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States, unhappy with health-care overhaul, look to form compact

Would convert federal benefits to grant money

By Guy Gugliotta
Kaiser Health News / September 19, 2011

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WASHINGTON - State governors and legislators opposed to the federal health-care law are considering a novel approach to escape its provisions: joining an “interstate compact’’ that would replace federal programs - including Medicare and Medicaid - with block grants to the states.

To date, legislation has been drafted or introduced in 14 states and brought to the floor by lawmakers in at least nine. Three Republican governors - in Georgia, Oklahoma, and Texas - have signed the compact into law, while Governor Jay Nixon of Missouri, a Democrat, let the compact become law without signing it. Supporters say they hope to get 40 states to put it on the legislative calendar in 2012.

If a significant number of states pass the compact, supporters plan to submit it to Congress for approval in the same way that the body approves interstate compacts regulating commerce, transportation, and resource conservation and development.

Although critics do not dismiss the compact out of hand, they say its chances of becoming law are close to nil. Governor Brian Schweitzer of Montana, a Democrat, said in vetoing his state’s bill that “we will put a person on Neptune’’ before Congress passes the compact. States have never sought a compact to shield them from a whole area of federal law, let alone been granted permission to form one.

Some state officials, including Republicans such as Arizona Governor Jan Brewer who vetoed the compact, are worried that it would usurp their authority. Many others point out that joining a compact would disqualify their states from receiving automatic federal funding increases during hard times and prevent them from getting their fair share of the available pool of money.

Still, even if its prospects are more dubious than other methods of getting rid of last year’s Patient Protection and Affordable Care Act - congressional repeal, judicial challenge, or a Republican presidential victory in 2012 - the compact has become a popular way for conservatives to highlight their opposition.

Compacts might receive even more attention now that Governor Rick Perry of Texas signed his state’s law July 18, just three weeks before he announced his candidacy for the Republican presidential nomination. The primacy of states’ rights over federal powers is a tenet of Tea Party movement Republicans, whose support is key for candidates during the primary season.

For the original drafters, health care is only the first compact in a longer list that would include measures giving states broad powers to control banking, education, and energy.

The health-care compact grew out of discussions and research conducted at the Center for Tenth Amendment Studies at the Texas Public Policy Foundation, a conservative policy group in Austin. The 10th Amendment to the Constitution leaves to the states all powers not conferred upon the federal government.

The history of compacts goes back to the Colonial period, and more than 200 are currently in force. Many coordinate activities between contiguous states, such as the Port Authority of New York and New Jersey. Others, such as the Driver License Compact and the Wildlife Violators Compact, offer reciprocal recognition of laws and licenses in member states.

The Health Care Compact, however, is the first one that attempts to shield states from a whole area of federal law. It would replace the current federal health-care system with block grants to the states. The initial grants would be prorated on the basis of 2010 federal funding levels. Thereafter, allocations would rise to reflect inflation and state population increases. The compact would not apply to military personnel, veterans, or Native Americans.

With this template in hand, the bill’s adherents formed the Health Care Compact Alliance late last year. Eric O’Keefe, chairman and chief executive of the conservative Sam Adams Alliance, is the alliance chairman, and Houston businessman Leo Linbeck III is vice chairman.

Late in 2010, O’Keefe won support for the compact from leaders of the Tea Party Patriots, one of the main Tea Party groups that have emerged across the country. Linbeck said “our big push’’ will come in early 2012, when he and O’Keefe are hoping that 25 to 40 legislatures may take up the bill.

Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health-care-policy organization. This story was distributed by The Washington Post.