Should the States Set Up ObamaCare Exchanges?

Under the Patient Protection and Affordable Care Act (PPACA), state governments are expected to set up health insurance exchanges through which individuals will buy their own health insurance, in many cases with substantial subsidies. Should the states comply?

In the following point-counterpoint discussion, Linda Gorman and I give opposing answers to this important question. Leave your thoughts in the comments.

John Goodman: Yes

If the states abdicate their responsibilities under PPACA, the federal government will step in and act in lieu of the state. Under this scenario, states will relinquish all power to make a bad law better. Letting the federal government implement reform almost guarantees bad outcomes.

Linda Gorman: No

Exchanges are required to perform a variety of duties beyond distributing ObamaCare subsidies, and these duties are likely to add significantly to estimated costs. Some of them will damage a state’s business climate by creating new opportunities for crony capitalism. Some require that currently fashionable, but poorly tested, models be forced on health care providers. Some require that state exchanges have expertise equal to private insurers. Others force states to increase the cost of health insurance for people who currently have coverage.

“I’ve got better things to do.”

John Goodman continued:

The states should engage in preemptive reform over the next two years. This means enacting responsible, rational reforms — the kind of reforms that they should have enacted all along, in the absence of federal legislation. Where possible, states should try to make their reforms compatible with the new federal law — but only if compatibility does not sacrifice the major goals of the state’s reform.

There are four arguments in favor of preemptive action at the state level:

  1. If states enact their own reform and if it is achieving most of the goals of the federal law in a reasonable way, they may be able to secure a federal waiver to continue with whatever they are doing.
  2. There is some possibility that the federal law may be found unconstitutional or it may be repealed altogether. In either case, the states will be able to continue with their good reforms without federal interference.
  3. There is a high probability that PPACA will be subjected to major modification within the next three years—barring an outright repeal or a finding of unconstitutionality. An amended PPACA will likely grandfather any state reform that appears to be working reasonably well.
  4. Even if the states are forced to modify their reforms in major ways three years from now, the end result is likely to be much better if the system being modified is a good system to begin with than if a set of perverse federal rules are super-imposed on a pre-existing dysfunction of system.

State Responsibilities under the New Law. States are required to do a number of things under the PPACA. These include:

  • Setting up and administering a new risk pool for people who have been denied coverage because of a pre-existing condition.
  • Enforcing new health insurance regulations, including no ceiling on annual and lifetime spending, limits on the amount insurers can spend on overhead, enforcing a prohibition on pre-existing condition provisions in child-only policies, etc.
  • Beginning in 2013, enforcing a prohibition on adjusting premiums to reflect an individual’s expected health care costs, enforcing guaranteed issue in the individual market—both inside and outside the health insurance exchanges—and limiting the spread of premiums charged to different individuals at different ages and in different occupations.
  • Regulating health insurance premiums in the individual market.
  • Setting up health insurance exchanges and administering federal subsidies for individuals who purchase their own health insurance, beginning in 2013.
  • Managing a major expansion of Medicaid, including families with incomes up to 133 percent of the federal poverty level, beginning in 2013.
  • Managing the flow of people who move back and forth between the federal/state-funded Medicaid program and the tax-subsidized health insurance exchanges.

All of these responsibilities are challenging. They are costly and administratively difficult. Hence, it is tempting for the states to dump the problems back in the lap of the federal government.

What if States Do Nothing? More than half the states have already decided not to operate the new federally funded risk pools—which make health insurance available to people who have been denied coverage for a pre-existing condition—for the same premium healthy people would pay. In these states, the risk pool is being operated by federal authorities.

It is understandable that states would have little interest in operating a fund with downside risks and no obvious upside benefits. But for states that take my advice and implement preemptive reform, this decision may have been unwise.

The biggest problem in health reform is the problem posed by people known to have high health care costs. As a result, the greatest help a state can get in transitioning to a new health care system is a pool of money to pay for those costs—even if only for three years.  A well-funded risk pool should be an element of rational state-level reform.

Here is a principle to keep in mind on this and on many other issues: It is in the states’ interest to shift costs to the federal government wherever possible; it is in the federal government’s interest to shift costs to the states. With respect to a risk pool or a health insurance exchange there will be hundreds—even thousands—of decisions made on a day-to-day basis, that are hard to review and even harder to undo. From the state’s perspective, who do you want to make these decisions?

