Policy groups spar over La. health-insurance exchange

Legislation that would establish a virtual one-stop shop for health insurance options statewide has received at least some bipartisan support in Louisiana so far, despite staunch opposition and what one policy group calls “misinformation” from the idea’s biggest critics  — Gov. Bobby Jindal and state Health and Hospitals Secretary Bruce Greenstein.

The concept of health care exchanges, or an “Amazon.com” of all things health insurance as termed by Wall Street Journal economics editor David Wessell, is one of the few components of Obamacare that boasted bipartisan support for its ability to increase competition and open up the health insurance market. The issue also has created a chasm of sorts between Republican governors, some of whom favor it and others, like Jindal, who oppose the idea.

Still, Louisiana is one of only a few states in the country that has not agreed to establish its own health-insurance exchange, according to a report from The Advocate. And if the Legislature sides with the governor and balks at the bill (SB 744) to create Louisiana’s own exchange system, Louisiana will “be stuck with the [exchange] that’s designed by the federal government” if the federal law survives the scrutiny of the U.S. Supreme Court, Wessell tells NPR in a recent interview.

The state bill, proposed by state Sen. Karen Peterson, D-New Orleans, would create a 19-member board to set up the exchange and also develop a Small Employer Insurance Exchange for small business owners looking to offer health insurance to employees. It won 6-2 approval from the Senate Insurance Committee May 3 in what Greenstein labeled “a very risky move.”  The Senate Finance Committee, which delayed taking up the bill during its Thursday meeting, will likely address Peterson's measure Monday.

Hours before the start of Thursday's Finance Committee meeting, the conservative Pelican Institute on Public Policy published its “Five Reasons Not to Create an Obamacare Exchange,” encouraging lawmakers to vote against Peterson’s legislation:

Louisiana taxpayers should not be forced to fund a state exchange. Louisiana could expect to pay approximately $40 million per year to run the exchange. This money would come from the pockets of Louisiana taxpayers. If legislators elect not to establish an exchange, the federal government can create one, but Louisianans would not be forced to pick up the tab. Legislators should not stick their constituents with a $40 million annual bill to help implement an unpopular federal law. If Washington insists on an exchange, let them pay for it.

State legislators should not create a new bureaucracy that will be controlled from Washington. The federal government already prevents states from establishing sensible health care policies. President Obama’s health care law continues this unfortunate trend. Establishing an exchange will do nothing to address this problem. If anything, it will serve as a fig leaf for the federal bureaucrats who dominate health care policy. Legislators should look for opportunities to expand state autonomy over health care policy rather than participating in another exercise in central planning.

A state exchange will make it easier for the Obama administration to enforce troubling aspects of the Affordable Care Act. For example, creating an exchange would make it easier for the Obama administration to collect taxes that fund efforts to force religious employers to provide coverage for services they find immoral. Legislators who oppose this attack on religious freedom should not facilitate it by creating an exchange.

Firing back not long after was the Louisiana Budget Project, a nonprofit policy research organization that’s been largely critical of Jindal’s privatization efforts, with its own "fact sheet" on health-insurance exchanges:

A Louisiana health insurance exchange would be locally designed and run and financially self-sufficient. It will help an estimated 350,000 Louisianans get affordable health insurance and federal premium tax credits beginning in 2014.

In reality, the federal government will cover the cost of setting up a health insurance exchange and pay for its first year of operation. After that, the exchange can sustain itself without any state general funds through strategies that all other states are considering—like a modest fee on the new insurance company revenue generated by the sale of plans in the exchange or selling advertising on the exchange website.

The Pelican Institute derived its flawed estimate from the budget of the Massachusetts Connector, an exchange-like entity set up in that state in 2006. But the Massachusetts model isn’t a valid comparison for Louisiana. First, Massachusetts didn’t get any of the help with set up and operating costs that Louisiana would receive from the federal government. Second, the Connector’s costs include tax subsidies to help people afford their health insurance premiums because Massachusetts paid those costs under its reform. But the federal government will pay the full cost of these subsidies for Louisiana residents.

Unfortunately, Louisiana has declined all federal financial support so far — that’s the real bad budget decision.

The Pelican Institute claims that creating a state-based health insurance exchange will increase federal control.

The opposite is true. The federal health care law allows each state to set up its own exchange. States have broad flexibility to design and run their exchanges as they see fit. In fact, the exchange concept was originally developed by conservative think tanks, and for years enjoyed bipartisan support precisely because it provides a state-based solution and uses the private market to address the problem of unaffordable health insurance.

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