Guest Columns

KOPP: SOUND THE ALARM

Colorado Health Benefit Exchange may be a slow-moving train wreck

GUEST COLUMNIST

Under the federal Patient Protection and Affordable Care Act, also known as Obamacare, Colorado must adapt to new federal mandates that will dramatically affect health care costs and the insurance plans available to health care consumers. How will Colorado cope with these new and costly federal mandates?

Senate Bill 200, enacted in May, created the Colorado Health Benefit Exchange Board and last week Governor Hickenlooper announced the appointment of the nine members of the body. Thus, Colorado has joined nine other states in establishing a state health benefit exchange as required under the Obamacare. Meanwhile, Republican governors in twenty-one other states have refused to do so without federal waivers giving them flexibility in implementing it.

The legislative debate over SB 200 came down to an argument over whether the bill served to endorse and validate Obamacare or whether it was a necessary and prudent step to help Colorado deal with new federal health care laws. Like it or not, SB 200 sponsors said, that train is coming down the track and we have to deal with it.

Senate Republicans were unanimous in opposing the bill, but it passed both houses and was signed by the Governor. So, that debate is over. The health benefit exchange exists. The question now is — what do we do with this thing? Can it serve a useful purpose?

The Governor appointed five of the nine voting members and the Republican and Democrat leaders in the General Assembly appointed the other four. The nine appointed voting members include five Democrats, three Republicans and one unaffiliated. Three health-related agency heads appointed by the Governor, including Insurance Commissioner Jim Riesberg, a former Democrat state representative, will sit on the board as non-voting ex-officio members.

Given this alignment and the fact that at least three of the governor’s five appointees are well-known advocates for increased government subsidies of health care, we have little basis to be optimistic about the direction the health exchange will take.

However, the opening section of the law creating the exchange contains the following statement of the organization’s goals: “The exchange shall foster a competitive marketplace for insurance ….” Additionally, the new statute declares that the intent of the legislature was to create “Colorado-specific solutions….” Also, the board is explicitly prohibited from rule-making or invading the powers of the state’s insurance commissioner.

Thus, there is solid basis in the charter of this body to limit its functions to promoting a more viable marketplace in health care without added government bureaucracy or added costs to consumers. On the other hand, there is justifiable concern about the exchange because of the federal framework for health care policy established by the PPACA. When push comes to shove in 2012 and 2013, the concern is that federal rule-making will shape the exchange more than the board and the legislature will.

Fostering “a competitive marketplace” requires more than setting up a single place —virtual or otherwise — where people can shop for health insurance. Truly competitive markets share some common characteristics that must be present for the exchange to promote competition and drive down costs and broaden access.

Competition begins with consumer choice. We need to maximize transparency in what is offered to consumers. The incentive structure of a free marketplace, where the most cost effective and high quality products are rewarded, can only work if consumers have a clear understanding of plans’ premium costs, covered benefits, and measures of quality like customer satisfaction in achieving their personal health-related goals as far as a plan is able.

Competition also requires willing competitors. If PPACA’s perverse incentives cause insurance companies to consolidate, it is crucial that the Colorado exchange presents consumers with as much choice and competition as possible. The exchange should be open to all insurers eligible to operate in Colorado.
Competition and choice also imply that the purchasers of health insurance are exercising their own sense of personal responsibility, not the inclinations of government policymakers hoping to entitle more taxpayer funded benefits to an ever growing number of people.

If the PPACA is declared unconstitutional by the US Supreme Court or repealed by Congress, the Colorado Health Benefit Exchange may continue as an adjunct to state insurance laws. But if Obamacare survives all challenges and Colorado is forced to adapt to it, the exchange may wind up playing a lead role in shaping our response to intrusive federal mandates.

For public officials like myself who have opposed Obamacare and hope it will be repealed, this uncertainty over the future direction of federal health care policy poses a dilemma. Should we sit back and merely watch the oncoming train wreck, taking care to get our children and cattle out of harm’s way? As appealing as that option may be, responsible lawmakers have an obligation to avert train wrecks whenever possible. Citizens and policymakers alike must monitor the exchange closely and try to influence it in a positive way.
The Colorado Health Benefit Exchange may be part of the solution, or it may add to the problems already present in government health care interventionism. Regrettably, the odds on a positive outcome to this experiment are not good.

Senate Minority Leader Mike Kopp represents Colorado Senate District 22 which includes: Southern and Western Jefferson County (including Lakewood, Ken Caryl, and Columbine).