Why are mandated Health Exchanges bad for Arkansas?

While the concept of health exchanges in principle is a good idea there are some very fundamental and serious problems with the concept. The first problem with health exchanges is the constitutional issue of a government mandated purchase of insurance and requisite fines and penalties of non-compliance. The individual mandate exceeds the constitutional limits of the commerce clause’s power beyond economic activity, to economic inactivity. That is unprecedented. While Congress has used its taxing power to fund Social Security and Medicare, never before has it used its commerce power to mandate that an individual person engage in an economic transaction with a private company. Regulating the auto industry to install seat belts or paying “cash for clunkers” is one thing; making everyone buy a Volkswagen over a Cadillac is another. While the PPACA finds its way to the Supreme Court, Arkansas must make some tough decisions.

“Bending the Cost Curve”, is the watch word for supporters of Healthcare Exchange supporters. Yet absolutely no proof has been provided that the establishment of healthcare exchanges will lower the costs of insurance or healthcare. The only savings that may be realized is the savings to government administered healthcare programs. The fundamental principle of insurance is to expand the base of coverage to decrease the cost of insurance. With health exchanges broadening the base will include expanding eligibility for subsidies up to 400% of the FPL. These costs are passed along to the taxpayer. The only thing that happens with health exchanges is that they cover more people by increasing the cost through taxation and increased premium costs. Massachusetts has an exchange similar to the one proposed in the PPACA. Yet, an analysis of the least expensive policies for a family of four in cities across the country finds the Massachusetts Commonwealth Connector to be more than three times as expensive as other cities. The Massachusetts plan, which is different than the Utah plan has attracted more participants than Utah’s. A key factor there is Massachusetts is heavily subsidized at a far greater cost. The budget for the Massachusetts Connector in Year 1 was $25 million, growing to $30 million. In Utah, the respective figures are $600,000 and $675,000. Utah plan a more innovative plan has first looked to government being a facilitator and private market reforms.

The healthcare reform bill would mandate that most US citizens and legal residents purchase “minimal essential coverage” for themselves and their dependents. You can buy it through new marketplaces that will sell policies to individuals; these marketplaces would be called “exchanges.” If you ignore this mandate and don’t get health insurance, you’ll have to pay a tax penalty to the federal government, beginning in 2014. This fine starts fairly small, but by the time it is fully phased in, in 2016, it is substantial. Certain people with religious objections would not have to get health insurance. Nor would American Indians, illegal immigrants, or people in prison.

Forty-three percent of noncitizens under 65 have no health insurance. The cost of the medical care of these uninsured immigrants strains the financial stability of the health care community and adds to the cost of insurance. Another problem is immigrants’ use of hospital and emergency utilization rate of hospitals and clinics by illegal aliens (29 percent) is more than twice the rate of the overall U.S. population (11 percent). As a result, the costs of medical care for immigrants are staggering 73 million dollars annually, a full 1/3^rd of the projected cost of the mandated Medicaid eligibility increases. One of the frequent costs to Ar. taxpayers is delivery of babies to illegal alien mothers 97.2% of the cost is born by the taxpayer. This major cost issue is not addressed in either the federal or proposed state health exchange plans. “Health reform must include new resources and penalties to fight fraud in the Medicare and Medicaid programs including the costs of supporting illegal aliens. The CBO acknowledges that each $1 invested in uncovering fraud generates $1.75 in budget savings.” What greater fraud is being perpetrated upon the American people than the abuse of taxpayer dollars to pay the healthcare costs of those who are not supposed to even be here!

The solutions are not simple but a solution can be found if we choose the right road. The road we are currently on is one of growing government involvement in private healthcare decisions. The road we are on leads to higher redistributive taxation which has not and will not lower insurance costs. As long as government subsidizes the purchase of insurance it will continue to see dependence on government grow stifling self-reliance and entrepreneurship. The right road is one of government performing the duties of facilitator helping the establishment of free market solutions and stubbornly resisting the temptation to interfere in our free market economy. The solution is using our very finite and limited resources to root out waste fraud and abuse while simultaneously ending the spending of tax payer dollars to support illegal aliens. Let’s return our nation back to a country where hard work and determination is rewarded and we encourage others to lift themselves out of the bondage of poverty and governmental dependency. The old saying still applies today, “Give a man a fish and he eats for the day, teach a man to fish and he