Arizona health insurance exchange hangs in balance

By upholding the federal health care law, the U.S. Supreme Court cleared the way for states to establish their own health insurance exchanges — web portals where individuals and small businesses can purchase health plans.

But while the justices erased any legal ambiguity surrounding the health care overhaul, legislative leaders and other influential lawmakers in Arizona remain highly critical of the law — and they’re fiercely resisting the idea of a locally run exchange, which is also meant to seamlessly integrate with Medicaid enrollment.

Already, House Speaker Andy Tobin said his preference is to wait until the results of the November presidential election, confident that if Republican Mitt Romney wins, the health care law will be repealed.

But waiting until November means Arizona could lose out on its ability to operate its own exchange in 2014, when the law requires the exchanges to be operational.

And for many, including the insurance industry here, that’s too big of a risk.

Gov. Jan Brewer’s office has for months been designing and planning for a state-run exchange.

The office has already spent $30 million in federal grant money on the program, strongly indicating that Brewer will tell the Obama administration late this year that Arizona will operate the program rather than defer to the federal government.

But even if she does, it won’t end the debate over the exchange’s establishment.

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The chief complication of establishing an Arizona-run health insurance exchange, which would also determine eligibility for Medicaid and the federal Children’s Health Insurance Program, lies in finding a permanent source of funding for the program.

The federal government is currently picking up the tab to set it up, but there’s no assurance the money will be provided in perpetuity.

In short, Brewer will have to persuade a recalcitrant Legislature to not only authorize the program, but also to fund it.

While there’s no official estimate on how much running the exchange would cost Arizona, it would definitely mean another government bureaucracy to oversee what could potentially be the biggest insurance marketplace in the state.

Many lawmakers are ideologically opposed to the health care law and they regard implementing any of its components as yet another capitulation to an overreaching federal government.

Not only that, repeal of the health care law has become Republicans’ battle cry, and influential lawmakers are arguing that establishing the exchange is entrenching the law.

Sen. Nancy Barto, a Republican from Phoenix and chairwoman of the Senate Healthcare and Medical Liability Reform Committee, said that would make it even harder to undo.

“It will entrench the law further at a time when we know now what the stakes are, and how badly the law will need to be repealed in the new Congress,” she said.

What Barto essentially wants is for Arizona and other states to engage in some kind of protracted war over the health exchange, arguing that if more states refuse it, Congress would be more easily persuaded to terminate the law.

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While politicians hem and haw, consumer advocates, hospitals and the insurance industry are urging policymakers to push ahead with a state- run exchange.

Diane Brown, head of the consumer watchdog Arizona Public Interest Research Group, said the state knows more about the nuances of the insurance market here, and is in a much better position to factor in those elements than the federal government.

“It should be clear to Arizona’s decision-makers that it is in our state’s best interest to move forward with a health insurance exchange,” Brown said.

It’s a position that’s also embraced by Chuck Bassett, a senior executive with Blue Cross Blue Shield of Arizona.

If Arizona manages the exchange, Bassett said, the state can take into account the health care disparity between rural and urban areas, and the fact that Arizona has numerous American Indian tribes.

Bassett is acutely aware of the political challenges the health exchange program will have to overcome.

But he said regardless of how people feel about the federal law, its constitutionality has already been decided — in its favor.

Bassett is also skeptical that the law would be repealed even if Republicans run the political table.

“But if they do, you can stop the exchange,” he said.

Bassett’s point is clear: The health care overhaul is the law of the land and it’s best for residents here if the exchange isn’t operated out of some government building in Washington, D.C.

“There has been time to sort of ponder this and, you know, play a little politics with it and that sort of thing. But time is out,” he said.

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Don Hughes, who heads the governor’s efforts to plan for the exchange, said the Brewer administration hasn’t made a final decision whether to push for the exchange’s establishment.

But Hughes said they’re on track to operate the exchange and can accommodate consumers by October 2013, which is the exchange’s open- enrollment period.

Already, there’s one looming deadline for states like Arizona.

By Nov. 16, Arizona has to submit its blueprint to the U.S. Department of Health and Human Services and let the agency know if the state would operate its own exchange.

Here’s another complication for Brewer, albeit a minor one: It remains unclear whether the governor can submit its blueprint and commit Arizona to run the exchange without expressed legislative consent.

“We’ll be talking with our general counsel and making a decision about that,” Hughes said.

If Brewer’s office concluded that she needs the Legislature’s authorization, lawmakers could be looking at a special session possibly right after the general election.

But even if she doesn’t need lawmakers’ consent this November, she’d still need to persuade them to fund the exchange later.

Senate President Steve Pierce said his “gut reaction” is to oppose the exchange.

But he hasn’t totally shut the door on the possibility of a state-run web portal.

“I do not care for the exchange. However, I need to know more facts,” the Republican leader told the Arizona Capitol Times. “My gut reaction is I’m opposed to it, but we need to look at the facts, and it may be that we need to do something.”