State exchanges unwise? Probably. Blameworthy? Maybe not.

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I learn all sorts of interesting things at blogger conferences, and some of the most interesting are incidental to the official program. And sometimes you have to go a thousand miles away to learn about something in your own state.

dean_clancy_thumb.jpgBack in April, I was at BlogConCLT, sponsored by FreedomWorks and the Franklin Center for Government and Public Integrity. We were listening to a talk by Dean Clancy, FreedomWorks Legislative Counsel and Vice President for Health Care Policy, on ObamaCare, the possible outcomes of the Supreme Court case (which parts might be overturned, if not the entire mess), and what might happen after the Supreme Court decision. Clancy praised Oklahoma as one of five states that had not established a health insurance exchange.

This caught a blogger sitting the row behind me by surprise. She said had worked for a year and a half with an Oklahoma legislator to develop legislation to set up a healthcare exchange, believing that it was the best safeguard to retain local control in the face of ObamaCare, and yet Tea Party groups were upset with their efforts.

Clancy replied that Tea Party groups were right to be upset. Because of glitches in the ObamaCare law, if a state doesn't set up a health insurance exchange, then ObamaCare can't operate in that state. Clancy acknowledged that there is some controversy over that interpretation.

The former Oklahoma legislative aide said that people from the Cato Institute, a libertarian think tank, said that it was a good thing to set up an exchange and were advising them on it; Clancy said that at this point Cato was solidly against states setting up exchanges.

Someone from another state's think tank spoke up and said that they had been looking at following the Utah model for an exchange in their state, but what caused them to drop the idea was Judge Vincent's opinion in the 11th Circuit ruling, saying that states that move forward with the individual mandate undercut their own legal argument that the mandate is unconstitutional and onerous.

The former Oklahoma legislative aide said that they had looked at Judge Vincent's argument as well, but her legislator's concern was if ObamaCare was not struck down, Oklahoma should have something set up to allow Oklahoma to have some sort of control, rather than ceding all control to the federal government.

Clancy replied that what's happened recently is the discovery of this interpretation regarding exchanges: At one point it was thought that in the absence of a state exchange, the feds would set one up anyway on their terms. Now, this glitch in the law has been discovered that means that even if the federal government does set up an exchange, the premium subsidies and the employer mandate can't operate in your state. Clancy concluded humorously, "I think we can absolve you of any sins; you just didn't know any better."

During the following break, I turned around and introduced myself. The young woman who had been an aide in the Oklahoma State House is Meredith Dake, now an associate editor for There is no doubt in my mind about the sincerity of her opposition to ObamaCare, and it's not credible that she would work to advance ObamaCare.

Glen_Mulready_headshot.jpgDuring her last session in the House, Meredith worked for State Rep. Glen Mulready. She had high praise for Mulready's work ethic, saying that he made a point of reading every piece of legislation headed for the insurance committee, which he chaired. (She also had kind words for Rep. Aaron Stiles, Mulready's office mate, and for Rep. Sally Kern, for whom she worked during her first year as a House staffer.)

The conclusion I drew from Dean Clancy's presentation and Meredith Dake's comments is that there was a point in time, when ObamaCare was first approved, that there seemed to be good reason from a conservative perspective to set up a state exchange. After further study of the sloppy mess that is the ObamaCare bill, many conservative health care policy experts have concluded that rejecting federal ObamaCare funding and not setting up an exchange is the best thing states can do to frustrate the implementation of ObamaCare.

In May, FreedomWorks hosted a live blog event on the topic "How to Stop ObamaCare at the State Level," featuring Dean Clancy, Michael Cannon of the Cato Institute, Christine Herrera of the American Legislative Exchange Council, and Ben Domenech of the Heartland Institute. The summary of the discussion includes this from Cato's Cannon:

"The biggest challenge," Cannon wrote, "in convincing states not to create Exchanges is this. Lots of state officials, including conservative ones, have been sold on the idea that "if we don't create an Exchange, the feds will IMPOSE one on us." Or that states are somehow protecting their sovereignty by creating an Exchange themselves.

"To be clear, establishing a state-run Exchange does not prevent a government takeover of your state's health insurance markets. That takeover took place on March 23, 2010. That's the date on which states lost their sovereignty over their health insurance markets. Establishing an Exchange makes states complicit in that federal takeover. Heck, by creating Exchanges, states are paying for the privilege of having their sovereignty taken away.

In preparing this story, I contacted Rep. Mulready to ask if, in light of this new perspective, he still supports setting up a state exchange. He characterized a state exchange as "Plan C" -- a defensive move, not the ideal, but a backup plan in case Plan A (Supreme Court declares ObamaCare unconstitutional) and Plan B (Republican President and Congress repeal ObamaCare) fail to come to pass.

Mulready doesn't buy the argument that the glitch in the law will stop the feds from forcing their will on a state without an exchange. He believes that Health and Human Services Secretary Kathleen Sebelius would simply create a rule to require states to comply, notwithstanding the letter of the law. (There's precedent for that concern: When it was learned, shortly after ObamaCare passed, that the pre-existing condition protections weren't as strong in the law as the Obama administration had promised, Sebelius effectively twisted the insurance industry's arm and forced them to comply with non-existent provisions of the law. And as the President's Friday announcement about immigration non-enforcement shows, the Obama Administration doesn't feel constrained by the law.)

