Problems With State Health Insurance Exchanges
Stanley Feld M.D.,FACP,MACE
December 15th was the deadline
for states to sign up to implement state health insurance exchanges.
President
Obama was hoping all 50 states would agree to set up and implement health
insurance exchanges.
Health
insurance exchanges might be able to dis-intermediate the healthcare insurance
industry. They might also cause the insurance industry to leave the healthcare
business.
If that happens President
Obama would not have anyone to provide administrative services for Medicare and
Medicaid.
Why
would President Obama be interested in expanding a failed entitlement program
such as Medicaid? Medicaid is bankrupting the healthcare system. States would
go deeper in debt if they try to implement health insurance exchanges.
In order to survive states would have to increase state taxes.
Businesses
and people are leaving California in droves because of the real effective tax
rate will be over 60% of gross income on January 1, 2013.
Governors
realize their state can have a competitive advantage over others in attracting corporations to move to their state
if they balance their budget. They are trying to avoid this federal government
disaster.
Over
60% of the population is opposed to Obamacare.
States
refusing to set up state health insurance exchanges are reflecting public
opinion.
President
Obama’s goal should be to improve entitlement programs such as Medicare and
Medicaid so that the programs would save money and improve the healthcare
system.
“Even
President Obama has recognized Medicaid is broken," says Mike Schrimpf,
spokesman for the Republican Governors Association. "For many states,
placing more individuals into a broken system would be like adding more
passengers to the Titanic. And regardless of whether it's federal dollars or
state dollars, taxpayers are still on the hook."
A total of 30 states are leaning toward rejection
of the health insurance exchange concept. Only 17 states plus DC have agreed to
run a health insurance exchange.
The federal government will have to set up 30
health insurance exchanges. The latest reports are the administration is not
prepared to set up run the exchanges.
“As
of November 19, 2012, seventeen states, NY, MA, RI, NH, DC, KY, DE, W VA, MS.
NM, CO, CA. OR, NV, MN, WA, and HI have declared their intention to establish a
State-based Exchange (SBE).”
After my recent articles about health insurance
exchanges several readers asked why the health insurance exchanges were a bad
idea from a state’s point of view.
There are many reasons:
1. States are under
no obligation to create a health insurance exchange that could create a large
financial burden to the state and its citizens. A Supreme Court ruling has given
states that option.
2. 14 states have
enacted either statutes or constitutional amendments (or both) forbidding state
employees to participate in an essential exchange function. It made operating
Obamacare illegal in the following states; Alabama, Arizona, Georgia, Idaho,
Indiana, Kansas, Louisiana, Missouri, Montana, Ohio, Oklahoma, Tennessee, Utah,
and Virginia
States passing these amendments was by a state was part of
the strategy to reject Obamacare.
3. State governors
estimated that health insurance exchanges would cost the state $10 to $100
million dollars a year. State constitutions prohibit budget deficits. Health insurance exchanges would
necessitate increased taxes.
Increasing taxes has a negative effect when states are trying
to lure businesses. i
4. Deadlines have continually been delayed. Concrete rules
and regulations have not been published. Uncertainty prevails as if a trap is
going to be sprung on the states.
President Obama has
not yet provided the crucial information for
states to make an intelligent decision about setting up a health insurance
exchange. President Obama wants the states to trust him, sign up, and then
accept federal regulations.
5. States have been given the option to create health
insurance exchanges at a later date. Some state politicians fear the loss of
federal funds. Others see the federal funds as a carrot that will cost their
state more in the long run.
6. In the preliminary rules the “state-created exchanges”
are not controlled by a state-controlled exchange.
The exchanges are to be controlled by rules created by the Obama
administration.
7. President Obama has authorized payment to the states
for start up costs and expenses for Medicaid Expansion until 2017.
Congress has not authorized these
funds. President Obama might not be able to get the funds from congress to fund
the states’ health insurance exchanges.
The states’ would be stuck with
the bill.
8. State officials responsible for setting up the exchanges
believe Obamacare will fail. Many feel it will increase private insurance
premiums and deny assess to care.
These state officials do not want to take the blame for this
disastrous mess that they have no control over.
9. President Obama’s ultimate goal is to create a “Public Option”
and then have the federal government control all the stakeholders in the
healthcare system. His ultimate goal is
to have a single party payer system.
State governors understand that public outcry will stop it.
States want to control their own destiny.
10. If the federal government must set up health insurance
exchanges because the state refuses, the Obamacare law as written exempts a
state’s employers from the employer mandate of $2,000 per employee per year.
The Supreme Court called the mandate a tax but everyone
knows it’s a mandate.
11. If the states
avoided the mandate and save $2,000 per state employee it would put the state
at a competitive advantage to improve the prospect for job creation. It would
protect individual and states rights. It would protect some tenants of
religious freedom that Obamacare ignores.
There is no evidence that Medicaid is
cost effective, that medical outcomes are improved or that access to medical care
for the poor would improve.
“There is scant reliable evidence that Medicaid improves health
outcomes, and no evidence that it is a
cost-effective way of doing so.”
In the short term it has been predicted that healthcare insurance premiums for the
middle class will increase by 50% and access to medical care will decline.
State health insurance exchanges
will result in higher state taxes, fewer jobs, and less protection of religious
freedom. States are better off defaulting to a federal exchange.
Neither the states nor the federal government has the money
to expand Medicaid.
Theoretically,
health insurance exchanges are a good idea. Practically, they are not.
If all states refuse to set up health insurance exchanges
and avoid falling into President Obama’s trap Obamacare will be doomed.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.
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