Let’s consider three areas where decision-making authority could be worth millions of dollars to state governments.

First, if state governments abdicate their right to set up health insurance exchanges, the federal government will step in and set up federally regulated exchanges in those states. But the official who stands at the entrance door of the exchange will be the person who will decide whether an applicant is entitled to federally subsidized insurance or whether that person should be getting insurance from an employer or from Medicaid. Consider also that whatever decision is made, no one will know if it was the right decision until an audit is done five years after the fact; and at that point there will not be much that can be done about it anyway.

In principle, there is nothing wrong with a health insurance exchange. What is wrong with existing exchanges is that they give health plans perverse incentives to underprovide to sick people. But an exchange that did not have such perversions built into it could be a valuable institution.

Second, consider the regulation of premiums for plans sold in the exchanges. The Obama administration’s goal for controlling costs in Medicare is immensely transparent. The administration wants to force seniors into super HMOs called Accountable Care Organizations (ACOs). It will then limit the income of the ACO—forcing it to ration care. In doing this, the administration will be following a precedent that is already underway in Massachusetts.

With that in mind, who do you want to regulate private insurance premiums in your state? If the federal government does it, the tendency will be to replicate what is happening in Medicare. The regulators will try to keep the growth of premiums below the rate of growth of health care costs. This will not really control costs but it will limit the size of the subsidies the federal government has to pay. In the process it will force health plans to ration care.

A third area where decision-making authority will be worth millions of dollars is the ability to determine whether an individual or family qualifies for Medicaid or qualifies for insurance in the exchange. Under Medicaid, the federal subsidy is much lower and the state has to pay a good portion of the cost. In principle, eligibility for Medicaid follows in a straightforward way from objective criteria—mainly family income and assets. In practice, however, people’s income and assets are changing all of the time. It’s not unusual for a family to be eligible and then ineligible for Medicaid several times in one year. According to one study of the problem, within six months, more than 35 percent of all adults with family incomes below 200 percent of the federal poverty level will experience a shift in eligibility from Medicaid to an insurance exchange, or the reverse. Within a year, 50 percent, or 28 million, will.

In the light of all this movement and flux, the ability to make decisions about who should be in the exchange and for how long could be worth an enormous amount of money to the state. Keep in mind that a family at 133 percent of the poverty level will get a benefit in the health insurance exchange in excess of $20,000, according to estimates of the Congressional Budget Office. Medicaid spending will probably be less than half that amount and the federal government doesn’t even pay all of that.

Bottom line: states should at least consider retaining as much decision-making power as they can get.

In a future Health Alert, I will discuss the elements of pre-emptive reform.

Linda Gorman continued:

Once an exchange is established, a state must:

  • Reimburse the exchange, but not private insurers, for the cost of any new health insurance mandates.
  • Establish a reinsurance program for the first three years of operation. Fees will be collected from health insurers and used to “stabilize premiums” in the individual market. This increases health coverage costs for people who have existing coverage.
  • Operate a risk adjustment program that collects risk-related data to determine individual risk scores. Private insurers have historically used experience based rating, not risk scores. Risk adjustment has not worked for Medicare Advantage.

Coverage offered through an exchange must:

  • Meet a variety of reporting and document standardization requirements.
  • Distribute grants to selected community groups “hired” to replace the services of traditional insurance brokers under PPACA’s “Navigator programs.”
  • Establish network adequacy standards that have no minimum requirement except that they cover a “sufficient number” of “essential community providers.”
  • Meet a variety of quality improvement requirements that, in pilots, have been shown to increase costs with little improvement in care:
    • Quality reporting.
    • Design new programs for case management, care coordination, chronic disease management, and care compliance initiatives.
    • Implementation of the medical home model.
    • Use of evidence-based guidelines.
    • Wellness promotion.
    • Operate programs for community outreach and cultural competency training to reduce health disparities.

We invite you to leave your thoughts in the comments.

