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Yes to State Exchanges
Beware the federal “fallback exchanges,” the single-payer Trojan horse hidden in Obamacare.


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Obamacare became law. Strike one. Obamacare was upheld by the Supreme Court. Strike two. President Obama was reelected. Strike three, and no full repeal of Obamacare for the foreseeable future. Still, there are important health-policy battles that conservatives should fight — and can win — during the next four years.

Supporters of free-market health care must continue to resist the rationing mechanisms, burdensome mandates, and hundreds of billions of dollars’ worth of taxes in the law. These are issues where the policy and the politics are on our side.

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With the election now behind us, there’s another area that demands immediate attention and effort: the establishment of state-based health-insurance exchanges.

If states fail to establish their own exchanges by December 15, the law says the federal government will step in and establish the exchanges for them. Already 18 states have decided to leave their exchanges to the federal government, choosing a slippery slope toward precisely what liberal Democrats want: a federally controlled health-care system that would be the first step toward European-style, single-payer health care.

Conservatives have an obligation to keep this from happening. Setting up state-based exchanges is an important piece of defense.

Under Obamacare, health-insurance exchanges — new, state-based markets for buying health insurance — must be up and running in every state by January 1, 2014. States that establish their own exchanges will design them and decide how they will function. States can take steps to keep exchange costs low, respond locally to consumer questions and concerns, and make sure that consumers have many health-insurance products to choose from.

States can, and should, control their destinies by deciding how their exchanges will function, which private insurance companies can participate, and what kind of insurance coverage will be offered. They should use their political leverage — the administration desperately wants them to sign on to Medicaid expansions — to pare back the regulations and unrealistic timetables that would govern a state exchange. This is the kind of local decision-making that works best for businesses, workers, and taxpayers.

The alternative is to forgo a state-based, customized approach and capitulate to the federal government and its one-size-fits-all default arrangement. By law, states that haven’t established their own state-based exchanges must implement federal “fallback” exchanges established for them.

That means that if states do not act, they acquiesce to federal deadlines for approving health plans to be offered, even though these deadlines are not realistic. This quick pace could easily mean that consumers will have, instead of a robust market of competitive offerings, nothing more to choose from than a federally designed and approved plan.  That is, the federal government will decide what insurance plan will be offered in a state regardless of what consumers want or need.

This would truly be a Washington takeover of health care. And if conservatives allow it to happen, they will be consenting to an unprecedented and potentially irreversible intrusion into states’ economies and health-care systems. It would give single-payer advocates a foothold across many states.

In fact, federal “fallback” exchanges are the single-payer Trojan horse hidden in Obamacare. Conservatives must not allow themselves to be outfoxed and overrun.

The Department of Health and Human Services recently announced it will give states more time to make critical decisions. Those 18 states that already have decided to let the federal government come in and run this crucial marketplace should think again. There is now sufficient time to make a well-considered — and better — choice, one for state-controlled exchanges.

Waiting for the election results before deciding how, and whether, to move forward on exchanges was the right thing to do. But now, the looming specter of an intrusive federal exchange leaves conservative leaders with two choices: Establish your state exchanges on your terms, based on policies and programs that are good for your state and designed to meet the unique needs of your citizens, or hand it all over to the feds.

Remember, the concept of exchanges originated among conservative thinkers. A consumer-driven marketplace where private companies compete on price, variety, and quality to sell their products is far better than the federal government’s dictating to consumers and undermining their choices.

Even leading business organizations that have sued to block the Affordable Care Act support establishing state exchanges and believe they are vastly preferable to allowing federal exchanges to go into effect.

Conservatives must recognize that establishing a state health-insurance exchange is not acquiescing to Obamacare. It is instead one of the best means available to fight it and to ensure that control remains where it belongs — in the states and with citizens.

Douglas Holtz-Eakin is president of the American Action Forum.



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