Gov. Heineman on Federal Health Care Law: $646 Million State Exchange Too Costly

Press Release

By:  Dave Heineman
Date: Nov. 15, 2012
Location: Lincoln, NE

Gov. Dave Heineman today announced that he has submitted Nebraska's affirmative election to participate in the federal health insurance exchange, citing the extreme cost differential that ultimately the Nebraska taxpayer would have to incur.

"I want to share with Nebraskans that I have listened to all sides of this issue," said Gov. Heineman. "As Governor, my focus is on implementing the federal health care law in the most efficient and cost effective manner for Nebraskans and their families."

Whether a state runs a health exchange, or that is done by the federal government, all citizens will have the option to purchase insurance policies through an exchange. A state decision either way does not affect that access.

The Governor appreciates the input he received from a variety of perspectives throughout the course of the several years since the federal health care law was enacted in March 2010. While there were diverse and emotional opinions on this issue, the Governor stated that his decision is based on what is best for Nebraska's hard-working, middle class taxpayers.

Fiscal analysis of budget impacts done by the Department of Insurance and the Department of Health and Human Services calculate the cost of a state insurance exchange for Fiscal Years 2013-2020 at $646 million; while the cost of a federal insurance exchange is $176 million. The cost of a state exchange to Nebraska taxpayers is $470 million more than a federal exchange.

The analysis encompasses costs associated with building, managing and maintaining a state-based exchange. These costs include, but are not limited to: website development, call center operations, an insurance premium billing system, staffing, equipment, supplies, office space, and the technology costs related to each of these functions. In addition, these costs include expenses necessary for the exchange to interface with the Medicaid program, in accordance with requirements of the federal law.

"The reality is that the federal health care law is being totally dictated and totally controlled by the federal government," the Governor added. "On the key issues, there is no real operational difference between a federal exchange and a state exchange. A state exchange is nothing more than the state administering the Affordable Care Act with all of the important and critical decisions made by the federal government."

The Affordable Care Act calls for the creation of health insurance exchanges, state-run or federal-run markets where households and small businesses can shop for private coverage. Governors have a Nov. 16 deadline to indicate their intent to establish a state-based exchange. If a state does not elect to run a state-based exchange, then the health exchange will be implemented by the federal government.

According to the federal law, open enrollment is scheduled to begin for health exchange plans Oct. 1, 2013. Any exchange is expected to be fully operational on Jan. 1, 2014.

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