A news service for the people of Michigan from the Mackinac Center for Public Policy

While Gov. Rick Snyder and some GOP legislators are using the reassuring language of a modest “Heritage Foundation-type” or “Utah-type” health insurance “exchange” to advance legislation, the Snyder administration is requesting strings-attached Patient Protection and Affordable Care Act grants that increasingly commit the state to something very different: a full-blown “Obamacare exchange.” The latter is not really an exchange at all, but rather the agency through which PPACA’s mandates, subsidies, regulations and rationing will be imposed.

In the next couple weeks, legislative committees will start taking testimony. The legislation that has been introduced creates the structure of an exchange, but does not spell out full details of its duties or powers.

Whether intentionally or not, Michigan legislators may be getting set up for a “bait-and-switch” vote. The administration’s actions increasingly guarantee that the entity any legislation creates will be an Obamacare exchange, even though the bill may not explicitly say this and may be sold as something much more modest.

The consequences will be the same, though, whatever form the bill’s supporters’ sales pitch takes. Cato health policy expert Michael Cannon recently described some of these consequences in testimony to the Missouri Legislature, which is also being confronted with exchange legislation. Here is an excerpt:

If you opt to create an Exchange, then among your many responsibilities will be such diverse tasks as the following. You would be responsible for ensuring that carriers do not follow the law’s enormous financial incentives to avoid, mistreat, and dump the sick. You would have to run a reinsurance program and a risk-adjustment program. You would have to define and monitor “network adequacy” as well as each insurance carrier’s service area. You would have to monitor each carrier’s marketing materials. You would have to monitor and enforce carriers’ compliance with the law’s other anti-discrimination provisions. You would have to fund and monitor the “navigators” the law envisions. You would have to fund the Exchange in 2015 and beyond, perhaps with a premium tax. (Oregon has opted for a premium tax of up to 5 percent.) Then there’s all the reporting you would have to do to Washington, the approvals you would have to obtain and the months and months of waiting for an answer on everything.

In other words, be careful what you wish for when voting for an exchange that’s “just a Travelocity and Orbitz for health insurance.”

It is very likely that only a handful of states will have operational exchanges by the supposed “deadline” of Jan. 1, 2013, and the feds do not have the capacity to set up many state exchanges themselves. Given this, prudent state lawmakers should ignore the false urgency implied by exchange supporters. If it’s not about creating an Obamacare exchange, what’s the hurry anyway? After all, in 2013, the country will know better the final fate of the PPACA.

Cannon’s full Missouri testimony is here.

~~~~~~~~

See also:

Gov. Snyder’s 'Exchange' an Obamacare Trojan Horse?

Why Creating Health 'Exchange' Helps Entrench Obamacare

Health Care Compact Shifts Choices from D.C. to Michigan

Meet James Hohman, Assistant Director of Fiscal Policy at the Mackinac Center. James discusses his latest project, an analysis of Proposal 1, the proposal on personal property tax reform that will appear on the August 5th ballot. Read more about Proposal 1 here: http://www.mackinac.org/20246


Most Popular