#257: To Establish an Exchange, or Not To?

Published February 1, 2011

One of the key questions nearly every governor will be facing in their current legislative sessions is whether to set up a health insurance exchange, as they are required to do under President Barack Obama’s health care law.

At Health Care News we have a report on this process and on the approaches of Republican governors. We surveyed every Republican governors’ office, and by Friday had received responses from Govs. Bentley (AL), Brewer (AZ), Scott (FL), Otter (ID), Daniels (IN), Branstad (IA), Jindal (LA), Barbour (MS), Heineman (NE), Dalrymple (ND), Christie (NJ), Kasich (OH), Fallin (OK), Perry (TX), McDonnell (VA), and Walker (WI). We asked all the offices two questions:

1. Do you currently plan to set up a state-based health insurance exchange?

2. If so, will you attempt to include a sunset provision for the exchange should Obamacare be repealed?

Most governors responded in the affirmative to both question, or said at the minimum they were currently considering both tracks through boards or commissions they’d set up to examine the exchange issue. This is to be expected–legislators are currently examining the issue, and each state has a process (typically involving long meetings with, to employ a term I despise, “stakeholders”) that has to be considered first. But three answers were particularly interesting.

Govs. Scott and Jindal of Florida and Louisiana – the first a former health care executive, the second a former state secretary of health and top staffer at the U.S. Dept. of Health and Human Services – said they do not currently plan to set up exchanges. And on the flip side, Gov. Barbour of Mississippi stressed his loyalty to the exchange model, and he was the only governor of all the Republican executives we surveyed to dismiss the idea of any sunset provision.

You can read the entire story here. Needless to say, this is a story we’ll be following in the future as states continue their decision-making processes.

— Benjamin Domenech



The New England Journal of Medicine has released a key report on the challenges of serving Obamacare’s dramatically increased Medicaid population. This is a must-read report for a number of reasons, despite the fact it only measures primary care. An excerpt:

A composite “Medicaid expansion index” and a “primary care capacity index” were computed for each state; all indexes were standardized for state population and set to average 100 across the states. We then computed what we called an access-challenge index, by dividing the Medicaid expansion index by the primary care capacity index and set this index to average 100 as well. States with access-challenge scores exceeding 100 have higher-than-average Medicaid expansions relative to their current primary care capacity, so they will face a larger challenge.

Eight states – Oklahoma, Georgia, Texas, Louisiana, Arkansas, Nevada, North Carolina, and Kentucky – face the greatest challenges. These states are expected to have large Medicaid expansions yet now have weak primary care capacity. In the absence of additional efforts, the demand for care by newly insured patients could outstrip the supply of primary care providers in these states. Seventeen other states with access-challenge scores above 100, most of which are in the South or the Midwest, could also face problems. Massachusetts, Vermont, the District of Columbia, Maine, New York, Rhode Island, and Connecticut have scores below 50, indicating that they have greater capacity relative to the size of their expansions.

If anything, I expect this report to lowball the challenges involved.

SOURCE: The New England Journal of Medicine


Here’s a story you should expect to be repeated across the states in short order: a dramatic increase in the percentage of each state’s share of Medicaid costs. Greg Moody, the incoming head of Gov. John Kasich’s Office of Health Transformation, reported the following dire numbers:

Left unchanged, Medicaid will cost Ohio taxpayers an additional $1.6 billion next year. That’s a 49 percent jump in the state’s share of costs for the health-care program covering more than 2 million poor and disabled Ohioans, pushing to $4.9 billion the cost to the state for the next fiscal year.

Most of the increase to Ohioans is due to the loss of federal stimulus money. The federal government has been covering a higher share of Medicaid costs to help states during the recession, but that help ends June 30. In addition, state officials are projecting an increase in enrollment and utilization of services, both of which also will drive up costs.

Kasich is one of the 33 Republican governors who previously demanded the White House allow states to cut Medicaid enrollment and not lose the related federal aid – without such a response, it’s inevitable that a round of massive cost-cutting will have to occur. “Doing nothing, Moody said in an interview, is not an option.” Actually, it is an option – just a very bad one. For more on this topic, read our previous CPR on Medicaid issues.

SOURCE: Dispatch Politics; The Heartland Institute


In comments to the House Budget Committee described by the AP as “unusually direct,” Medicare chief actuary Richard Foster said two key promises President Obama repeated throughout the debate on his health care overhaul are more false than true. Just little promises, in this case – such as keeping costs down, and keeping your plan and doctor if you like it.

Foster was asked by Rep. Tom McClintock, R-Calif., for a simple true or false response on two of the main assertions made by supporters of the law: that it will bring down unsustainable medical costs and will let people keep their current health insurance if they like it.

On the costs issue, “I would say false, more so than true,” Foster responded.

As for people getting to keep their coverage, “not true in all cases.”

Video of Foster’s appearance is here.

SOURCE: Associated Press


Despite advice to the contrary, Republican senators continue to pursue a nip-and-tuck strategy on “fixing the unfixable” when it comes to Obama’s law. The latest is a proposal to remove the tax on medical devices, as introduced by Utah Republican Orrin Hatch and three colleagues. The Hill reports:

The bill, raised by four Republican senators, would remove a new 2.3 percent tax hike on medical device manufacturers that would raise $20 billion in revenue over 10 years. The tax is set to go into effect in 2013.

“A $20 billion tax hike on medical device manufacturers to fund Obamacare will cripple an important engine of opportunity, job growth and innovation, while hurting the advancement of technologies essential to improving patient care,” Senate Finance Committee ranking member Orrin Hatch (R-Utah) said in a statement.

This is certainly a wise thing to repeal. But with each step taken in this direction, Republicans allow this unsustainable law’s supporters to make it more palatable for Americans.

SOURCE: The Hill


Republican Energy and Commerce Chairman Fred Upton of Michigan is advancing an inquiry of HHS regarding the lackluster deployment of the high-risk pools, the interim measure designed to fill the needs of those with pre-existing conditions prior to the fully-formed 2014 rollout of Obamacare. Sarah Kliff reports, however, that the inquiry is coming just as these pools are beginning to take off:

Health reform’s high risk pools, so far plagued with lackluster enrollment, are showing signs that they are starting to turn around – just as House Republicans are launching an investigation into the program.

Within the past 75 days, enrollment in the federally run high risk pools has just about doubled. Approximately 10,000 Americans are currently being covered between the state and federally run insurance plans, Health and Human Services Secretary Kathleen Sebelius told reporters.

An official state-by-state enrollment count is expected from the Obama administration later this month.

It’s possible that conservatives who hailed low enrollment in the pools as an essential failing of Obamacare were crowing too soon. But the real lesson to take away from this experience is the real lack of knowledge on the part of the federal agencies involved regarding how many people would sign up for the pools or how much it would actually cost.

Prior to the passage of Obama’s law, many observers thought the risk with the pools was that they would run out of money in advance of 2014, not that they would lack for popularity. This is one reason why federal programs fail – resource allocation is just not something government does well. As my colleague Greg Scandlen always notes: “It’s like throwing darts at a dartboard with a blindfold on.”

SOURCE: Politico