Arizona Governor Jan Brewer chooses not to form state-run health care exchange under federal law

PHOENIX - Arizona Gov. Jan Brewer has decided against creating a state-run health insurance exchange required to implement a key part of President Barack Obama's federal health care law.

Brewer's decision announced Wednesday means the federal government will set up an exchange that will provide consumers with an online marketplace to buy subsidized health care coverage.

Brewer, who reiterated her opposition to the health care overhaul, said there are too many costs and questions associated with a state-run exchange.

"It's like the Feds are building a plane as it's running down the runway and the Governor is saying just let me off," said the Governor's spokesperson Matt Benson.

Brewer said she concluded that federal requirements meant the state "would wield little actual authority over its `state' exchange."

"The federal government would maintain oversight and control over virtually every aspect of our exchange, limiting our ability to meet the unique needs of Arizonans and the Arizona insurance market," she said in a statement.

Brewer sent a federal official a one-page letter disclosing her decision.

Her announcement preceded a Dec. 14 deadline for states to declare whether they'd run their own exchanges.

A decision to create an exchange would have been subject to approval by the Republican-led state Legislature.

Though the Nov. 6 election results reduced the size of Republicans' majorities in the state House and Senate, a Brewer push to create a state-run exchange would have faced a fight from GOP lawmakers who oppose the law.

An alliance of hospitals, insurance companies and business groups wanted Arizona to have a state-run exchange, arguing that it would increase coverage while giving the state flexibility in designing a program to its liking.

"We are disappointed in the decision because it's easier to influence programs at the state level than to deal with the Federal Government," said Peter Wertheim, a spokesperson for the Arizona Hospital and Healthcare Association.

Conservative advocacy groups such as the Goldwater Institute stand in opposition. They say Arizona shouldn't help implement a law that could foist new expenses on the state and raise health insurance prices for residents.

Brewer's administration spent two years planning for a possible exchange, accepting approximately $31 million of federal funding to pay for the advance work.

As part of that planning, Brewer in September selected a minimum benefits package for a state-run exchange based on current insurance coverage for state employees. She noted in a Sept. 28 letter to the Obama administration that the package she chose excludes abortion coverage.

While some Republicans governors in such states as Texas and Maine have balked at creating state-run exchanges, others in Nevada and New Mexico have opted to proceed.

The governor released the following statement Wednesday:

Today, Governor Jan Brewer notified the Obama administration that the State of Arizona will not pursue the creation of a state-based Health Exchange. Instead, Arizona will participate in a federally-operated Exchange, according to the guidelines of the Patient Protection and Affordable Care Act.

"Today, I notified the U.S. Department of Health and Human Services (HHS) that the State of Arizona will not create a state-based Health Exchange. This decision comes following an extensive research and outreach process during which my team of health advisors conducted public hearings and met with HHS, patient advocates and representatives of Arizona hospitals, health providers, insurers, tribal groups and other members of the health care community.

"This has been one of the more difficult decisions of my career in public service. My opposition to the Affordable Care Act (ACA) is unwavering, as is my belief that it should be repealed and replaced with legislation that achieves its stated goals: to improve access to quality, affordable health care in this country. But I am also aware that the ACA remains the law of the land. Likewise, though I am a steady advocate of local control, I have come to the conclusion that the State of Arizona would wield little actual authority over its ‘state' Exchange. The federal government would maintain oversight and control over virtually every aspect of our Exchange, limiting our ability to meet the unique needs of Arizonans and the Arizona insurance market.

"A state Exchange would be costly. Though the federal government has pledged to pay nearly all startup costs, states that form their own health exchanges are on the hook for operational expenses beginning in 2015. Those costs could total $27 million to $40 million annually for the State of Arizona, according to a recent study conducted by Mercer. Of course, these expenses would be passed along in the form of fees resulting in higher health premiums for Arizona families and small businesses. This would be an additional financial burden at a time when so many Arizonans are still struggling.

"Lastly,

there simply remains too much we don't know about how a State-based Exchange would function and its ultimate cost to taxpayers. Without clear federal guidance and instruction, I cannot in good conscience commit the taxpayers of my state to this costly endeavor.

"The State of Arizona has a long history of health care innovation. Our Medicaid program, AHCCCS, has been a national model of cost-efficient care for three decades, and our pioneering pursuit of integrated health is designed to improve the quality of life for Arizonans living with serious mental illness. In this proud tradition, I remain committed to working with legislators to enact State reforms that improve care and reduce costs for Arizona families, while maintaining a vibrant and competitive health care marketplace."

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