Arizona should stop planning for health insurance exchange

A central feature of the federal Patient Protection and Affordable Care Act is an option for each state to establish a health insurance exchange. In its simplest form, an exchange would be a website on which individuals and business people could shop for health insurance. However, insurance policies offered on the exchange must be heavily regulated by the state to apply federal standards and price controls.

California was the first state to pass legislation to establish an exchange. Governor Jan Brewer’s office has received a grant of almost a million dollars to plan for an exchange in Arizona. There are good reasons, however, for the state not to bother.

First, the mandate that every American must buy government-controlled health insurance has twice been declared unconstitutional. Arizona is part of the 26-state lawsuit that received one of those rulings last week. Creating an insurance exchange would have Arizona enforcing the individual mandate even as the state defends its court victory to strike down that mandate.

Second, the Goldwater Institute also has filed a lawsuit on behalf of many Arizona state legislators challenging several parts of the federal health care law. A claim in this lawsuit is the federal legislation does not clearly preempt state law, including the voter-approved Health Care Freedom Act. However, if the state decides to create an insurance exchange, state laws likely will have to change to comply with federal specifications. As a result, this basis for the legislators’ lawsuit would evaporate.

Third, the federal government is an unreliable financial partner that, down the road, could force states to pay for all of the ongoing costs of their insurance exchanges.

Fundamentally, I believe, and so does more than half the Arizona Legislature, that this law is unconstitutional; therefore, the state should not spend any money on or take any steps towards implementing it.

Dr. Byron Schlomach is director of the Goldwater Institute’s Center for Economic Prosperity.

Learn More:

Christian Science Monitor: Health care reform bill 101: What’s a health ‘exchange’?

Wall Street Journal: An Obamacare Appeal From the States

San Diego Union-Tribune: California takes lead in health insurance exchange