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Important Information About Insurance Exchanges and Proposed Funds Acceptance

Grassroots in Michigan Research     February 28, 2013 

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Important Information About Insurance Exchanges and Proposed Funds Acceptance

The U.S. Supreme Court ruling (NFIB v Sebelius) on the health care law (PPACA), overturned the provisions requiring states expand their Medicaid programs, citing from a prior decision, “The Constitution simply does not give Congress the authority to require the States to regulate” (page 5) Such principles are precisely why setting up any Exchange, is purely VOLUNTARY. State officials must knowingly and willingly commit the State of Michigan by the acceptance of a Level 2 Federal Grant, the corresponding program and it’s attendant future strings.

The health care law, as most Americans know, was passed very hastily through Congress, and therefore, has some major flaws in its language, many of which are NOW highly relevant. The bill’s text is missing important provisions which prevent lawful implementation of Exchanges, imposition of penalties and delivery of subsidies.

Michigan lawmakers seem to be oblivious to the fact that the Obama Administration, through the Department of Health and Human Services and the IRS, are attempting to cover over the law’s missing provisions by administrative rule-making, which is unlawful and crying out for legal challenge.

The health care law (PPACA) does NOT provide ANY funding for any type of Exchange other than those commonly referred to as “State Exchanges” (found under Section 1311). And funding is limited.

In establishing an Exchange under this section, the State shall ensure that such Exchange is self-sustaining beginning on January 1, 2015, including allowing the Exchange to charge assessments or user fees to participating health insurance issuers, or to otherwise generate funding, to support its operations.75    PPACA (Consolidated)    Sec. 1311

The law doesn’t even include funding for Federal Exchanges (Section 1321), referred to as “Federal fallback Exchanges”.

85 (page)  PPACA (Consolidated)    Sec. 1321
ment health care programs, and the adequacy of provider net- works of Federal Government health care programs.

The type of proposed Exchange, a State-Federal Exchange, does NOT exist in the health care law AT ALL. The Secretary of Health and Human Services created the “State-Federal Partnership”, absent legal authority.
PPACA’s IRS penalties on employers and individuals cannot be enforced on Michigan citizens in absence of an Exchange. Opposition to any Exchange, then, would PROTECT the taxpayers, business owners, and other citizens of the State.The IRS has attempted to cover over the law’s missing language to carry out the penalties for any other type of Exchange by simply issuing administrative rules. The State of Oklahoma has filed a lawsuit challenging this illegal rule-making, which is a Legislative branch power, and a violation of the Administrative Procedures Act.

The NEW, HUGE entitlement (welfare) program that is part of the health care law’s language can NOT be implemented without the setup of an Exchange, so, some of the worst budget- busting, health care economy transforming aspects of the law wouldn’t be able to do their damage.

Michigan Legislators should be encouraging the State’s Attorney General, Bill Schuette, to pursue his inquiry into filing a legal challenge, similar to that of Oklahoma’s, rather than resigning themselves to the “inevitability” of implementing the health care law.


Patently false information is floating throughout the state. Some politicians / officials have asserted that HB 4111 has NO attachment to Health Insurance Exchanges . For instance, Rep. Greg McMaster adamantly asserted on February 14, 2013, that HB 4111 had nothing to do with the health care law or its implementation. (Assertion made in conversation with Joan Fabiano – see text message image of same date)
HB 4111 is an appropriation of a Federal Level One Grant funds for the use of the implementation of the Health Care Exchange. !

Summary: The Michigan Department of Licensing and Regulatory Affairs (LARA) will use Level One funding to: conduct additional analysis on the impacts of the Exchange and the Affordable Care Act in Michigan, including additional insurance market analysis; acquire contractual services to assist the State and the Exchange with legal matters, technology planning, education and outreach, financing and policy issues; and, support the State of Michigan as it works toward establishment of this new entity.

From HB 4111

Sec. 301. Any unexpended amounts appropriated for the cooperative agreement for partnership exchange are considered work project appropriations and are available for expenditure in the succeeding fiscal year. The following is in compliance with section
451a(1) of the management and budget act, 1984 PA 431, MCL 18.1451a: (a) The purpose of the project to be carried forward is to implement the cooperative agreement for partnership exchange. (b) The project will be accomplished by state employees, contracts, memoranda of understanding, and other such agreements as established by the department of licensing and regulatory affairs. (c) The total estimated cost of the project is $30,670,000.00.

Cooperative agreement for partnership exchange refers to funding available to States under Affordable Care Act Section 1311(a). http://cciio.cms.gov/resources/factsheets/hie-est-grant- faq-06292012.html

From HB 4111
Sec. 102.
Cooperative agreement for partnership exchange ……. $    30,670,000


Appropriated from: Federal revenues: Federal revenues………………………………. 30,670,000
State general fund/general purpose………………. $ – 0 -


Also available HERE

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  1. David Lonier

    Good research!
    I will include the link with my “vote no on HB 4111″ advice to our State Senators.
    Thank you Joan for your brilliant work.
    David Lonier, Auburn Hills

    1. Joan

      Part 2 comping up

  2. Phillipa Zylanoff

    To lure legislators into supporting the “health care exchanges’, the Feds are offering a 3 year, 100% reimbursement for the cost of setting up the exchanges. Once this is done, the state will no longer have the option of discontinuing participation after year 3–which is when one can be certain that the Fed will back down on the 100% cost of the exchanges. This will leave Michigan taxpayers holding the bag. Medicaid is already over 25% of the state budget. Participating in the exchanges will ensure that Medicaid will consume some in the neighborhood of 50% of the state budget. Just how will the state cover costs for other necessary things, like schools, roads, courts, etc.? The exchanges will enroll thousands of new participants. Medicaid already reimburses only a fraction of what it costs to care for patients covered under Medicaid. Furthermore, the exchanges subsidize Medicaid for some families who have incomes sometimes over $90,000! Working stiffs who make $50,000 will not only not have Medicaid, but will be paying for families making almost twice that to be covered! Medicaid services are already highly overutilized because the patients have either no out-of-pocket expense, or ridiculously low ($1.00, $2.00 or $5.00 co-payment for prescriptsions) co-payment.

    1. Joan

      Justice Roberts,put that in perspective when looking at the mess we are in now, when he noted in his majority opinion ruling “And it seems to me that they have compromised their status as independent sovereigns because they are so dependent on what the Federal Government has done, they should not be surprised that the Federal Government, having attached the strings they tied, they shouldn’t be surprised if the Federal Government isn’t going to start pulling them.”

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