gramesmith70: Health Insurance Exchanges, Obamacare Friend or Foe?

Last year I attended a stakeholder meeting at the Nevada State Office Building to brainstorm ideas for implementation of the Silver State Health Insurance Exchange Program. A key component of the Affordable Care Act, a health insurance exchange is an online marketplace where small businesses and individuals can shop for private health plans.

While Republicans on Capitol Hill were arguing down parts of the law as unconstitutional, Governor-appointed advisory committees were convening behind the scenes to address financing and sustaining the Exchange, plan management, options for small businesses, consumer assistance and risks and reinsurance.

This is what could be overheard at a typical meeting:

?Plan X offers a richer benefits package and is supported by consumer oriented groups?;
?Plans Y and Z have less benefits but are also less costly?;
?Plan X covers eye wear?;
?Plan Z doesn?t cover speech or hearing exams.?

These are just a few examples of the types of decisions being made about your health care.

Even though law requires all states have exchanges, six states ? Alaska, Florida, Louisiana, Maine, South Carolina and Texas ? have said they will not create their own. For these few, the United States Department of Health and Human Services will create one for them, operating as a Federally-Faciliated Exchange (FFE), with or without their help.

Moreover, The Washington Post reported that dozens of states are unprepared to submit plans for running their own exchanges by the November 16th deadline. Some, but not all, of the resistance can be chalked up to Republican-led states who were hoping that the Supreme Court would strike the health care law down or that Mitt Romney will win the election in November and repeal the law the following year.

?We thought states would sit down and weigh the pros and cons of taking on this responsibility,? said Alan Weil, executive director of the National Academy of State Health Policy. Instead, ?states are looking at this much more from a partisan lens and less through a strategic analysis of running an exchange.?

It doesn?t make sense that states would rather defer to the federal government than to operate their own health insurance exchange programs. Especially given the assault on health care law for being an overreach of states? rights. But, then again, we are talking politics.

This article in the New York Times, explains the fundamental ideological paradox of the Affordable Care Act, which is ?based on conservative, not liberal ideas about individual responsibility and the power of market forces.?

?The core drivers of the health care act are market principles formulated by conservative economists, designed to correct structural flaws in our health insurance system ? principles originally embraced by Republicans as a market alternative to the Clinton plan in the early 1990s. The president?s program extends the current health care system ? mostly employer-based coverage, administered by commercial health insurers, with care delivered by fee-for-service doctors and hospitals ? by removing the biggest obstacles to that system?s functioning like a competitive marketplace.?

Also explained here:

??health insurance exchanges, another idea idea formulated by conservatives and supported by Republican governors and legislators across the country for years. An exchange is as pro-market a mechanism as they come: free up buyers and sellers, standardize the products, add pricing transparency, and watch what happens.?

Even the Heritage Foundation issued a report in support of federal health insurance exchanges. From 2009:

?A state-based health insurance exchange can indeed be a sound way to achieve a level playing field and a statewide market for a variety of different private health plans to compete directly for the business of employers and employees, individuals, and self-employed persons. That is why conservatives in Congress and elsewhere have promoted the exchange as a voluntary option for those states that could use such a mechanism as part of their reform of their often-dysfunctional health insurance markets.?

Yet, Republicans cry foul. So, Obamacare doesn?t offer a voluntary option for states to opt into marketplaces ? it?s important to make that distinction, but does that really warrant a full repeal of health care law?

If, for instance, Mitt Romney is elected in November and ?acts to repeal? Obamacare, a few things could happen. The most likely conclusion is that he would try and use budget reconciliation to get rid of the law?s spending. This won?t get rid of the law itself, but it would make it impossible to execute because the law gives states federal grants to help build their exchanges, and the loss of this funding will make it harder for states to start their online marketplaces. Even if Romney decided to keep funding for exchanges, he would most certainly cut spending for subsidies so low income people wouldn?t be able to afford to purchase insurance in the marketplace.

Interestingly, private sector businesses are now jumping on board with insurance exchanges as well. A great example of this can be seen with Sears Holdings Corp. and Darden Restaurants Inc. The Wall Street Journal ran an article last week explaining the firms? overhaul of benefits, which will give employees ?a fixed sum of money, allowing them to choose their medical coverage and insurer from an online marketplace.?

It?s important to note that this approach is not directly related to health care law, but incorporates the model of an online marketplace. Why? Because it works. It gives consumers more options. Costs and savings are predictable. It drives competition and efficiency among insurers. It?s Market Economics 101.

Public exchanges and private exchanges are objectively different. Those created under the Affordable Care Act are aimed at providing subsidies for people who can?t afford to get benefits on their own. Private exchanges obviously don?t have this problem because employers and employees already have access to benefits through broker communities and online. Both concepts though, get consumers more involved in the purchasing of benefits for themselves.

Of course, there are complex issues like tax inequity, erosion of coverage, and the rising cost of health care, that continue to be raised. Depending on which economist you ask, you could get vastly different answers. Either way, it?s clear that health insurance exchanges are quickly becoming an idea supported by the mainstream, and it?s probably here to stay.

Is the Health Insurance Marketplace an Obamacare Friend or Foe? Sound off!

@KWriterClark