LINCOLN, Neb. (AP) — Nebraska will not operate its own health insurance exchange because a state-run program is too expensive, Gov. Dave Heineman said Thursday.
Instead, the Republican governor opted for a federally run program, even though some lawmakers and health care advocates have touted a state-based exchange as the best option. Heineman said creating a state exchange would have cost Nebraska taxpayers $470 million more than defaulting to a federal exchange.
The exchange will serve as a marketplace where individuals and small businesses can comparison shop for health insurance online, over the phone or through an agent. Supporters of President Barack Obama's health care overhaul argue that the transparency will ultimately push costs down, while many Republicans view it as a government intrusion into the private marketplace.
"The reality is that the federal health care law is being totally dictated and totally controlled by the federal government," Heineman said at a news conference Thursday.
His announcement came one day before the deadline for states to confirm whether they'd create their own exchange or rely on the federal government.
"On the key issues, there is no real operational difference between a federal exchange and a state exchange," the governor said.
Heineman said he initially favored a state-run exchange, but a budget review from his office showed a federal exchange was cheaper: $176 million as opposed to $646 million between the fiscal years of 2013 and 2020. Heineman also said the state-run option was also full of federal mandates, and Nebraska would have little real control.
The state's larger health care showdown will happen the 2013 legislative session. Omaha Sen. Jeremy Nordquist has said he will introduce legislation that would extend Medicaid coverage to cover more Nebraskans — an idea that Heineman staunchly opposes.
The expansion was originally required as part of the health care law, but the U.S. Supreme Court ruled in June that the federal government cannot penalize states that refuse to participate. Expanded Medicaid is also backed by the health care industry and advocates for low-income residents.
Republican U.S. Sen. Mike Johanns said in a statement Thursday that Heineman made the right decision.
"When it comes to the president's health care law, saying anything is state run is simply a misnomer," Johanns said. "The reality is that the federal government will wholly dictate how the exchange operates."
Supporters of the state-run exchange have argued that Nebraskans would be best served with a local program tailored to the state's needs.
Bruce Rieker, a lobbyist for the Nebraska Hospital Association, said his group would not try to overturn the governor's decision. Instead, he said, the state's hospitals will focus on lobbying the federal government for as much flexibility as possible.