It's no surprise that Gov. Sean Parnell has been dead set against federal health-care reform, or the Affordable Care Act, or "Obamacare." Alaska, under the Parnell administration, was among 26 states that sued to overturn the health care law, and Parnell has since called for its repeal.
What is surprising is Parnell’s June 17 announcement, citing cost, that his administration planned to hand over significant state control of Alaska's health care market to bureaucrats in Washington, D.C., rather than apply for federal grants to fund a health insurance exchange. The state exchanges are fundamental to the national health reform law and were among the most significant concessions by Congress of federal health-care policymaking to the individual states.
Parnell's resistance to federal meddling in Alaska business makes the decision all the more contradictory, some say.
In March 2011, Parnell wrote a letter to Alaska Sen. Hollis French outlining his administration's benchmarks involving the exchange. "Principles that will guide us," he wrote, "will be to maximize Alaskans' freedom and privacy, minimize federal entanglement and foster more citizen-based choices."
The letter was an explanation of sorts for Parnell's decision not to accept $1 million in grants -- money accepted by every other U.S. governor, including those challenging the health law's constitutionality -- offered by the Feds to offset state costs to study and design the exchanges.
"What's going to happen now is that we will get stuck with an exchange that is developed by the federal government," said Pat Luby director of the AARP Alaska. "If the federal government does it, how are we going to make sure that it’s working for Alaskans?" he said.
States get a say in health reform
Exchanges are intended to be one stop shops managed by the states or a state-selected nonprofit to provide a single point for comparison shopping of health insurance plans. Alaska's very high rate of uninsured citizens and comparatively few health insurance providers make this a big deal. As many as 77,000 Alaskans will enter the health insurance market once the law has been fully implemented. A carefully designed insurance exchange could conceivably attract more insurers to Alaska. More health insurance options would mean more competition for the business of state health-care providers. And that typically means lower costs and better coverage.
Parnell is among at least five Republican governors -- Rick Perry of Texas, Nikki Haley of South Carolina, Rick Scott of Florida and Bobby Jindal of Louisiana -- to announce their states would not conceive health insurance exchanges.
Parnell cited a state health department-commissioned report prepared by Outside consultants that concluded that allowing the Feds to create the exchange would be the least expensive option. After the report was released, Parnell said that "Federally mandated programs should be paid for by federal dollars."
The report, which cost the state $200,000, found that an exchange created by Alaska would cost somewhere between $4 million and $70 million. An exchange created by the Feds for Alaska would cost the state between $1.5 million and $3 million.
The report however notes federal funding available for creating the exchanges.
Keith Maley, a spokesman for the U.S. Department of Health and Human Services said establishing an exchange wouldn't cost Alaska anything. "States have had every opportunity to apply for 100 percent federally-funded exchange grants, and we have extended the deadline for establishment funding,” he said.
Parnell, however, rejected the Health Department statement as disingenuous. "We don’t know what level of federal grants Alaska will qualify for,” he said. “That is a huge unknown.”
Indeed, there is a wrinkle, but it's one of Parnell's own making. Because Alaska was the only state not to apply for an early grant to help fund conceiving the exchange, subsequent federal grants might be more difficult to get. However, Maley said that HHS “will work with the state if it is interested in federal support for an exchange.”
In effect, allowing the Feds to build the exchange could cost the state as much $3 million. If the state built it, it would likely cost nothing.
Frist: State exchanges are a solution
Washington State received about $150 million in federal grants to create its exchanges. Michael Marchand, spokesman for Washington Health Benefit Exchange, the lead agency responsible for its creation, said Washington won't pick up any costs associated with creating its exchange. In fact, the Feds might even get a refund.
Marchand sees a good deal for Washington. “It allows us to design a marketplace in a way that best addresses the need of our population,” he said, adding, “It provides (Washingtonians) with more freedom.”
Even some influential Republicans are urging intransigent state governors to give it a rest and build exchanges that best suit their respective markets. Michael O. Leavitt, a top aide to presumed Republican presidential candidate Mitt Romney, told the New York Times it would be better for the states to create their own exchanges.
“I understand why some of my fellow conservatives oppose the formation of insurance exchanges,” the New York Times quotes Leavitt as saying. But, “continued inaction by states risks an Obama-style federal exchange being foisted upon a state.”
In an Op-Ed published Wednesday in the weekly newsmagazine “The Week,” former Senate Majority Leader Bill Frist, a Republican surgeon from Tennessee, urged states to move forward with establishing exchanges:
State exchanges are the solution. They represent the federalist ideal of states as ‘laboratories for democracy. We are seeing 50 states each designing a model that is right for them, empowered to take into account their individual cultures, politics, economies, and demographics. Simply put, state exchanges represent a distinctly American opportunity to improve our local communities and at the same time help our nation avert a major crisis.
Pat Luby of AARP Alaska, who was on Parnell's health care transition team, said he didn't think health care for Alaskans has ever been a priority for Parnell.
"He's got his good coverage and doesn’t seem to realize what it’s like for a 59-year-old who lost their job, and has to wait six years for Medicare," Luby said. "He’s an oil and gas governor” who's focused almost exclusively on the oil patch.
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