States Consider Health Compacts to Challenge Federal PPACA

December 1, 2015

Some state lawmakers opposed to the PPACA focused on a Supreme Court solution, but a growing number also looked beyond the court’s decision. Beginning in 2011, they supported legislation to create interstate health compacts, aimed at giving a group of states primary responsibility for regulating health care goods and services within their boundaries (except military.)  Most of the measures also include this provision:  “Each Member State… may suspend by legislation the operation of all federal laws, rules, regulations, and orders regarding Health Care that are inconsistent with the laws” adopted by the member state as part of a compact.  The creation of any interstate compact requires formal congressional approval - a separate step, not yet tested as applicable to health reform. 

As of 2015 a total of at least 26 states had considered interstate compact legislation at least once since 2010.

As of December 2015 a total of nine states had enacted and signed interstate compact statutes.1 
The laws are in:

Kansas H 2553 - passed House and Senate; signed into law as Chapter No. 2014-96 on April 22, 2014.  Adopts and establishes an interstate Health Care Compact, seeking to ''return the authority to regulate health care to the member states consistent with the goals and principles'' articulated in the compact. The member states would be charged to "improve health care policy within their respective jurisdictions and according to the judgment and discretion of each member states.'' Requires congressional approval to be defined as an interstate compact. 

Alabama HB 109, enacted, became law as Act No. 2013-420, May 20, 2013. Establishes the interstate "Health Care Compact" in the state of Alabama, allowing states that join the compact to propose state health policies that could replace federal provisions, citing, "Each member state, within its state, may suspend by legislation the operation of all federal laws, rules, regulations and orders regarding health care that are inconsistent with the laws and regulations adopted by the member state pursuant to this compact." The laws also seeks to use appropriated federal funds, redirected to state-specified programs. The interstate compact plan requires prior approval by the U.S. Congress before it becomes a recognized as interstate compact.

South Carolina - S 836, passed Senate and House, signed by the governor as Act 221, 6/21/2012.   Enacts state participation in the Interstate Healthcare Compact; providing that state compact members must take action to obtain congressional consent to the compact; providing that the legislature is vested with the responsibility to regulate healthcare delivered in their state; provides for healthcare funding; also establishes the S.C. interstate advisory Health Care Commission.

Utah which enacted S 208, signed March 19, 2012. 

Indiana enacted H 1269, signed March 20, 2012  as Chapter 150.
In 2011, four compacts were signed into law: 

Georgia H 461 on April 20; 

Oklahoma  S 722 on May 18. 

Missouri's H 423 passed both chambers and became law without the governor's signature on July 14. 

The earliest Interstate health compact bill passed the Texas legislature and was signed by the governor on July 19, 2011. 

In 2013, Utah enacted Chapter 101, which included a provision to repeal their compact by July 2014, unless an analysis was completed with details of the compact plan affecting Utah.

Since the federal health reform law was largely upheld as constitutional by two Supreme Court decisions, sponsors of compact laws, supported by the Health Care Compact Alliance  and the American Legislative Exchange Council (ALEC), hope their states can gain congressional approval, and can use federal funds to define their own approach, or retain existing policies. 

Drafters at the Health Care Compact Alliance say it 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. States that agree to form a compact must pass identical compact language and enact separate statutes defining, or in some cases making it a crime to interfere with, health freedoms. 

Vetoes:  Arizona's legislature enacted S 1088 and S 1592, but Governor Brewer vetoed both in April, 2011. Her veto message stated it would result in additional fiscal challenges for the health care system and violate the state's separation of powers. Montana's H 526 passed, but was vetoed on May 12, 2011.

Recent Floor Action. In 2015, there was a substantial slow-down of legislative activity aimed at interstate health compacts, with no additional bills enacted into law.  In Ohio, one such measure, HB 34, passed the House on Sept. 30, and remains pending in the Senate in 2016. 

The U.S. Constitution (Article 1, Section 10) grants states the right to enter into agreements with other states for their common benefit. Historically, these compacts have been used to address common problems among states, such as border disputes, creating governmental commissions and establishing common guidelines for agencies in the member states. Any compact that increases the political power of the member states must be approved by Congress. Interstate compacts addressing criminal justice matters may be granted an exemption from Congressional approval under limited circumstances.

1  The proposed Interstate Health Compacts have no legal relation to two separate types of compacts that are authorized by the PPACA.  These include basic health programs for lower-income using regional "health compacts" (in Section 1331) and "health care choice compacts" authorizing two or more states to offer state-regulated health insurance policies across state lines beginning in 2016 (in Section 1333).
Tally of Filed State Legislation, 2011-2014

Type of state legislation Total states States with filed legislation (Bold indicates signed laws = 9)

Interstate Health Care Compacts

 16 (2011-12)
+ 10 (2012)    ____

= 26

Filed in 2011:  AZ, CO, GA, IN, LA, MI, MO, MT, NM, ND, OH, OK, SC, TN, TX, WA
New for 2012:  AL, FL, IN,  KS, MN, NH, SD, UT, VA, WV
Refiled for 2013: AL, AZ, OH, TN, (UT= repeal)

Refiled for 2014: KS