Newly Elected Gov. Pence Unlikely to Implement Obamacare Exchange

Published December 18, 2012

Indiana Republican Governor-elect Mike Pence weighed in on implementation of the exchanges required by President Obama’s health care law with firm opposition to a state-created health insurance exchange.

In a November 15 letter to outgoing Gov. Mitch Daniels, a fellow Republican, Pence affirmed his opposition to both a state-based exchange and a hybrid exchange, stating “absent new information” he will make that position formal to federal authorities by the extended deadline of February 16, 2013.

“I do not believe the State of Indiana should establish a state-based health insurance exchange because doing so will cost taxpayers millions of dollars and it is not clear that Hoosiers would benefit from incurring the cost of implementing this new federal healthcare bureaucracy,” Pence wrote. “Without knowing more details on the cost and nature of state-based exchanges, it is possible that our state could be placed in the untenable position of serving as the administrator of a new federal healthcare bureaucracy over which we have little control.”

Clear Opposition to Exchange

In his letter, Pence noted the U.S. Department of Health and Human Services estimated the exchange would cost Indiana taxpayers approximately fifty million dollars per year.

“Despite this investment, there is no evidence that such an exchange would benefit Hoosiers, give us significantly more control over our healthcare choices or lower the cost of insurance premiums,” Pence wrote. “In fact, the State’s actuaries are predicting significant premium increases for the individual and small group market, regardless of whether the State or federal government operates an exchange.”

With Republican super-majorities in both houses of the Indiana legislature, there will not be much pressure on Pence to alter his position.

Medicaid Expansion Uncertain

Pence did not address the other decision he would have to make as governor—whether to expand Medicaid. In 2011, after the Obama Administration denied a key waiver for the consumer driven Healthy Indiana Plan for state workers, the Daniels administration considered using the increased Medicaid matching funds from Obama’s law to help pay for an expansion of that program. But in a July 30 letter to Daniels, Pence said the costs of the expansion concerned him.

“The Medicaid program continues to be one of Indiana’s largest budget items. Its costs grow every year and we have struggled to pay for our existing program,” Pence wrote. “The Medicaid expansion would increase dependency by putting one quarter of all Hoosiers on Medicaid and could cost Indiana billions between now and 2020.”

Jonathan Ingram, a health care policy analyst with the Illinois Policy Institute, said Pence is right to be skeptical about expansion.

“So far, just nine states have committed to implementing the expansion. Leaders from most states, including both Republicans and Democrats, have either said no to the expansion or are leaning that way,” Ingram said. “States are facing their own financial crises. They simply cannot afford the billions of dollars needed to expand a broken Medicaid program to include millions of new people.”