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Hutchinson, Sanders, and AAI on Obamacare Exchanges


hutchinson sanders obamacare-01

Once again, Arkansas policymakers are debating whether our state or our federal government should establish and manage a health insurance marketplace (popularly called an “exchange”). In a recent presentation to the Health Reform Legislative Task Force, Gov. Asa Hutchinson asked “Why are we building a state exchange, rather than relying upon the continued partnership with the federal exchange?” No real answer has been forthcoming: notably, the advocates of transforming Arkansas’s federal exchange to a state exchange have provided slogans, not substance, when asked to explain the basis of that recommendation. Earlier this week, state Senator David Sanders was interviewed on TV’s Talk Business & Politics with Roby Brock earlier this week about a state exchange. Sanders reacted to Gov. Asa Hutchinson’s questioning the desirability of a state exchange as follows:

I am a supporter of a state-based exchange, and let me tell you why. We’ve litigated the exchange sort of question. The conservative legal strategy was to advocate for a federal exchange -- not a very conservative policy. Historically, states have been where insurance regulation has been managed, developed, and implemented. I think that’s where we need to go, and I think it’s better for us and it does create more flexibility long-term.

This is, unfortunately, gibberish; you’d probably get a more sensible statement about Obamacare exchanges if you threw a bunch of word magnets at a refrigerator. I think Sanders’s critique of the “conservative legal strategy” refers to the King v. Burwell litigation, but that Supreme Court opinion only settled the question of how the federal government was required to read one clause of the Affordable Care Act – it had nothing to do with the question of whether a state or federal exchange is good public policy. Furthermore, the federal control that the Affordable Care Act imposed on each state’s health insurance decisions certainly doesn’t vary depending on what kind of an exchange – state or federal – the state adopts, so Sanders’s claim about the alleged lack of conservatism of a federal exchange seems groundless. Finally, I’m all in favor of “flexibility” – who isn’t? – but it’s worth noting that, so far, defenders of a state exchange have flourished the idea of flexibility more as a slogan or a buzzword than as an actual argument. In fact, the Advance Arkansas Institute just put out a paper that I co-authored on the dangers of a state exchange and the superiority of a federal exchange: "A State Obamacare Exchange: Arkansas's Worst Option." That paper has the virtue of providing actual arguments for the points it makes. Here’s an excerpt:

In fact, establishing a state Obamacare exchange would create huge problems for Arkansas:
  • From a tax perspective, a state exchange would impose a 378 percent tax increase on Arkansans who purchase insurance through it.
  • From a budget perspective, the establishment of a state exchange appears to be a gateway to new health care fees and new burdens on the Arkansas state budget.
  • From a practical perspective, states that have established state exchanges have experienced extraordinary practical difficulties. Indeed, several states have recently abandoned their state-run exchanges for a federal exchange.
  • From a policy perspective, a state-run exchange produces little or no meaningful increase in local or state control.
  • From a political perspective, voters do not want Arkansas policymakers to set up such an exchange.
  • From a legal perspective, establishing a state exchange may violate federal law and invite legal action.
In short, establishing a state exchange would cause problems for Arkansas consumers and burden state taxpayers for decades to come. To put it bluntly, a state exchange is bad for Arkansas.

(I should add that it has always been The Arkansas Project’s policy to allow for the publication of a rebuttal statement on behalf of anyone who wants to respond to our criticisms. In other words: Senator Sanders, we look forward to hearing from you.) 



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