Five Reasons Christie Shouldn’t Implement Obamacare Exchanges

Published May 22, 2012

Gov. Chris Christie is currently deciding whether to sign into law the New Jersey Health Benefit Exchange Act, which would implement a state-level health insurance exchange as mandated under President Barack Obama’s law. Here are five reasons he shouldn’t implement.

1. It’s a federal takeover of New Jersey health insurance. Although the administration represents the exchanges as avenues for easier purchase of insurance, in reality Obama’s exchanges shift the political and infrastructure costs to the states while moving all power inside the DC beltway. The exchanges will function as delivery mechanisms for bureaucratic regulations, price controls, and costly taxpayer-funded subsidies for decades to come. All exchanges established under the auspices of Obama’s law are by definition federal exchanges–the final authority for all meaningful decisions resides in Washington, not New Jersey, and the federal Secretary of Health and Human Services can overrule state-level authorities in virtually any area she wants.

2. It’s a waste of taxpayer money. Every dime spent on implementation of a New Jersey exchange could, in just a few short months, turn out to be wasted. The president’s health care law currently hangs in the balance of an election and a Supreme Court ruling. The next six months will decide whether it survives. Even states that plan to implement exchanges, such as Illinois, have announced they are holding off making any further decisions until things become clearer.

3. It’s a waste of time and effort. The vast majority of states have made little or no progress toward creating an exchange as Obama’s law mandates, even those states where the politicians are united in approving such an effort. This is due in part to the administration’s own inability to implement Obama’s law–HHS has missed one-third of the law’s deadlines, and it still has many rules and regulations to finalize, which will create an even heavier bureaucratic compliance burden on New Jersey for a law that may not even be on the books in a while.

4. It won’t lower the costs of health insurance. Since the passage of Obama’s law, premiums have gone in one direction: Up. The average employer health insurance premium rose by 9 percent in 2011, three times the increase of 2010, and family premiums exceeded $15,000 a year for the first time. In some states, premiums rose by even more–a significant portion of which is due to the handful of mandates in Obama’s law that already have taken effect. The exchange experience in Massachusetts has done nothing to lower costs; in fact, Bay Staters’ premiums remain the highest in the nation. A taxpayer-subsidized New Jersey exchange would do nothing to change this.

5. All the Obama administration has to offer is hollow threats. The primary reason anyone would want to be in an exchange is the generous taxpayer-funded subsidy for insurance purchased through it. But a glitch in the law doesn’t authorize tax credits or subsidies in federal exchanges, only in ones established at the state level. The administration desperately wants states to implement exchanges, even just to start the process, so they will have a legal argument for their subsidy and price control system should the Supreme Court strike down the law. They know that states refusing to create an exchange can block the law for good.

Most state legislatures now understand patience is a virtue. They know Congress will revisit Obama’s law next January regardless of the outcome in the Supreme Court–either by Democrats seeking to fix the numerous problems or by Republicans looking to repeal and replace it entirely.

If New Jersey creates an exchange in accordance with Obama’s law, it may very well have to be dismantled in response to the decisions made at that point, and taxpayer dollars spent creating it will have been wasted. The responsible choice for New Jersey is to wait.

Benjamin Domenech ([email protected]) is a research fellow at The Heartland Institute and managing editor of Health Care News.