Health Care Compact Q&A

February 27, 2011 by  

Q&A regarding SB 1592 – the Health Care Compact (passed House & Senate!)

  • What is the Health Care Compact?

The Health Care Compact is an interstate compact – which is simply an agreement between two or more states that is consented to by Congress – that restores authority and responsibility for health care regulation to the member states and provides the funds to the states to fulfill that responsibility.

  • Why is a state compact necessary?

Federal law preempts conflicting state law.  Because the federal government has passed laws that regulate health care, states are unable to enact laws that differ from these federal laws.  A compact can solve this problem by allowing states to suspend the operation of federal health care laws within states that are members of the compact.  Once Congress consents to the compact, the compact becomes federal law.  Therefore, there is no longer any conflict between federal and state law and therefore no preemption of state law by federal law.

  • What happens to states that do not enter the compact?

States that do not enter the compact will continue to operate under federal health care laws and regulations.  Only in states that are members of the compact will federal health care laws that conflict with state laws be suspended.

  • Can a state that is a member of the compact suspend all federal laws, or only certain federal laws?

Member states can suspend federal laws regarding only health care.  All other federal laws would continue to preempt state law.

  • Are federal health care laws automatically suspended by the compact?

No, a state must expressly invoke its authority under the compact to suspend federal law.  Otherwise, federal health care laws would remain operative in that state.

  • Has a compact ever suspended federal law before?

Yes.  The compact that created the Washington Metropolitan Area Transit Authority, entered into by Virginia, Maryland, the District of Columbia, and Congress, provided that federal laws and regulations regarding transit systems would not apply to the newly-created authority.

  • Why would Congress approve a Health Care Compact that can undermine their (Federal) authority?

Political pressure from both the right and left.  The Health Care Compact is policy neutral meaning states can implement health policy to their own liking, whether adjusting existing programs or instituting a ‘single payer’ system – it’s up to the individual states in the compact.   Increasing federal debt plays a part.  There is growing concern on both sides of the aisle that both debt and federal control is out of control, that Congress has a one-size-fits-all mindset and doesn’t have a plan for sustaining current federal health care programs.  Importantly, the HCC bends the spending trajectory downward over time while allowing each state the flexibility to innovate by managing their own program.

  • How many states are required to join the compact before it becomes effective?

At least two states must enter the compact, and the compact must receive congressional and presidential consent, before it becomes effective.

  • Will member states still receive federal health care funding?

Yes.  Member states will receive a lump sum amount from the federal government to help administer health care in those states.

  • How much money would each state receive?

Each state would receive funds pursuant to a formula contained in the compact.  States would receive the 2010 level of federal health care spending in that state adjusted for population and inflation.

  • Does the compact create any new regulatory body?

No.  The compact creates the Interstate Advisory Health Care Commission.  The commission would have no ability to regulate for compact member states.  Rather, the commission would serve as a clearinghouse for information and recommendations relating to the provision of health care.

  • Who would serve on the commission?

Each member state could appoint two members to serve on the commission, with each member entitled to one vote.  Each state decides for itself how it appoints its members.

  • May a state leave the compact?

Yes, a state may withdraw from the compact by enacting a law to that effect.

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