By Gene Meyer
Kansas Reporter
TOPEKA — A federal appeals court ruling in Georgia that overturned a portion of the nation’s latest health insurance law Friday did little to end confusion over how to follow that law in Kansas.
A three-judge panel of the 11th U.S. Circuit Court of Appeals ruled that the Patient Protection and Affordable Care Act, which requires all Americans to carry health insurance or face penalties, is unconstitutional. The Court ruled that Congress exceeded its constitutional powers by requiring people to buy health insurance when they choose not to do so.
Other federal courts, including the 6th U.S. Circuit Court of Appeals, have upheld the law, saying it falls within Congress’ authority to regulate interstate commerce. This circuit consists of Michigan, Ohio, Kentucky and Tennessee. When two lower federal courts conflict, the U.S. Supreme Court makes the final decision.
Kansas is one of 26 states suing the United States to overturn the health plan law, and Friday’s ruling “makes Supreme Court review of the law almost certain,” said Kansas Attorney General Derek Schmidt.
If the federal law is upheld, Kansas is one of 49 states proceeding with plans to set up electronic insurance exchanges where businesses and consumers could buy health insurance.
States have until Jan. 1, 2013, to create a proposed exchange plan for the federal government to approve, or the federal government will impose one of its own on Jan. 1, 2014, when the exchanges are scheduled to become operational.
“Ideally, the courts will never let that happen.” said Ken Daniel, chairman of Midway Wholesale, a Topeka building materials distributor. “I think we’re headed for the damnedest train wreck you’ve ever seen otherwise.”
Many other business owners agree, said Dan Murray, chief spokesman for the National Federation of Independent Business in Kansas. The federation is the nation’s largest lobbyist for small and independent businesses.
“But if we have to have an exchange, we prefer one that is designed and based in Kansas, not one from Washington,” Murray said.
Kansas’ work on developing such an exchange was jolted, when Gov. Sam Brownback earlier this week unexpectedly announced that the state was giving up a one-time, $31.5 million grant the U.S. Department of Health and Human Services awarded it in February.
The money was awarded to help Kansas develop the technological infrastructure needed for a one-stop electronic marketplace and clearinghouse for health insurance, where consumers could shop for health plans and be screened for eligibility in Medicaid or Children’s Health Insurance Plans. None of the funds would help pay for insurance to reduce those consumers’ rates.
The federal offer came with too many strings attached, provided too little relief for rising health-care costs, and would be risky to depend on, given Washington’s current budget problems, Brownback said.
Neither the Kansas Insurance Department nor the health-care providers, insurance specialists and business groups who’ve been meeting since January to design the exchanges would estimate the cost to complete the work in time for federal deadlines.
Both Brownback and Kansas Lt. Gov. Jeff Colyer, an Overland Park physician who often serves as the administration’s point man on medical policy issues, also declined to offer estimates.
“Going forward, the administration will work in consultation with the Legislature and the insurance commissioner’s office,” said Samir Arif, a deputy press secretary in Brownback’s office. “At this point, estimating the cost would just be speculation.”
Fortunately, Kansas will not be on the hook for the full $31.5 million, said Linda Sheppard director of the Kansas Insurance Department’s Accident and Health Division.
Kansas has used only about $600,000 of the $31.5 million grant to pay for the seven months of organizational work done so far, Sheppard said. Now, it simply will not ask for more and the unused balance will remain with the federal government, she said.
Kansas’ more pressing problem is those looming federal deadlines.
“What we’ve really lost is the ability to move forward,” Sheppard said.
Meetings that the Kansas Insurance Department, the Kansas Chamber of Commerce and National Federation of Independent Business scheduled this month to bring more residents and businesses into the creation of a plan were canceled.
Smaller gatherings of insurance specialists, computer experts and business representatives that were planned to thrash out eye-glazing details needed to organize the exchange also are on hold.
Proposed legislation that allows legislators to make required policy decisions is going nowhere.
“We’re getting behind as we speak,” Sheppard said. “We need to find out what our stakeholders want to do before we can proceed further.”
That may take a while, said Mary Beth Chambers, chief spokeswoman for Blue Cross/Blue Shield of Kansas, which is the state’s largest health insurance provider and a major stakeholder, with executives serving on many of planning committees about the exchanges.
“Everyone needs to sit back and see what the government plans to do next,” Chambers said. “We strongly believe it is important that Kansas create the exchange that will deliver care to Kansans.”
Untangling the logjam may be difficult if Oklahoma’s experience is any guide, said Shawn Ashley, public information officer at the Oklahoma Insurance Department.
Oklahoma in April became the first state, and the only one other than Kansas so far, to turn down federal grant money — $54 million — for the early development of the required exchanges. Grants in varying amounts also have been awarded to Maryland, New York, Oregon, Wisconsin and a consortium of states led by Massachusetts.
Legislators drew up plans for a proposed seven-member governing board and public-private funding to begin the work. Ultimately, those plans passed the Oklahoma House, but languished in the Senate, Ashley said.
“Now everything is on hold,” Ashley said. A special joint committee of Oklahoma legislators is scheduled to meet next month to figure out what to do next.