Why Illinois should forgo state-based health exchange
A new Illinois Policy Institute report lays out the many reasons why a state-based exchange is not only unnecessary, but also harmful to the state.
Illinois lawmakers are facing mounting pressure this week to establish a state-based ObamaCare exchange. Thirty-four states have already resisted the push to start a state-based exchange. Illinois would be wise to continue to follow their lead.
A new Illinois Policy Institute report lays out the many reasons why a state-based exchange is not only unnecessary, but also harmful to the state. But the fundamental question is: Why should lawmakers embrace the already flailing Affordable Care Act, or ACA?
Many favoring a state-based exchange in Illinois want “insurance protection” against an upcoming U.S. Supreme Court case that could strike down the ACA insurance subsidies in states that have not established a state exchange. The vast majority of states have, wisely, not adopted this approach. It would be the responsibility of federal lawmakers to remedy the situation.
Furthermore, in the event that these subsidies are struck down, the Internal Revenue Service would no longer be able to impose penalties of up to $325 on 455,000 Illinoisans and up to $3,000 on employers that don’t offer “qualified” and “affordable” coverage, affecting approximately 16,000 Illinois employers (employing 3.8 million Illinoisans). Such a ruling would force lawmakers to go back to the drawing board, providing an opportunity for affordable and accessible health care – promises the ACA has not delivered on.
Even if a state decides to start an exchange, it will be costly. While the federal government would provide startup funds, it’s state taxpayers who soon would be on the hook for the cost. A state-based exchange would 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 the state government’s own estimates, these costs could easily exceed $100 million or more per year – without a single dime going to patient care.
Fourteen states and the District of Columbia have started their own ObamaCare exchanges. Seven of these exchanges are already inoperable or on the brink of failing. In Oregon, the state spent $303 million and not a single person was able to enroll for coverage online. Oregon’s state-based exchange and some of the state’s senior political leadership are now the subject of federal investigations. There is no question that, if this level of cronyism and mismanagement can happen in Oregon, then Illinois could also be susceptible to this level of failure.
Furthermore, a state-based ObamaCare exchange is not required by federal law. If a state does not establish an ACA exchange, residents can still access health insurance plans through the federal exchange at no cost to the state. That’s why so many states have made a financially wise decision not to establish a state-based exchange.
Illinoisans deserve access to health insurance that is affordable. But a state-based ObamaCare exchange does nothing to achieve that goal.