Two recent headlines have created a political stir in the Republican party that has left more than the average voter scratching his head. The first was that the American Legislative Exchange Council and the CATO institute are actively discouraging republican state legislators from implementing health insurance exchanges as required by Obama’s Affordable Care Act (ACA). The other is that Mitt Romney has tapped former Utah governor Mike Leavitt as the head of his transition team. These events clash over the politically convoluted issue of state health insurance exchanges.
If there is any piece of legislation in Obamacare that hard-line, free-market Republicans should like, it’s the exchanges. After all, what doesn’t satisfy the political right like a good old-fashioned marketplace? Exchanges are simple websites that are designed to provide a web portal for consumers to compare insurance plans. As a side effect, insurance companies have to compete over premium prices, which should push them down in the long-run. Granted, Obama’s idea of an exchange is a little more heavy handed than the right would prefer (including a generous subsidy program), but at least it captures the general idea. Let me back up and explain where Obama first heard about exchanges.
Mitt Romney as governor of Massachusetts was the first to sign a state-regulated health insurance exchange into law. The website is called the Connector, and it’s a lot more intuitive than most government-developed sites. I had a few minutes, so I stopped by the site and found some very cool features that would definitely get me going if I were a Massachusetts resident looking for insurance. Some of the coolest features: a tiered system that allows you to choose the mix of premium, deductible or co-pay that you prefer; an intuitive overview of available plans that are easy to compare; and even a doctor look-up function. Since everyone in MA has to purchase insurance under their individual mandate, this is a handy tool to get people informed and get insurance companies to compete over price. A couple years later, Utah came out with their own exchange. The website is not quite as user-friendly, especially since it is primarily aimed at business owners not individuals, but it still accomplishes the primary goal of providing information and encouraging price competition.
The irony is that Massachusetts and Utah are much more than a stone’s throw away from each other on the political spectrum, but they have been the joint-innovators that inspired Obama to make the exchange a central reform in his health law. The GOP is essentially sacrificing one of the more promising health policies as a way to block some of the less palatable parts of the law from being implemented. It is an obvious political play, but it sure leaves the rest of us wondering which party actually likes the idea.