OP-ED

Why States Should Move Forward with Health Insurance Exchanges

Imagine that you’re being required to buy a car. You will have to pay for most of it, but you can’t choose exactly what you want. There are so many restrictions on your options that you’re forced to choose from a few used, four-cylinder, two-door sedans with manual transmissions. And there’s one more catch: If you don’t choose one yourself, the dealer will decide for you.

It’s not an enviable position to be in, but most of us would grudgingly decide that if we have to get one of the cars, it’s better to have a small say in what we get than to have someone else decide for us.

This is the same predicament that many state policymakers find themselves in regarding the creation of health insurance exchanges.

Health insurance exchanges are a key part of the health reform law. Supporters argue that exchanges will provide consumers with valuable information on their coverage options, while at the same time providing stricter regulation of health insurers. They are also the only way people can benefit from the lavish subsidies included in the law.

On Monday, the Department of Health and Human Services released a final rule governing the exchanges. The rule sets an ambitious timeline for getting the exchanges up and running in every state by January 1, 2014. Between now and then, states can either build their own exchanges and tailor them as much as federal law will allow or decide not to build exchanges at all.

But there’s a catch: If states don’t build their own exchanges, the federal government will do it for them.

Governors like Bobby Jindal in Louisiana and Rick Scott in Florida, who are not only national conservative leaders but health care experts, are staunchly against any state action on exchanges. Legislators in other states, such as Oklahoma, Wisconsin and Missouri, have blocked efforts to build exchanges in their states.

That is a principled and understandable position. Many see building an exchange as an endorsement of the law, which virtually all conservatives are loathe to do, particularly those who represent states that have filed suit against the law.

Many, like Bob McDonnell, governor of Virginia and chairman of the Republican Governors Association, say the rules are overly prescriptive: “The regulations issued today by the Department of Health and Human Services extend the federal government’s reach into the states and will cost the states millions of dollars annually to operate.”

Still, if states do not move forward on their own, the federal government will. Because of this fact alone, states should move forward with creating their own exchanges. It’s better for states to exert some control over the structure of their exchanges than to abdicate control to Washington.

Plus, no one knows what a federal exchange would look like.

Take, for example, the treatment of high-deductible health plans with health savings accounts. A state exchange could and should include them as an option. They have proven to lower costs and expand consumer choice. But considering that many on the left oppose consumer-directed plans, a federal exchange may very well exclude them.

Perhaps a federal exchange will lard mandate upon mandate on participating plans, driving costs through the roof. Perhaps it will be so restrictive in its plan eligibility that only a few options will be available. Perhaps HHS will offer a public option.

We simply don’t know what a Washington-controlled exchange will look like — but it’s safe to assume that folks in states like Oklahoma won’t like it.

Unless and until the law is repealed by Congress or overturned by the Supreme Court, all health care stakeholders — including state policymakers — need to prepare for it as though it will be the law of the land forever. Wishing the law away is not a strategy. Hoping that it is overturned is not a plan.

Brian Robinson, a spokesman for Georgia Governor Nathan Deal, captured it best last year: “The governor has to follow federal law as it stands. If Georgia must have an insurance exchange under federal law, the governor wants to ensure that our exchange is established by and run by Georgians. The alternative is having an exchange established by and run by Washington bureaucrats. The governor considers the latter unacceptable.”

There is no doubt that state lawmakers are in a bad position, and neither choice is a good one. But controlling what they can and keeping Washington out as much as possible is what’s best for their states’ residents.

David Merritt is the former CEO of the Center for Health Transformation and the Gingrich Group and currently a senior adviser at Leavitt Partners.

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MGMD as HELLJonathan HBobbyGKleon Femi Recent comment authors
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MD as HELL
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MD as HELL

Cute apples and oranges article you reference. Americans do not want healthcare…they want concierge medicine on their terms. I can hardly wait until the gov’t tells a Medicare patient “No”. So far it does not happen.

MD as HELL
Guest
MD as HELL

Holding the White House and the Senate and The AP and CBS, NBC, ABC, CNN, MSNBC, CNBC (except Rick Santelli), the left is in power. Glad to help you out.

MD as HELL
Guest
MD as HELL

Governors and legislators do not have either the skills, talent, or political will to spend money their state does not have in forming a business they know nothing about to benefit this loser cause. They are not about to look like they endorse this Obamanation. Political suicide is not happening. If it were, they all would be cutting spending, the correct thing to do for the country. The longer the left is in power the longer we get to watch the implosion of liberalism. For all you suckers who believe government should buy your birth control, you will soon find… Read more »

BobbyG
Guest

The “left” is in power, ‘eh?

I somehow missed that.

BTW: http://globalpublicsquare.blogs.cnn.com/2012/03/16/health-insurance-is-for-everyone/

Kleon Femi
Guest
Kleon Femi

Nice. The author works for Leavitt Partners, who makes money selling consulting services to states on how to set up an exchange.

BobbyG
Guest

That’s getting to be an old riff.

