Leavitt Partners – The Health Care Blog

Health Insurance Exchanges Work

Sep 20, 2012• 6

By Rich McKeown

The Salt Lake Tribune Editorial Board recently used strong words to criticize the Utah Health Exchange. Its perspective ran afoul of our firm’s recent experience with the Utah exchange, which has been overwhelmingly positive.

Like many small businesses, the triggering event for our involvement in the Utah Health Exchange was the appearance of our insurance broker who laid out a spreadsheet presenting a 22 percent increase in next year’s premium costs. Disappointed, we asked our broker to review other options.

The conventional market yielded quotes ranging from a 22 percent to a 134 percent increase. Ask any small business and you will learn that these increases come right out of employee compensation and, in many cases, new hires. Containing these costs, particularly in small businesses with small risk pools, has eluded the best minds in health care policy for decades.

We asked our broker to explore the Utah Health Exchange with vigor. We considered it last year, but the deadlines proved to be an obstacle for us. Our experience this year was remarkable and is instructive for states that object to state-created health insurance exchanges on the flimsy basis of their association with federal health reform.

The Utah Health Exchange started in August 2009 with the primary target of helping small businesses obtain health insurance for their employees. It was named an exchange before the fury over Obamacare tainted the concept.

The word “exchange” connotes the market freedom that is associated with activities like the New York Stock Exchange. The Utah Health Exchange is organized by state government, but driven by the market. What we found was a transparent system that created options for every individual employed by us and exemplified market principles, states’ rights and federalism.

Why States Should Move Forward with Health Insurance Exchanges

Mar 16, 2012• 19

By David Merritt

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.

Gingrich Adviser Urges States to Implement ObamaCare

Mar 14, 2012• 2

By Michael F. Cannon

State after state is refusing to implement ObamaCare’s health insurance Exchanges. Republican David Merritt hopes they will “grudgingly decide” to change their minds.

Merritt is a health care adviser to Newt Gingrich. He is also a senior adviser at Leavitt Partners. Leavitt Partners is a consulting firm that makes money by helping states implement ObamaCare. In the Daily Caller, Merritt tries to persuade state officials to help implement a law they oppose.

Merritt begins his pro-Exchange argument like so: “Imagine that you’re being required to buy a car.” Would you rather choose that car yourself, he asks, or would you rather the dealer choose the car? Hmm, good question. I choose Option C: wring the neck of whoever is requiring me to buy a car. Not Merritt, though. He counsels states to choose their own “car.”

There are so many problems with this analogy that it’s hard to list them all. First, as Merritt essentially admits, states would be able to choose from such a narrow range of “cars” that it scarcely makes a difference whether they pick their own or let the feds do it. Second, states would only have to pay for their “car” if they pick it out themselves; otherwise, the feds pay for it. So Merritt is literally urging states to volunteer to pay for a “car” when the feds would otherwise hand them one for free. Finally, he says states should select their own “car” even though “no one knows what a federal [car] would look like.” How can Merritt counsel states to choose Option A if he admits he doesn’t even know what Option B is? Wouldn’t the prudent course be to wait and see? Especially since the Obama administration admits it doesn’t have the money to create Exchanges itself?

Merritt’s hypotheticals don’t make his point, either: