Blueprint for States to Reject and Replace Obamacare

Second, states must refuse to create state-based exchanges, which provide heavily-subsidized insurance policies to middle-income Americans not provided healthcare by employers. Because it would violate the Tenth Amendment’s anti-commandeering principle to require states to create or run the exchanges, if a state doesn’t do it, HHS will directly create and run it.

But there are no tax subsidies if HHS runs an exchange, so no incentive for people to flock to the exchanges; they’d pay full price. While many high-risk individuals would do so, it would still be vastly more expensive. Many will instead choose to pay the penalty (tax?) for violating the individual mandate.

Third, if employers with 50+ employees do not provide federally-approved healthcare, Obamacare imposes a $2,000 penalty per employee, per year. (Minimum penalty $100,000.) However, that penalty is triggered when those employees receive tax subsidies from a state-based exchange.

Since HHS-run exchanges have no subsidies, for states refuseing to create exchanges, no employer in that state will be subject to that penalty. This means business owners will band together to lobby their state not to set up exchanges.

More than half the states sued to have Obamacare struck down. Presumably most will now pursue their options to decline the Medicaid expansion, not create exchanges, and thereby also save their companies from federal penalties. Medicaid, the exchanges, and the employer mandate are three of the central pillars of the Obamacare system.

This will create an unworkable patchwork nationwide, between states with semi-socialized medicine and healthcare costs spiraling out of control, versus those with private-sector medicine. Expect doctors, insurers, and providers to flock to these friendlier states, creating an increasingly unbalanced system. Then Obamacare will start coming apart at the seams, and momentum will build to repeal and replace.