AUGUSTA – Efforts to put in place a key piece of the Affordable Care Act have stalled in the Maine Legislature as arguments to overturn the federal law begin at the U.S. Supreme Court.

Republicans on the legislative committee that deals with health insurance reform, not wanting to be seen as endorsing the federal law and hoping the high court strikes it down, voted earlier this month against creating a health insurance exchange. The issue could reach the floor of the Legislature as soon as this week, even as the justices listen to arguments in Washington, D.C.

The two-year-old Affordable Care Act requires each state to have an exchange, a government-run marketplace to help consumers shop for private health insurance and apply for public subsidies. If states don’t set up their own by 2014, the federal government will do it for them, according to the law.

Maine’s Legislature had been moving forward with plans to create a state-run exchange, with members of both parties preferring a program designed and run by the state to one imposed by the federal government.

Maine has already spent about $1 million in federal grant money to plan for its exchange. The federal government has promised Maine another $5.8 million to use for its exchange, if it moves forward.

Maine, however, also is one of 26 states that sued the Obama administration to overturn a centerpiece of the health reform law that requires individuals to buy insurance. And, with the Supreme Court case approaching, the Legislature’s Insurance and Financial Services Committee voted 7 to 6 earlier this month against formally creating a state exchange. All Republicans voted against an exchange, while all Democrats voted for one.

“Seeing how the state of Maine is opposed to Obamacare, we felt it was a bit hypocritical to move forward with an exchange at this time,” said Sen. Rodney Whittemore, R-Somerset, co-chair of the committee. Republicans also did not want to spend more money on the effort if the law may be struck down this summer, he said.

Maine’s Legislature may still have time to reconsider after the Supreme Court rules, but the committee’s stand raises the possibility that the state may instead allow the federal government to decide how Maine’s exchange will operate.

“It sort of took people by surprise,” said Peter Gore, lobbyist for the Maine State Chamber of Commerce. The business group wants the state to retain control of the exchange.

“From the viewpoint of some in the business community … we would classify it as a lost opportunity,” Gore said.

Maine, like the country, is deeply conflicted about the federal health care reform law.

Maine Attorney General William Schneider signed on to the multi-state lawsuit and will be in Washington on Wednesday to listen to oral arguments during the third day of the historic session.

Schneider said last week that his opposition is on constitutional grounds: The federal government cannot require citizens to buy a product or service against their will, he said.

“It’s really so fundamental to the operation of the entire law that I’d like to see the whole thing struck down,” Schneider said. “There are popular parts of the law,” he said, such as a requiring insurance companies to cover pre-existing conditions. Congress can reinstitute those things if the law is struck down, Schneider said.

Maine Rep. Sharon Treat, D-Hallowell, on the other hand, is one of a group of state legislators around the country who helped shape the law. Treat, who will be in Washington today in hopes of watching the Supreme Court arguments, said overturning the law would set back years of progress toward a fair and accessible health care system.

“This helps millions of people in really significant ways, and I would much rather go back and fix things that aren’t perfect than throw the whole thing out,” she said.

Treat’s proposal for a state-run exchange was one of two rejected by the majority on the Insurance and Financial Services Committee. Maine may not have time to design its own program if it doesn’t move forward this year, she said.

Democrats could try once more to establish an exchange when the committee recommendation gets to the full Legislature. A floor debate has not been scheduled on either of the relevant bills, L.D. 1497 and L.D. 1498.

Gov. Paul LePage could call lawmakers back to Augusta to establish an exchange if the Affordable Care Act survives, said Whittemore, the committee chairman. “If we’re going to have an exchange, I feel it would be better to have our own,” he said.

But some lawmakers no longer see the benefits of a state-run exchange at all, said Rep. Jonathan McKane, R-Newcastle.

McKane had proposed a bill more than a year ago to create an exchange, but now says it would be too costly and subject to too many federal rules.

“We see the state as getting stuck with the dirty work,” he said.

McKane, meanwhile, is hoping the law simply gets struck down this summer. “There are just too many questions about the Affordable Care Act,” he said.

State House Writer John Richardson can be contacted at 620-7016 or at:

jrichardson@mainetoday.com