Health insurance exchanges are designed to help individuals and small employer groups be better positioned to purchase high quality health insurance by creating “organized markets” that simplify the job of selecting and enrolling in coverage and securing performance information about available products. [...]
Health insurance exchanges are designed to overcome a basic problem, namely the lack of a robust, organized market for the purchase of health insurance by individuals and small business. In the absence of an organized market, the price of coverage rises because of the additional costs incurred in marketing to and supporting thousands of small customers. In addition, the lack of an exchange means the absence of an organized group of individuals and small business purchasers across whom the cost of coverage can be spread.
Having been tried before in various places, these aren't an entirely new concept. Some attempts, like the Commonwealth Connector in Massachusetts, seem to be working pretty well. Other attempts, like those made in California, Texas, and North Carolina in the past, have failed for various reasons. States have between now and January 1, 2014 to design their exchanges; the failures of some previous efforts underscores the importance of getting that design right.
Switching gears for a moment, you've got to love the Heritage Foundation. Recently they lauded some health reform experiments Utah has been conducting in this piece: Consumer Power: 5 Lessons from Utah’s Heath Care Reform. Of course, being
The new federal health legislation is deeply unpopular, highly disruptive, unaffordable, and subject to extensive and growing litigation. As a result, it might be repealed or substantially altered by a future Congress.
Contrast that with the glowing review they give to Utah's reforms:
Utah’s specific model could yield positive results in other states, but states should adapt Utah’s broader approach to their own individual markets and conditions. Utah’s reform agenda provides a blueprint to empower health care consumers through conservative principles of free enterprise and consumerism. Utah’s experience provides general lessons for every state about how to establish an affordable quality health care system.
But what element lies at the center of the reforms in Utah? As you can probably guess from the context of this post, it's a health insurance exchange. In fact, they just took their pilot program statewide a little over a week ago:
Employees of participating Utah businesses can now use the exchange to "shop" for health insurance policies that best fit their individual needs, similar to arming employees with a debit card of sorts, to use for health insurance. If an employee desires a more expensive plan than what the employer covers, the employee would then make up the difference themselves. The defined contribution component, according to Utah's Office of Consumer Health Services spokesman Matt Spencer, is the cornerstone of the exchange system.
Rather than have one or two options that are pre-selected by their employers, workers can choose from more than 60 different plans from four of Utah's largest insurance companies: Humana, Regence, Select Health and United Healthcare.
By state statute, all plans offered through the Utah Health Exchange must meet federal standards for employer-sponsored coverage, which ensures all plans offered provide quality coverage from responsible carriers. It is also expected that the element of consumer choice — employees selecting their plans directly from carriers — will put downward pressure on prices and upward pressure on coverage quality.
They especially like the "defined contributions" aspect of Utah's exchange. That means instead of having an employer choose a plan or small menu of plans for its employees (as my employer does), the employer instead makes a set contribution toward the employee's plan, which the employee is free to choose from any plan offered in the exchange. Under that design, employers still contribute to their employees' plans but the employees have much greater choice and thus the market itself experiences much more competition between plans. I can see why Heritage likes it.
How does this jibe with the federally mandated health insurance exchanges? Well, it depends. Federal guidance is still forthcoming but as this great look at the policy issues surrounding the exchanges can attest, these new exchanges may well operate by exactly the same rules as Utah's exchange:
The ACA sets out in some detail the size of the employers that may participate in the exchange but is less clear as to how exactly employer participation would work. A “SHOP exchange” is identified but not described in the legislation. It could possibly be intended as an exchange in which small employers themselves purchase group plans for their employees. This would seem to be consistent with section 1312(f)(2), which defines a qualified employer as an employer “that elects to make all full-time employees of such employer eligible for 1 or more qualified health plans offered in the small group market through an Exchange.”
Elsewhere, however, the ACA seems to countenance an arrangement under which small employers play a more passive role, simply contributing to the premiums used by their employees to purchase insurance as individuals. For example, the law states: “A qualified employer may provide support for coverage of employees under a qualified health plan by selecting any level of coverage under 1302(d) [bronze, silver, gold, or platinum] to be made available to employees through an Exchange.”143 The provision goes on to say that employees may choose any plan within the tier of coverage chosen by the employer.
If things go as described in the second paragraph, the exchanges in every state will work just like Utah's new exchange. And then we can eagerly await a Heritage piece praising the federal health reform law. Or perhaps scrubbing their website of any positive mentions of Utah's reforms. Reversing (and attacking) their positions once Democrats adopt them wouldn't exactly be new for them.
While in 2009 Heritage was dying to explain to you Why the Personal Mandate to Buy Health Insurance Is Unprecedented and Unconstitutional, what they neglect to mention is that the dreaded individual mandate was their idea.
In 1990, at a time when Democrats leaned toward an employer mandate, Heritage presented an alternative, in line with the conservative catch-phrase "individual responsibility":
The second central element-in the Heritage proposal is a two-way commitment between government and citizen. Under this social contract, the federal government would agree to make it financially possible, through refundable tax benefits or in some cases by providing access to public-sector health programs, for every American family to purchase at least a basic package of medical care, including catastrophic insurance. In return, government would require, by law every head of household to acquire at least a basic health plan for his or her family.Thus there would be mandated coverage under the Heritage proposal, but the mandate would apply to the family head, who is the appropriate person to shoulder the primary responsibility for the family's health needs, rather than employers, who are not. By no longer restricting tax relief for medical care to employer-provided plans, and by restructuring tax assistance to help those Americans most in need, the Heritage proposal significantly would improve the American health system.
And in case you're wondering, this isn't just an idea they toyed with twenty years ago and then dropped. As recently as 2003, the individual mandate appeared in proposals offered by Heritage staffers to Congress:
The current social contract should be replaced with a more rational one. In a civilized and rich country like the United States, it is reasonable for society to accept an obligation to ensure that all residents have affordable access to at least basic health care - much as we accept the same obligation to assure a reasonable level of housing, education and nutrition.
But as part of that contract, it is also reasonable to expect residents of the society who can do so to contribute an appropriate amount to their own health care. This translates into a requirement on individuals to enroll themselves and their dependents in at least a basic health plan - one that at the minimum should protect the rest of society from large and unexpected medical costs incurred by the family. And as any social contract, there would also be an obligation on society. To the extent that the family cannot reasonably afford reasonable basic coverage, the rest of society, via government, should take responsibility for financing that minimum coverage.
The obligations on individuals does not have to be a "hard" mandate, in the sense that failure to obtain coverage would be illegal. It could be a "soft" mandate, meaning that failure to obtain coverage could result in the loss of tax benefits and other government entitlements. In addition, if federal tax benefits or other assistance accompanied the requirement, states and localities could receive the value of the assistance forgone by the person failing to obtain coverage, in order to compensate providers who deliver services to the uninsured family.
Let's hope the "general lessons for every state about how to establish an affordable quality health care system" learned from Utah indeed spread to the health insurance exchanges in every state, facilitated by a Democratic health reform law. I can't think of a better way to make Heritage despise them.
No comments:
Post a Comment