Comments (32)

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  1. tdp says:

    In the item from yesterday’s Politico, an interesting point: Mass’s current exchange, the Connector, expects to lose up to 70% of its current volume when the ACA is fully implemented. Only one of the several reasons this could be the case is explained in this brief piece, but it is important:

    Massachusetts to move with Basic Health Plan back
    By Jason Millman | 5/22/12 12:02 PM EDT
    BOSTON — Massachusetts is moving ahead with plans to implement the Basic Health Plan, a little-known, optional ACA program that provides states with an alternative way to cover their low-income populations.
    The program would offer coverage through managed care plans for adults earning between 133 and 200 percent of the federal poverty level — people whose incomes would be just above the Medicaid cutoff line in 2014.
    Massachusetts is likely the first — and may be the only — to move ahead with this optional ACA program, according to Nancy Turnbull, a member of the Massachusetts exchange board.
    Individuals who enroll in the Basic Health Plan wouldn’t be eligible for exchange coverage, and states will get a 95 percent match from the federal government for what it otherwise would have spent for exchange subsidies.
    If Massachusetts goes forward with Basic Health — an option that could go away, depending on how the Supreme Court decides on the ACA — it would contribute to a massive exodus from the Massachusetts exchange’s individual market come 2014.
    Between Basic Health and the ACA’s Medicaid expansion, the state’s health exchange — known as the Connector — is projected to lose 70 percent of its individual market, Turnbull said. That has the Connector looking at new financing options.
    “Because we’ve had for now six years a program of subsidized coverage for people who are not eligible for Medicaid, one of the reasons we’re going to do the Basic Health Plan is [that] just putting those folks into an exchange and letting them buy coverage with tax credits isn’t as good as what we have now, so that would be a rollback in coverage for some people,” Turnbull said. She added that the state’s consumer groups are highly supportive of Basic Health.
    Some of the early criticisms of Basic Health have focused on the lack of guidance from the feds and uncertainty about its effect on the state’s individual market.

  2. Jane Orient says:

    There is no right way to do the wrong thing. States should not collaborate with implementation of an unconstitutional law. What naive faith to think that HHS would give a waiver to a plan that is not accomplishing the purpose of the Exchanges, which appears to be the destruction of true insurance!

  3. Ralph @ MediBid says:

    John, I disagree with you on this one. I dont think any level of government has any business distributing private products. They are incompetent to do so. We know exchanges are needed for obamacare, without them, it can not work. We also know that the funding for the exchanges has not been allocated, and that the house can simply refuse to fund it, effectively killing the bill. If the states comply, they are validating, and taking on huge costs, and setting up new bureaucracies for years to come. A law can be more easily defeated as long as it is ONE federal bill, if it becomes 50 state bills, it is more difficult. That’s why they are trying so hard to enact the exchanges and compacts quickly.
    When socialized medicine in Canada changed from one federal program to 10 provincial programs, that guaranteed eternal life of single payer in Canada. You will never have 10 conservative provincial premiers and one conservative prime minister in office at the same time, to simultaneously repeal the Canada Health Act.

  4. Ron Bachman says:

    It is a good thing you wrote this now as after June 28, 2012 this argument will be mute. ObamaCare will be unconstitutional. In any case, I am shocked that John is advocating anything that expands government control over markets, especially at a time when no such argument is of needed until the SCOTUS rules. If ObamaCare is constitutional and a republican administration and Congress is elected in November, then the argument should be for the use of private insurance information marketplaces as an option to get a waiver from government mandated exchanges. The government should not do those functions that are served better through private companies.

  5. Jeff says:

    I think Dr. Goodman gets the better of this exchange. Everyone seems to agree on principle, but the standpoint of the “yes” vote is more nuanced. It accounts for several future contingencies that radically re-frame the terms of the debate, including the possibility of providing alternatives to *less* attractive state plans (such as those listed by @tdp above)

  6. Todd says:

    @Ralph makes a good point, particularly when he says “A law can be more easily defeated as long as it is ONE federal bill, if it becomes 50 state bills, it is more difficult. That’s why they are trying so hard to enact the exchanges and compacts quickly.”

    This is intuitive but I agree more with the perspective that says that if states rejected this opportunity they’d effectively hand the reins over to the federal government. Ultimately, this is a discussion that hinges on decision-making power. It is too big a risk to leave that entirely in the federal government’s hands (particularly the Supreme Court’s.)

  7. Tim says:

    John’s got a good point. Take these points as true:

    a. Obamacare will fail.
    b. The highest health care costs come from the “riskiest” patients.

    The logical conclusion of these two statements is that “risky” patients will leave Obamacare because it will fail. States will *inevitably* see demand from risky patients. However, instead of modifying their own policy according to their own wishes, they’ll be forced to work around a failing federal alternative.

