Of the two versions, however, the House plan is by far the worse. It is both national and more sweeping in scope, severely limiting choices and driving up premiums for everyone — especially for the young and healthy.
If the House’s nationalized exchange proposal wins out, Americans will be stuck with a costly new government bureaucracy called the Health Choices Administration run by another appointed “czar” who decides what constitutes good healthcare and who is entitled to it.
This super-bureaucrat would have absolute power in transforming today’s consumer-driven healthcare into a government-dictated system that, among other things, would:
- Not be required to consult with patients or healthcare providers and would make unilateral decisions about healthcare choices.
- Could impose penalties on patients, doctors, employers and insurers with no system in place to ensure such penalties are fair and justified.
- Have the power to grant illegal immigrants healthcare tax credits based on a process different than that in current law.
- Dramatically increase waiting times for appointments, tests and new procedures in ways that in many cases would be rationing of healthcare services.
In short, the federal exchange proposed in the House bill would be worse and far more insidious than the public option Democrats may scrap to meet Senate demands.
About 165-million Americans currently get their health coverage through an employer. They have both guaranteed access to coverage, and the employer can choose from the range of policies offered by the insurer.
Unfortunately, the House legislation limits employers’ choices to those insurers participating in the exchange and to one of only four standardized plans.
As for individuals buying their own coverage, in most states they already have access to multiple options. In most areas there will be more than a dozen health insurers offering a wide range of deductibles, co-pays and HMO products, and at a wide variety of premiums.
Since the vast majority of Americans are relatively healthy, they would have no problem choosing from one of the existing plans being offered and have coverage within a few days. So why try to manufacture a market when one already exists?
Of course, some uninsured people have a pre-existing condition and could be denied coverage or charged a lot more for it. That problem is one of the reasons that exchange supporters think the system is broken — and the exchange will fix it.
But 35 states have implemented state-run high risk pools that provide coverage to individuals who can’t get it. True, some state high risk pools work better than others and the coverage can be expensive.
Importantly, the Senate version of the reform bill includes $5 billion to subsidize the high-risk pools until the exchange begins operating in about three years, a provision President Obama supports. A better solution would be to scrap the exchange and public option completely and focus on ensuring the high-risk pools work well and are adequately funded.
Besides limiting options, the exchange will also drive up premiums. Actuaries claim that the cost variation between the younger and older people is much larger than the 2-to-1 spread in the House exchange.
That means that older middle-age workers — those who turn 65 move into Medicare — will get a great deal while younger, and usually lower income, workers will pay a lot more. Most actuaries expect premiums for the young to at least double almost immediately.
While we do need some reforms to fix the current problems, we certainly don’t need the House’s exchange. It will lead to fewer options and higher premiums — and a whole lot of promises to fix those problems next time Congress gets around to it.
Merrill Matthews is the executive director at the Council for Affordable Health Insurance (cahi.org), a free market advocacy group of insurance companies, small businesses, providers, nonprofit associations, actuaries, insurance brokers and individuals. Readers may write him at CAHI, 127 S. Peyton Street, Suite 210, Alexandria, VA 22314 or e-mail him at policyguy1@aol.com
