Americans for Prosperity-Michigan

ObamaCare Health Care Exchange Regulations

July 2011

In principle, conservatives should support health insurance exchanges. They harness the power of free market competition, transparency and value comparison to drive innovation, increase choice, and reduce costs. However, when a health plan’s participation in the exchange is conditioned on page-after-page of federal mandates and restrictions, exchanges can also be used as a tool to expand bureaucratic control. That’s exactly what President Obama and Health and Human Services Secretary Kathleen Sebelius are trying to do with ObamaCare’s exchanges. On July 11, 2011, HHS released the first set of proposed exchange regulations. AFP’s concerns include:

Federal Control of State Exchanges: The President knows the country realizes his plan is a federal health care takeover. So in the first proposed regulations his bureaucrats used language that made it appear they were giving states flexibility to set up their own exchanges. Remember the health care market is far too complex for D.C. to run; they need the states to implement their scheme. Giving the appearance of flexibility is one way to convince states to do it. However, the proposed regulations direct that any “significant change” states want to make will require HHS approval. These changes could be as small as exchange governance structure, state laws or regulations, IT systems or functionality, or the qualified health plan certification process. States will be constantly asking permission to run their own exchanges; not a lot of real flexibility.

Centralized Database Risks Security of Personal Data: The proposed regulations also seek to establish a centralized claims database for the purpose of calculating risk. Insurers would be required to submit patients’ personal claims data to a huge federal database for the purposes of calculating “risk scores” and quality reporting – an enormous privacy concern. Do you want the federal government to have access to information about all of your health care decisions?

No Hint of Qualified Plans: “If you like your plan, you can keep it,” the President constantly promised during the health care debate. One of the more important elements of an exchange is which insurance plans will be allowed to participate. What plans qualify? This first regulation is entirely silent on what a qualified plan will look like. Care providers, insurers and patients are still waiting to learn if the President will allow us to keep the health care we have and like.

Short Timetable Threatens Federal Takeover: Maybe the worst aspect of these rules is the incredibly short time frame it gives states to get their exchanges up and running. States must receive “approval or conditional approval” from HHS by January 1, 2013 in order to avoid the federal government taking over the state’s exchange. However, due to various HHS review deadlines, states will probably need to have their plans submitted for federal signoff by July, 2012. With HHS due to release several more regulations before the states will have a clear picture of what the exchanges will need to look like to get HHS approval, states will likely only have a few months between when the final regulations are issued and when their plans are due.