Opinion Editorial
April 18, 2011

By Linda Gorman

ObamaCare is unpopular, unwieldy, expensive, arguably unconstitutional, and a prime target for repeal. It requires the states to do much of the federal government’s dirty work. Right now, the federal government is paying states $1 million to plan health insurance exchanges designed limit the kinds of health insurance policies available to state residents.

A lot of misinformation has been circulating about exchanges. Small businesses have been told that they will lower insurance premiums. In reality, the exchanges are insurance brokers. They sell approved plans offered by insurers and will support themselves by adding fees to the costs of plans sold through them.

Last November, Colorado elected Republicans to a slim majority in the state’s House of Representatives. Relying on claims that states could steer exchanges in a pro-market direction, House majority leader Amy Stephens co-sponsored HB11-200 to establish a Colorado Health Benefits Exchange. ObamaCare supporters hailed this as evidence of bipartisan support for ObamaCare ideas.

As more information became available, Representative Stephens requested that her bill not be enacted without inserting language specifying that it is not to be implemented unless the federal government grants Colorado a full waiver from all of the provisions of ObamaCare, and from the regulations flowing from it. She has since retreated from that position.

The Utah Health Exchange is often given as an example of an exchange that expands health insurance choices. In theory, it can aggregate tax-free defined contributions from different employers. If, for example, a husband’s employer contributes $300 per month to the exchange for health insurance and his wife’s employer does the same, the exchange would combine the amounts so that the husband and wife have $600 that they can use to buy either of the employers’ coverage plans.

Unfortunately, the Utah aggregator has not really been tested. It is less than a year old. It has enrolled 69 businesses covering about 2,000 people. This is a trivial number in a state with almost two hundred thousand non-farm establishments employing almost two million privately insured workers.

Massachusetts’ health insurance exchange, the only one of any size in operation, cost about $30 million to operate in 2009. Its budget ate up 3.5 percent of all payments that insurers and people buying insurance made for insurance coverage. The addition of an exchange fee to already bloated premiums explains why governors in Florida, Louisiana, and Georgia have said no thanks to state exchanges.

Even if Utah has figured out a way to expand health insurance choice, it is unlikely that it will survive the ObamaCare take-over intact. ObamaCare imposes complex requirements on both health insurance and state insurance exchanges. As no regulations have yet been issued, no one knows what kinds of exchanges will be allowed. However, the law gives President Obama and Kathleen Sebelius, U.S. Secretary of Health & Human Services, all the tools they need to prohibit local attempts to provide local choice in health insurance.

Existing evidence suggests that those regulatory tools are already being used to full advantage. In a likely attempt to disguise the true cost of ObamaCare until after the 2012 election, Secretary Sebelius has given over a thousand waivers to politically connected groups. Those waivers exempt Obama administration cronies from Obamacare’s burdensome regulations for one year.

Exchange supporters are fond of asserting that by working together “we” can use exchanges to get health insurance that “we” can afford. In fact, Stanford University’s John F. Cogan estimated that insurance premiums in Massachusetts were 6 percent higher than they would have without the reform that created the exchange. Massachusetts exchange policies are more limited than the policies available in other states. They offer limited choice and do not cover non-emergency care outside of Massachusetts.

Colorado’s exchange board would likely adopt similar rules. For example, while SB11-200 prohibits private insurers like Humana from having representatives on the exchange board, it does not apply similar prohibitions to representatives from health plans like Denver Health or Kaiser-Permanente.

ObamaCare is President Obama’s problem. Establishing an exchange would make it Colorado’s problem by imposing Obamacare’s impossible regulations on Coloradans’ health choices.

A version of this article originally appeared in the Colorado Springs Gazette.