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Americans for Prosperity Testimony on Health Benefit Exchanges in Montana

August 22, 2011 J,

Americans for Prosperity submitted testimony today to the Economic Affairs Interim Committee, tasked by Montana’s state legislature with studying the implementation of health care exchanges in the state.

Under the Patient Protection and Affordable Care Act (widely known as “ObamaCare”), all 50 states have been asked to establish health care exchanges by January 1, 2014. The Interim Committee’s findings will help determine how the state will react to the law’s requirements. Americans for Prosperity is opposed to exchange creation in all 50 states given the law’s burdensome federal regulations.

The full text of AFP’s testimony is listed below.


Americans for Prosperity, Montana

August 23, 2011

62nd Montana Legislature
Economic Affairs Interim Committee 2011-2012

Testimony on Health Benefit Exchanges

Americans for Prosperity (AFP) is a free market non-profit organization that is committed to educating and engaging grassroots citizen activists across the country to advocate for smaller government, lower taxes, and free enterprise. We believe that the free market is and always has been the true path to prosperity. On behalf of our almost 8,000 activists in Montana, I am pleased to submit this written testimony opposing any attempt by the State of Montana to create a “Health Benefit Exchange” as dictated by the Patient Protection and Affordable Care Act (PPACA).

Exchanges in their most basic form are a simple market mechanism allowing consumers to research, understand, and satisfy their health care needs. However, the Exchanges–as drafted within PPACA and substantiated by the Proposed Rules released in the Federal Register on July 15, 2011–are blunt instruments restricting consumer choice and limiting state flexibility.

The Proposed Rules from the Department of Health and Human Services (the Agency) try to provide the impression of state flexibility, while the Agency retains all important decisions regarding the Exchange and its processes. The Agency must provide initial approval of any Exchange, thus requiring compliance with standards and guidelines the Agency sets outside of Montana’s control. Secondly, the Agency establishes a “significant change” test that removes any discretionary power from the State to make changes as needed. “Significant changes” include such items as: Exchange governance structure, state laws and regulations and IT systems or functionality. The Agency gives States discretion regarding the Exchanges but only within the tight approval and operational paradigm laid out by the Agency. Even Montana’s best attempts to create a consumer-focused exchange will be thwarted by the Agency leaving Montana as an administrator of policies formulated two thousand miles away.

Further, AFP objects to Agency attempts to create a centralized claims database. The aggregation of personal health data carries inherent security and privacy risks. The Agency also suggests that the use of this data will extend beyond the stated purposes of risk adjustment leaving the door open to “other uses,” creating accountability, security, and transparency issues.

Finally, AFP objects to the timeline the Agency has provided for Exchange creation. The Agency must issue its approvals for Exchanges by January 1, 2013, according to PPACA. The rules, as written, give the Agency 90 days to review any Exchange proposals and make final comments making applications actually due by October 1, 2012. If a state reserves a 30-60 day window for initial comments from the Agency and revisions, the application must be submitted by August 2012. AFP believes given the large number of Exchange regulations still to come—along with associated notice-and-comment periods—a one-year timeline is simply not feasible for Montana or any state to comply.

AFP opposes any attempt by Montana to create its own Exchange and instead urges the State to reject the Federal government’s attempt to make important decisions on behalf of Montana and her citizens.

For a thorough explanation of AFP’s position on Exchange regulations visit our website at:



James Valvo
Director of Government Affairs
Americans for Prosperity

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