Projo Omits the Real Story of Health Benefit Exchanges

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The Providence Journal’s article checking in on the progress of Rhode Island’s ObamaCare health benefits exchange ignores the major policy questions and potential objections that have made the exchanges a subject of controversy across the country.  With the exchange’s executive director, Christine Ferguson, as its only source, the article is little more than a preview press release for an expensive government service that is of dubious origin, questionable promise, and dangerous potential.

Here is a mere sampling of the conspicuous omissions:

  • The article ignores the controversy of more states’ refusing to set up exchanges than agreeing to do so. Oklahoma is leading the way in a lawsuit challenging the authority of the Internal Revenue Service (IRS) to impose a fee on medium-sized and large employers that do not offer healthcare benefits in states that will have federally run exchanges.
  • The article glosses over the distortion of the employment market caused by the employer mandate. With the threshold of 50 full-time employees before businesses are required by the law to offer healthcare benefits or pay the IRS penalty, the law is creating perverse incentives that are leading employers nationwide to limit workers to part-time status and potentially not to hire them at all.
  • The costs of the exchange and the Medicaid expansion to the state are not mentioned. The initiation of ObamaCare in Rhode Island looks like a windfall of federal dollars for the state, but within a few years, the additional local costs will add strain to the state’s annual struggle to balance its budget. With data from the Kaiser Family Foundation, the RI Center for Freedom & Prospeity estimates that the cost of the Medicaid expansion to Rhode Island taxpayers will be approximately $50 million per year.  When it comes to paying for the exchange itself, Rhode Island may follow Massachusetts’ strategy of charging a 3% fee on top of premiums.
  • The planned expansion of the exchange as a “unified infrastructure” is nowhere to be found. The officials behind Rhode Island’s health benefits exchange are also planning to integrate it with other state subsidies and services, such as welfare and food stamps. The Center has dubbed this strategy a “dependency portal,” because it would potentially create an automatic “on ramp” to dependence on government handouts.
  • The article also ignores the interests on the exchange’s board. In populating the governing board of the exchange, Governor Lincoln Chafee paved the way for expansion of services supplied through the exchange, without appointing any board members who might act as a counterweight to the special interests around the table.

Rhode Islanders deserve a government that treads cautiously when dabbling in such costly and radical changes to the critical services of the health care marketplace.  And they definitely deserve a state-level press corps that exposes government inadequacies and the risks and costs that it incurs.

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