A Conversation with the Governor on Utah’s Health Insurance Exchange

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A Report on the December 14th Health Care Deadline
Utah’s Response

I spoke with Governor Herbert’s office, as well as a spokesperson from the Goldwater Institute in Arizona on December 12th. Here is a summary.

The Governor’s “plea” to the President is found here.

The Governor’s position is that:

• Utah has no good choices. Either it keeps the state-funded exchange already in place, or it adopts the President’s mandate. The exchange’s current cost is $500,000/year, with 3.5 employees. Presumably the remainder is for marketing/web maintenance.

• Utah’s exchange is a model for the nation, and the Governor is appealing to the President to consider it to encourage the 23 states that have refused to play to participate.

• Utah has been “saved” by having set up its own exchange.

• The exchange is a free-market approach to health care.

• It is voluntary and therefore superior to the President’s mandate.

• A goal is to return it to the private sector, provided an entity is secured that will step up to manage it.

A Response from the Goldwater Institute:

• “State-based” (state-funded) health insurance exchanges are the vehicle for implementing PPACA (ObamaCare). The Obama Administration under Secretary of HHS Kathleen Sebelius requires an “all-in” approach, including Medicaid expansion.

• It is unlikely that the Obama Administration will accept Governor Herbert’s plea to waive the “all-in” requirement and to allow Utah’s exchange to continue with voluntary participation

• There is no deadline on making any decisions on whether to expand Medicaid. The first opportunity for people to participate is January 1, 2014. The December 14th deadline was to express intent only.

• No one, not even the Obama Administration, has been able to disclose what this expansion will cost and what the federal matching funds will be up front. It would be foolish for any state to accept the President’s terms under these circumstances.

• Arizona began to build its exchange, estimating the annual cost would be $29.5 million annually. That grew to $60 million annually.

• All federal funding of the exchange and Medicaid will end by 2015, leaving the states with yet another unfunded mandate. I call this “Medicaid on steroids”.

• No state will be in violation of the law if it does not set up an exchange.

• However, Utah has a Health Care Freedom Act in statute. If Utah is required to participate in ACA, it will be in violation of its own state statute.

• States that set up exchanges will be required to mandate that employers with 50 or more employees that do not participate will be fined $2,000/per employee.

• Utah must get rid of its current exchange because the state will be required to spend its own state tax revenues to force qualifying employers to participate.

• The Supreme Court has left a door open to bring a First Amendment challenge before the Court because that was not addressed in the first challenge. Liberty University has already brought such a suit before the Court.

• A compelling interest in Utah is that one of its largest health care providers, DMBA, owned by The Church of Jesus Christ of Latter-day Saints, along other churches that offer benefit plans, will be required to provide services – abortion and abortifacients which violate religious tenets.

American Leadership Fund’s Response:

It is no secret that I do not support any state-funded exchange or individual mandate and that I consider the PPACA to be a violation of our First Amendment rights.

The state exchange, whether Utah’s voluntary and more limited version, or the Obama Administration’s all or nothing version, is facilitating more government. Utah’s exchange is the open door for future development and, if it follows the history of new “voluntary” welfare programs, it will be developed into another massive, bureaucratic, fraudulent-ridden costly – and mandatory government program.

By late 2012 Utah, formerly named the best-managed state in the nation, fell to 4th place by the end of 2012 because of growing debt, which is now nearly $20 billion. Even best-managed Utah is spending about $3 billion more a year than it takes in, and every citizen is in debt nearly $7,000 – and that’s only on the state level. As the United States reaches the “fiscal cliff,” this is not a good time to add more spending to the state budget.

To commit to any additional government funded project – Medicaid expansion or single payer system – would be premature because the details of the budget and costs are still unknown.

The main purpose of the exchange is to promote state-funded welfare programs under the guise of the private sector. I object to my tax dollars being spent to encourage people to use my money for welfare and especially to do it in a deceptive manner.

I asked the Governors’ advisors the following questions:

Does the exchange reduce the size of government?
This question was not answered. However, the answer is: No. It has added to the budget, starting with 3.5 employees and an annual budget of $500,000. Utah cannot afford to add to the deficit.

Is it successful?
The claim is that it is highly successful. However, the following information shows otherwise.

In September 2012, the system’s online security was breached, exposing Utah citizen’s private information.

Only three insurance companies and two HSA providers remain in the system while others have departed, while only a fraction of Utah’s employees are benefiting.

Because the exchange developed a negative brand, the Governor’s office decided it needed a name change. Instead of calling it an “exchange” it is now called “Avenue H.”

The website is no longer a .gov extension, but now a .com extension because it was determined that people would not go to a .gov site for health insurance information.

Its slogan is now “Utah’s Health Insurance Marketplace,” implying that this is a private sector online portal. Is a government-funded program a “marketplace?” No. Government is not a marketplace, and it never has been.

I have reviewed the new website and consider it to be deceptive advertising lacking any government disclaimer on its branding pages. Nowhere does the site indicate that this is a government-funded site. A few pages are linked to government resources and websites.

I encourage you to contact the Attorney General’s office about this deceptive practice and to file a complaint against Avenue H.

Does the exchange represent the free market? The Governor’s office insists the exchange is a free-market approach. It is defined as a “private sector/government partnership.”
Elected officials must become better educated on political philosophy, enough to know that a private sector-government partnership is not the free market. It has a name in political philosophy: economic fascism. Ask anyone who emigrated from the Soviet bloc about this kind of government and they will tell you that Stalin came to power by developing private sector-government partnerships. This is a Trojan Horse, and the Obama Administration knows it.

What service does it provide that the private sector does not?

The Governor’s office asserts that the online information portal gives employees choices that employers cannot give them – the ability to choose their own plans.

Private brokers have successfully shopped the best products for their clients for decades. Most employees do not have time, nor are they experienced in choosing plans for themselves and are happy to work with their employer to find the best products and options.

Why does the private sector not create a website and provide a portal for choosing health care plans then?

The governor’s office said they tried to find a private entity that would do it, but they could not find any takers.

If it was not seen as a lucrative enterprise in the private sector, what makes anyone believe it will be lucrative for the government to provide it?

The governor’s office replied saying it is the Governor’s intent to return it to the private sector. I am not aware of any government programs that have been transferred to the private sector.

Does the exchange take the place of a function the private sector already covers?

The governor’s office maintains that it does not, and that no brokers will lose their jobs in the private sector. It asserts that the broker locator on the website will be a benefit to them and that they can also use the site to assist their clients.

However, under ObamaCare, it is all or nothing, and when the individual mandate takes over, independent insurance brokers will go out of business, just as the many private schools went out of business when compulsory education was passed and then charter schools funded.

Independent brokers see the writing on the wall and have been taking action to fill their client base with other products and services and are already abandoning the health insurance market.

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