Joe Flower
Guest

> Wishing the law away is not a strategy. Hoping that it is overturned is not a plan. Well put. Managing healthcare, and healthcare funding. Besides political differences, there are real cultural differences between different parts of the country, as well as genuine debate and uncertainty about what would work best. One of the biggest problems of our continuing debate about how to do this has been the patent refusal of most Americans to imagine that we could learn anything from the many different systems used in other countries. One of our biggest assets, on the other hand, has been… Read more »

MG
Guest
MG

Pretty much the way I feel about the GOP states that are rejecting the state insurance exchanges yet done have any kind of real plan to deal with healthcare reform on a coherent basis in their state.

Nate Ogden
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Nate Ogden

if the current system is better then the proposed reform plan doing nothing is the best course of action.

If we hadn’t done Medicare we would be 40 trillion further ahead today. If we didn’t do Solyndra we would be 500 million further ahead. Doing something isn’t always better, unless your trying to win an election.

Nate Ogden
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Nate Ogden

“high-deductible plans are not excluded” Actually they are, come 2014 I will no longer be allowed to buy the $5000 deductible plan I have. They are capping deductibles at 2000 which is hardly high deductible. “innovative wellness incentives are not excluded.” Wrong again on this one. There is no more innovation in wellness, the rules are so strict you have very little to work with. The maximum incentive, what your allowed to incent, equal treatment, you now have 1 1/2 hands tied behind your back. “why hasn’t the market provided this type of plan already?” It was illegal? We have… Read more »

Jonathan H
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Jonathan H

High-deductible plans will be limited, but not excluded. If you were under 30 you would be able to buy a $5,000 deductible catastrophic plan. Also, I thought the maximum deductible for Bronze plans would be closer to $3,000 than $2,000. Is that not right? How strict the rules on Wellness are depends on your perspective. I’m in NY, and the Federal rules are actually more flexible and allow more innovation than NY state law. Also, the ACA expands the maximum wellness incentive allowed from 20% to 30% of premium, and permits HHS to make rule changes for incentives up to… Read more »

Nate Ogden
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Nate Ogden

http://www.naic.org/documents/committees_b_Exchanges.pdf it is $2000. “ACA expands the maximum wellness incentive allowed from 20% to 30% of premium, and permits HHS to make rule changes for incentives up to 50% of premium. What more could you reasonably want?” self inflicted injuries to not be covered at all, ideally. If someone drinks their liver away I don’t think we should all have to buy them a new one. Same for smoking. The penalty should be commensurate with the risk. With PPACA, community rating and other government distortions of the market that can be higher then 50%. “And if by equal treatment you… Read more »

BobbyG
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Nate Ogden
Guest
Nate Ogden

you link to a 4 page article why? Any specific point to your link or do you just like seeing your name in the comments?

BobbyG
Guest

Pul-eeze. Read it, Nate, instead of wasting your time cracking on me. I thought it was pretty good. e.g., “The court is scheduled to hear the case later this month and issue an opinion in June. But even if the mandate is struck down, many states are still going to move forward with an exchange, and those people who need insurance and qualify for subsidies will still go to the exchange for their coverage. In the middle of all of this are the health insurance brokers who are currently trying to sort out what all of this means and how… Read more »

Joe Flower
Guest

> self inflicted injuries to not be covered at all, ideally. If someone drinks their liver away I don’t think we should all have to buy them a new one. Same for smoking. This is a common idea. There are four assumptions built into it, all three of which have problems: 1) That the “self-inflicted injuries” that people commonly identify (smoking, drinking, other addictions, obesity) actually are major predictors of cost. 2) That we can clearly differentiate “self-inflicted injuries” from other medical problems 3) That to the extent that they are actually “self-inflicted,” the patient could just stop doing them… Read more »

Nate Ogden
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Nate Ogden

They wont be huge cost savings but they would lower cost a few percent. I think we need 20-30 solutions that all reduce 1-2%, not one magic bullet. If we never did a liver or lung transplant for smoker/heavy drinker it would save money and make the organ available for someone that hadn’t engaged in that activity. I have a case now that is finally getting a lung transplant, hold up was waiting for them to go 6 months without smoking. There needs to be consequences to bad decisions. We just need clearly defined rules that we don’t make exceptions… Read more »

Jonathan H
Guest
Jonathan H

I agree with the main argument wholeheartedly, though not with the tone. In particular: “There are so many restrictions on your options that you’re forced to choose from a few used, four-cylinder, two-door sedans with manual transmissions.” This demonstrably mischaracterizes the options in the exchange. Consumer-directed plans are not excluded, high-deductible plans are not excluded, tiered networks are not excluded, value-based benefits are not excluded, bundled payments to spread risk with providers are not excluded, innovative wellness incentives are not excluded. What sort of Jaguar or Elantra health plan is excluded that would transform health care cost or quality? Also,… Read more »

Peter1
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Peter1

“exchanges will provide consumers with valuable information on their coverage options”

Yea, less coverage means less cost – duh.