Welcome to ObamaCare, Part VI: Proposed Regulations “Exchange” a Good Idea for a Bad One
If health insurance exchanges were developed without government interference, they would serve as a clearinghouse to enhance competition, transparency, and value comparison. When plans have to compete directly with each other to offer the best services at the lowest price, consumers are the winners in the end.
But when a health plan’s participation in an exchange is conditioned on adhering to page after page of federal mandates and restrictions, exchanges can be used as a tool to expand bureaucratic control over health care. Such legally-binding “qualification” requirements force health insurers to provide certain benefits, services, or premium rates they otherwise would not in a free market; non-compliance means getting kicked out of the exchange and losing access to a huge number of potential customers. That’s exactly what the president and his Health and Human Services Secretary, Kathleen Sebelius, are doing to health care exchanges under ObamaCare.
We’ve just seen the first glimpse of the onerous bureaucratic requirements the Obama administration has in mind, requirements that will put a huge drag on the exchanges’ efficiency, make them a nightmare for states to administer, and allow the federal government to tighten its grip on America’s health care. The Department of Health and Human Services (HHS) just proposed nearly 350 pages of new regulations they want to impose on exchanges. This is the first in a series of rulemakings that will implement the broad delegation of power Congress gave HHS in ObamaCare.
As states scramble to set up their exchanges by January 1, 2014 as required by the law, the Obama administration has repeatedly tried to paint themselves as taking a “hands-off” approach, claiming they will offer states a wide range of flexibility to design their state health insurance exchanges and set requirements as they see fit at the state level. Secretary Sebelius repeated that line during a press conference surrounding the rule’s release; she touted that “each state will have the flexibility to design its own exchange.” The proposed rule itself talks of affording the states “substantial discretion in the design and operation of an Exchange.” If we learned anything from this proposed rulemaking, however, it’s that this is pure doublespeak. For example, when you dig down into the document, you find §155.105, paragraph (e), which states the following:
(e) Significant changes to Exchange Plan. The State must notify HHS in writing before making a significant change to its Exchange Plan; no significant change to an Exchange Plan may be effective until it is approved by HHS in writing.
Elsewhere in the rule, HHS makes clear that a broad range of “significant changes” would need the Secretary’s approval before moving forward, including changes to the health plan enrollment process, changes to state laws or regulations affecting the exchange, or any “other changes to the Exchange Plan that would have an impact on the operation of the Exchange.” Even states’ “IT systems or functionality” will face heavy federal oversight. In short, there is no doubt states will face significant federal micromanagement preventing them from running or reforming their exchanges as they see fit.
There is plenty more to dislike in the rulemaking. To start with, health insurers will be required to submit patients’ personal claims data to a huge federal database for the purposes of calculating “risk scores” and quality reporting – an enormous privacy concern. Do you want the federal government to have access to information about all of your health care decisions? Additionally, all exchanges are required to be financially self-sustaining by 2015, and the rule makes clear that some of the administrative costs should be recouped by levying hefty fees on health insurance providers – adding more new costs to an industry that is already getting crushed in an effort to hide the true cost of implementing ObamaCare.
And if that’s not enough, HHS has put states on an extremely tight schedule and asked them to design these exchanges at break-neck speed without any guidance on the criteria they are supposed to follow. What happens if the state’s exchange isn’t ready by the deadline? The federal government will step in and take over a state’s health care exchange. HHS bureaucrats will then run the exchange under their own (not yet specified) guidelines. States then have to wait at least 12 months and clear a number of bureaucratic hurdles before they can take back control of their own health care system from the federal government.
Perhaps worst of all, we still don’t have any information about some of ObamaCare’s most damaging health insurance reforms. Notably absent was further guidance on what types of “essential health benefits” insurance plans are mandated to offer in order to participate on the health care exchanges, leaving the health care industry and patients like you and me with a number of questions. Will the federal government require plans to offer services Americans don’t want? To what extent will “community rating” and “guaranteed issue” be required, and how will this affect premium rates?
As these questions are answered in future rulemakings (adding even more pages of bureaucratic requirements), we expect to see the federal government’s grip on the health care industry tighten considerably. It was clear all along that the President planned to use exchanges as a tool to micromanage American health care. Last Friday’s release was only the start of recording this fact in the nation’s rulebooks. As we’ve said at AFP all along, bureaucrats should not come between patients and doctors, but those days are over.
In light of these facts, we urge states to cease implementing exchanges and to refocus on repeal.
Welcome to ObamaCare.
Check out previous posts in the “Welcome to ObamaCare” series by clicking below:
• Part I – Overselling on Child Coverage and Preexisting Conditions
• Part II – Obama Taxing Benefits Costs Companies Millions
• Part III – CMS Finally Admits ObamaCare “Cost Savings” Are Phony
• Part IV – Can You Really “Keep Your Plan” If You Like It?
• Part V – Businesses Feeling the Impact, Asking for Waivers