Oklahoma’s Health Insurance Exchange Time-Waster

Published March 15, 2012

The next ten months will decide whether President Barack Obama’s namesake health care law survives or dies on the table. The Supreme Court will rule on the constitutionality of the individual mandate, a central pillar of the law, and the fall’s elections will determine the political makeup of the White House and Congress. That will create major health care policy changes all across the country, yet some Oklahoma legislators appear unwilling to wait for the Court and the voters to decide, wanting instead to force policy changes now. That leads to a question: Why are they so impatient to create a health insurance exchange?

The recent release of the Oklahoma legislature’s Joint Committee recommendations regarding an exchange, sold as a government-run marketplace for the purchase of insurance, includes several optimistic estimates regarding the costs for the state if Obama’s law remains on the books. But the commitment to the establishment of a state health insurance exchange is troublesome.

The report states, “In an effort to stop the implementation of a federal exchange and to provide better market-driven options for our citizens, we recommend that we establish a state-based private marketplace network. … This network would be along the lines of the Utah model for small businesses,” which predates Obama’s law.

If Oklahoma truly wants to establish such an exchange, operating outside the authorities of the federal government and without the mandates, price controls, redistributive subsidies, and other failings, Utah’s example is well and good. But Utah’s insurance exchange is far more limited in focus and affects only a minuscule portion of the marketplace. As of January 2012, roughly 5,000 Utahns were covered by insurance purchased through the exchange, out of approximately 300,000 Utahns who work for qualifying small businesses.

More significantly, Utah’s exchange is not compliant with Obama’s law in numerous respects. To suggest an Oklahoma-based version of Utah’s exchange would exempt Oklahoma from the implementation of a federal exchange is simply false. To compare the two in the same paragraph is an inaccurate conflation of two very different creations.

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 Oklahoma City, and the federal Secretary of Health and Human Services can overrule the state-level authorities in virtually any area she deems necessary.

In reality, Obama’s exchanges represent a federal takeover of health care, with Washington shifting the political and infrastructure costs to the states while retaining the power inside the beltway. The states will function as delivery mechanisms for bureaucratic regulations, price controls, and costly taxpayer-funded subsidies.

Or at least they would have, if states had not overwhelmingly rejected this approach. The vast majority of states have made little or no progress toward creating the exchanges mandated by Obama’s law, even where state politicians are united in approving the effort. This is thanks in part to the administration’s own inability to implement Obama’s law–HHS has missed one-third of the law’s deadlines, according to a recent report from Sen. Tom Coburn, and it still has not finalized the exchange rules, which could change dramatically. And now HHS has the added burden of creating a federal exchange to cover a vastly larger pool of defiant states than was expected, a process it has only just begun.

Most state legislatures now understand patience is a virtue. They know Obama’s law will be reopened in January 2013 by Congress regardless of what the Supreme Court decides–either by Democrats seeking to fix the numerous obvious problems with it or by Republicans intent on repealing and replacing it entirely. An exchange created in accordance with the Utah model in Oklahoma and not in accordance with Obama’s law may very well have to be torn up and re-envisioned entirely in response to the decisions made at that point. Taxpayer dollars spent on its creation will have been wasted.

Why rush something this important? It is better to wait and see what happens. If Oklahoma legislators truly wish to create an exchange, they would be far better off waiting for the dust to settle in the aftermath of key decisions from the Supreme Court and the people.

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