Tell Governor Brownback to Put a SOCK in it! (Summer, 2011)

The Truth About Implementing Federal “Exchanges” Under the Affordable Care Act

The ACA does not mandate that states must do anything to establish an “Exchange”. The states are given a period of time during which they may voluntarily design, develop and implement an ACA “exchange”. Under the ACA the federal Department of Health and Human Services (HHS) must implement an “Exchange” in all states that cannot or will not implement such by 2014. The HHS is required to make this determination by January 2013.

States are not allowed to “build their own” “Exchanges” or retain more control over “their” Exchanges. States which accept grants for the ACA Exchanges, including the Early Innovator Grant (EIG), are obligated by the terms of such grants to design develop and implement a plan that is consistent with the ACA and related HHS regulation. HHS has supervisory authority for the ACA “exchanges” no matter who implements them. And, under the terms of the EIG pursuant to the FOA by accepting an EIG the state is accepting the condition that it: “Will comply with any IT guidance relating to the Exchange of Medicaid issued by HHS and continue to update their plans based on changes to guidance…”

States that are implementing ACA exchanges are undermining efforts to repeal and / or have the ACA judicially declared unconstitutional. The fact that several state plaintiffs in the Florida federal District Court indicated they were moving forwarded with ACA exchanges was the basis for the judge not maintaining a stay on the federal government from further implementing the ACA until the case was resolve. Also, if the states have contractually obligated themselves to implement the ACA exchanges they may moot at least some of their claims in the federal action alleging the federal government is forcing them undertake certain activities since the states’ activities as to such ACA “Exchanges” are voluntary not forced.

Those who have taken an oath to “support” the U.S. Constitution may not implement, obey or enforce a law they believe to be unconstitutional. Their duty is to resist such “law” in every insistence. Laws which are unconstitutional are unconstitutional from their very inception not from when a court declares them to be unconstitutional. No person is obligated to obey an unconstitutional law.

Myths and False Arguments for Implementing Obama Care
"In a time of universal deceit, telling the truth is a revolutionary act." - George Orwell

The states are mandated by the ACA to implement an Obama Care Exchange

The states will have more control over the exchange in their state if they implement (design and develop) it themselves.

The implementation of an Obama Care Exchange will not harm the effort to repeal or to judicially overturn the ACA.

It is not harmful for a state to design and develop an ACA exchange since it will require legislative action to actual put it into service.

The federal Early Innovator Grants and other ACA grants do not require the state to design and develop an exchange compliant with ACA

If the Obama Care Law is declared un-Constitutional it will just go away.

What is in a Name: exchanges vs. “Exchanges?”

“In the final analysis, control of food is tantamount to control of the body, and control of language to control of the mind"
-Thomas Szasz, The Untamed Tongue, 65, 1990

An Obama Care “exchange” is not an exchange at all. A traditional exchange is where free and willing buyers and sellers come together to make transfers (exchanges) of goods and / or services. The New York Stock Exchange is an example and so is the local “farmers’ market”. Such exchanges generally result in more and a better variety of products and a price that is more in keeping with market forces i.e., supply and demand.
An “Exchange” under the ACA is not composed of free and willing buyers and sellers and the price is not determined by supply and demand. In fact products offered are not determine by the market i.e. what buyers want to buy and what sellers want to sell. Sellers are largely told what they will offer and what they will not offer and buyers are told what they must buy and what they may not buy. In short the PPACA exchanges are a “perversion” of a “free market” exchange.
The ACA “Exchanges” are primarily for the purpose of facilitating control of the healthcare industry and imposing governmental policies upon the citizens. These pseudo- exchanges are to be used to impose new regulations, standardize “private” health insurance, administer a new program of federal health care subsidies for tens of millions of Americans (redistribution of wealth) and enroll millions of additional Americans in federally mandate and expanded “state” Medicaid programs. The result of which is to restrict consumer choice and insurer competition which drives up prices.

