Utah offers an interesting test case for President Obama's promise to make the implementation of the Affordable Care Act as flexible as possible. We're not surprised that Gov. Gary Herbert sent a letter this week to Health and Human Services Secretary Kathleen Sebelius with a list of questions he would like answered before deciding whether Utah should join the federal health insurance exchange mandated by that law. The way the administration answers will be telling, indeed.
For three years now, Utah has been operating its own exchange. Unlike what appears to be the federal model, however, Utah's is a true marketplace of licensed insurance providers. The administration's plan seems to be one in which participating companies must agree to provide coverage for certain things and in certain ways — a narrow and controlling system that really isn't much of a marketplace at all.
Herbert seems determined to keep Utah's exchange going regardless of whether the administration qualifies it to operate as part of "Obamacare." That would be a good decision. Even if the federal and state exchanges operate side-by-side, there would be no down-side for consumers.
Utah's exchange has been hailed by some as a model for health-care reform. Writing in Forbes.com, Avik Roy, a senior fellow at the Manhattan Institute for Policy Research, said, "Utah has been the nation's innovator in setting up a health insurance clearinghouse."
Roy notes the administration is correct when it says health insurance exchanges originated as a conservative idea for reform. The original idea was to construct a system that moves the nation away from an employment-based model, in which consumers obtain insurance only through their place of work and tend to lose that coverage when they quit or change jobs. The plan was to set up an exchange that allowed people to shop for their own coverage, encouraging employers to provide a lump sum to help workers do so. People without willing employers would receive government help toward premium payments.
This conservative idea was designed to work best when it gave consumers a wide array of choices in an atmosphere that encouraged innovation, diversity and competition. Any licensed insurance company could participate. The administration's plan, however, seems determined to require insurers to conform to a narrow set of standards in order to qualify for use in an exchange.
A number of states already have decided not to set up exchanges under the federal plan. The law allows them to opt out, specifying that the federal government will step in and set up an exchange in that state, instead.
Herbert has asked some important questions about how much it would cost the state to make its exchange a part of Obamacare, and whether the state would have to change its procedures and laws. If the administration truly was flexible, it would let Utah's experiment proceed — if nothing else, to see whether it provides a model that works better than what Washington has in mind.
After all, the end goal should be to provide a system that works best for consumers, not one that pushes one idea only or satisfies some need for control.
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