NCPA - National Center for Policy Analysis

State Decisions on Health Exchanges: Early Indicators for ObamaCare's Post-Election Health

November 19, 2012

The Department of Health and Human Services (HHS) initially set November 16 as the date for states to decide whether they plan to set up a state-based health benefits exchange in time for initial HHS approval by January 1, 2013. The deadline has since been pushed back to December 14, says Thomas P. Miller of the American Enterprise Institute.

At the moment, it seems a majority of the states will not meet the deadline. This is, in part, due to concerns about the Affordable Care Act (ACA).  Indeed, creating a functional health benefits exchange under the ACA faces key impediments:

  • The ACA is a classic example of a limited, but theoretically good, idea mutating into a politically-driven passage to overregulation, income redistribution and increased dependence on Washington.
  • Most states will either refuse to set up their own exchange or prove unable to do so for political and technical reasons.
  • The administrative challenge in organizing necessary data stream from multiple venues, creating basically "new" insurance markets, and handling a potential flood of demand for such coverage remains daunting and unprecedented.
  • Serious legal questions on the actual authority of federally run exchanges to administer premium subsidies remain unresolved, diluting the power of any arguments that states must set up their own exchanges to avoid losing control.

There are several options state leaders can employ to express their resistance to the ACA.

The first option is "the Pottery Barn Rules" -- meaning, you break it, you buy it.

  • This is a passive-aggressive stance that implies that the opposition just stand back and wait for the implosion.
  • This, however, is not proactive in solving the problem.

The second option might involve approving different versions of own state-based exchanges that can operate under a market-friendly framework.

  • Flexibility, choice and open competition would be more important tools than standardization, selective contracting and compulsion.
  • Such exchange-like mechanisms would involve willing consumers, private providers and employer sponsors as partners rather than as subjects.

There's also an intermediate option. It would resist implementation of federally facilitated exchanges while improving bargaining leverage to insist on pro-competition state-designed alternatives.

Source: Thomas P. Miller, "State Decisions on Health Exchanges: Early Indicators for ObamaCare's Post-Election Health," American Enterprise Institute, November 13, 2012.


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