It is estimated that the cost of subsidies from 2014 through 2020 will be $457 billion. This is money that will largely be paid to insurance companies who are able and willing to cooperate with the federal government on this Obama endeavor.

When you get to the nitty- gritty it does not sound like the kind of a mechanism one would expect to find in a “free” country but what one might expect in one of the “ism” states i.e., communism, socialism and fascism.
Governor Brownback has called Obama Care “socialism” and the current President of the American Association of Physicians and Surgeons called it “fascist”. Fascism is a more apt characterization of the government business arrangement in this endeavor but, however one wish to characterize the ACA it is definitely not free market, consumer oriented or a reflection of traditional American values.
Obama Care and its marketing by the federal government is a page right out of Orwell’s 1984 where the Ministry of Truth is preoccupied with creating deceptions and the Ministry of Peace is in charge of maintaining a perpetual war. The Department of Health and Human Services is in the midst of denigrating one of the best healthcare industries in the world and perpetrating a great disservice to the humans in its path. The Obama Care Act is riddled with contraindications and oxymorons.

There is no such thing as a State “Exchange” under Obama Care
The “Exchanges” contractually mandated under the EIG applications are in fact American Heath Benefit Exchanges (AHBE) which is in fact a PPACA (Obama Care) “Exchange”. The term “Exchange” is a statutory term of art which is by definition an AHBE as defined in §1311 of the PPACA. This term of art, “Exchange”, is carried from the PPACA into the Funding Opportunity Announcement for the EIGs. The term is then carried into the Early Innovator Grant (EIG) application.

Every time the term “Exchange” is used in the Kansas EIG application it is by definition referring to an American Heath Benefit Exchange as defined in the PPACA i.e. an Obama Care “Exchange”. The Kansas EIG application provides Kansas is “…uniquely positioned to take the initiative in implementing a state- of- the- art end-to –end solution in support of ACA deadlines….” The term “ACA” includes the PPACA legislation which is commonly referred to as the “Obma Care” law.

Under the Kansas EIG application Kansas is integrating it K-MED with the “Exchange”. Numerous references are made to requirements of the PPACA “Exchange” such as “comparative information”, “certified plans”, “managing enrollment”, “and administering premium tax credits”, “cost sharing assistance” and “data capture for performance metrics”. The Kansas EIG also provides that “The American Heath Benefit Exchange Model Act will be used as a template for legislation authorizing the Kansas Health Insurance Exchange”. As noted above, the American Heath Benefit Exchange is the name for the PPACA’s Obama Care Exchange.

The FOA ties the EIG Exchange to the ACA including noting that the “Exchanges” must “meet other requirements specified in the Act [ACA]….” it also notes that a requirement to receive an EIG is that the recipient State i.e. Kansas “Will comply with any IT guidance relating to the Exchange or Medicaid issued by HHS and continue to update their plans based on changes to guidance…” There is no time limit once a state puts this leash on, it is on forever.

“AHBE” Exchanges under the PPACA have very specific requirements under the Obama Care law and regulations. Much of the regulations have not yet been written. No matter if the state sets up the “exchange” or it is set up by the federal government it will, according to the ACA, have to comply with the ACA and HHS regulations. Moreover a state will be contractually obligated to comply with ACA as well if the state implements an “Exchange” under contract to the federal government by an Early Innovator Grant (EIG).
As one analyst in Oklahoma said: “While Oklahoma leaders have clearly stated their intention to create a “patient-centered, pro-market exchange…[that uses]…free market principles to contain health insurance costs,” such an exchange is simply not permitted under either the Affordable Care Act or the $54 million “Early Innovator” grant our state recently received….” (Emphasis that of the author.)
The following experts advise states not to accept any of the federal money awarded under the ACA to plan, design, develop or implement Obma Care Exchanges. They say if a state has taken federal grant money they should give it back:
Nina Owcharenko and Robert E. Moffit -Heritage Foundation

