In the case of Vermont, state officials and the legislature are designing its exchange such that it could become a platform for a state-based single-payer system. The state would like to eventually pool all sources of revenue, including individuals’ and employers’ premium contributions, plus federal and state funds (for Medicare and Medicaid as well as for the ACA exchanges), so that they become equivalent to a single-payer system.
What’s Really Happening?
Efforts by D.C. and Vermont to grab a larger market share for their new ACA exchanges underscore the weakness of the ACA exchanges in attracting voluntary enrollees. Even the special advantages of premium-assistance tax credits devoted to individual market coverage exclusively through the ACA exchanges do not seem enough to guarantee sufficient enrollment.
The ACA includes statutory protections against what D.C. and Vermont are attempting, but they are blatantly disregarding them, echoing many other examples of how the law as passed by Congress has been ignored, skirted around, or callously redefined as it has been implemented.
The Real Game Plan for ACA Exchanges 2.0
Although exchange coverage remains dysfunctional after its first six weeks of implementation, we are assuming, heroically, that several million Americans will eventually stagger into the exchanges for desperately needed subsidized insurance coverage. Not only will the small beachhead of heavily regulated, highly subsidized, and politically protected exchange coverage be defended, but (through handicapping its outside market competitors) attempts will be made to expand it.
The most transparent preview of the real aspirations of health-exchange planners appeared recently in The New England Journal of Medicine
(September 4, 2013). Henry Aaron and Kevin Lucia, both members of the D.C. Health Benefit Exchange Authority, explained that correcting the initial glitches in implementing the ACA’s health-insurance exchanges would create an opportunity to shape the organization, quality, and financing of all U.S. health care. They pointed to the existing powers of exchange administrators that have not (yet) been used much, if at all, including
Limiting the number of plans insurers can offer
Requiring insurers to offer standardized plans
Setting additional standards for the quality of care paid for by plans
Selectively contracting with only particular insurers or health-delivery organizations
Barring plans that do not meet the exchange’s quality or price standards
Aaron and Lucia eagerly anticipated the scope of exchange coverage to grow — at first by allowing larger employers to enroll their workers in the exchanges, and later as states follow Vermont and D.C. in creating a single, united market for insurance. They concluded with these revealing words: “The exchanges are an instrument of enormous potential power.”
Of course, with great hubris should come greater humility. Shortly before its October 1 launch, the D.C.’s health exchange announced that potential insurance shoppers would not have access to their premium prices until mid-November, at the earliest. In early tests, the exchange was experiencing “a high error rate” in calculating the federal tax credits that low- and middle-income people would use to purchase insurance there. In Vermont, Governor Peter Shumlin announced on October 31 that small businesses may bypass the state’s official health-exchange website and instead contract directly with the two private insurers still operating in the state. Moreover, the date by which small businesses and individuals in Vermont would be required to have an exchange plan was moved from January 1, 2014, to April 1.
Expect more delays, more derailments, and, from the exchange architects, more denials of reality and of the stubborn complexities of health-care markets.
— Tom Miller is co-author of Why Obamacare Is Wrong for America.