ObamaCare Exchanges: Like Applying for a Mortgage

by Amanda Griffin-Johnson As part of ObamaCare, states have the option to establish a health insurance exchange, intended to be a centralized marketplace for insurance. These exchanges must conform to federal guidelines, and if the state does not “demonstrate progress toward implementing an Exchange” by January 1, 2013, the federal government will be responsible for setting...

by Amanda Griffin-Johnson

As part of ObamaCare, states have the option to establish a health insurance exchange, intended to be a centralized marketplace for insurance. These exchanges must conform to federal guidelines, and if the state does not “demonstrate progress toward implementing an Exchange” by January 1, 2013, the federal government will be responsible for setting up the exchange. The federal legislation requires the exchange to be fully operational by January 1, 2014. While the stated purpose of the exchanges is to simplify the process of purchasing health insurance, the task is much more complicated than it is often made out to be. Politico reports:

The online exchanges that are being created by the health reform law are often described as a new “Travelocity for health insurance.” Consumers will go to a website, input information about their income and needs and pick the coverage that fits best. But the people who are charged with setting up the exchanges say it’s not going to be as easy as buying a plane ticket.

“People have talked about this as a ‘Travelocity’ experience,” said Bruce Caswell, president and general manager for health services for Maximus, an information technology company that handles Medicaid managed-care enrollment in 13 states. “It’s probably going to be more like applying for a mortgage.”

No wonder more and more states are refusing to create exchanges. As John Graham of the Pacific Research Institute explains:

States establishing Obamacare exchanges are making a one-way, lose-lose bet. If Obamacare persists, exchanges will become bloated administrative nightmares. If Obamacare is defeated, states will have wasted time and energy that should have been directed towards that effort.

While some supporters (and opponents) of ObamaCare are encouraging states to implement these exchanges in order to maintain control of them, there are good reasons states should avoid them. While state implementation may seem to equal state control, in reality, the federal government will have the last sign-off on the exchanges, leaving very little room for flexibility.