  8. Kenneth A. Fisher, M.D. says:

    HHS documentation states:
    Each State electing to establish an Exchange must adopt the Federal standards contained in this law and in this proposed rule, or have in effect a State law or regulation that implements these Federal standards. Section 1311(k) further specifies that Exchanges may not establish rules that conflict with or prevent the application of regulations promulgated by the Secretary.” http://www.gpo.gov/fdsys/pkg/FR-2011-07-15/pdf/2011-17610.pdf

    Thus the Secretary of HHS is in reality the czar of a state’s exchange and each succeeding secretary can change the exchange at will. This is nothing more than a power grab by the large insurers to work their will through the secretary. This is a bad idea no matter how one tries to excuse it!

  9. Alieta Eck, MD says:

    Dr. Fisher is right. Setting up an exchange with no ability to change the rules or be creative, is just giving the Secretary (un-elected) more authority to rule us. I think we need governors with guts– to just say no to the feds. This law is unconstitutional no matter what the SCOTUS says.

    The poor do not need insurance. They do not need an entitlement. They need medical care when they need medical care– a place to go when they find themselves sick and cannot pay. Local communities need to set up non-government clinics, not over-regulated, overly bureaucratic health insurance exchanges.

    The feds need to simply get out of health care. They provide NOTHING but rules, regulations and red tape.

  10. Twila Brase says:

    Just say no. The government exchanges are THE key to Obamacare (and national health care) and should be resisted, not installed. HHS (actually CCIIO) is on its third day of a THREE-DAY “Health Insurance Exchange System-Wide Meeting” in Washington, D.C. between federal and state officials. Three days. Imagine.

    Last week, $181 million was announced to advance the government health insurance exchange (HIX) in six states. That means over $1 billion has been given thus far to establish these federal “takeover centers” in each state. The feds are pushing them pre-SCOTUS because they want as many in place as possible.

    A Bloomberg Government study revealed that 98% of new spending will go to health plans through the exchanges: a whopping $1 trillion over 8 yrs. Last week, HHS said all qualified plans would be allowed in the HIX — for the first year.

    Showing their intentions, HHS in its guidance last week is pushing every state to pursue parallel paths: a “state” exchange AND a federally-facilitated exchange (shared duties). They want states to set up the infrastructure for federal control so it’s in place no matter what happens with SCOTUS, and in place when states later don’t want to spend $30 million a year to operate it. Last week, CCIIO ignored an Illinois reporter’s question on whether states would have to return the HIX establishment grant dollars. I’ll bet HHS intends to let states keep the money to keep building the HIX (http://www.nixthehix.org).

    States must refuse to cooperate regardless of how SCOTUS rules. If Obamacare is not overturned, the feds should be forced to set up a federal exchange in each state (actually it’ll probably be just one National HIX with 50 state web portals – http://bit.ly/AcuYq0) so that the federal takeover is actually visible to the public. It should be HHS-run with an HHS name. The whole idea for a “state” exchange is to hide the federal takeover from the public until the entire infrastructure is set up and nearly impossible to undo.

    As Dr. Fisher correctly states, every exchange must follow the federal law and the growing pile of federal rules. Just say no.

    I just wrote about this for my weekly CCHF Health eNews — which will be distributed Friday. Sign up if you want to receive this weekly publication that includes a letter from me, stats of the week, and “News to Know”: http://www.cchfreedom.org/form.php/14

  11. Harv Randecker/NAABC says:

    I think it is time to stop discussing how we can cooperate with implementinig a perverse plan that is only in place by partisan political means and for political reasons and certainly is not there to fix anything! There should have been an injunction against the PPACA when opponents filed in court………..like most other cases would have required. By not filing for an injunction, we have all been victims of the political psychology game which insinuates that ObamaCare is a given and may even influence the SCOTUS decision.

  12. Ralph @ MediBid says:

    @Harv, good points

  13. Vicki says:

    I think I agree with Dr. Goodman.

