State Flexibility Needed For ObamaCare Reform


Everyone prefers freedom of choice. This is no less true when choosing your healthcare than it is when ordering your lunch.

Perhaps the biggest problem with ObamaCare is that it limits freedom of choice. Everyone must purchase health insurance policies that cover the same treatments –whether you need them or not. Men have to purchase obstetrical care and women must purchase prostate exams. Nuns must purchase contraceptive coverage and elderly women, too.

This limitation of choice is central to the liberal architects of ObamaCare because it fulfills their choice of the minimum standard for health insurance for all Americans. But this insistence on “one size fits all” healthcare is the source of the higher cost of insurance premiums and higher deductibles and co-pays for everyone not on a government subsidy. Why not give people the freedom to choose the type of insurance that best fits their needs?

State Flexibility       

The Supreme Court has heard arguments in King v. Burwell concerning the Obama administration’s interpretation of the law to allow individuals purchasing insurance on the federal exchange to receive taxpayer-funded subsidies. When the decision is handed down in June, there will be a need for an alternative plan if King prevails.

One such plan calls for allowing states to design their own alternatives. This would give states the freedom to make their own choices about the needs of their residents. What works best in California may not work well in New Hampshire.

Our country was founded on the basis of federalism ­ – the principle in which the power to govern is shared between national and state governments. This principle is preserved in the Medicaid system that has been in practice for the last 50 years. States are given varying support from the federal government to provide healthcare to the poor but retain some autonomy in developing programs that fit their needs and budgets.

Lanhee J. Chen, research fellow at The Hoover Institution at Stanford University calls for similar flexibility in the states to provide ObamaCare alternatives. Writing an Op-Ed in The Wall Street Journal, Chen notes such flexibility is already possible in Section 1332 of the Affordable Care Act.

Section 1332 allows states to craft their own healthcare reform plans while waiving many of the law’s most onerous requirements. If a state drafts its own plan, it is exempt from enforcing both the individual and employer mandates, having to furnish the law’s tax credits and cost-sharing coverage subsidies, and enforcing the law’s standardized suite of medical benefits.

Sounds great – but there’s a catch. The new plan would have to overcome several obstacles to be implemented. These obstacles include:

  • New plans could only take effect in 2017 without a change in the statute.
  • A new plan must be approved by the White House to qualify for a waiver.
  • To qualify for a waiver the new plan must provide coverage that is at least as “comprehensive and affordable,” as the ACA.
  • It must cover at least as many individuals as the ACA.
  • It must not raise the Federal Deficit
  • The final arbitrator of this evaluation is the HHS Secretary.

These are high bars to overcome under the current administration.

Block Grants to States

Grace-Marie Turner and Diana Furchtgott-Roth proposed to block-grant existing federal spending on subsidies and premium assistance to the states in a New York Times Op-Ed in February. This would help states to subsidize the purchase of health-insurance plans they’ve approved. Block grants would incentivize states to come up with more effective and efficient plans by allowing them to capture any savings that ensue.

They propose Congress pass legislation allowing people to keep the subsidies they have already received through the end of the year. Then, beginning in 2016, instead of subsidies to individuals, the 37 states without exchanges could receive a new, capped allotment from the federal government. The states could then use these allocations to provide immediate premium assistance to people affected by the court decision.

Turner and Furchtgott-Roth correctly note this sounds like the same subsidies by a different name. However, they note these subsidies would not be subject to the ACA’s mandates, taxes, insurance rules, and benefit requirements.

This should make them less expensive. If the states are allowed to develop their own plans absent the mandates, these new plans would give people the freedom of choice to purchase only the coverage they need – which will cost less. The high cost of ObamaCare plans is derived from the expense of providing the same coverage to everyone.

This comes back to the central issue in this healthcare debate. Do we want a system where the government chooses our healthcare or do we want to preserve our freedom of choice as individual Americans? Americans must choose – and choose wisely.

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