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Life Health > Health Insurance > Health Insurance

On the Third Hand: Privatization

By Allison Bell

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Ebola is still a problem in Africa and could flare up here.

ISIS is doing terrible things in the Middle East.

Central bankers are keeping the economy stumbling forward by depressing interest rates to a level that suffocates life insurers.

Meanwhile, the House has been holding many hearings on the Patient Protection and Affordable Care Act (PPACA) public exchange system enrollment systems and enrollment activity. Now that Republicans control the Senate, maybe they’ll now hold some really entertaining hearings on … how any dork working for a HealthCare.gov subcontractor could see very clearly, in January 2013, that HealthCare.gov was going to be a mess.

Soon, we’ll also have hearings on how the Internal Revenue Services (IRS) sometimes has problems with administering the PPACA premium tax credit, and how the U.S. Department of Health and Human Services (HHS) has problems with the PPACA health insurer risk-management programs.

On the one hand, maybe, even if private-sector organizations were going to create some private equivalent of the PPACA public exchange system, they would have needed the antitrust-law-defying and state-red-tape-slashing powers of Congress to get a “Travelocity for health insurance” up and running. It seems as if many of the rules that have made the public exchange system possible are also good for managers of private exchanges.

On the other hand, whatever you think about PPACA or HealthCare.gov: While our country faces such serious problems, it seems absurd to see so many top officials spending so much time obsessing about the development of a website and the details of exchange plan sales reports.

On the third hand, Congress has to keep tabs on programs that go wrong. HealthCare.gov and the various state-based exchange enrollment and administration systems have had problems.

On the fourth hand, maybe the state of IRS PPACA program administration is a reasonable thing for policymakers to obsess about, if we have those programs. Along the same lines, to get past antitrust, state turf and free-rider issues, maybe we need to at least start out with a government-supervised risk-management program if we’re going to continue to try to prohibit most use of medical underwriting in the sale of major medical insurance.

On the fifth hand, even if we have a national health insurance exchange system, the idea that HHS needs to run the day-to-day operations of the system seems to be absurd as the idea that HHS needs to run the New York Stock Exchange or Nasdaq. Having HHS run the same exchange system that it regulates also leads to potential conflicts of interest. If, for example, HHS were simply regulating the exchange system, not running it, would it be comfortable with exchange helper efforts to focus mainly on bringing in younger applicants? If HHS were wearing only a regulator hat, would it see that as age discrimination?

I think the obvious solution is to put a time limit on how long the public exchange plan enrollment and administration programs that HHS runs can be an operational part of HHS. If the PPACA public exchange program continues to exist, either create one exchange program utility and sell it to the highest qualified private-sector bidder, or break it into several exchange program utilities and sell each utility to the highest qualified bidder. The only operational functions that stay with HHS should be the functions that have to be performed by the government.

See also: 5 ideas for the next health reform fight

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