Later this month, state legislators will begin discussions about designing and implementing a health-care exchange.
If experience is a guide — and it is — Washington lawmakers should tread very carefully because recent events have shown how perilous such efforts can be.
State health-care exchanges, authorized under the federal health-reform law, were originally characterized as virtual open-air markets where health-insurance providers would compete side-by-side so consumers could easily compare coverage and cost.
Some states are using the exchanges to introduce single-payer systems, squeezing out private insurers and dramatically increasing costs for consumers.
Will that happen here in Washington? Hopefully not. But the outlook is not promising.
For example, the legislation creating our state health exchange was quickly approved and signed into law even though lawmakers had no idea what it will cost, where the money will come from, what it will look like or who it will serve.
Those details were left unanswered in the rush to get the bill approved. Cynics might wonder if the goal was to quickly pass the legislation three years ahead of schedule, before those tough questions could derail the effort.
Supporters say the state has $23 million in federal funding to implement the state health-insurance exchange — but that’s just for the first year. Where will the money come from next year? Nobody knows. These days, federal funding is not guaranteed.
Case in point: The federal government had promised to fund our state’s Health Insurance Partnership, which helps low-income workers by paying a portion of their health-insurance premiums. But buffeted by mounting debt, the federal government recently pulled its funding, and Washington’s HIP program has shut down.
How will our state implement its health-insurance exchange if the federal funding goes away? No one knows. And more troubling, it seems that no one in government asked the question.
Launching a major program with no idea of how to pay for it is something the average person would never do. It’s the government version of, “I have enough money for the first month’s payment, so I bought a new car!”
We already know that our state health exchange will do far more than just provide a virtual marketplace for private insurers. Federal law requires state exchanges to decide who’s eligible for federal subsidies, which health plans qualify to participate in the exchange, and coordinate services with myriad other publicly-funded health programs.
Over the next six months, lawmakers and the state Health Care Authority will “put some meat on the bones” of the state health exchange. But before they get too far along and commit taxpayers to a program that affects the health care of every citizen of the state, lawmakers should answer some very important questions:
1. How much will it cost?
2. Where’s the money coming from?
3. If they plan to rely on federal money, what’s their plan if federal funding
disappears as it did in the HIP program?
4. How far does the state intend to take over services currently provided by
the private sector?
5. Will they impose regulations or approve incentives designed to drive
consumers out of the
private market into state run plans?
6. Will they limit their intervention or attempt to compete with the entire
private insurance
market?
7. What private market options will consumers have if the exchanges fail?
Ideally, these are all questions that should have been asked and answered before lawmakers created the health exchange. Taxpayers and consumers deserve answers to these queries as the process moves forward — hopefully before the second month’s car payment is due.
Don Brunell is the president of the Association of Washington Business.