  14. Benjamin Cutler says:

    John, as usual you wrote a cogent article on the issues surrounding whether a state should take control of setting up a health insurance exchange.
    I’d like to give you something to chew on regards what I see as a major problem for insurers who opt to provide products on a given state exchange.
    The problem is what premium should I be charging? Assuming we get some clarity from HHS on how actuarial equivalence will be calculated, which
    Is fraught with complexity and an incredible number of variables which need to be taken into account in any actuarial equivalence calculation. But let’s
    Assume that gets clarified. With guarantee issue, there is no way for an insurer to know what cohort of risks will elect to purchase one of their exchange plans.
    And while insurers have experience with guarantee issue morbidity in their large and small group blocks of business, those groups are for the most part
    Actively at work risks. So there are woefully few risk measurement tools to estimate what claims cost totally uninsurable risks will generate.
    On top of that with HHS on the warpath on what they few as price gouging rate increases, if an insurer under prices a exchange product they may have
    A very difficult time getting adequate rate increases.
    John, I’ve been in the insurance business for over 40 years and I am stumped as to how I would go about pricing a health insurance product on a state exchange.
    This might be an area for NCPA to do some further exploration, as it in my mind will become a huge issue as we get closer to 2014.

  15. Hank Gardner says:

    As with many arguments, my experience tells me that both John and Linda have substance in their positions. However, neither cite micro-economics risk stratification data to support their arguments. Our research shows that the 5% high cost population who consume over 50% of covered services are remarkably consistent across all covered groups. Even with a high risk pool of uninsured individuals, where 5% consumed 54% of the annual plan cost….while 50% of this presumed high risk population used less than 1%. Our research shows that at least 30% of cost incurred by the 5% is moral hazard waste linked primarily to administrative information inefficiencies and benefits design. Neither of which are corrected by beaurocratic systems, whether with Federal or State Goverment. Or for that matter, with private insurance carriers. Only market competetive presures will fix that problem.

  16. Alieta Eck, MD says:

    NJ has has guaranteed issue and community rating (ObamaCare) since 1992. We have had our own insurance exchange, where the state sets the rules and companies set the premiums. I just pulled these MONTHLY premiums off the state website:

    Aetna Health- single-$759.00, family-$2,444.00

    AmeriHealth HMO- single-$893.97, family-$2,641.67

    Horizon BCBS of NJ- single-$931.06, family-$2,801.81

    Oxford- single-$813.00, family-$2,519.00

    Notes:

    Aetna rate is for a $30 copay plan with $2,500/$5,000 out-of-network deductible, $400 per day in-patient copay plan, and 100% in network/70% out-of-network coinsurance.

    Horizon rate is for a $50 copay plan with $5,000 deductible and 100% in-network/70% out-of-network coinsurance.

    This is what the rest of the states have to look forward to. These rates will be subsidized by the feds, but who will come up with the subsidies?

  17. Ralph @ MediBid says:

    @Alieta,
    Premiums in TN for a $5,000 deductible are $79, for somone under 25

  18. wanda j. jones says:

    John and LInda–you are both right but you have both bought into the mind-set of having a complicated insurance game implemented across 50 states with competency and integrity, plus ease of use by the affected customer. With many states unable to fund their current programs (California), and certainly unable to provide the matching funds for the Medicaid enrollments, all of this is a march to a cliff that leads to undoing something in a nasty way, either reversing benefits, or beggaring the provider sector.

    This is the worst law ever written in health care.

    There are things states can do if their population appears to want and need them: networks of primary care centers, chartering of healthcare systems to develop the care needed by the uninsured in exchange for exemptions from old-school mandates and regs that hold back innovation, and encouragement of community nursing using existing spaces in the community, such as churches and schools. There is much more to do, but look at how much is being designed and marketed by innovators in the tech world. Social media are a low cost way to educate consumers, and self-testing is a great way to shave off office visits. There’s much more to do and the private sector is the most creative sector to serve the public.

    I’m holding my breath for the Supremes.

    Wanda J. Jones, MPH
    President
    New Century Healthcare Institute
    San Francisco

  19. John R. Graham says:

    I will vote with Linda Gorman and the majority of people commenting here. Michael Cannon and I have written a number of articles explaining why states should adopt a policy of absolute non-collaboration with Obamacare.

    That being said, there are all kinds of reforms, which states should be implementing. However, these reforms need to look forward, beyond Obamacare – which is likely to soon be a footnote in history.

    Energy wasted trying to find a way to set up an Obamacare exchange is energy not invested in effective reforms that need to be in place post-Obamacare.

    How a state responds to Obamacare is not just an effect of Obamacare, but an influence on the future of Obamacare. Suppose (as most expect), the Supreme Court eliminates the indvidual mandate but leaves the rest of the law intact.

    Does anyone know what that looks like? No: It guarantees that Obamacare will have to be re-legislated in 2013. We want Obamacare repealed. We don’t want it opened up and “repaired”.

