Healthcare exchanges put GOP at crossroads: placate Tea Party, or abandon core principles

By Nathan Rothwell

What the new web-based health insurance exchange might look like.
Image courtesy of www.Medhealth.com

After President Obama won his re-election bid weeks ago, the future of the Patient Protection and Affordable Care Act (PPACA) became more certain. This legislation, which is widely considered to be the Obama Administration’s most significant accomplishment to date, faced possible repeal if Obama did not win a second term. Now that he has, it seems all but certain that the remaining components of the PPACA will be phased in over the next several years.

One noteworthy component is a mandate for the creation of state-wide health insurance exchanges. By January 1, 2014, all 50 states are required to establish such an exchange, which is essentially a web-based marketplace where consumers can compare and purchase private health insurance plans. Certain eligible individuals can purchase these plans with federal subsidies, or enroll in Medicaid.

Early versions of the PPACA called for health insurance exchanges to also include a public option, where consumers could purchase health care provided by the federal government. Significant Republican opposition led to the removal of the public option, but political debate over these exchanges remains. Much of this debate is over who will run them, and how they will be operated.

Each state was permitted the option of running the newly-mandated exchange on its own, with no involvement from the federal government. The Department of Health and Human Services (HHS) recently established a Dec. 14 deadline for states to inform HHS if they wanted to run their own exchanges. Thus far, only 13 states (and the District of Columbia) have indicated that they will.

A number of other states, however, have indicated that they will not set up their own exchanges. Not surprisingly, most of these states (such as Texas, Kansas, and South Carolina) went for Mitt Romney on Election Day, due in no small part to their hope that Romney would deliver on his promise to repeal the PPACA and effectively kill the health insurance exchange mandate. Even in the wake of the Supreme Court ruling on the PPACA and President Obama’s re-election, these states remain entrenched in their decision not to run their own exchanges.

There is a certain irony here that appears to be lost in these states, which are almost overwhelmingly run by Republican governors (only Missouri comes to mind as a state that has a Democratic governor and remarkable opposition to ObamaCare, although not from Gov. Nixon’s office). Many of them oppose the idea of health care exchanges solely because it violates their preference for small government; however, by not electing to run the exchange itself or at least in partnership with HHS, these “small-government warriors” are allowing the much larger federal government to move in and run everything on their own.

I suppose one can understand how implementing a state-run health insurance exchange could be seen as capitulating to President Obama’s agenda, and these Republican governors (who are politicians first and public servants second) risk earning the ire of their electorate.Yet it can just as easily be argued that they are abandoning their core principles for nothing more than political points. When opposition to health insurance exchanges comes almost overwhelmingly from voters who petitioned to secede after Obama was re-elected and champion states’ rights above all else, why would they allow the federal government to not only tell them how to run their states’ health care exchanges, but also ask the feds to do it for them?

Republican governors in states that went for Obama, however are singing a different tune. Florida’s electoral results, for example, have caused Governor Rick “I’m going to make welfare recipients and state employees get tested for drugs, but pay no attention to the fact that I founded a drug-testing company and my wife still owns shares in it” Scott to practically recant his opposition to a health insurance exchange in his state after previously blocking every effort to create one.

"The election is over and President Obama won," Scott said. "I'm responsible for the families of Florida ... If I can get to yes, I want to get to yes."

Scott’s sudden change of heart seems encouraging at first glance. But it is probably better explained by the reality that the Florida governor who is no stranger to conflicts of interest realized the biggest conflict of all – his interest in remaining governor, and Florida voters’ sizeable interest in voting him out.

Which brings us to today. Insurance exchanges are an enormous gift to health care consumers; among other things, they help individuals stay educated about the health insurance market, select coverage plans that ideally suit their needs and financial situations, and even mandate consumer protections such as guaranteed issue and elimination of pre-existing condition exclusions and benefit caps. But Republicans, in their sad quest to oppose President Obama at every turn, have taken this gift and spit on it as big government interference.

Now they find themselves in a terrible predicament – do they abandon their core principles by refusing to let state governments become involved in implementing health care exchanges, or do they risk alienating the Tea Party-wing of the party?