In 2018, millions of middle-class Americans, particularly those unsubsidized enrollees in the states’ individual health insurance markets, are rightfully anxious about the future of their health care.
They face skyrocketing premiums—a 34 percent jump for “standard” plans—as well as exploding deductibles, amounting to many thousands of dollars annually.
In some states, health insurance costs are so high that enrolling in the Obamacare coverage is akin to financing a second mortgage.
Choice and competition in these Obamacare markets are plummeting, as networks of doctors and other medical professionals get narrower, while fewer and fewer insurers offer coverage in the states’ declining exchanges.
For this year, 52 percent of all U.S. counties will have only one health insurer in their exchange.
Obamacare transferred an enormous amount of regulatory power from the states to the federal government. Today, the people of the states, though their markets differ radically, are largely on the receiving end of Washington’s unilateral decisions, and, as The Heritage Foundation and others have shown, the regulatory costs of those decisions have been substantial.
After the Senate’s disappointing 2017 performance, congressional leaders appear hesitant to try again this year, given the multiplicity of other legislative challenges. Yet the problems are worsening.
The nation’s governors and state lawmakers, therefore, should use every legal means available to them to fix their broken health insurance markets and thus reduce the punishing costs Obamacare is imposing on the residents of their states.
State officials have some room to maneuver by taking advantage of Section 1332 of current law, and applying to the secretary of the Department of Health and Human Services for greater flexibility.
They can do this by securing Health and Human Services waivers from as many as 11 statutory requirements of Obamacare.
For example, they can get waivers to redefine a “qualified health plan,” take control of the kind and number of health benefits required for lawful coverage, and get out from under the federal “actuarial value” requirement that mandates specific levels of health insurance coverage.
They can also get waivers from rules governing the insurance risk-pooling and the administration of the health insurance exchanges within their borders, as well as from rules for premium and cost-sharing subsidies in their state exchanges.
For example, Alaska judiciously redeployed federal subsidies for its risk pool to offset high medical claims costs, and, in the process, reduced the state’s 2018 insurance premiums and thus federal taxpayer costs.
Under current law, state officials must meet certain conditions to get waivers from Obamacare’s rules and regulations.
First, state officials’ coverage alternatives must enroll as many people as Obamacare, a condition easier and easier to meet, since the Congressional Budget Office’s projections have been laughably inaccurate. Real enrollment has fallen persistently far below CBO’s estimates.
Second, state officials’ alternative cannot add to the federal deficit.
Third, proposed state alternatives must meet Obamacare’s standards for “comprehensive” coverage. The Department of Health and Human Services, however, has the administrative authority to interpret and apply those standards, and enjoys a privileged position in their interpretation.
State officials should be mindful that the Supreme Court has ruled that federal courts should defer to an agency’s interpretation of the law in issuing regulations unless that interpretation is unreasonable.
The Trump administration has indicated its desire to maximize state flexibility, and President Donald Trump already ordered federal agencies to take steps necessary to minimize Obamacare’s regulatory burdens.
Beyond applying for federal waivers, state officials can take other steps to reduce costs and improve the functioning of the markets.
- Promote price transparency.
Markets cannot work without consumer information on price and quality. Too many Americans do not have a clue about the real costs of their health insurance coverage, are shocked by nursing care costs, and are positively mystified by hospital charges.
State officials can empower consumers, help them make informed decisions, and help take the mystery out of health care financing.
The state of Maryland, for example, is taking a small, but significant, step in promoting the transparency of hospital prices.
The Maryland Health Care Commission has created a consumer-friendly website that provides Maryland residents information on the average total cost of a select set of episodes of hospital care: hip replacement, knee replacement, vaginal births, and hysterectomies.
Maryland’s pioneering initiative should inspire other states to pursue similar efforts.
- Promote provider competition.
A good place to start promoting competition is by reviewing the impact of certificate of need laws.
These laws, currently enforced in 35 states and the District of Columbia, require the state to give official permission for the construction, replacement, or expansion of hospitals and other health care facilities.
Both the Justice Department and the Federal Trade Commission have long identified these laws as anti-competitive. A growing body of professional economic literature confirms this assessment.
Certificate of need laws generally do not control costs, nor improve quality, and they restrain provider entry and innovation in health care delivery.
- Pursue regulatory reform.
State officials, for example, should review and eliminate any legal or regulatory barriers to telehealth, an initiative that improves medical outcomes and saves money.
They should also eliminate legal or regulatory restrictions on direct primary care practice. More and more primary care practices are providing care for an affordable monthly subscription, cutting out third-party payment and reducing administrative costs.
For millions of Americans who are increasingly frustrated with the restrictions and the paperwork that accompany conventional insurance, this is an excellent remedy.
Faced with growing physician shortages, state officials should also roll back restrictions on the “scope of practice” in the health care professions, and allow a greater role for nurse practitioners and physician assistants.
Moreover, state officials should review and reform their medical tort liability laws, particularly if there is evidence that those laws are compromising access to patient care.
America’s health reform debate is only going to intensify, whether Washington engages or not. States are well-equipped to lead with reforms that can help their residents’ access better-quality coverage and care.
Note: Robert Moffit is a member of the Maryland Health Care Commission and has extensive experience in state health care reform.