I received this letter from an adviser in Lt. Gov. Peter Kinder’s office, emphasis Smith’s:

To: Missouri Senate

Re: Affordable Care Act (ACA) options for Missouri

From:  David Smith, Director of Governmental Affairs, Anthem BCBS

   Two issues that confront you and the caucus related to the affordable care act (ACA):  a) whether to establish a state-based exchange or default the function to the federal government, and b) whether to take the incentive of an enhanced federal match to expand Medicaid.  The federal government is now in a position to impose the ACA in states that do not preempt that intrusion through proactive legislation and executive action.  Strategies to continue the effort to block the law’s implementation are a luxury only afforded to pressure groups and think tanks.  Employers, and the health plans that serve them, are now less than one year from open enrollment for the first year of exchange operation and the first insurance policy written.  


   On the issue of an exchange, there are three options available to states.  

Realistically, only two options are on the table for Missouri.  States were originally to have made a “declaration of intent” as to whether they intended to establish a state-based exchange, apply for a federal/state partnership or default to the federal exchange by this Friday, November 16th.  However, HHS announced last week that the deadline has been extended until December 15th in the case of a state-based exchange declaration, and until February 15th, 2013, for those states interested in pursuing a partnership exchange.  Missouri has not made enough progress to make establishment of a state-based exchange that could get certified to operate on 1/1/14.  If Missouri decided to move forward its own version of a purchasing exchange, risking non-compliance from HHS, a pre-filed bill would need to be issued to move the discussion along.  

State option: apply for a federal/state partnership exchange for 2014 and then pass legislation in 2013 establishing a state-controlled exchange effective 1/1/2015.  

   Under the ACA the federal government will pay for the costs of operating the exchange for one year.  Beginning 1/1/15 all exchanges must be self-sustaining.  For example, in 2010 Missouri HB 609 paid for the exchange by assessing participating carriers and leveraging grants from the Foundation for Health.  In states that let the federal government run their exchange after 1/1/15 the act enables the federal government to assess the cost for building the IT infrastructure and operating the exchange back on the users, the state.  That means Missouri will be responsible for funding the exchange regardless if it is done under state or federal control.  There are federal tax subsidies available beginning 1/1/14 for individuals and business who purchase coverage through the exchange:  a) for employers a 50% federal tax credit toward an eligible employer’s contribution and b) for individuals and families with incomes between 134% and 400% of the federal poverty level.  The act describes twelve functions that an exchange will perform:

1.  Legal authority/governance

2.  Plan management

3.  Eligibility and enrollment

4.  Customer service

5.  Finance and accounting

6.  Oversight and monitoring

7.  SHOP

8.  Risk adjustment and reinsurance

9.  Human resources and organization

10. Technology

11. Privacy and security

12. Contracting, outsourcing and agreements

   Under a federal exchange, the federal government manages all aspects.  Under a federal/state partnership exchange the state maintains a role in plan management and customer service and some aspects of eligibility, determination and enrollment for Medicaid and CHIP.  Under a state-based exchange the state manages all 12 aspects.  Here are some examples of the responsibilities abdicated to the federal government if a partnership model is not pursued in Missouri:

Plan Management activities

1.   Development and implementation of processes and standards for certification of qualified health plans. – Choices could be limited

2.   Qualified health plan account management, oversight and monitoring, and market conduct monitoring.

3.   Data collection from qualified health plans.

4.   Verification of qualified health plan accreditation status.

5.   Collection and display of provider quality and enrollee satisfaction data.

6.   Establishment of the benchmark benefits plan design.

Consumer Assistance activities – 

1.   Support, administer and oversee the navigator program, including selection of navigators. – Insurance brokers could be eliminated, as it is not defined at this time

2.   Providing in-person assistance to consumers for eligibility determination and application.

3.   Reporting a change in status or comparing coverage options.

4.   Enrolling those eligible in a qualified health plan.

5.   Conducting stakeholder outreach and education programs.

   Federal grant(s) money with no state match is available through 2014 for exchange establishment activities under a partnership model.  Under a federal exchange all eligibility determinations for all functions – certification of qualified health plans, tax credits, cost sharing reductions, Medicaid and CHIP eligibility determinations based on the new definition of MAGI (modified adjusted gross income) – would be made by the federal exchange.

Under a federal exchange the federal government would determine who the “navigators” would be, e.g., unions, community activists, etc.  Under a partnership model the state could retain control of that designation.

  The partnership model at least gives states a seat at the table to help insure that the exchange does not undermine the viability of the market outside the exchange.  The state can also transition to a state-controlled exchange easier if they start out performing some of the more critical functions.  Under a federal exchange the state loses all control over the structure and governance of the exchange.


  On the issue of Medicaid expansion, unfortunately the problem is real.  If disproportionate share program (DSH) payments to hospitals are reduced by 50% over four years, within the ACA and state policy decisions, without a safety net put in place for the expansion population the economic stress in rural communities will be significant and the cost of health care in urban communities will increase dramatically as providers seek to cost-shift the burden onto private payers (insurers).  

  One solution would be to leverage the enhanced Medicaid match available through a waiver process that shrinks the traditional Medicaid rolls by rationalizing eligibility thresholds and providing affordable health insurance options through an exchange.  Furthermore, streamlining could be accomplished to capture general revenue currently being diverted to programs such as the high-risk pool and health insurance for the blind.   Shrinking traditional Medicaid by creating market-based, affordable coverage options with a personal responsibility component (cost-sharing) is transformative and doing so without additional general revenue commitment is smart and fiscally sound.  Rather than a stress effect on rural communities, the effect will be simulative.

