When a judge last month declared ObamaCare unconstitutional, many people in Georgia and the other states suing to overturn the law wondered if they had been freed from its onerous taxes and regulations.
Georgia could stand pat, gambling that the ruling will hold up on appeal. A more prudent tack is to copy a reform model that predates the federal law — and might satisfy it.
Utah created a health-insurance exchange in March 2009, around the time President Barack Obama began his health-reform push. A pilot version was in place later that year, and last fall the exchange went statewide. More companies in Utah offer health insurance to workers now. And they didn’t get subsidies to do it.
Utah’s exchange gives consumers information about plans and helps them enroll in one. Crucially, it allows them to pool health dollars, whether from their employer(s) or their own money, as never before.
“It’s the easiest idea in the world,” says Cheryl Smith, who helped launch Utah’s exchange and now works with other states that want to do the same. (Georgia is not a client, though state leaders are interested in starting an exchange.)
The ability to pool money is key. Smith says most of Utah’s uninsured were employed, but many of them worked multiple part-time jobs and didn’t qualify for health benefits.
For those individuals, Smith says, “if Employer A gave $300 and Employer B gave $200 … we could combine those contributions and help them get a plan.” Both employer and employee can do this with pre-tax money.
Pre-existing conditions aren’t a factor because the exchange helps insurers mimic the size, stability and randomness of large risk pools. In turn, the exchange adjusts the premiums insurers receive for the risk they take on with consumers who have, say, diabetes.
“This is really what most states need,” says Grace-Marie Turner of the Galen Institute, a think tank that promotes free-market solutions for health care. “It allows insurance to be portable because the insurance is owned by the individual.”
State exchanges are also a feature of ObamaCare. But while its requirements for those exchanges are still in the works, they’ll likely be more burdensome than what many states would design. Turner predicts low-premium, high-deductible plans — popular on Utah’s exchange — will be scarce.
The Obama administration’s concept of an exchange is closer to what Massachusetts has done, including the insurance mandate for individuals and subsidies, than Utah’s model.
The Massachusetts plan has attracted more participants than Utah’s — “When you’re giving it away free, it’s not hard to get people to join,” Smith says — but at a far greater cost. The budget for the Massachusetts Connector in Year 1 was $25 million, growing to $30 million. In Utah, the respective figures are $600,000 and $675,000.
But back to the lawsuits moving through the courts. If ObamaCare survives the legal challenges, a state that hasn’t planned its own exchange may not have time to catch up. The consequence: The feds would set up and run an exchange in that state as they see fit.
But if a state already has an exchange that “is getting good results, and they can see that people who are formerly uninsured are becoming insured,” Smith says, “I would hope [the federal government] would have the wisdom to let a state continue to do that.”
Wisdom from Washington? Sounds like a stretch, but it’s worth a try.
– By Kyle Wingfield
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