Even the states whose politics make the idea of “Obamacare” unacceptable are feeling the pressure to begin thinking about insurance marketplaces. As the federal law deadlines edge closer, states must either create their own exchanges through which citizens can buy their policies or face the threat the federal government will offer their own version. Why should GOP states fear the federal government on this? Forgive a little cynicism. If GOP states sit down to write laws for local marketplaces, they can do whatever is in their power to protect the interests of their local insurance companies. Although we have yet to see any specific proposals from the federal government, it’s likely their plans will be a boilerplate solution that favors consumers over the insurers. Since the eventual network of local exchanges will allow millions of Americans to buy their policies, anything that swings the balance of power in favor of consumers is bad news for the profitability of the insurers. This is forcing even the most resistant of state legislatures to start drafting their own laws.
Leading from the front on this comes California which has just passed two statutes to bring the local marketplace into being. It’s likely many other states will follow the Californian solutions except, in Iowa, we have an information-only exchange in preparation which will leave it to the private insurers to sell all policies in that state. The Californian experience is interesting. In addition to the specific provisions mandated by federal law, there has actually been some bipartisan negotiation, if only because Governor Schwarzenegger made an early announcement in favor of the federal system. Not unlike this website, Californians will be able to access a website containing standardized information about policies allowing a full comparison on a like-for-like basis. If citizens have problems in understanding this information, there will be a toll-free number with real people available to explain the health plans to the callers. Even more importantly, this information will be linked to the federal and state subsidies that will help pay for the coverage. The aim is to give people as much information about the available policies and how to pay for them through an independent website. (more…)