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Brewer rejects state health-insurance exchange, triggering federal operation

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WASHINGTON – Gov. Jan Brewer announced Wednesday that Arizona will not create a state-based health exchange but will leave that job to the federal government, as detailed in the Affordable Care Act.

Brewer said the decision was one of the more difficult ones of her career in public office, but that ultimately there were too many unknown variables to proceed with a state-run exchange.

“There simply remains too much we don’t know about how a state-based exchange would function and its ultimate cost to taxpayers,” Brewer said in a prepared statement released by her office. “Without clear federal guidance and instruction, I cannot in good conscience commit the taxpayers of my state to this costly endeavor.”

But some health officials in the state, while not criticizing the decision, worried that the governor may have just traded one unknown for another.

“We don’t know how much a federal exchange would involve,” said Pete Wertheim, spokesman for the Arizona Hospital and Healthcare Association. “Is it a one-size-fits-all, or a look at a state’s needs? How will decision-making occur?”

Arizona becomes the latest state to reject a role in the health-insurance exchanges, one of the many aspects of the federal health reform law sometimes called “Obamacare.”

The exchanges are supposed to be virtual marketplaces where small businesses and uninsured low- and moderate-income consumers can buy coverage. Exchanges are to be up and running by 2014, when the law’s “individual mandate” kicks in, requiring all Americans to either have health insurance or face the possibility of having to pay a penalty.

States were given the option of setting up their own exchanges or having the federal government do it for them. But many governors who opposed Obamacare – like Brewer – delayed a decision until after this fall’s elections, on the chance that the health reform law could be overturned by a new Congress or new administration.

States now have until Dec. 14 to tell the federal government whether they plan to set up their own exchange or not. As of last week, 18 states were in, 20 were out and five were going into exchange partnerships with the federal government, according to the Center on Budget and Policy Priorities. Seven – including Arizona at the time – were still undecided.

Brewer said her decision “comes following an extensive research and outreach process during which my team of health advisers conducted public hearings and met with HHS (the U.S. Department of Health and Human Services), patient advocates and representatives of Arizona hospitals, health providers, insurers, tribal groups and other members of the health care community.”

The decision was quickly criticized by several Democratic lawmakers in the state.

“This exchange is one of the key areas in the Affordable Care Act that provides local people the flexibility to make decisions about what is best for local communities,” said Rep. Chad Campbell, D-Phoenix, the House minority leader, in a prepared statement. “The governor just signed over a lot of power to the federal government.”

Sen. Leah Landrum Taylor, D-Tucson, called it “a missed opportunity to establish healthcare solutions that are tailor-made for the unique needs of our state.”

“I would think the governor would want to be involved in decisions affecting the well-being of Arizonans,” Taylor said in a statement.

But Chic Older, executive vice president of the Arizona Medical Association, whose office had worked with Brewer’s on the issue, agreed with the governor that there are still a lot of questions.

“The Affordable Care Act is a fact and it’s complex for every one of us,” Older said. “Many, many aspects of it are open to interpretation.

“This was probably, for the governor’s office, very difficult and without the attached certainty, hard to go forward with without knowing the ultimate cost and the cost-benefit,” he said.

Older said the medical association usually advocates for local control and that it supported a state-run exchange, but only from a procedural standpoint. And he noted that Arizona is not alone in declining to establish a state-based health exchange.

“It’s not like Arizona is the only one,” Older said. “They’re in good company. There are a number of states that have made the same decision.”

An earlier deadline for states of Nov. 15 was pushed back after the Republican Governors Association sent a letter to President Barack Obama “seeking clarification on critical outstanding questions related to the federal health care law.”

Older said the states were left with a lot to digest in a short amount of time.

“This is the hand we have been dealt and we will go with it,” he said.

Wertheim said he hopes the state’s decision can be revisited if circumstances change.

“We would prefer state-based, but we respect Gov. Brewer’s decision and we have to move forward,” he said. “We’re disappointed, but ready to move on to the next challenge.”

- Cronkite News Service reporter Khara Persad contributed to this report.