Daily Independent (Ashland, KY)

May 23, 2013

Judge: Health exchange suit can proceed

By RONNIE ELLIS
CNHI News Service

FRANKFORT — Franklin Circuit Judge Phillip Shepherd will allow a suit challenging Gov. Steve Beshear’s constitutional authority to establish a Health Benefit Exchange — a key feature of federal health care reform — to proceed.

On Thursday Shepherd denied Beshear’s request to dismiss the suit brought by tea party activists David Adams, Dawn Cloyd and Sarah Durand. They claim Beshear has no authority to establish the exchange or spend money on it without legislative approval.

Adams called Shepherd’s ruling “a great day for Kentucky and a real blow to the political class.”

Beshear’s spokeswoman Kerri Richardson said while the administration disagrees with the “procedural decision” it does not affect the effort to set up the exchange.

“(I)t does not affect the state’s ability to continue building the Health Benefit Exchange, which will allow hundreds of thousands of uninsured Kentuckians to access affordable health care,” Richardson said. “Clear constitutional and statutory authority support the Executive action to establish the Health Benefit Exchange, and we will continue to move forward.”

The exchange is an online site where potential purchasers of insurance may compare plans, coverages and prices offered by private companies or sign up for Medicaid coverage or insurance subsidies or tax credits if they qualify by income. It is a key component of the Affordable Health Care Act which requires everyone to be insured or face a tax penalty.

“Obamacare,” as it is called by its critics, is vigorously opposed by tea party groups. Several Republican state lawmakers have also questioned Beshear’s authority to set up the exchange or expand Medicaid eligibility without legislative approval.

Shepherd issued the ruling on the same day Adams and several other tea party opponents attended a meeting of the Health Benefit Exchange Advisory Board. The exchange is scheduled to begin enrollment in October and participating insurance companies will the offer coverage by Jan. 1.

Adams, Cloyd and Durand argue Beshear’s executive order violates the state constitution while Beshear claims the authority under Kentucky Revised Statutes 12.028, a law that gives him authority to reorganize the executive branch and to do so without legislative approval during times the General Assembly isn’t in session.

Beshear’s lawyers argued Adams, Cloyd and Durand lack standing — meaning they face no personal adverse impact from or had a legally recognizable interest in the establishment of the exchange.

But the plaintiffs’ attorneys responded that they have standing as citizens and as taxpayers challenging the expenditure of public funds.

In his ruling, Shepherd wrote that a genuine controversy existed between the parties and, “The plaintiffs, as citizens and taxpayers, have a right to challenge the executive actions of the Governor . . . ”

Shepherd did not rule on the substance of the controversy and asked attorneys for both sides to begin working out a schedule for making arguments on the suit.

Adams has also filed a second suit, challenging the expansion of Medicaid eligibility, another component of the ACA.

Adams and roughly a dozen or so other opponents of the exchange and health care law showed up at the meeting Thursday afternoon of the advisory board.

After a review of activities to date and a marketing plan to educate potential users of the exchange, several of the critics submitted written questions, many asking who will pay for the exchange and calling it a government monopoly.

Carrie Banahan, executive director of the exchange, said it will be funded with federal grants of $253 million during its establishment and first year and thereafter by existing insurance fees – no tax money will be used.

Gerardo Serrano of Jackson County complained the board would only take written questions and won’t allow follow-up questions to the answers to those.

He opposes the AFA because he thinks it will increase his already rising insurance costs. Serrano said his health insurance has increased from around $400 to more than $600 a month over the past two years.

“I can’t see how this will be cheaper with all the added layers,” Serrano said. “I’d rather have a private company (which is) interested in making money. These people (the administration and exchange) are just interested in spending it.”

Banahan said later the new law is likely to increase some premiums while reducing others while offering some people subsidies to help pay their premiums.

Premiums could go up for those who previously paid lower premiums based on their youth and good health or if they’re male while older customers, women or those with existing health problems will probably pay less. Depending on income, anyone in any of those groups might receive subsidies to help pay premiums.

Under the new law insurance companies must use “community ratings” (health statitistics of an area population) in establishing premiums. Previously, health insurance companies set different and usually higher rates for older persons, women or those with existing health problems.

RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.