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Section A: General News


Editorial: The impending disaster of ObamaCare exchanges




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Guest Editorial
November 14, 2012 | 935 views | 2 comments

By Sally C. Pipes

Nov. 16 is the deadline for states to submit a blueprint to the federal government for ObamaCare insurance exchanges -- a key component of the new health-care law.

Already, the exchange system is proving to be an unmitigated disaster. No one should be surprised by this. Like so much of the president’s gargantuan health-care entitlement, the exchanges are burdened by a spider’s web of confusing regulations, poor design, and a top-down, command-and-control structure.

These exchanges were conceived as state-based insurance marketplaces. They were intended to reduce costs and increase access by streamlining the process of buying coverage. States would customize their exchanges to meet specific local needs. They could experiment. And individual consumers and small businesses would have an easy avenue to get coverage.

It seemed to be a rare instance of liberal lawmakers taking Justice Louis Brandeis’ advice to use states as “laboratories of democracy.” In practice, however, nothing could be further from the truth.

For starters, each state’s base plan must abide by federal mandates regarding application requirements, income verification, and appeals processes. Regulations released earlier this year by the Department of Health and Human Services state the situation plainly: “The Affordable Care Act does not contemplate divided authority over an Exchange.” In other words, it’s the fed’s way or the highway. If a state refuses to start up an exchange, the federal government steps in and forcibly establishes one for them. So much for experimentation.

But it gets worse. Even now, state governments have no idea what standards or rules they will actually have to abide by. With the Nov. 16

deadline quickly approaching, the federal government still hasn’t even spelled out the so-called “Essential Health Benefits” -- that is, the set of minimum benefits every plan on the exchange has to offer. (Then again, what do you expect from a government that hasn’t even passed a budget in three years?)

As Pennsylvania State Insurance Commissioner Michael Consedine recently explained before Congress, “Continuing without answers to these crucial issues is like driving down a winding road, at night, without any headlights -- nothing good will come of it.” But even if the government had done its job and spelled out the rules, the exchanges would still be a raw deal for the states.

To date, only 15 states plus Washington, D.C., have declared their intention to set up insurance exchanges. The rest are holding back, upset with the costs associated with running them. States have to bear the expenses of staffing these exchanges and financing development of needed technologies, like website registration systems. Many worry that these costs will deplete funds for more immediate needs, like education and transportation. It’s for such reasons that Florida and Louisiana have opted not to set up their own exchanges.

Back in September 2010, financially strapped California was the first state to sign legislation creating an exchange. California’s pocketbook was already hurting then and things have only gotten worse since. Local cities like Stockton and San Bernardino have declared bankruptcy. Now the Golden State will have to shell out for an exchange expected to cost more than $2 billion a year. With little progress being made since California accepted the first funds from the feds to set up an exchange, Peter Lee, who is in charge of establishing the exchange, has hired the consulting firm Accenture to help build it.

California Health and Human Services secretary Diana Dooley has even criticized the essential health benefits requirement. These mandates drive up the price of plans. As a result, some insurance companies may decide not to participate in the exchanges at all. And, as Dooley recently told the New York Times, many of the required benefits “go beyond what I would call essential.”

Making matters worse, the deadline for compliance came in the throes of a presidential election, ensuring that the issue would be fraught with political baggage. Some conservatives, like New Jersey Gov. Chris Christie and Nebraska Gov. Dave Heineman, decided to wait until after the election to make any major decisions about the exchanges.

Like ObamaCare itself, the exchange system is plagued by incompetent management, burdensome regulations, and inept political calculations. Even now that the president managed to come out victorious on Election Day, November could still prove his undoing.

Sally C. Pipes is president, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute. Her latest book is The Pipes Plan: The Top Ten Ways to Dismantle and Replace Obamacare.
 

Your Opinions and Comments

 
Alvin Charmaine  
November 14, 2012 11:40pm
 
Did we just vote? I thought we just voted and this issue was at the center of the debate, I could have sworn we just voted.

 
Facts only please  
TX  
November 14, 2012 8:48pm
 
I am glad Texas is going to let the government setup the exchange system for Texas. Just one more thing for Perry to screw up.

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