If you're married to a gambling addict, you don't do him any favors by lending him money or telling the bank you were the one who blew the mortgage at the track. Likewise, Virginia should not enable Washington's addiction to big government, epitomized by the federal takeover of health care, by setting up a state insurance exchange.
State lawmakers across the country are debating whether, and how, to set up such exchanges, which are encouraged by the 2010 federal health-care overhaul, or let the feds do it for them. The exchanges will act as clearinghouses where consumers can compare health insurance policies, a bit like the way you can compare travel deals on Expedia.com.
Here in Virginia, legislators differ on whether the exchange should be an entity unto itself, or an arm of the State Corporation Commission. The correct answer is: neither. Virginia should not set up such an exchange at all. The commonwealth has nothing to gain by doing so, and a lot to lose.
For one thing, the Supreme Court might rule the
federal Patient Protection and Affordable Care Act unconstitutional
later this year. If so, then the money and effort to create the
state exchange will have been wasted. And setting up the large
bureaucracy required to run the exchange would cost a lot of
money—perhaps tens of millions of dollars.
Utah already has a small exchange that, as Kaiser Health news reported, "accepts any insurers and sets few rules."
Yet it still costs $500,000 a year to operate. The other existing state exchange, in Massachusetts, was established thanks to a certain GOP presidential candidate whose name starts with R and rhymes with Omni. More comprehensive and intrusive than Utah's, it costs $30 million a year.
As Virginia Democrats have argued about some of Gov. Bob McDonnell's transportation proposals, setting up a health-insurance exchange here would steal scarce resources from education, environmental protection, and public safety. Or Virginia could fund the exchange with a surtax on insurers—and drive up premiums as a result.
Of course, the high court might rule in favor of ObamaCare. If that happens, then Virginia can always create an exchange later. But it still shouldn't.
Any state exchange will have to abide by the Obama administration's directives. Virginia cannot create a free-market exchange that allows every kind of insurance and coverage plan. (Utah's exchange, which originally did essentially that, likely will not survive federal scrutiny.) To participate in an exchange, insurers will have to include a variety of mandated benefits. The Department of Health and Human Services has let it be known states can add more mandates than ObamaCare requires, or adopt a single-payer system, but they cannot have fewer.
Those mandates will drive up premiums. And high premiums have discouraged consumers in both Utah and Massachusetts from buying policies through those states' exchanges, even though Massachusetts offers substantial subsidies. (Massachusetts provides "complete" or "substantial" premium subsidies for individuals making up to 300 percent of the poverty level.) An analysis by Georgetown University's Health Policy Institute, for instance, notes that "high cost was the primary reason for non-participation" in Utah, and the Massachusetts exchange "has been unable to meet small employers' most pressing need: lower insurance prices."
What happens if a state creates an exchange that Washington disapproves of? The federal government storms in and takes over. If Washington is going to dictate the terms, why should Virginia foot the bill?
That bill almost certainly will be far higher than anyone has projected, and not just for the exchange. Far from "bending the cost curve down," ObamaCare is likely to drive health-care costs through the roof. This is precisely what happened under RomneyCare in Massachusetts: From 2006 to 2010 the cost of that state's insurance program jumped 42 percent, and a Rand Corporation study found that "in the absence of policy change, health care spending in Massachusetts is projected to nearly double [by] 2020." (So much for Mitt Romney's promise that "the costs of health care will be reduced.")
But at least residents up there are getting better care, right? Wrong. Avoidable emergency-room visits have gone up, not down. More than half the state's doctors are refusing to take any new patients. Waiting times are increasing: In 2011 it took, on average, 41 days to see a Massachusetts OBGYN, a week longer than it took the year before.
ObamaCare could soon produce the same higher costs and poorer service. And it is going to be monstrously difficult to implement. Last month The Washington Post reported there is growing concern that HHS will be unable to launch the federal exchange in time.
Naturally, federal officials would love to sit back and give orders while states like Virginia shoulder the burden—and the cost—and the blame—of a government takeover. Virginia's response to Washington should be: You created this problem, you deal with it
A. Barton Hinkle is a columnist at the Richmond Times-Dispatch, where this article originally appeared.