Michael F. Cannon – CATO Institute
Jason Sutton, Jonathan Small - Oklahoma Council of Public Affairs, Inc.
Tamzin A. Rosenwasser, M.D, President - American Association of Physicians and Surgeons
John R. Graham - Pacific Research Institute
Christopher M. Jaarda - American Healthcare Coalition
Beverly Gossage – HAS Benefits Consulting

Danger of “Hedging your bet” by Building an “Exchange”

When states design and develop their own “Exchange” under ACA the states undermine the likelihood of overruling or repealing Obamacare. By moving forward with exchanges the states appear that they do not truly believe the PPACA is un-Constitutional i.e., it gives the law “the appearance of legitimacy”, it undermines the credibility of those states trying to overturn the law in court, which it has already undercut, it creates motivated proponents to the exchange in those whose jobs depend on the exchanges and those who benefit from the exchanges including insurance companies, by moving forward it will make any repeal more disruptive and thereby less appealing , it will help insurance companies fund a lobbying effort to resist any repeal that would endanger their access to billions of tax payer funded subsidies .

Who benefits from and “Exchange”? Those vendors who get to help plan, design and implement the exchanges and who get to maintain them. The few insurance companies, who can beg, bribe (campaign contributions, jobs to friends and family members) or who otherwise are able to elbow themselves on to the politicians “A” list for acceptance into the “Exchange”. The lucky politician that controls the grant money and who can pick the winners and losers of the insurance companies is sure to have a butt load of friends and supporters.
States are not mandated to Design and Implement “Exchanges”

Under the PPACA, states are not required to implement “Exchanges”. One expert commented in testimony before a state legislature:
“I am continually surprised by how many people around the country mistakenly believe the new law requires states to create an Exchange. To be clear: Virginia is under no obligation to create a health insurance Exchange.”
And, neither is Kansas required to implement an “Exchange”. In fact for the federal government to require the states to develop and implement an exchange would very likely be unconstitutional in itself. States may voluntarily implement an exchange up to 2014. After that it becomes the federal HHS’ headache and financial burden.

State Officers who believe the law is un-Constitutional are Duty Bound to Resist the Law

All state and federal legislative, executive and judicial officers are required by the U.S. Constitution to “support” the Constitution. To the extent a Constitutional officer believes a law is unconstitutional they are under an obligation not to implement, enforce or obey such law.

Brownback has very loudly expressed his belief that ACA is unconstitutional. So has the Lt. Governor. The Kansas Attorney General has said the ACA is un-Constitutional and has joined Kansas in the lawsuit against the federal government challenging the Constitutionality of Obama Care in the federal District Court in Florida. Gov. Brownback has stated that he “directed” the Attorney General to join the law suit.

The formal position of Kansas is that Obama Care is un-Constitutional. For the governor and Lt. Governor to move forward with a voluntary implementation of Obama Care is a violation of their oath of office and their oath to support the U.S. Constitution. They are subject to impeachment or more likely to occur, recall.

Implementation of Obama Care Exchanges have Hurt the Virginia Lawsuit against Obama Care

No Government Exchange is a Good Exchange

Stealth Implementation of Obama Care by State Officials

Praeger has quietly applied for every health reform grant related to insurance, meaning the vast majority of Kansas’s implementation moves through her office.

The Fraud and Farce of There Being a Health Insurance Crisis

Forty per cent (40%) of health cost increases from 1950 to 1990 was due to the use of comprehensive health insurance.

“In the beginning of a change, the patriot is a brave and scarce man, hated and scorned. When the cause succeeds, however, the timid join him...for then it costs nothing to be a patriot.” -Mark Twain

