The Reform Law’s Health Insurance Exchanges

The health insurance exchanges to be set up under the health reform law have garnered a fair amount of notoriety lately, with two opposing appeals court decisions regarding the availability of subsidies on the federally operated exchange and a Government Accounting Office report regarding the ease with which, on a very limited sample, people who shouldn’t have been able to were able to sign up for coverage and get subsidies on the federal exchange.  (GAO Report)  The appeals court decisions will ultimately be resolved by the Supreme Court and, unfortunately for the Administration, it may be hoist on its own pedant, as wunderkind health economist Jonathan Gruber, who likes to think of himself of the father of the reform law (and lets give him credit for being willing to acknowledge a bastardized creation), has been discovered on video well before the lawsuits occurred indicating that the subsidies were only intended for sign-ups on the state exchanges, to invent the states to create one.  The GAO report, which really has to be read in full to be believed, involved creation of fictitious applicants, 11 out of 12 of whom obtained coverage and subsidies, and two of whom had fake documents submitted by GAO, reviewed and accepted as authentic.  Given the proclivity for health care fraud in this country, organized crime has a whole new way to rip off taxpayers.

Another recent development regarding the exchanges relates to a proposed rule to automatically re-enroll people next year in the coverage they selected this year unless they proactively re-enroll in a different plan.  This will lead to nasty sticker shock for a number of individuals who may not shop around.  While we admit to schadenfreude in regard to the reform law’s travails, the truth is that anything of this complexity, whether created and administered by a government or a private entity, is going to endure issue after issue and never really work well.  That is why the proposed much simpler approaches to dealing with issues of health care coverage and health care service receipt should have seriously examined and adopted.