NCPA - National Center for Policy Analysis


April 1, 2010

Obamacare threatens state health reform experiments by superseding them.  In doing so, the new federal program deprives the country not only of the experiments themselves but also of evidence that might cast doubt on the promises of the new legislation, says Amity Shlaes, author of "The Greedy Hand."

State experiments allow the country to ascertain which mix of taxes, incentives and public administration works best when it comes to health care.  Indiana, for example, created the Healthy Indiana Plan: 

  • The program was billed as subsidized insurance for low- and middle-income Indianans.
  • Joining was voluntary.
  • As part of Healthy Indiana, the state created a health spending account of $1,100 per adult to be used for basic medical needs and preventive care.
  • At the end of the year, patients can rollover what remains in the health spending account if they receive appropriate preventive care; those who don't get the preventive care do not get those funds. 

In its two-year life, Healthy Indiana has proven popular: 

  • Some 60,000 Indianans have enrolled.
  • Ninety-nine percent said they would re-enroll.

Now, however, Healthy Indiana will be overwhelmed by Obamacare, which will have little regard for individual budgeting and incentives.  Unsure of future funding, Governor Mitch Daniels is already freezing new enrollment for the plan.  Daniels points out that the federal law will force tax increases at the state level in Indiana and elsewhere.  That's because the federal law effectively mandates expansion of Medicaid, whose costs the states help foot, says Shlaes. 

There other state experiments, as well, but Devon Herrick, senior fellow at the National Center for Policy Analysis, points out that the Obama plan will increase Medicaid enrollment by about 89 percent, leaving few resources for pilot projects in other states.

Herrick says that the federal government may grant waivers for state pilot plans like Indiana's, but that choice will be made at the discretion of federal officials. 

Source: Amity Shlaes, "Obama's Health Beast Squashes State Experiments," BusinessWeek, March 30, 2010. 


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