Cato Institute - States Should Flatly Reject ObamaCare Exchanges

Here are just a few reasons why states should refuse to create ObamaCare Exchanges.

Jobs. Refusing to create an exchange will block Obamacare from imposing a tax on employers whose health benefits do not meet the federal government's definition of "essential" coverage. That tax can run as high as $3,000 per employee. A state that refuses to create an exchange will spare its employers from that tax, and will therefore enable them to create more jobs.

Religious freedom. In blocking that employer tax, state officials would likewise block Obamacare's effort to force religious employers to provide coverage for services they find immoral — like contraception, pharmaceutical abortions, and sterilization.

The federal debt. Refusing to create exchanges would also reduce the federal debt, because it would prevent the Obama administration from doling out billions of dollars in subsidies to private insurance companies.

The U.S. Constitution. The Obama administration has indicated that it might try to tax employers and hand out those subsidies anyway — even in states that don't create an exchange, and even though neither Obamacare nor any other federal law gives it the power to do so. If that happens, the fact that a state has refused to create an exchange would give every large employer in the state — including the state government itself — the ability to go to court to block the administration's attempt to usurp Congress's legislative powers.

A lower state tax burden. States that opt to create an exchange can expect to pay anywhere from $10 million to $100 million per year to run it. But if states refuse, Obamacare says the federal government must pay to create one. Why should states pay for something that the federal government is giving away?

Bye-bye, Obamacare. That is, if the feds can create an exchange at all. The Obama administration has admitted it doesn't have the money — and good luck getting any such funding through the GOP-controlled House. Moreover, without state-run exchanges, the feds can't subsidize private insurance companies. That by itself could cause Obamacare to collapse.

Michael F. Cannon is the director of Health Policy Studies at the Cato Institute. Video Produced by Caleb O. Brown and Austin Bragg.

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