The ACA represents an unparalleled power grab by the federal government and an unwelcome intrusion into the sovereign sphere of the states and their citizens. Those who believe the ACA is unconstitutional must, under their oath to the Constitution, resist the ACA by every means possible. Such resistance necessarily includes not assisting the federal government to implement the ACA’s pseudo-exchanges.
States are not required under the ACA to implement ACA “Exchanges”. Many feel without assistance from the states the federal government will not be able to implement “exchanges” in the states and the ACA pseudo –exchanges may well collapse from their own weigh.
There is absolutely no sound economic, financial or Constitutional reason for the states to participate in the erosion of their own sovereignty and the liberty of their citizens.
The only socio- political reason to implement Obama Care is to fundamentally alter the nature of the Republic’s tri-sovereignty system by moving the states closer to sub-units of the federal government and to further diminish the ultimate sovereignty of the citizens. It moves us all closer to being wards of the state rather than masters of the Republic.
Those who are attempting to implement Obama Care voluntarily, by stealth or deception, are violating the trust we citizens have placed in them and the duty they owe us under their oath of office. Whether this betrayal is fully understood by them or is a result of self inflicted ignorance, a lack of due diligence or just plan incompetence matters not. When such a valuable thing as our Liberty hangs in the balance, as it does with Obama Care, those who have betrayed us need to be removed from any position from which they can even possibly due further harm.

For the sake of Liberty,

Richard D. Fry Esq.
For the November Patriots

MYTH: It is not harmful for a state to design and develop an ACA exchange since it will require legislative action to actual put it into service.

REALITY: This is not true as the HHS may simply come in and take the Exchange over and impose it on the sate or any other state not complying with the ACA. Also it will often times be politically very difficult to vote against a project that has cost $33 million dollars and has been in development for several years. (The EIG gives the federal government the authority to use an Exchange under the EIG program.)

MYTH: If the Obama Care Law is declared Constitutional it will just go away.

REALITY: This is not necessarily true. Although, the ACA will be unenforceable as a federal statute if found unconstitutional, for the Innovator States it is simply part of their contractual agreement with the federal government. Since the Innovator States are responsible to maintain and operate the “Exchange” not the federal government. Recall 6 states and a group of states are / were in the Innovator program. Also three other states have in essence established Obama type exchanges: Massachusetts, Utah and California. So a total of 24% of the states would be involved in “Exchanges” and recall there are other states that are implementing Obma Care outside the EIG program.

Funding Opportunity Announcement, Cooperative Agreements to Support Innovative Exchange Information Technology Systems, U.S. Depart. Health and Human Services, (10.29.2010)

Jason Sutton, Jonathan Small, OCPA Memorandum Can Oklahoma Create a “Free Market” Health insurance Exchange Using the $54 Million Early Innovator Grant? Oklahoma Council of Public Affairs, Inc. ( ) (The Patient Protection and Affordability Act (PPACA) (March 23, 2010) and the Health Care Reconciliation Act (HCRA) (March 20, 2010) are jointing referred to as the Affordable Care Act.

Jason Sutton, Jonathan Small, OCPA Memorandum Can Oklahoma Create a “Free Market” Health Insurance Exchange Using the $54 Million Early Innovator Grant? Oklahoma Council of Public Affairs, Inc. ( )

Jason Sutton, Jonathan Small, OCPA Memorandum Can Oklahoma Create a “Free Market” Health Insurance Exchange Using the $54 Million Early Innovator Grant? Oklahoma Council of Public Affairs, Inc. ( )
(“Background. On March 23, 2010, the President signed into law the Patient Protection and Affordable Care Act. On March 20, 2010, the Health Care and Education Reconciliation Act of 2010 was signed into law. The two laws are collectively referred to as the Affordable Care Act…”)

Michael D. Tanner, Bankrupt Entitlements and the Federal Budget, CATO Institute (March 28, 2011)
(“Affordable Care Act exchanges are perversions o f the “free market” exchange model promoted by the Heritage Foundation.”)

