Wednesday, January 25, 2012

CO Considering Repealing Health Insurance Exchange

Last year, the state of Colorado agreed to establish a health insurance exchange, after much political debate. This year, state Senator Tim Neville has introduced a bill to repeal last year's bill creating that exchange.

Although I won't be able to testify in person at the hearing on this bill, I was invited to submit a written statement in support of Senator Neville's bill:
Statement to CO Senate Health and Human Services Committee Supporting SB12-053

Paul Hsieh, MD
Co-founder, Freedom and Individual Rights in Medicine (FIRM)

I'm writing to support Senator Tim Neville's bill, SB12-053, "Repeal SB 200 Healthcare Exchange".  Establishing the exchange last year was a mistake.  As a practicing physician concerned about the medical freedom of Colorado patients, I'm glad to hear the state legislature is considering repealing the earlier bill and rectifying last year's error.

The fundamental problem with the state exchanges is that they serve as a vehicle for implementing the federal ObamaCare legislation at the state level.  Rather than facilitating a free market in health insurance, the exchanges would effectively put health insurance under the control of the federal government.  This would allow them to dictate what policies would look like and how doctors would manage their patients covered by exchange-provided insurance.

As Twila Brase of the Citizen's Council for Health Freedom notes, "State-established Exchanges may not write rules that conflict with or prevent implementation of federal rules issued by HHS under the law."  In other words, by creating our own state exchange in Colorado, we did not give ourselves greater flexibility and freedom from federal law, but rather surrendered to it.

Some negative consequences include the following:

1) Federal law will encourage employers to "dump" employees onto the state exchanges.

As reported by Minnesota Public Radio News and Kaiser Health News: "A loophole in the federal health care overhaul could allow employers to game the system by getting their sicker employees to opt into buying coverage on the health insurance exchanges, according to two University of Minnesota law professors.  They say the loophole could have dire consequences for the financial health of the exchanges..."

Hence, the exchanges will become a "budget buster" for the taxpayer-subsidized exchanges.

2) Coverage decisions would be mandated by Washington

For example, the federal government has empowered the USPSTF (United States Preventive Services Task Force) to determine what sorts of preventive care are or are not considered "cost effective".  In 2009, the USPSTF recommended restricting screening mammography to women over 50 (and only at 2 year intervals), despite the proven medical benefits of the current practice of screening women starting at age 40 at yearly intervals.

Under ObamaCare legislation, the USPSTF will set the de facto standards for what preventive services will or will not be covered by government insurance such as Medicare.  These criteria will inevitably also be applied to determine which private plans may be offered on the state exchanges.  Coverage decisions would be made by bureaucrats in Washington, DC.

3) Mandated benefits would drive up costs for patients

In Massachusetts, insurance prices on their state exchanges have risen much faster than the national average because pressure from special interest groups has resulted in mandatory coverage of services, whether or not patients actually need or desire such coverage.  Since 2006, special interests in Massachusetts have successfully lobbied to include 16 new benefits in the mandatory package (including lay midwives, orthotics, and drug-abuse treatment), and their state legislature is considering 70 more.  The decisions over what services will or will not be covered by exchange insurance plans have become fierce "political footballs" to the detriment of patients.  This will likely occur in Colorado as well.

Fortunately, states have a method of fighting back against this unwarranted federal control of health care.  In a recent editorial, Sally C. Pipes (president of Pacific Research Institute) and Dr. Hal Scherz (President of Docs4PatientCare) note the following:

The feds have further stipulated that people can only access billions of dollars in tax credits and subsidies earmarked for the purchase of policies by shopping in the state-run marketplaces.  If a state refuses to set up its own exchange, Obamacare allows the federal government to come into the state and set one up.

But here's the rub. The text of the law stipulates that only state-based exchanges -- not federally run ones -- may distribute credits and subsidies.  Without the federal cash, consumers won't patronize the government-run exchanges -- particularly with all the cost-inflating mandates they impose on insurers who wish to participate.

In other words, the federal government needs the acquiescence and active co-operation of the states to make the government-run exchanges work.  Hence, state governments can block this key feature of ObamaCare simply by refusing to establish a state exchange.

In conclusion, state-run exchanges under ObamaCare will harm patients and taxpayers.  For these reasons, other states such as Florida and Louisiana have already declined to establish their own state exchanges.  Colorado can join them by passing SB12-053, thus correcting last year's mistake.  Passing SB12-053 would be an important step in protecting essential medical freedoms for Coloradans.



"Don't get mugged by a politically controlled insurance exchange"
Brian Schwartz, Denver Post, 5/6/2011

"State Health Insurance Exchanges Will Impose Federal Control"
Twila Brase, Citizens’ Council for Health Freedom

"Study: Employers Could Dump Sickest Employees On Public Health Care"

"Mass. health care costs outpace nation"
Boston Globe, 6/14/2011

"Rejecting health-care exchanges"
Pipes and Scherz, Charleston Post and Courier, 12/29/2011
The idea of repealing a prior bad law should be proposed more often. I'm glad our state legislators are seriously considering this idea. Perhaps this will be the beginning of a larger trend!