    In which environment is total repeal more likely? One in which many states are collaborating with the federal government setting up exchanges, or one in which most states have resisted and rejected them?

    I think that the latter is the obvious answer. We want Obamacare to have suffered as many mortal wounds as possible as it stumbles into November. We don’t want it striding confidently into that election.

    We do not want the health-industry lobbyists to remain confident in their message that they have already invested so much into Obamacare. We want their confidence severely shaken so that when the time comes for the next President and Congress to repeal the bill, they just get on with it.

    Furthermore, even if President Obama is re-elected, the threat of the federal government unilaterally establishing exchanges is probably non-existent. As Michael Cannon has discovered, the law does not grant Sec. Sebelius funding to establish such exchanges, nor to the Treasury Department to send tax credits to individuals in such exchanges. Both HHS and Treasury rebut Mr. Cannon’s analysis. Nevertheless, there will surely be more lawsuits if the federal government attempts to establish exchanges.

  20. Ralph @ MediBid says:

    @JohnGraham,
    I agree. Any state which sets up an exchange ESPECIALLY if they do so before SCOTUS and November 6th, are casting a vote in favor of obamacare. Even if obama is re-elected, it is almost certain the Republicans will have a majority in the house and senate, and be able ot block funding for the exchanges and compacts, thereby killing the compacts.
    Here is Michael Cannon’s video http://www.youtube.com/watch?v=AD8bInqBazI

  21. Charlie Bond says:

    Hello Friends,

    This excellent debate between John and Linda highlights the fact that health care financing reform is not the reform of health care. Until the care we, as patients, receive is rationally and fairly priced (based on true cost) any and all financing reform will be built on fiction and irrationality.

    It is time to bring health care back to its roots. All health care is personal–one patient, one provider at a time. Care is delivered to patients, not to statistical norms. And all health care is local. The delivery of care can only be made more efficient and cost-effecitive if we reform health care from the ground up, not the top down. Thus the only economic model that makes sense is the pursuit of community health plans in which the delivery of care and the value exchanged for that care are locally determined. Such localized plans can be “home grown” or–more likely–localized offerings from existing health plans.

    Why local reform? The answer is straightforward. While actuarial rules suggest that the larger the pool, the lower the cost, health care defies this premise because the price of care is not pegged to any true value and is widely variable from patient to patient within the same market–even within the same hospital. For decades we have institutionalized a fictional pricing scheme and have imbedded it in a complex house of cards based on false financial premises. Our response to irrational pricing has been to create even more complex systems of payment to combat a pricing structure that does not “play by the rules.”

    Creating an “exchange” to sell citizens health coverage does not address the fundamental economic flaws in our system. Nor does an exchange address the massive inefficiencies in the delivery of care itself.

    We all have a stake in reforming health care. Our very own lives or the lives of ones we love may be affected by how care is delivered. That reform needs to start with each of us and reach out into our communities so that reform happens doctor to patient, neighbor to neighbor, town to town, as we learn how to take care of one another.

    Our health and wellbeing, as well as the country’s fiscal health, depend on whether we can mobilize Americans to treat health care reform like a barn-raising and make it a local, community effort. The Patient-Physician Alliance is dedicated to spearheading such reform using free market forces without governmental intervention and without political partisanship or a political agenda. The organization would thus welcome any and all of the good readers of this blog to join us in our efforts.

    Cheers,
    Charlie Bond

  22. Ralph @ MediBid says:

    @Charlie,
    Excellent point. Insurance should always be a secondary product to cover a desired risk. It should follow that risk and cover systematic risk. The third party payer system we have now is attempting to DRIVE the underlying product.
    Back in the 60′s, there was a product called Medical Care. It was provided by Marcus Welby M.D. He defined the scope of the service, and the quality, and he delivered it individual. We purchased as much or as little as we needed or wanted.
    Over the years, the “product” has become “healthcare”, and medical care is simply a widget or byproduct. Healthcare is not universally defined, but it really is the payment, or financing of medical care.
    Remember when a car said “$8,600″ on the window, and the accessories were the expensive items? Now, it says “$499 a month, ZERO down”, and all the accessories have been added.
    We buy “healthcare” the same way. $499 a month, and it funds contraception, drug counseling, wigs, chiropractic etc. Because the product we are trying to reform is healthcare, not medical care, the cost of the underlying asset is out of our focus. It’s like the tail wagging the dog.
    Because so many items are underfunded in this model, basic items need ot be over priced to compensate for other losses.
    That’s why at http://www.MediBid.com we are able ot get prices which are on average 38% to 50% below Healthcare Blue book, or insurance discounted rates. It’s because we have a laser sharp focus on the product, and there is no cost shifting.

