Michigan health care exchange offers illusion of local control
By Scott Hagerstrom
House Speaker Jase Bolger has so far wisely delayed action on legislation that would establish a state health care exchange. In doing so, he is resisting one of the many mechanisms President Obama’s health care law uses to coerce states into compliance.
The President’s health care law allows, but does not require, states to set up an exchange. Nonetheless, I’m sure the pressure on House lawmakers has been intense.
Private insurance companies stand to gain billions in taxpayer-funded subsidies distributed by state health exchanges. And unscrupulous lawmakers have made it clear that their weakness for federal tax dollars surpasses their commitment to reducing federal spending and debt.
Michigan’s house leaders should continue to stand their ground. If state lawmakers create a health care exchange like President Obama wants, it will result in long-term unfunded liabilities for Michigan taxpayers and facilitate the Washington health care takeover in what the Cato Institute has deemed a “mirage” of local control.
Let me explain.
Proponents of a state exchange claim it is necessary to preserve local flexibility and control. However, if Michigan chooses to set up an exchange it must agree to comply with the numerous regulations contained in the 2,700-page Patient Protection and Affordable Care Act, not to mention the thousands of pages of amendments and “guidance” the federal government issues in the process of implementing the law.
In March, the U.S. Department of Health and Human Services published its most recent portion of the exchange rules in a document totaling 644 pages. The word “require” appears 320 times; the word “must” appears over 1,000 times.
Before Michigan can even create an exchange, it must first apply to HHS with its “exchange blueprint” template by Nov. 16 of this year. HHS Secretary Kathleen Sebelius has the sole power to approve or deny any application.
The facts point to one conclusion. Michigan has lost control of its health insurance. Scrambling to set up an exchange cannot undo the federal government’s takeover of our system. The feds already have the power to completely commandeer Michigan’s exchange if they determine the state is not “substantially enforcing” federal standards and related provisions.
Does that sound like local control to you?
Aside from the issue of federal control, questions remain over how much a health care exchange will cost Michigan and who will pay for it. The federal government has played fast and loose with grant money aimed at helping states get their exchanges up and running, but those dollars dry up in 2015.
Sure, Michigan can help drive up the federal deficit by tapping into a $9.8 million grant from HHS, but when federal money runs out, state taxpayers will foot the bill for operational costs. The Cato Institute estimates exchanges will cost states between $10-$100 million per year to operate. In anticipation of these costs, Oregon’s legislature opted for a premium tax of up to 5 percent in order to fund the ongoing operations of their exchange.
Proponents of the president’s health care law position health care exchanges as insurance marketplaces designed to promote competition. Nothing could be further from the truth. Customers will only be allowed to choose from over-priced, over-regulated policies that meet the federal government’s definition of health insurance. These government bureaucracies will be the antithesis of a competitive marketplace.
Nowhere in its thousands of pages does the Affordable Care Act require any state to create a health care exchange. That’s because the architects of President Obama’s health care law knew that requiring states to create health insurance exchanges would be unconstitutional.
Instead, they crafted clever talking points and financial inducements aimed at enticing states to obey.
Just a few short months ago, Michigan joined dozens of other states in arguing that the law was an unconstitutional power grab by the federal government.
Instead of giving in to a façade of flexibility, our leaders in the House should continue to stand on principle and reject a state health care exchange.
This article can also be viewed in the Lansing State Journal.
Scott Hagerstrom is the State Director of Americans for Prosperity-Michigan.