Washington and Lee law professor Timothy Jost adds one more important point to the federal governments’ initial guidance on how states can establish exchanges under the Affordable Care Act. It expands on this notion that so-called “red” states and “blue” states will likely adopt very different kinds of exchanges that will accomplish very different things:

In perhaps the most noteworthy paragraph of the Guidance, HHS clarifies that both an “active purchaser” (Massachusetts or California) or “open marketplace” (Utah) model are acceptable under the ACA. Many consumer advocates favor an active exchange that would demand value for money from health plans, while insurers favor an “any willing insurer” model. While the Guidance blesses both, it should be noted that, in the prior paragraph, the Guidance notes that the exchange must have “discretion to determine whether health plans offered through the Exchange are ‘in the best interests of qualified individuals and qualified employers” as Section 1311(e)(1) [of the ACA] requires.” A state statute that required an exchange to certify any health plan that met all other explicit statutory requirements could not, therefore, be in compliance with the ACA.

Progressive states want the exchange — likely governed by an independent authority — to act like an active purchaser of insurance: restrict inefficient and poor quality plans from entering and bargain with insurance companies on behalf of consumers. The so-called “open marketplace” model is very different. Here, consumers will compare a wide variety of plans sold by any insurers that want to participate, meaning that they may be overwhelmed by the choice and sold some not very good products.

The government’s guidance is important for two reasons. First, it confirms what Joel Ario, the Director of the Office of Insurance Exchanges at HHS, has been saying publicly for quite some time — states will have a great deal of flexibility in establishing their own exchanges. But — and this is the second point — they won’t, as Jost points out, be able to just invite anyone into the new market place. A certain floor of standards will be established.

It’s also worth reiterating that insurers are very obviously (and publicly) lobbying for the latter structure — touting out a whole series of poll testes phrases about enabling “competition” and promoting “consumer choice.” It will be interesting to see how they respond to this federal guidance.

Earlier this month, several states — led by Texas Governor Rick Perry (R) — floated the idea of resisting the requirements of the health care law by opting out of the Medicaid program. Relying on a Heritage Foundation study, the states argued that they could save money by sending back million of dollars in Medicaid matching funds and designing more efficient alternatives for covering their poorest residents.

Health care wonks and economists questioned the feasibility of the scheme and this morning, during an appearance on C-SPAN’s Washington Journal, Kaiser Health News reporter Marilyn Werber Serafini explained why it would only increase costs for the federal government:

SERAFINI: There is a proposal out there right now coming out of the Heritage Foundation that talks about one possible option for doing this and under this option he says 40 out of the 50 states would actually come out ahead by dropping all that federal matching funding. [...]

The states would take full responsibly for their long term care, their nursing home coverage and also for helping the folks who are on Medicare the senior citizens who still need help paying their premiums and with cost sharing. But the rest of the folks [below 133% of the poverty line] they qualify for subsidies. They buy private insurance through the exchange and therefore you’re essentially giving them full responsibility to the federal government…. If they did drop out of Medicaid, if these folks did qualify for the subsidies and were turned over to the federal government, it would meet a lot more spending by the federal government.

Watch it:

The federal government would have to spend more and so would the Medicaid population. Even if the poorest residents were eligible for subsidies in the exchanges (which as Serafini points out is debatable), they would have to contribute 2% of their incomes to health insurance and would likely be spending a lot more on health care than if they had stayed in the Medicaid program.

States would also have to stretch their contribution to cover individuals with disabilities and long term care services in the face of rising health care costs. Even if they somehow managed to do that, they would likely be confronted with an uptick in uncompensated care and that would and that — along with the fact that the proposal would take billions out of the state economy that goes to support hospitals and other providers — would ensure a revolt from the provider community. Hospitals and doctors would have to swallow the costs of caring for uninsured individuals who will continue to use the emergency room as their primary source of care.

As former Bush HHS Secretary Gov. Tommy Thompson (R-WI) told the New York Times this morning about Wisconsin’s expanded Medicaid program, “The program is very popular, and I don’t want the Republicans to do things that will damage them in the future.”

Conservatives would be undermining state Medicaid programs and increasing federal government expenditures on health care — which, ironically, is exactly what they say they’re trying to reduce.

Yesterday, the Congressional Budget Office released its preliminary analysis of the Ryan-Rivlin Health Proposal, a plan the two members of the President’s Fiscal Commission — Rep. Paul Ryan (R-WI) and former White House Budget Director and Federal Reserve Vice Chair Alice Rivlin — want to present before the committee. The CBO estimates that the proposal would “reduce federal budget deficits over the 2011-2020 period by about $280 billion,” but it would so by gutting the very institutions that spread economic risks across rich, and poor, healthy and sick, able-bodied and disabled, young and old and shifting all of the economic costs and risks onto individuals.

Ryan/Rivlin raises the eligibility age for Medicare to 67 from 2021 to 2032, transfers future beneficiaries into the exchanges in 2021 — where the infusion of older sicker people will increase premiums for everyone in the risk pool — and gives them a voucher that is intended to not keep up with health care costs. The CBO describes the consequences:

Voucher recipients would probably have to purchase less extensive coverage or pay higher premiums than they would under current law, for two reasons. First, most of the savings for Medicare under the proposal stem from reducing the amounts that the federal government would pay for enrollees on a per capita basis, relative to the projections under current law. Second, future beneficiaries would probably face higher premiums in the private market for a package of benefits similar to that currently provided by Medicare [...]

For both Medicare and Medicaid, the budgetary effects would become larger over time because federal payments would tend to grow more slowly under the proposal than projected costs per enrollee under current law. Although the level of expected federal spending and the uncertainty surrounding that spending would decline, enrollees’ spending for health care and the uncertainty surrounding that spending would increase.

The prognosis is even worse for Medicaid beneficiaries, many of whom would likely be forced out into the private market under the proposal’s block-grant approach. Rivlin/Ryan converts the existing matching system into block grants, where states would receive a fixed dollar amount annually that would fall below current growth — hence the savings. Under this arrangement, states would either have to increase their contribution to the program or cap enrollment, cut eligibility, stop offering mandatory benefits, lower provider reimbursements etc. As the CBO put it: “reducing federal payments for Medicaid relative to currently projected amounts would probably require states to provide less extensive coverage, or to pay a larger share of the program’s total costs, than would be the case under current law.

The proposal repeals the CLASS long-term care act to boot, leaving the sickest and poorest Americans who currently benefit from the Medicaid program without any obvious form of affordable coverage.

So consider this proposal dead on arrival, but one can’t help but marvel at its sheer callousness.

Today is the deadline for proponents and critics of the Affordable Care Act to submit their friend-of-the court briefs in the multi-state Florida-led case that’s challenging the constitutionality of the law’s individual mandate and Medicaid expansion. In October, U.S. District Court Judge Roger Vinson dismissed three of the Plaintiff’s claims, but allowed their challenge to the law’s minimum coverage provision and a separate complaint about the law’s Medicaid expansion provision to move forward.

Hearings in the case will begin on December 16th, but a comparison of the different groups that have submitted amicus briefs is telling. While health advocacy groups, disease-specific organizations, and health care providers are standing on the side of reform, the anti-reform column is dominated by politicians and at least two potential GOP presidential contenders (Pawlenty and Thune). In fact, supporters of the multi-state challenge were unable to attract a single health care organization to join in their effort:

Joining Florida in its lawsuit are Alabama, Alaska, Arizona, Colorado, Georgia, Idaho, Indiana, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Pennsylvania, South Carolina, South Dakota, Texas, Utah and Washington.