  23. Ron Bachman says:

    I agree that states should be preparing for reform post-ObamaCare. In Georgia, we have 6 bills ready to go as some as it is ruled unconstitutional. That legislation includes:
    1. Regional multi-state coalition
    2, Private Health Insurance Information Marketplace
    3. Personal Responsibility High Risk Pool
    4. Flexible Choices Act
    5. Private Market Safety Net
    6. Charity Care Clinic Organizations

    We believe the above can lower the cost of insurance by 20-40% and increase insured lives by over 1million in our state.

    The specifics and details of this state reform can be found at http://www.georgiahealthreform.com

  24. Ralph @ MediBid says:

    @Ron,
    Where can I see those bills? In TN, the legislators have ZERO healthcare knowledge, and are passing very bad bills, including trying to get exchanges set up

  25. Ron Bachman says:

    They are on the website:

    http://www.georgiahealthreform.com

    4 are in final legislative language, the other two are described in detail ready for legislative counsel.

  26. Beverly Gossage says:

    I have served on 3 of the 8 exchange study groups in KS. As Dr. Fisher mentioned in his post, the state exchange must meet HHS’s never ending regulations. There is no real flexibility.

    I agree with Linda, John Graham, and others on this blog who are against creating a government bureaucracy masking as a pseudo “free” marketplace. It doesn’t matter which govt. entity creates it; government run exchanges will raise rates, reduce options, stifle competition, and lead to a single payer, government run system.

    True health reform started on the ground level when individuals began to purchase their own private policies. Doctors began to offer concierge care. HDHPs grew in popularity. Carriers started listing the cost for procedures on their websites. We must be certain that any legislation must remove barriers to these consumer-centered trends and not involve more govt. takeover of the health insurance and health care sector.

  27. Twila Brase says:

    (Second attempt to submit this comment)

    Just say no. The government exchanges are THE key to Obamacare (and national health care) and should be resisted, not installed. HHS (actually CCIIO) is on its third day of a THREE-DAY “Health Insurance Exchange System-Wide Meeting” in Washington, D.C. between federal and state officials. Three days. Imagine.

    Two weeks ago, $181 million was announced to advance the government health insurance exchange (HIX) in six states. That means over $1 billion has been given thus far to establish these federal “takeover centers” in each state. The feds are pushing them pre-SCOTUS because they want as many in place as possible.

    A Bloomberg Government study revealed that 98% of new spending will go to health plans through the exchanges: a whopping $1 trillion over 8 yrs. Last week, HHS said all qualified plans would be allowed in the HIX — for the first year.

    Showing their intentions, HHS in its guidance last week is pushing every state to pursue parallel paths: a “state” exchange AND a federally-facilitated exchange (shared duties). They want states to set up the infrastructure for federal control so it’s in place no matter what happens with SCOTUS, and in place when states later don’t want to spend $30 million a year to operate it.

    Last week, CCIIO ignored an Illinois reporter’s question on whether states would have to return the HIX establishment grant dollars. I’ll bet HHS intends to let states keep the money to keep building the HIX (nixthehix dot org).

    States must refuse to cooperate regardless of how SCOTUS rules. If Obamacare is not overturned, the feds should be forced to set up a federal exchange in each state (actually it’ll probably be just one National HIX with 50 state web portals – see our online diagram at the nixthehix webpage ) so that the federal takeover is actually visible to the public. It should be HHS-run with an HHS name.

    The whole idea for a “state” exchange is to hide the federal takeover from the public until the entire infrastructure is set up and nearly impossible to undo.

    As Dr. Fisher correctly states, every exchange must follow the federal law and the growing pile of federal rules. Just say no.

  28. Ralph @ MediBid says:

    @Twila,
    Good points. If any state tries to take over the sales function of health insurance and obamacare does not survive, we will have something similar to the situation where Republicans passed HIPAA after Hillary care was defeated.
    Everyone wants the data, R’s and D’s alike. They use it to manipulate elections. Government has NO BUSINESS selling insurance

  29. Ron Bachman says:

    Lesss than 13 days before Health Freedom Day!

  30. Ralph @ MediBid says:

    Ron, what is health freedom day?

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