Friday, December 02, 2011

EDITORIAL >>Feds control exchanges

It’s official. When the final phase of the new health-insurance law is implemented in January 2014, uninsured individuals and businesses will buy insurance through a national exchange in Washington, not one tailored for Arkansas.

State Insurance Commissioner Jay Bradford announced Friday that the state was giving up on establishing an Arkansas exchange, which would give people a wide choice of insurance plans and premiums devised by insurance companies specifically for Arkansas people and the Arkansas health-care system. Republicans, at least the GOP contingent in the state Senate and House of Representatives, were against a state exchange, so Gov. Beebe decided to let them have their way and give Washington the job.

For most people, who are already insured either through employer-based group plans, individual policies or one of the government health programs, it will make no difference. For those who will be expected to buy an insurance policy or pay a tax to comply with the Patient Protection and Affordable Care Act of 2010, it may make a lot of difference or perhaps very little.

No one at this point knows what the national exchange that will be put together by the federal government will look like or how the plans and premiums that would have been offered by a peculiar Arkansas exchange would differ. But Arkansas almost certainly will be worse off. The state will not be regulating the market and perhaps not even collecting the normal premium taxes, which presumably will go to the federal government.

The insurance industry, business groups, Gov. Beebe and the state Insurance Department wanted the state to devise and operate the exchange, for obvious reasons. Regulators at Little Rock would be closer and probably more amenable than those in Washington and the premiums and services might have been more suitable. But who knows for sure?

There is much blame to go around for this perverse turn of events—perverse because Republican calculating has now produced the one result that this generation of Republican leaders abhorred: federal regulation. Gov. Beebe and a craven band of Democratic lawmakers must bear some of the onus, too.

Arkansas Republicans have made great strides the past two years by invoking the name of the black president who was and continues to be intensely unpopular in Arkansas. Republicans for almost every office last year ran against Barack Obama and the insurance-reform law that became associated with him, although he initially opposed significant parts of it. It is now called “Obamacare.”

The central provision of the law requires people who are not insured and can afford it—those with family incomes above 133 percent of the federal poverty line—to buy an insurance policy or else pay a small but growing tax. The federal government would help families pay for the policies until family incomes exceeded 400 percent of the poverty line. The so-called “mandate” was to end medical cost shifting from the uninsured sick to people who do have insurance and it will enable insurance companies to cover everyone, including those with pre-existing conditions.

Each state would create a marketplace, called an exchange, where people and businesses could shop for a plan that fit their needs. There would be a national exchange where people could shop if their state did not set up an exchange or the state exchange did not supply good options.

Republicans attacked the law in court, primarily on the basis of the mandate, and the U.S. Supreme Court will rule by next summer. The insurance mandate, by the way, was a Republican idea, launched first by President Nixon in 1973 and fought for in the 1990s by congressional Republicans (notably including current presidential frontrunners Newt Gingrich and Mitt Romney).

This spring, Republican state lawmakers fought a bill authorizing the state Insurance Department to use federal dollars to plan and establish the exchange. The Republicans did not have quite a majority in either house but hammered “Obamacare” so fiercely that a number of Democrats sided with them and sidetracked the bill into an interim committee. Democratic legislators feared being linked with the president in any way in their 2012 re-election races.

Beebe could still obtain a federal grant to do the planning for the exchange, but he said he was not going to do it unless there was a modicum of Republican support. Republicans stood fast in hearings this fall: no to anything remotely associated with President Obama, no matter the consequences.

When Beebe capitulated and said OK, you’re going to get what you sought, Republicans set out to blame him for the coming federal regulation. They said, in effect, “the governor should have had the courage to stand up to us.”

And they were right. Leadership is doing what is best for the people when there is no political gain in it. Beebe met the underhanded politics of the other party with some clever politics of his own. He should have done what he knew and said was the right thing to do. It is not his finest hour.