PPACA prescribes states’ “flexibility” in structuring exchanges. Libertarian and conservative policy analysts have criticized Massachusetts’ bloated and intrusive Commonwealth Connector, the country’s first pre-Obamacare exchange. Some, however, have pointed to the Utah Health Exchange, re-launching next year, as a more consumer-friendly alternative. According to this line, even states opposed to Obamacare should go forth and establish Utah-type exchanges, which will blunt the worst effects of Obamacare.
These grounds for collaboration, unfortunately, do not survive careful scrutiny. In the pre-Obamacare world, exchanges were suggested as a way to get around the major government failure in American health care: Congress’s grant of monopoly control of our pre-tax health dollars to our employers.
The Utah Health Exchange allows spouses to aggregate defined contributions from different employers. For example, suppose a husband’s employer contributes $300 per month to the exchange for health insurance. His wife works for another employer which does the same. The household has $600 to spend on a family policy that they, not their employers, choose. The husband and wife can then decide to which of their employers they wish to affiliate, satisfying federal regulations for group coverage. That sounds pretty good. However, this “premium aggregator” has not yet been tested. It goes into effect this month, for members who applied via open enrollment at the end of last year.