   Lastly, it is the belief that the two issues should be combined.  Simply expanding Medicaid while abdicating to a federal exchange is unacceptable and giving the administration a pass.  Using the state exchange to provide new options for affordable coverage that facilitates Medicaid transformation is innovative.

  The state of Missouri has delayed for the last 3 years opting to fight the implementation of the ACA each step of the way. U.S. Supreme Court struck down the challenge and America is not ready for change, even if the ACA is implemented. So why should we think that doing nothing, being silent will stop the ACA?  “Think tanks” do not provide insurance to Missourians, provide access to care to Missourians, and provide jobs to Missourians.

In No One Left To Lie To, Chris Hitchens’s book which I found at a critical time as I was slowing evolving away from liberalism and the Clintons, says this on the power couple’s health care plan:

Had the masses risen up against the insurance companies they would have discovered that the four largest of them—Aetna, Prudential, Met Life, and Cigna—had helped finance and design the “managed-competition” scheme which the Clintons and their Jackson Hole Group had put forward in the first place.


The “triangulation” went like this. Harry and Louise sob-story ads were paid for by the Health Insurance Association of America (HIAA), a group made up of the smaller insurance providers. The five major insurance corporations spent even more money to support “managed competition” and to buy up HMOs as the likliest investment for the future. The Clintons demagogically campaigned against the “insurance industry,” while backing—and with the backing—of those large fish that were preparing to swallow the minnows. The strategy, invisible to the media (which in those days rather liked the image of Hillary verses the fat cats), was neatly summarised by Patrick Woodall of Ralph Nader’s Public Citizen:

The managed competition-style plan the Clintons have chosen virtually guarantees that the five largest health-insurance companies—Aetna, prudential, Met Life, Cigna, and The Trevelers—will run the show in the health-care system. 

Déjà vu? Look who benefits the greatest from this law:

The Affordable Care Act, through this requirement, will bring millions of paying customers to the health insurance industry and big name insurers likeUnitedHealth Group (UNH); Humana Inc. (HUM); Aetna Inc. (AET) and Cigna Corp. (CI). Their stocks are getting hammered early this morning given the rules and regulations they face that require them to spend more than 80 percent of premiums on medical care and other consumer-friendly regulations.


The health plans’ lobby, America’s Health Insurance Plans (AHIP), was a huge proponent of the mandate and demanded President Obama and Democrats include it in the legislation. Here’s an earlier take on the tick-tock of those events leading up to passage of the legislation into law before spring of 2010.

Granted, they’ll be capped at profit, but guaranteed profit and a friend in the White House may seem like a good deal to some who would rather cut such deals than be run out of business by the federal government.

Just because Obamacare gives the impression that states are able to direct anything, they’re still operating under the auspices of the federal government.

The lobbyist in this letter discusses how individuals and businesses can apply for tax subsidies:

There are federal tax subsidies available beginning 1/1/14 for individuals and business who purchase coverage through the exchange:  a) for employers a 50% federal tax credit toward an eligible employer’s contribution and b) for individuals and families with incomes between 134% and 400% of the federal poverty level.

Silly. A tax subsidy? Why not just make it cheaper? The only person who gets rich in this scenario is the middle man—which is exactly the point. The government already blinked: with a number of states voting to reject Obamacare last Tuesday and a number of governors refusing to implement the law against their states’s 10 Amendment rights, HHS had to extend the deadline from tomorrow at noon until December 14th.

If the state wants to create an exchange it is the prerogative—and right—of the people within the state that one should be created. If Missouri lawmakers can be forced to abandoned their Constitutional duty to listen to the people who twice by a landslide rejected Obamacare and the establishment of state exchanges by the forked tongue of lobbyists, we are duty bound to run them all out.

We should be encouraging our states to stand strong with its voters and push Jay Nixon to request a waiver, as other states have done. I talked with Lt. Gov. Kinder about this very option on today’s show:

Here’s how you can apply pressure. From members of Gateway Grassroots:

Action Item:
Call or email each Republican senator. Time is very short as they will be discussing this Friday and Saturday. Tell them the people of Missouri don’t want them to set up an Obamacare exchange any more than they want the governor to. The sentiment behind the Prop E vote applies to them, too!

(Here are the senators for whom we have public contact information.
Some of the new senators don’t have published information yet.)

Dan Brown Rolla [email protected] 


Mike Cunningham R
Tom Dempsey St Charles [email protected]


 573-751-1141 R
Bob Dixon Springfield [email protected]


 573-751-2583 R
Edgar Emery Lamar R
Michael Kehoe Jefferson city 573-751-2076 R
Will Kraus Lees summit [email protected]


 573-751-1464 R
Brad Lager Savannah [email protected]


 573-751-1415 R
John Lamping St Louis 573-751-2514 R
Douglas Libla Poplar Bluff
Brian Munzlinger Williamstown 573-751-7885 R
Brian Nieves Washington [email protected]


 573-751-3678 R
Michael Parson Bolivar [email protected] 


David Pearce Warrensburg [email protected]


 573-751-2272 R
Ron Richard Joplin 573-751-2173 R
Gary Romine Farmington R
Scott Rupp Wentzville 573-751-1282 R
David Sater [email protected]

Robert Schaaf St Joseph [email protected]


Kurt Schaefer Columbia [email protected]


 573-751-3931 R
Eric Schmitt St Louis [email protected] R
Ryan Silvey Kansas city [email protected] 

Wayne Wallingford [email protected]


Jay Wasson Nixa [email protected] 

573-751-1503 R

Here is a link to all the current phone numbers and emails for the State Senate

Here is a link to all the current phone numbers and emails for the Missouri House.

I’ve said repeatedly since the day after the election that our battle shifts to the states. You are needed. Your country calls.

ADDITIONAL READING: This great piece from Michael Cannon on how Obamacare is still very much vulnerable.