Cost of a state-based ObamaCare exchange underestimated in Illinois

Despite Illinois’ precarious financial situation, some lawmakers are continuing their efforts to establish an expensive state-based ObamaCare exchange.

Despite Illinois’ precarious financial situation, some lawmakers are continuing their efforts to establish an expensive state-based ObamaCare exchange in the Prairie State. The current push to establish an exchange is being driven by a potential Supreme Court ruling that threatens the legality of IRS subsidies flowing into states that have not established a state-based exchange.

Instead of addressing the very real issues of health-care access and affordability – promises the president’s health-insurance overhaul has failed to deliver upon – some lawmakers would rather skip merrily past the state’s fiscal crisis to address a hypothetical situation. Turns out, this approach comes with a very high price tag.

While the federal government would provide startup funds, it’s state taxpayers who soon would be on the hook for the cost. Not only would a state-based exchange necessitate a new state-government bureaucracy, Illinois taxpayers would be responsible for all future exchange costs, such as salaries, pensions, and IT systems and upgrades. According to state government’s own estimates, these costs could range between $57 million and $89 million per year – without a single dime going to patient care.

But these estimates are not based on what the state is now spending (through federal grants) in key areas that would become the responsibility of Illinois should a state-based exchange be adopted. For example, the state’s current $26 million contract with FleishmanHillard is at least $20 million higher than the original marketing and advertising budget estimate of $4 million to $6 million. If Illinois lawmakers establish a state-based exchange, the state would become responsible for all of the exchange’s operational expenses, including this one. In short, the state could be on the hook for more than double the original, estimated cost.

Given the many reasons why a state-based exchange is misguided and unnecessary, the unpredictable costs provide even more reason to abandon this approach. In fact, of the small handful of states that have already established their own exchanges, some are finding the costs so high they might soon consider reverting back to the federal exchange.

To date, 34 states have already resisted the push to start a state-based exchange. Illinois would be wise to continue to follow their lead. At present, if a state does not establish its own exchange, residents can still access health-insurance plans through the federal exchange at no cost to the state.

The idea of fast-forwarding past Illinois’ financial woes to address a hypothetical situation is misguided and costly. Illinoisans deserve access to health insurance that is affordable. But a state-based exchange does nothing to achieve that goal.