legislature’s Health Care Taskforce.] If Idaho and other states resist the creation of a state exchange, the states can stand in the way of billions of dollars in new federal entitlement spending and wealth redistribution.[2. Ibid.]

The Internal Revenue Service, however, is ignoring the wording of the statute, and has written rules that allow government subsidies to apply to people whether they are in a state exchange or federal exchange.[3. Federal Register, Vol. 76, No. 159. http://tinyurl.com/cptxawk.]

This is litigable point, but only if Idaho refuses to build a state exchange. Building the exchange will deny Idaho and your constituents an opportunity to once again challenge the law and the federal rules associated with it. A successful litigation would force Congress to reopen this issue. Moreover, your refusal to build an exchange will protect Idaho businesses from the $3,000-per-employee tax against companies that don’t provide health insurance to its workers.[4. Cannon and Adler, USA Today, June 25, 2012. http://tinyurl.com/78wuuh2.]

Idaho should, instead, focus its efforts on true free market, patient-centered reforms that will have the effect of lowering costs and increasing health care outcomes.

In a recent letter to all 50 governors, US Senator Jim DeMint, Congresswoman Michelle Bachmann joined more than 70 other Senators and Congressman, including Idaho Congressman Raul Labrador, urging continued opposition to state health insurance exchanges.[5. Letter to the National Governors Association, June 29, 2012. http://tinyurl.com/7ux6sup.]

We would also reiterate our opposition to the expansion of the state’s Medicaid program. While the court upheld the individual mandate under the taxing authority of Congress, it struck down the law’s Medicaid expansion penalty.  Chief Justice John Roberts wrote for the majority, “The States claim that this threat [of withholding Medicaid funds] serves no purpose other than to force unwilling States to sign up for the dramatic expansion in health care coverage effected by the Act. Given the nature of the threat and the programs at issue here, we must agree.”[6. NFIB v. Sebelius, http://tinyurl.com/89suf6u.]

According to the Congressional Budget Office, the Medicaid expansion, if implemented in whole, would add 17 million new people to state Medicaid programs.[7. Revised CBO estimates for the PPACA, March 2012.] This expansion will cost American taxpayers nearly $800 billion over 10 years.[8. Ibid.]

The Supreme Court’s ruling allows Idaho policymakers to decide for themselves whether they can afford to add tens of thousands of people to their already financially strained Medicaid programs. As the minority opinion explains, “acceptance of the offer will impose very substantial costs on participating States.”[9. NFIB v. Sebelius, http://tinyurl.com/89suf6u.] We’d also note that the acceptance of such funds will divert attention and resources away from where it is needed most—providing a safety net to the neediest among us.

Finally, while there appears to be a short-term benefit to the state to accept the expansion of Medicaid (it would take pressure off the state and county health care emergency and indigent health care programs), the benefit of 100 percent federal funding will end in a few years—leaving the state with an unfunded program and thousands who have come to expect and depend on it.  At some point in the near future, Idaho will regret having expanded Medicaid. Once instituted, an entitlement program is nearly impossible to end.

It is an honor to work with you and other state policymakers to fashion solutions that restores liberty and improves the lives of Idahoans. Please let us know if we can answer any questions.

Yours for Freedom,


Wayne Hoffman

Executive Director

Idaho Freedom Foundation
802 W. Bannock Street, Suite 405, Boise, Idaho 83702
p 208.258.2280 | e [email protected]
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