Some Healthcare Exchanges Are Arriving

By Author: Marcus Stalder
Total Articles: 491
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The plan laid down by the Affordable Care Act is remarkably simple in theory. Every state will establish its own healthcare exchange to provide a marketplace where their citizens can buy a health policy. Insurers will not be allowed to exclude people because of preexisting conditions and, because of the mandate, the larger number of healthy people buying cover will increase and the cost to all will fall. If for any reason, a state unreasonably delays creating an exchange or, indeed, refuses to do so, the federal government will step in and impose one. So, progress is being made in many states. For example, the Senate in Oregon has just passed a bill to create an exchange. No local politician is claiming their bill is perfect, but it does move the process nearer to completion and allows Oregon to claim $48 million to cover its expenses.

The Oregon approach is to allow all the uninsured and small businesses to use the exchange, picking their preferred policy from those offered by private insurers and approved by the Insurance Commissioner. All uninsured people with a low income are eligible for a subsidy. The hope is the ...
... Commissioner will limit approval to good quality policies at affordable prices. With the mandate, the Commissioner is projecting a 15% fall in premium rates for all. Together with the federal program to promote preventative medicine, the general expectation is that the health of the state will rise as illnesses are detected and treated before they grow more serious and expensive to treat. The defect in the Oregon exchange is that it relies on the insurers to compete. There's no power in the exchange to negotiate lower premium rates.

But if we head over to Oklahoma City, Governor Mary Fallin has announced the state will be rejecting the federal grant of $54 million to set up an exchange. With the Republicans running on a political platform to reject Obamacare, no GOP-controlled state wants to be seen as cooperating with the enemy. Such states are working on the basis the Supreme Court will reject the Act as unconstitutional and make the creation of an exchange unnecessary. The fact the state would be earning grant money for doing the initial work is not going to change the decision. Although the money would no doubt be a welcome addition to state funds, accepting the money is a bridge too far for Tea Party and other equally conservative groups. They all believe the free market works well enough and does not need the exchanges.

It does not matter who is right on the broader political issue, the practical results will soon be plain for all to see. Millions of uninsured Americans could be helped by making individual health insurance policies available through the exchanges. This is likely to be delayed in the GOP states where, in many cases, there are high numbers of unemployed. Once the exchanges are operational, subsidies will help the low-paid to buy. Although it would be good for all to get cheap health insurance, both through the subsidy and more generally because of the mandate, health insurance should become more affordable.