April 4, 2011

April 4, 2011 | Factsheet on Health Care

Health Care Exchanges: Obamacare Isn't the Answer

Conservative, Market-Based State Exchanges

  • Defined-Contribution Model v. Government Model: A conservative, market-based exchange is an administrative mechanism for enabling businesses to offer workers a way to choose and own their health insurance while still benefiting from the current tax breaks for employer-sponsored coverage. In sharp contrast, an Obamacare exchange is intended to be a bureaucratic tool for the federal government to subsidize, standardize, and micromanage health insurance coverage.
  • Separate and Independent from Obamacare: States shouldn’t try to “shoehorn” a conservative, market-based exchange into the Obamacare architecture; it isn’t a viable strategy either practically or politically. States should instead advance separate conservative, patient-centered, market-based health care reforms that offer Americans concrete examples of a positive, alternative vision to Obamacare and reinforce congressional efforts to repeal it.

Fix Health Care Policy Benefits of a Conservative Exchange

  • Provides More Health Plan Options for Workers: Today, workers get the plans their employers select for them. Under a defined-contribution exchange, workers would instead be able to choose from a wide and varied menu of competing plans and plan designs based on their own needs and preferences.
  • Expands Employer Options: Today, employers either offer coverage, sometimes at great cost and time, or they offer nothing. A defined-contribution exchange option offers an easier and less costly way for employers to offer coverage to their workers. It also enables employers, particularly small ones, who don’t offer traditional group coverage a way to contribute to their workers’ plans, even for part-time employees.
  • Achieves Portability: Today, workers who leave their employers also leave behind their health plans. Under a defined-contribution exchange, when a worker leaves his job, he can keep his plan. Moreover, if he doesn’t like his current plan, he can pick a different one at the next “open season.”
  • Creates New Incentives for Insurers and Providers to Compete: Today, insurers are accountable to the employer, the owner of the health plan. Under a defined contribution exchange, individuals are the owners, so insurers and providers would be more likely to collaborate to develop plans that offer better value at lower prices to patients.
  • Creates a Pathway to Convert Public Programs into Private Coverage: The defined-contribution exchange model can also be used by states to reprogram Medicaid and CHIP funding to “mainstream” beneficiaries into better quality private coverage.

Don’t Give Up—Take a Leadership Role

  • Forge Ahead with State Health Reforms: States must take a leadership role in advancing conservative, market-based health care reforms that expand choice and competition; put countervailing pressure on federal officials; and create an alternative, “non-qualified” health care market if Congress fails to repeal Obamacare before 2014.
  • Consider a “Defensive” Exchange to Preserve State Authority: In addition to pursuing their own reforms independent and separate from Obamacare, states will also need to decide whether it is in their best interests to create a limited, “defensive” exchange designed to minimize federal interference, preserve state authority to regulate insurance, and maintain state control over Medicaid eligibility until Obamacare is eventually repealed.
  • Beware of Federal Money: As Utah has shown, creating a conservative, market-based exchange doesn’t require significant expenditures. Therefore, states should use only their own funds when setting up market-based exchanges that are independent of Obamacare. Separately, if a state decides to authorize a limited, “defensive” exchange—so as to preempt Washington from establishing a federal Obamacare exchange in the state—state lawmakers should take care to ensure that such a defensive exchange does not accept any federal funding that directly or indirectly obligates the state to abide by federal requirements.

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