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Health Care Showdown: Obama Administration Calls Out GOP Governors

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WASHINGTON -- The Obama administration is showing political tough love with Republican governors who criticized both the constitutionality and funding of the president's signature health care legislation.

On Monday, Press Secretary Robert Gibbs called out GOP leaders who were bemoaning the law -- and threatening to ignore its provisions -- while still taking the funds needed for implementation. Adding a bit of intrigue to the matter, Gibbs hinted that the White House would address some of the top Republican critics during an upcoming conference of governors later this month.

"[T]he implementation of this important law is moving forward," said the departing spokesman. "I don't know that we have had specific outreach [to Republican governors]. I know the governor's association is in town later this month, but our policy has and continues to be that implementation moves forward."

In private, heath care policy operatives say, the administration's message has been even more direct. As Republican governors back lawsuits against the legislation, and threaten to return money budgeted for it, the president's team has let it be known that, absent state action, the onus lies on the federal government to implement the law.

"For a lot of things there is a federal backstop," explained one administration official. "States have the first crack at it, for the lack of a better phrase, and states are empowered to take the lead on things, that's what we wanted ... But at the same time we aren't going to allow someone not to get important consumer protections just because he has the misfortune of living in a state that doesn't like the law."

The threat of federal intervention is more motivating than any other card the administration has or can play, and it is felt most acutely with respect to the state-based exchanges, which are required to be operational by 2014.

Len Nichols, a health care policy expert with George Mason University, has consulted a number of state governments on implementing reform. And when he looks at how governors are handling the federal grants coming their way, he offers a simple set of questions:

"Are you confident you can beat Barack Obama in 2012? If the answer is no, and you say, 'I don't want to do reform and bet I can beat him,' if you lose, then Kathleen Sebelius will set up your exchange. Who wants that? No one. Not even Massachusetts."

"What the feds are basically saying is 'okay, fine, if we win then we are doing the exchange,' then every insurer in that state will panic," Nichols added.

Even Republican governors more or less agree. On Monday, Virginia Republican Bob McDonnell sent a letter to Sebelius requesting a series of clarifications as to how his state could opt-out or work around provisions of the Affordable Care Act. His Attorney General, meanwhile, has been at the forefront of lawsuits challenging health care reform's constitutionality, going so far as to request an expedited hearing from the Supreme Court. But until firmer answers are received, the governor is taking the money and working within the parameters of the legislation.

"All states are stuck between needing to implement the law of the land and realizing that parts of it are unconstitutional," explained McDonnell spokesman, Jeff Caldwell. "So what we want, which is what the governor has been pushing for, is a final resolution."

In Ohio, a similar reluctance has overcome the John Kasich administration.

"We cannot let the insurance exchange default to federal control, so we are moving forward with the planning that is required to make the exchange work best for Ohio," said Rob Nichols, press secretary for newly-elected Republican governor.

So far, in fact, only two states have the exchange requirement (Louisiana and Florida). Only one has returned money received for planning and implementing health care reform -- Florida, which sent back a $1 million check.

Far more common are states (like Oklahoma, Wisconsin, and Alabama) suing to have at least one portion of the law (the individual mandate) overturned, while putting their individual imprints on reform in the meantime. A more clever tack is being taken by McDonnell in Virginia, in which language has been written to sunset the state exchange.

It is, Obama administration officials privately acknowledge, a remarkably wily feature of the legislative language. While the legal drama over health care plays out, state governments, insurers and individuals become more invested in seeing the reforms through. Should Obama lose re-election, circumstances will undoubtedly change. The same holds true if the Supreme Court determines that the individual mandate is unconstitutional.

But even then, the mandate could be severed from the rest of the bill, leaving Republican governors with no additional out from the process of reform.

"While you have this legal theater, the odds are that in the trenches, most states are going to take and spend the money," said Jonathan Oberlander, a health care policy professor at the University of North Carolina. "The further people get invested in this, not just the states but also the health care industry, it becomes harder to roll it back ... the more they get involved, the harder it becomes to reverse."

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