House Votes to Cut Funding for State Health Insurance Exchanges

BY Sarah Clune  May 4, 2011 at 5:20 PM EDT

House Republicans advanced their latest bill to dismantle the new health care law, with a Tuesday night vote to defund state health insurance exchanges. And while it’s unlikely to pass the Senate any time soon, it’s part of a larger ongoing effort by Republicans to demonstrate to voters they are committed to fighting the year-old reform law.

The exchanges are critical to the new law’s plan to expand coverage to 32 million Americans. Each state is responsible for designing its own exchange, where individuals and small businesses can compare insurance plans and purchase them directly from the insurer. If a state does not set up an exchange, the federal government is required to do so.

Tuesday’s legislation passed the House mostly along party lines, 238-183, save five Democrats who voted with Republicans.

The Hill offered a glimpse at the back-and-forth on the floor:

“Rep. Frank Pallone (D-N.J.) said de-funding the exchange grants would reduce states’ ability to create exchanges tailored to their own needs. The federal government can run a fallback exchange in any state that does not establish its own.

“‘It’s the exact opposite of what you’re saying you want to do,’ Pallone said of the de-funding bill during Tuesday’s floor debate.

Rep. Michael Burgess (R-Texas) argued that even if states receive planning grants and authorize their own exchanges, they don’t truly have flexibility over how to structure the new insurance marketplaces. The reform law sets criteria that every exchange, state-run or otherwise, must meet. States aren’t free to set up their own exchanges unless they can explore options outside of those mandates, Burgess said.”

And the Massachusetts Health Connector website is similar to what the new exchanges will look like in 2014. It is designed as a clearinghouse for insurance plans and payments. Massachusetts set up the exchange before it became federal law, after the state voted in 2006 to require nearly all residents to have health insurance. See it here:

House Republicans captured the majority in November, in part because of their pledge to repeal the health reform law. They quickly followed through on that promise in one of their first votes of the session, but the measure quickly failed in the Senate.

But Politico reports the Republican strategy — characterized as the “incredible shrinking defunding votes” — are aimed at the party’s base:

“Republicans insist the health care repeal effort hasn’t jumped the shark — but even they admit the bills they’re pushing through the House Tuesday aren’t exactly the biggest repeal votes they’ve taken.

“The bills are getting smaller and narrower — going after shrinking slices of President Barack Obama’s health care law, rather than the whole thing. The main one on Tuesday’s agenda, which passed the House 238-183, repeals the mandatory funding for the state-based health insurance exchanges. The other, which is expected to pass Wednesday, would get rid of the mandatory funds for building school-based health centers.”

The Democratic-led Senate is unlikely to take the measure up, and the White House issued a veto threat in the event it passed.

A separate bill to eliminate the law’s funding for school-based health centers was postponed until Wednesday.