Mulready believes that states creating exchanges, even if only in a slow, foot-dragging way, are less likely to attract the attention of the Obama Administration than states that aren't doing anything at all.

At this point, Mulready said that exchanges are on hold. There's now an out: States would be allowed and take back over a federally established exchange, so there isn't the urgency to set one up preemptively. While he still believes it was a good move for Oklahoma to try to do something defensively and that the exchange that was designed is a good plan if it's needed, at this point, it's on pause pending the outcome of the Supreme Court case and the presidential election.

Mulready said that the argument that those working on an Oklahoma health insurance exchange were "trying to implement ObamaCare" is disingenuous. He pointed out that prior to his run for office and prior to ObamaCare becoming law, he was giving a PowerPoint presentation to various groups entitled "ObamaCare Is Wrong for Oklahoma." He said his critics must think he's schizophrenic to believe that he went from denouncing ObamaCare to trying to usher it in.

He compared the situation to someone coming in at the end of a football game and seeing the linebackers lined up 10 yards behind the line of scrimmage. To someone just coming in, it might seem like the team on defense is deliberately trying to lose the game. Instead, it's a prevent defense -- they'd rather give up a first down in order to prevent a game-winning touchdown.

Mulready said that he's been open to alternative approaches to limit ObamaCare's effects on Oklahoma. During a visit to Washington, he took advantage of some time in his schedule to arrange an impromptu and lengthy discussion with the aforementioned Michael Cannon of the Cato Institute. He and State Sen. Gary Stanislawski sat down with U. S. Sen. Tom Coburn to get his perspective. (Coburn initially urged state-funded state-based exchanges, but more recently, in March, Coburn said that there's no point in moving forward with a state exchange until federal rules for state exchanges have been established. "I would think it would be pretty wasteful to spend a ton of money trying to design a system when we don't know what all the components of the system are going to be.") Mulready asked Oklahoma Attorney General Scott Pruitt whether an exchange would undercut Oklahoma's legal position in the ObamaCare lawsuit, but Pruitt's sense was that it would not hinder Oklahoma's position at all.

Mulready and other legislators who worked on a state-based exchange are being targeted for defeat in Tuesday's Republican primary. Mulready's primary opponent, Darren Gantz, has a website called where he says Mulready is "doing everything he can to further Obama's agenda in Oklahoma." In a video on the site, Gantz claims that "Glen Mulready is pushing for his former employer to monopolize the health insurance market in Oklahoma."

If that's happening, it's not immediately apparent. I've watched the video a couple of times, which includes edited snippets of a 2010 debate on HB 2130, and I don't see the smoking gun that Gantz claims is there. I like Darren Gantz and got to know him a little better through my volunteering for Randy Brogdon's campaign for governor (Gantz was Brogdon's volunteer coordinator), and I believe he is sincerely motivated by a concern that an exchange would have jeopardized health care freedom in Oklahoma. I appreciate Gantz's implicit suspicion that anything backed by the state Chamber of Commerce or the two big metro chambers is likely to be bad for the free market, for taxpayers, and for consumers.

But I also believe that Mulready and his conservative colleagues who worked on establishing an exchange are sincerely opposed to ObamaCare, and that even if the idea of a state exchange is misguided, I believe that it was offered in good faith as a strategy to avert greater federal control. This is a complicated issue, dealing with a complicated, poorly drafted law. I suspect we'll be finding out more about what was in it for years to come, assuming the Supreme Court doesn't do us a favor and sweep it all away in one stroke of the pen.

Of course, there's more to this race and other primary races than this one issue. For example, here's Gantz's reply to a mailer making personal attacks against him. (Mulready's consultants include Majority Designs and AH Strategies, the consulting firms of Fount Holland and Karl Ahlgren.)

It should also be mentioned that a PAC called Coalition for Oklahoma's Future is making independent expenditures in support of Reps. Mulready, Marian Cooksey, Todd Thomsen, and Elise Hall, and State Sens. Brian Crain and Clark Jolley. In SD 39, the group sent a mailer attacking Crain's challenger Kevin McDugle as a conspiracy theorist for claims that Crain's efforts in support of exchanges were ushering in ObamaCare. According to Mulready, the only piece the group sent into HD 68 was a positive piece touting his pro-life views. Does this group have an interest in healthcare, or is it simply pushing the issue that will help their candidate and hurt their opponent the most on a district-by-district basis?

If you've got an opinion on this issue or on the House District 68 race, feel free to submit a comment.

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Dean Clancy said:

Outstanding post, Michael.

Very accurate and helpfully detailed.

Many legislators have been helping set up exchanges without realizing that they can help beat ObamaCare by helping block exchanges in their states.

Thanks for your kind words, Dean, and thanks for all you do to clear up this complicated public policy issue.

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This page contains a single entry by Michael Bates published on June 21, 2012 11:32 PM.

Mullin campaign "tried to get me fired," reporter claims; Mullin, Pettigrew, Wood not registered in district last year was the previous entry in this blog.

BatesLine ballot card: 2012 Oklahoma primary is the next entry in this blog.

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