Health Care “Reform” From the Perspective of a Governor

by Pejman Yousefzadeh on February 7, 2011

Mitch Daniels points out what states would face if the health care bill passed last year survives constitutional challenges against it:

For state governments, the bill presents huge new costs, as we are required to enroll 15 million to 20 million more people in our Medicaid systems. In Indiana, our independent actuaries have pegged the price to state taxpayers at $2.6 billion to $3 billion over the next 10 years. This is a huge burden for our state, and yet another incremental expenditure the law’s authors declined to account for truthfully.

Perhaps worse, the law expects to conscript the states as its agents in its takeover of health care. It assumes that we will set up and operate its new insurance “exchanges” for it, using our current welfare apparatuses to do the numbingly complex work of figuring out who is eligible for its subsidies, how much each person or family is eligible for, redetermining this eligibility regularly, and more. Then, we are supposed to oversee all the insurance plans in the exchanges for compliance with Washington’s dictates about terms and prices.

The default option if any state declines to participate is for the federal government to operate an exchange directly. Which got me thinking: If the new law is not repealed by 2013, what could be done to reshape it in the direction of freedom and genuine cost control?

Daniels then spells out the conditions under which he, as a governor, would be willing to run an insurance exchange:

• We are given the flexibility to decide which insurers are permitted to offer their products.

• All the law’s expensive benefit mandates are waived, so that our citizens aren’t forced to buy benefits they don’t need and have a range of choice that includes more affordable plans.

• The law’s provisions discriminating against consumer-driven plans, such as health savings accounts, are waived.

• We are given the freedom to move Medicaid beneficiaries into the exchange, or to utilize new approaches to the traditional program, instead of herding hundreds of thousands more people into today’s broken Medicaid system.

• Our state is reimbursed the true, full cost of the administrative burden to be imposed upon us, based on the estimate of an auditor independent of HHS.

• A trustworthy projection is commissioned, by a research organization independent of the department, of how many people are likely to wind up in the exchange, given the large incentives for employers to save money by off-loading their workers.

Some legislative meat may have to be put on this, but Daniels’s suggestions are entirely reasonable, and could serve as a basis of negotiations and positive changes to the health care reform bill. A lot is being made about the sudden bipartisan nature of the Obama Administration. Let’s see if the Administration is truly bipartisan, by gauging its response to Daniels’s commonsense proposals.

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