Smith: The Davy Crockett exchange

Smith: The Davy Crockett exchange

December 3rd, 2012 By Robin Smith in Opinion Columns

Robin Smith, former Chairman of the Tennessee Republican Party and congressional candidate.

The cleverly named Patient Protection and Affordable Care Act signed into law by President Obama in March 2010 will move forward to full implementation by 2014. Meanwhile, the state-driven component is up against a looming deadline.

There are two choices faced by each state: One, whether or not to expand Medicaid coverage, or TennCare here, for the poor. Two, whether to establish and run a health insurance exchange -- that creates a market for those who qualify for the federal subsidy to purchase a minimum health benefit plan -- or to allow the federal government to establish and run the exchange.

Hopefully, no one has forgotten the work undertaken by Gov. Phil Bredesen and the Tennessee General Assembly to make significant cuts to TennCare in order to prevent our state's budget from being consumed by the health program for the poor. Expanding TennCare would be expanding a taxpayer-funded defined-benefit plan that is not adjusted for inflation.

Tennessee appears to have decided against expanding TennCare while contemplating the state exchange. Two of our neighbors, Alabama and Georgia have rejected both options.

The establishment and administration of a health insurance exchange would certainly be best controlled by each state -- if each state actually has control.

The federal government promises to "return" some of your tax dollars to Tennessee in the form of a defined contribution, a fixed amount. This fixed amount of funding will be awarded to people who are uninsured and meet the federally determined criteria of eligibility. This money is used to purchase a minimum-benefit health plan or applied toward the purchase of any so-called bronze, silver, gold or platinum insurance plans approved by the federal government.

The state health exchange, as mandated by the federal law, must also provide Web resources like a cost calculator and a toll-free call center. It must also determine eligibility and enroll participants, determine eligibility for cost-sharing reductions and tax credits, determine whether employer-sponsored insurance is "affordable" (less than 9.5 percent of household income), operate a consumer assistance program, report user and employer data to the U.S. Treasury and generate sufficient revenue to be self-sustaining by 2015. All this is according to Tennessee's Web page about our current state insurance exchange initiative.

Call me jaded, but having the U.S. government graciously "return" some of our tax dollars to Tennessee to fund a federally structured insurance program -- while setting the rules and sending a fixed contribution for a defined benefit that will no doubt increase in price to administer each year -- sounds less than ideal.

Do you remember what the Obama administration and the Democrats in Congress said about health care reform during the president's first term? They said it was to reduce health care costs.

The famed economist Milton Friedman once quipped, "The government solution to a problem is usually as bad as the problem." Indeed.

One of the ACA's architects, MIT economist Jonathan Gruber, initially trumpeted in 2009 Forbes magazine interview that, "young people would save 13 percent and older people 31 percent on their insurance premiums." Dr. Gruber has now reversed course when doing an analysis on the state level.

He has recently changed his tune after conducting a cost-benefit analysis for Colorado, Minnesota and Wisconsin. By 2016, each of these states would see increases in insurance premiums by as much as 19 percent, 29 percent, and 30 percent, respectively. Savings that were touted at the federal level have turned out to be price increases for consumers.

Tennessean Davy Crockett's advice informs our state leaders: "Be sure you are right; then go ahead."

Robin Smith, a consultant at Rivers Edge Alliance, is a wife and mother living in Hixson. She served as chairwoman of the Tennessee Republican Party from 2007 to 2009.