Opinion

Dump ObamaCare, Keep Exchanges

There is now a clear consensus that Obamacare is poisoning what was, long before the Affordable Care Act was passed in 2010, a failing U.S. health care system.

Mountains of costly, unnecessary regulations; risk corridors and insurance bailouts; market distortions; a host of new taxes; unsustainable subsidies; individual and employer mandates; skyrocketing insurance premiums; failed and failing co-ops; armies of new bureaucrats but no doctors; and insurance benefits decided by Washington, not by us: Obamacare must go.

The ACA should be repealed in its entirety, yet we can salvage something useful from the ashes. One of Obamacare’s children, more a stepchild — Health Insurance Exchanges (HIX) — can and should survive the demise of its odious parent.

Twenty-two states and the District of Columbia created HIXs under the ACA using billions of federal dollars. That support ceases in 2017, at which time the exchanges are on their own, independent and presumably self-sustaining. They could continue despite repeal of the initiating law. But they should continue only if their original function is restored.

HIXs were conceived, advertised, and originally called marketplaces — free markets where shoppers (patients) choose among offerings from competing sellers of insurance.

Then ACA manipulators such as the infamous Jonathan Gruber distorted the free marketplace concept until it was no longer free but instead under government control. Washington told the sellers of insurance as well as sellers of care what they could sell or could not, and for how much. Washington also told buyers (patients) what they had to buy, or else.

In the marketplaces as implemented by ACA, Washington controls both supply and demand. That is the antithesis of a free market.

The U.S. has expended billions of taxpayer dollars to establish the exchanges — $2.1 billion just for a website called healthcare.gov. Rather than writing off all of that huge outlay as a total loss, we should keep the exchanges (modified) even as we dump all of Obamacare.

Eleven states and the District of Columbia have created completely state-based HIXs. Five others developed state-based HIXs that lease the information technology structure from healthcare.gov, i.e., from the federal government. If — hopefully when — repeal of Obamacare eliminates the subsidies, taxes, bailouts, and all the constraining regulations, HIXs can become true free markets. And if Washington also allows insurance carriers to sell across state lines, a previously “state-based” HIX could become a regional marketplace for health insurance.

Consider the north-central area of our country. Minnesota established a HIX called MNsure. Neighboring states North Dakota, South Dakota, Nebraska, and Wisconsin did not create HIXs. Suppose MNsure changed its name to the North-Central Health Insurance Exchange and functioned as the hub of a five-state marketplace where insurance carriers freely compete for buyers’ (patients’) dollars. How about New York’s state-based HIX acting as a north-east hub?

Both New Mexico and Colorado created state-based HIXs. They might combine or even compete to sell health insurance policies in Texas, a state that did not create a HIX. Of course, Texas might choose to create its own HIX now that the federal government is no longer dictating how a “free market” should work.

No central regulation. No market distortion. No one telling buyers what to buy. No one telling sellers what to sell. Free markets. Seventeen or more supermarkets-of-health-insurance where people buy what they want at a price they can afford, or decide not to buy.

Repeal the ACA, and make good use of something that a bad law created.

 

Deane Waldman, MD, is an emeritus professor of pediatrics, pathology and decision science, and director of the Center for Health Care Policy at the Texas Public Policy Foundation as well as the author of The Cancer in the American Healthcare System.

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