Edmund F. Haislmaier, A State Lawmaker’s Guide to Health Insurance Exchanges, Heritage Foundation ( 3/21/2011)

Michael D. Tanner, Bad Medicine A Guide To the Real Costs and Consequences of the New Health Care Law , CATO Institute (2011)

Tamzin A. Rosenwasser, M.D., States Should Not Set up Health Insurance Exchanges (as required by ObamaCare), American Association of Physicians and Surgeons (Mar 13, 2011) http://www.aapsonline.org/newsoftheday/001527 (“...insurance companies will be companies in name only, their directors, pawns of the government. A name for that type of arrangement is Fascism….”);
Michael F. Cannon, Should Virginia Create a Health Insurance Exchange? Remarks before the Joint Commission on Health Care Richmond, Virginia (June 14, 2011) ((… [Obama Care] will compel nearly all Americans to purchase a nominally private but government-designed health insurance policy…”

PPACA and HCAC call ACA or Obamacare

Patient Protection and Affordable Care Act of 2010 (PPACA) Public Law 111-148 §1311(b)(1) (…American Health Benefit Exchange (referred to in this title as an “Exchange”)

Funding Opportunity Announcement (FOA) for Cooperative Agreements to Support Innovative Exchange Information Technology Systems (10/29/2010)

Integrated Medical Eligibility and Exchange Solution and Knowledge Sharing …(IME) (12/21/2010)

PPACA Public Law 111-148 §1311(b) (1) (A)-(C). “(C)” provides “meets the requirements of subsection (d)….”)” (d)” provides for the functions and characteristics of an Obama Care “Exchange”.

IME p.3; FOA p.5 (“…the Patient Protection and Affordable Care Act…and the Health Care and education Reconciliation Act of 2010 …are collectively referred to as the Affordable Care Act….”)

IME p.3-6, These terms are on page 5: “comparative information” (§1311(d)(4)(c)) “certified plans” (§1311(d)(4)(A), 1311(e)(1)), “managing enrollment” (§1311(d),(f), “and administering premium tax credits ”),“ cost sharing assistance ”(§1311 (D)(3) and“ data capture for performance metrics” ((§1311(c)(1)(D)(i))

IME p.6; Public Law 111-148 §1311(b)(1) (…American Health Benefit Exchange (referred to in this title as an “Exchange”)

Michael F. Cannon, Should Virginia Create a Health Insurance Exchange? (June 14, 2011)
(Before the Joint Commission on Health Care Richmond, Virginia)
(A recent Obama administration missive explains that the new law “authorizes [the federal government] to ensure that States with Exchanges are substantially enforcing the Federal standards…and to set up Exchanges in States that elect not to do so or are not substantially enforcing related provisions.” (Emphasis added.) In other words, the promise of local control is a mirage. The law allows the federal government to commandeer any Exchange that falls short of full compliance with federal dictates.)
Edmund F. Haislmaier, A State Lawmaker’s Guide to Health Insurance Exchanges, Heritage Foundation
( 3/21/2011)

Tamzin A. Rosenwasser, M.D., States Should Not Set Up Health Insurance Exchanges (as required by ObamaCare), American Association of Physicians and Surgeons ( Mar 13, 2011) http://www.aapsonline.org/newsoftheday/001527 (“Regardless of which entity sets up the exchange, the Department of Health and Human Services is given power to determine minimum requirements for medical services of all kinds, including the people who provide the services, as well as what the patient pays….”)

Health Care Exchanges: Obamacare Isn't the Answer , Heritage Foundation (Published on April 4, 2011)http://www.heritage.org/Research/Factsheets/2011/04/HEALTH-CARE-EXCHANGES-Obamacare-Isnt-the-Answer

Nina Owcharenko and Robert E. Moffit, Accepting Federal Exchange Funding for Obamacare: A Dangerous Proposition for the States, CENTER FOR HEALTH FREEDOM Apr 08, 2011 03:09 PM CDT http://www.ocpathink.org/articles/1114

Michael F. Cannon, Should Virginia Create a Health Insurance Exchange? (June 14, 2011)

Tamzin A. Rosenwasser, M.D., States Should Not Set up Health Insurance Exchanges (as required by ObamaCare), American Association of Physicians and Surgeons (Mar 13, 2011)

John R. Graham, Should Your State Establish an Obamacare Health Insurance Exchange? Pacific Research Institute (Oct. 25, 2010) http://pacificresearch.org/publications/should-your-state-establish-an-obamacare-health-insurance-exchange

Christopher M. Jaarda, Press release: AHEC Calls on States to Reject ObamaCare Grant Money Give Money Back to Preserve Health Freedom, American Healthcare Coalition (Friday, February 18, 2011) - urged states, particularly those participating in lawsuits against ObamaCare, to reject these monies.
- those strings are binding states to full implementation of ObamaCare.

