A Bad Idea: Establishing an ObamaCare Exchange for Pennsylvania
Dr. Nick Pandelidis, Director of Health Care Policy for PA Coalition for Responsible Government
The proposal of the Corbett administration and the state legislature to establish a health care exchange would create a large bureaucracy to administer ObamaCare mandates, subsidies, regulations and rationing.
Proponents say an exchange established by the state will give Pennsylvania more control over the administration of ObamaCare if the federal law is upheld by the U.S. Supreme Court. This is an illusion because the Obama administration has made it clear that it will impose its will irrespective of anything done at the state level.
A better course of action is for Pennsylvania government to continue to fight ObamaCare in legal cases already in progress and to develop market-based solutions to problems in the health-care system
The activities of the state’s ObamaCare exchange would include:
- Determining subsidy levels for private insurance products
- Verifying income eligibility and tax credit and cost-sharing subsidies by sending information to the IRS
- Verifying exemptions from ObamaCare’s individual mandate to purchase insurance by sending information to the IRS
- Certifying that an individual is exempt from the individual mandate
ObamaCare’s direct unfunded costs to the states include the expense of running exchanges and the associated bureaucracy. Consultants and vendors of information technology (IT) are swarming the states, urging them to invest in IT to enable ObamaCare exchanges. In addition, Pennsylvania will bear a portion of the cost for new enrollees into Medicaid.
From the Pennsylvania taxpayers’ point of view, it makes no difference whether that cost translates into higher federal taxes, higher state taxes, or more expensive health care insurance. These costs will exacerbate the already challenged state budgets and a struggling state economy.
Claims that an exchange will produce more competition in health care and lower costs are ludicrous. An exchange will be highly regulated and lead to fewer insurance providers and less competition, resulting in lower quality and higher cost. We don’t have exchanges for home or auto insurance yet there are vibrant competitive free markets for those products that provide consumers with products that are affordable and best fit their individual needs.
In setting up the exchange or even accepting federal grants to explore the possibility of an exchange confers legitimacy to the awful ObamaCare law and undermines Pennsylvania’s argument against ObamaCare to the Supreme Court. Judge Vinson, reflecting on his decision in Florida v. U.S. Department of Health and Human Services, notes “the severity of that injury (from ObamaCare) is undercut by the fact that at least eight of the plaintiff states have represented that they will continue to implement and fully comply with the Act’s requirements.”
ObamaCare’s requirements and imposition of new costs constitutes a substantial infringement on state sovereignty. By voluntarily setting up an exchange, Pennsylvania surrenders its sovereignty without a fight, giving up the case for states’ rights under the U.S. Constitution.
The fact that an exchange is state-run does not diminish federal control by one iota. There is nothing that a federal exchange can do that the federal government cannot also force a state-run exchange to do through regulation.
Any exchange must be approved by U.S. Health and Human Services (HHS) and any flexibility promised to the states can be eliminated by regulatory pronouncement without recourse. State established ObamaCare exchanges are only as flexible as federal law permits. But all this “flexibility” essentially allows is the creation of a state and federally-controlled market where the state determines which insurers participate and which plans and coverage are available. In reality, states will only be able to tinker at the edges or seek minor concessions from Washington.
Should the state decline to set up an exchange, the feds will not be eager to step in with their own exchange. Not only do they lack the capacity because of goof-ups in the law, they lack the authority to create and operate the exchanges.
ObamaCare failed to provide funding for federal exchanges. Even more seriously, the law did not authorize payment of insurance subsidies through the exchanges. The Obama administration is offering financial inducements to Pennsylvania to create an exchange because the administration knows that every new exchange helps them shield the law from Congress, the courts and the American people.
The majority of citizens oppose implementation of ObamaCare and that opposition will grow as more of ObamaCare’s harmful effects become evident. Why would Pennsylvania state government want to promote its implementation on the behalf of the federal government, actively establishing the exchange and then share the blame for its consequences?