Should Virginia take steps this year to set up a health insurance exchange as envisioned by the Patient Protection and Affordable Care Act?
An exchange would cost too much, harm businesses
Head, of Botetourt County, represents the 17th District in the Virginia House of Delegates.
In my brief time serving in the Virginia House of Delegates, I have already observed and come to appreciate the diligence and careful scrutiny that our state legislature routinely takes on major matters of policy. The creation of a state exchange would be among the most substantive and potentially catastrophic shifts in policy that Virginia has ever faced.
Currently, there are vast unknowns regarding the costs of implementation and administration of an exchange, the number of participants who would use such an exchange and the constraints that might be placed on us through as-of-yet unwritten regulations. Creating an exchange would in many ways be writing and signing a blank check.
Additionally, and more importantly, creation of an exchange would lock us into full participation in Obamacare and would likely have disastrous economic results because of the new and excessive burdens it places on businesses. If an exchange is established, all Virginia businesses with 50 or more full-time-equivalent employees would be required to provide and pay for the majority of health insurance benefits for their employees working 30 hours or more per week. In industries where unpredictable demand and variable hours are the norm, compliance would be almost impossible without dramatically increased administrative costs, which will lead to increased prices across all sectors of the economy.
This is illustrated clearly by the recent announcement by Papa John’s Pizza that compliance with Obamacare will raise their costs by anywhere from 3 to 5 percent. In industries with higher personnel costs, like most service industries, the cost of compliance will be much greater, and the cost of services will increase dramatically. Under the law, the penalty for noncompliance, $2,000 to $3,000 per employee, is only applicable when a state-run exchange exists.
It is incumbent on lawmakers to do everything in their power to stop, or, at the very least, slow down the runaway train of government overreach that is Obamacare. At the same time, we must take every step possible to provide affordable, accessible health care for all Virginians by encouraging Congress to allow the purchase of insurance across state lines, examining insurance mandates in Virginia to allow companies to provide a basic policy without all the “bells and whistles,” and further examining tort reform to allow our health care professionals more protection, while still respecting the rights of the consumer. The creation of an exchange will neither address the core problems of our health care system nor provide any solutions.
Editor’s note: The IRS reports a business will be bound by the law whether or not its home state adopts an exchange, though Virginia’s attorney general begs to differ.
Don’t hold a good idea hostage to politics
McClellan, of Richmond, represents the 71 District in the Virginia House of Delegates.
The clock is ticking on Virginia’s opportunity to create a state-run health benefits exchange under the Affordable Care Act before the federal government establishes one for us run out of Washington, DC. State exchanges must be fully operational by Jan. 1, 2014 to receive grants to fund it and submit a plan for approval.
In essence, an exchange is a marketplace for individuals and small businesses to purchase health insurance by offering a variety of certified health plans and providing information and educational services to help consumers understand their options.
Currently, many individuals and small businesses pay higher insurance rates because they lack purchasing power and the ability to pool risk. Exchanges increase their control and choice by providing information about prices, quality and physician and hospital networks. They are intended to keep prices low by increasing competition among private insurance plans through improved comparative shopping and more-informed consumers — and by providing small businesses the same purchasing power that large businesses enjoy.
Sound like a good idea? Many Republicans thought so before it became part of the ACA: Under Gov. Mitt Romney, Massachusetts created a state health exchange in 2006. Under former Gov. Jon Huntsman, Utah established an exchange in 2008. Former U.S. Senate Majority Leader and heart surgeon William Frist proclaimed last month in an editorial in The Week that both parties should “embrace” exchanges.
Even the McDonnell administration was for it before it was against it. In August 2010, Gov. Bob McDonnell established the Virginia Health Reform Initiative Advisory Council to develop recommendations to “help create an improved health system that is an economic driver for Virginia while allowing for more effective and efficient delivery of high quality care at lower costs.”
The VHRI recommended that Virginia operate its own exchange “to preserve and enhance competition,” and the 2011 General Assembly passed legislation stating our intent to operate a state exchange. The bill required the exchange to meet the requirements of the ACA, and directed Virginia’s secretary of health and human resources to provide recommendations for its structure and governance to the 2012 General Assembly.
But in 2012, the governor decided to wait and see if the Supreme Court would overturn the ACA, and now waits to see if Congress will repeal it.
In the meantime, we risk wasting what Frist calls “a distinctly American opportunity to improve our local communities and at the same time help our nation avert a major crisis.” Let’s not hold a good idea hostage to presidential politics. Let’s get to work.