You MUST Know This About Health Care Exchanges – PART 7 >>> Are They Free Market?

This is Part 7 in my series about ObamaCare health care exchanges.  Be sure to read other parts here.

Health care exchanges are simply this:  state-level bureaucracies that ObamaCare must coerce into existence.  Without them, there is no ObamaCare implementation.  Without them, the federal government hasn’t the hands it needs to meddle into and control the health care of every American citizen.

I have been told repeatedly by exchange proponents that state health care exchanges are a “conservative, free-market” idea;  however, I have yet to be convinced this is so.  The Heritage Foundation has been quoted as the single largest conservative think-tank advocating for exchanges, specifically from its document “A State Lawmaker’s Guide to Health Insurance Exchanges.”  I have read through this document and am unconvinced that this is a conservative, free-market idea. 

First, it’s essential to understand the Heritage guide’s premise…

Roll Over, Submit, and Make them Happen

The main premise of the 14-page Heritage document is this:  Since ObamaCare threatens to impose exchanges upon states who refuse to do so on their own by 2014, then states may as well roll over, submit, and make them happen:

“Governors and state legislators opposed to the misnamed Patient Protection and Affordable Care Act (PPACA) face a dilemma. Trying to shoehorn patient-centered, market-based reforms into the bureaucratic architecture of Obamacare’s health insurance exchanges is not a viable strategy, neither practically nor politically. But refusing to create an Obamacare state exchange, while politically appealing, would leave state health insurance markets vulnerable to even more federal interference and disruption over the next two years.”

“While state lawmakers, like everyone else, would obviously prefer to have more certainty regarding Obamacare, the reality is that they cannot expect to obtain such certainty any time soon. Consequently, they will instead need to focus in the near term on finding ways to better manage the new uncertainty that Obamacare has injected into the health care system.”

There is an alternative to reacting out of fear, and that is to stand up in courage.  We don’t have to make President Obama’s problem of implementation our problem, especially since ObamaCare’s fate is still uncertain in the courts. 

Now, back to free markets…

What is a Free Market?

The American Heritage New Dictionary of Cultural Literacy defines “free markets” like this:

“The production and exchange of goods and services without interference from the government or from monopolies.”

Is Heritage Advocating a True Free Market Here?

Read these excerpts from the Heritage document and ask yourself if these sound like free market ideas:

“The true purpose of a state health insurance exchange is to act as a purely administrative mechanism for implementing a defined-contribution health insurance alternative for employer-sponsored coverage.”

“…the function of a state health insurance exchange is simply to serve as a common mechanism for administering the transactions entailed in buyers and sellers offering and choosing coverage and paying and collecting premiums…”

“By enacting a defined-contribution health insurance option for employment-based coverage, states can create a more consumer-driven health care market while continuing to let workers benefit from the favorable federal tax treatment of employer-sponsored health benefits.”

“One advantage of a defined-contribution market for employer-sponsored coverage is that it offers insurers a more level competitive playing field.”

Hmmmm…. So according to Heritage, the states should play the role of an “administrative mechanism” that “administers transactions” and “creates markets” that “offer a more level competitive playing field?”  Are these ideas consistent with the definition of “free market,” or more consistent with “government inteference?”  Once government creates a “level competitive playing field,” free competitive markets have just been neutralized into “managed markets.” 

The Massachusetts RomneyCare Connection to Heritage’s Exchanges Idea

Why would a highly respected conservative think-tank like Heritage support exchanges?  I can’t completely answer that question, but I did learn of Heritage’s involvement in the creation of Massachusetts’ failed RomneyCare, from The Heartland Institute’s June 2006 article, “Analysis:  Massachusetts Health Care Plan Intrusive, Expensive – by Grace-Marie Turner – Health Care News:” 

“The new Massachusetts health plan has dominated the policy conversation recently, causing more division among conservatives than liberals.”

“While many free-market groups–such as the Pacific Research Institute, Cato Institute, and Council for Affordable Health Insurance–have been highly critical of the Massachusetts plan, the conservative bellwether Heritage Foundation was very involved in helping the governor craft the legislation. The governor credits Heritage with creating the new Federal Employees Health Benefits Program-like insurance connector [exchange] to offer insurance options and collect and distribute premiums. Bob Moffit of Heritage stood behind the governor at the signing ceremony.“

Considering that Heritage helped to craft a miserably failing system such as RomneyCare, why would any conservative lawmaker follow such counsel, specifically in regards to exchanges? 

One Example:  Colorado Has an Exchanges Bill on the Table

Here is one example of a state health care exchange bill to consider.  The Colorado State legislature is currently considering an exchanges bill for Colorado.  Read the following excerpts from SB 11-200 and decide if this bill aligns with the simple definition of “free markets.” 

10-22-102  “Therefore, the General Assembly intends to create a health benefit exchange to fit the unique needs of Colorado and seek Colorado-specific solutions.  The Colorado health benefit exchange, including an American health benefit exchange, is intended to facilitate the access to and enrollment in health plans in the individual market in this state and include a small business health options program to assist small employers in this state in facilitating the enrollment of their employees in health plans offered in the small employer market.”

10-22-104  “The board shall determine and establish the development, governance, and operation of the exchange.” 

 

10-22-106  “The board is the governing body of the exchange and has all the powers and duties necessary to implement this article.” 

 

10-22-106 (i)  “Investigate requirements, develop options, and determine waivers, if appropriate, to ensure that the best interests of Coloradans are protected.” 

Are Government Administered Health Care Exchanges Really “Free Market?”