HB 1273: Concerning the "health care opportunity and patient empowerment act"

This bill represents a significant opportunity loss for Colorado. Should legislation for an interstate compact pass in the Colorado General Assembly, and then be approved by both houses of Congress, the state would no longer receive the benefits resulting from the national health care reform law. The passage of House Bill 1273 would do nothing tangible to reduce the number of uninsured or underinsured in Colorado, improve health care outcomes, better manage premium or health care costs, implement insurance market reforms or provide other potential benefits of the national law. Additional provisions of this legislation, including the receipt of Medicaid funding through block grants without federal regulation or oversight and the purchase of insurance across state lines, could impose unintended and undesirable consequences for the citizens of Colorado.

Summary of Legislation

HB 1273 requires the executive directors of three state departments and the commissioner of insurance to consult with other state agencies and stakeholders to develop model legislation for a health care interstate compact. Compact legislation would enable those states to opt out of the federal health care law and regulate health care at the state level. The executive directors and commissioner of insurance will then be required to present a proposal to the health and business committees of both houses to consider whether legislation should be created to ratify the compact.

The bill addresses the following policy goals: improve health care policy; affirm that state legislatures have the primary responsibility and authority to regulate health care at the state level; authorize states to opt out of any federal health care law; allow states to receive federal funds in block grants for Medicaid without having to comply with federal eligibility requirements; create a (non-binding) interstate advisory health care commission.

However, these policy goals are secondary to and would not be pursued if they infringed upon each state's right to regulate its own health care system.

Background

HB 1273 is one component of a national strategy to provide states with a legal framework to avoid compliance with the federal Affordable Care Act. The compact strategy was developed by a number of national organizations, including the American Legislative Exchange Council, the Heritage Foundation and the Health Care Compact Alliance.

HB 1273 is based upon the assumption that the "Supremacy Clause" of the U.S. Constitution (Article VI, Paragraph 2) can be circumvented through the creation of an interstate compact. Proponents of health care compacts suggest that the existence of such a compact between two or more states, and approved by both houses of Congress, would allow signatory states to opt out of any federal law that would supersede the compact. They also contend that the "Compact Clause" specifies the only consent of Congress and as such does not need to be submitted to the president.

Legislation similar to House Bill 1273 has been introduced in Arizona (vetoed by governor), Georgia (enacted), Louisiana, Missouri (passed in House), Montana (passed in House), North Dakota (defeated), Oklahoma (passed Senate), South Carolina, Tennessee and Texas (passed in House).

Research and Evidence of Effectiveness

More than 200 interstate compacts have been implemented since the ratification of the U.S. Constitution in 1788. Until now, compacts have not been created for the express purpose of allowing states to exempt themselves from federal law. In general, compacts have been used to establish agencies and manage waterways and any number of other multi-state issues, from environmental protection to waste disposal.(1) Very few compacts have been created to address issues of health care, and most of them are narrow in scope and do not address management of a state health care system.

Interstate compacts have been considered to address insurance products. One interstate compact, the Interstate Insurance Product Regulation Commission, which serves as a central point of electronic filing for certain insurance products, specifically excludes health insurance products. The National Association of Insurance Commissioners has studied the issue of providing insurance through a compact, and specifically rejected the approach for health insurance and property/casualty insurance.(2) Washington state Insurance Commissioner Mike Kreidler conducted a feasibility study in 2008 to determine if an interstate compact could be used to provide individual health insurance. He concluded: "Until best practices are identified and agreed upon, using a multi-state compact to provide individual health insurance is not a viable solution to make individual health insurance more affordable or reduce the number of people who are uninsured."(3)

Thus, the history of compacts offers little to support the notion of a compact as a workable alternative to national health care reform.

In addition, any health care compact would be required to confront significant political, legislative and legal hurdles. In order to become law, a health care compact would require a filibuster- and/or veto-proof majority in the U.S. Senate to secure the approval of Congress. A letter presented to the House Health and Environment Committee from Professors Scott Moss and Melissa Hart, director of the University of Colorado's Byron R. White Center for the Study of American Constitutional Law, suggests that HB 1273's constitutional assumptions are based upon "flatly incorrect premises, in at least three fundamental, related ways."(4)

Estimate of Impact and Benefits

Over time, the Affordable Care Act could reduce the cost of family health insurance premiums by $1,510 to $2,160 by 2020 In conjunction with the Colorado Health Care Affordability Act, national reforms could provide coverage to 500,000 uninsured Coloradans. Up to 90,000 small businesses in Colorado could be eligible for tax credits to help make coverage for employees more affordable. Through the Affordable Care Act, additional funding could be available for some or all of the 123 community health centers in Colorado. Finally, expanding health care coverage could create up to 23,000 new jobs in the state, and coverage expansion could boost Colorado's net economic input by $3.8 billion in 2019.(5)

The passage of HB 1273 and the success of health care compacts would eliminate all of the above benefits without any practical alternative for achieving similar outcomes.

Finally, Colorado voters have already spoken on the matter of opting out of federal health care reform. Amendment 63 in November 2010 offered a close approximation to a referendum on federal health care reforms. The proposed amendment would have stopped federal intervention with respect to health care choices and would overruled any law, state or federal, that required "individuals to buy insurance, join a health-care exchange or accept government-subsidized care."(6) Colorado voters, unlike those voting on similar amendments in Arizona and Missouri, defeated the amendment 53-47 percent, with a margin of more than 104,000 votes.

End notes
1) Adam Winkler, professor of law, University of California at Los Angeles, Republicans' Latest Effort to Circumvent the Constitution: Interstate Compacts, March 10, 2011.
2) Mike Kreidler, Washington State Office of the Insurance Commissioner, Feasibility Study on Use of an Interstate Compact to Provide Individual Health Insurance, Dec. 1, 2008.
3) Ibid.
4) Melissa Hart and Scott Moss, Letter to the House Health and Environment Committee, April 19, 2011.
5) Lorez Meinhold, Implementing Health Care Reform, A Roadmap for Colorado, December 2010.
6) The Wall Street Journal, Another Health-Care Obstacle Awaits in States, Jan. 20, 2010.