Topeka — The federal government on Friday announced the award of $185 million in grants to states to help set up health insurance exchanges — a process that was thrown into limbo in Kansas after Gov. Sam Brownback this week rejected a $31.5 million grant to work on establishing an exchange.
In a conference call from Washington, D.C., U.S. Department of Health and Human Services Secretary Kathleen Sebelius said the new round of grants would go to 13 states and the District of Columbia for the exchanges — one-stop shops where consumers can search for the best insurance policy for their needs. Kansas was not among the group. The exchanges are part of the federal health reform law and are scheduled to be in place in 2014.
In February, Kansas had been awarded a $31.5 million “early innovator” grant to start work on the health insurance exchange. But on Tuesday, Brownback, a Republican who had earlier signed off on the grant, rejected it, saying there were too many strings attached and too many unknowns about future federal funding.
Sebelius, a Democrat, did not address Brownback’s rejection in the teleconference, but maintained that states had been given leeway in implementing the exchanges to tailor them to their needs.
As a former governor, insurance commissioner and legislator in Kansas, Sebelius said, “I know the importance of letting states lead.”
But Lt. Gov. Jeff Colyer, Brownback’s point man on health issues, said one of the reasons Brownback rejected the federal grant was because of concerns about federal budget cuts.
“We have great concerns that in the long run there may not be the money there,” he said.
He said if there is an exchange in Kansas “the Legislature needs to pass a bill.”
Sebelius said the health insurance exchanges will increase competition between health insurance companies and that will result in better rates and policies for individuals and small businesses.
Sebelius and IRS Commissioner Doug Shulman also released proposed rules on tax credits to help people buy private insurance, and procedures to check income and eligibility.
Brownback has been praised by those opposed to the new health reform law for rejecting the grant, but others have questioned the wisdom in turning down the funding.
Kansas Insurance Commissioner Sandy Praeger, a Republican, said Brownback’s action represented a “missed opportunity.”
The ultimate fate of the Patient Protection and Affordable Care Act will probably rest with the U.S. Supreme Court.
On Friday, an Atlanta appeals court ruled that the requirement that nearly all Americans have health insurance or face a penalty is unconstitutional. But the panel upheld other parts of the law. And in June, an Ohio appeals court upheld the entire law.
Kansas was one of 26 states that joined the legal effort against the law in the Atlanta court.
Attorney General Derek Schmidt, a Republican, said, “For the first time, a federal appeals court has declared that this law requiring Americans to purchase a product or face a penalty exceeds the power granted by the Constitution to our federal government.
“The Constitution created a federal government of limited, enumerated powers and did not grant to the federal government an unlimited general police power to do whatever it wishes.”
He said the appeals court decision “makes Supreme Court review of the law almost certain.”