June 11, 2011 presentation before the Northwest Johnson County Republicans Club (video available for viewing at???????????); June 22, 2011 Meeting with Kansas Lt. Gov and interested parties.

Michael F. Cannon, Should Virginia Create a Health Insurance Exchange? (June 14, 2011)
(Before the Joint Commission on Health Care Richmond, Virginia)
(For several reasons, creating an Exchange would entrench the law and make it less likely to be repealed or overturned.)

Michael F. Cannon, Should Virginia Create a Health Insurance Exchange? (June 14, 2011)
(“In his most recent ruling, federal judge Roger Vinson wrote that the fact that some of the plaintiff states are implementing the law undercut their own argument that he should halt all implementation….)
Florida cite here

Michael F. Cannon, Should Virginia Create a Health Insurance Exchange? (June 14, 2011)
(Before the Joint Commission on Health Care Richmond, Virginia)
(I am continually surprised by how many people around the country mistakenly believe the new law requires states to create an Exchange. To be clear: Virginia is under no obligation to create a health insurance Exchange.)

Printz v. United States, 521 U.S. 898 (1997) (This is the well known case involving Sheriff Mack.)

A State Lawmaker’s Guide to Health Insurance Exchanges, (“The Patient Protection and Affordable Care Act provides for the establishment of health insurance exchanges in every state that conform to federal standards and requirements,1 authorizes the Secretary of Health and Human Services (HHS) to provide grants to states to create exchanges,2 and specifies that the Secretary is to establish and run exchanges in states that do not, or cannot, do so by January 1, 2014 (with the Secretary further required to make such determinations by January 1, 2013).3”; ( “the PPACA effectively gives state governments a “right of first refusal” to design and operate AHB exchanges within federal guidelines…”)

U.S. Constitution Article VI cl.3, http://www.usconstitution.net/

Michael F. Cannon, Should Virginia Create a Health Insurance Exchange? (June 14, 2011)
(Before the Joint Commission on Health Care Richmond, Virginia)
(Virginia officials, like state officials nationwide, take an oath to protect not just their own state’s Constitution, but also the Constitution of the United States. They are therefore oath-bound to use all legal means to block a law that they believe violates the U.S. Constitution. The same duty, then, that obliges them to sue to overturn the health care law also obliges them not to implement it. To implement this health care law, such as by creating an Exchange, would be to violate their oath of office.)

Joint Correspondence from Gov. Sam Brownback et.al., to Secretary Kathleen Sebelius, Department of Health and Human Services (HHS) (February 7, 2011)
“In addition to its constitutional infringements, we believe the system proposed by the PPACA is seriously flawed, favors dependency over personal responsibility, and will ultimately destroy the private insurance market. Because of this, we do not wish to be the federal government’s agents in this policy in its present form….

…in its current form the law will force our health care system down a path sure to lead to higher costs and the disruption or discontinuation of millions of Americans’ insurance plans….

…we believe the PPACA in its current form threatens to destroy our budgets and perpetuate and magnify the most costly aspects of our health care system. While we hope for your endorsement, if you do not agree, we will move forward with our own efforts regardless and HHS should begin making plans to run exchanges under its own auspices….”

“…we believe the PPACA in its current form threatens to destroy our budgets and perpetuate and magnify the most costly aspects of our health care system….”

June 22, 2011 meeting with interested parties.

See Governors first canned response to Obma Care inquires.

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Michael D. Tanner, Bad Medicine A Guide To the Real Costs and Consequences of the New Health Care Law , CATO Institute (2011)