Free Market Alternatives to Health Care Exchange

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Why our state should implement free market plan instead

The new federal health care law is being challenged on multiple fronts, from Congress to the Courts, and its implementation in 2014 is far from certain. But instead of exploring ways to decrease DC influence in our state, as some states are doing, SC policymakers are considering legislation to mandate the adoption of the state-based health exchange, a major provision of the new federal health care law.

WHAT IS THE EXCHANGE?

The exchange is a highly regulated, government-subsidized insurance market that would:

  • Manage the health insurance of hundreds of thousands of South Carolinians.
  • Eliminate the private market for individual coverage – and, over time, small-employer plans.
  • Give state and federal bureaucrats vast new powers over health care insurance.

WHAT WILL THE EXCHANGE LOOK LIKE?

Proposed legislation would create a new state agency with broad powers to manage the state’s subsidized insurance market. The board, composed of agency heads, legislators, and industry and nonprofit representatives, would:

  • Approve federally mandated insurance policies.
  • Spend public and private dollars.
  • Generate revenue through fees and fines imposed on insurance companies.

WHAT’S THE IMPACT?

South Carolina is currently unfriendly to competition in the insurance industry because of politicians’ heavy-handed mandates on companies.

  • South Carolina’s 29 insurance mandates have driven up costs by an estimated 30 percent.
  • New federal mandates will further increase the cost of private coverage, making the cost of doing business likely prohibitive for most insurance companies.
  • Higher costs will mean lower wages, more expensive premiums, and/or higher taxes.
  • Quality of care will decrease as higher costs force government insurance providers to implement cost-cutting measures.
  • Millions of South Carolinians could lose existing coverage because individual and group coverage will disappear as private insurers join the government-subsidized exchange.  The result?  Smaller companies will drop insurance coverage, dumping employees into the government exchange.

WHAT TO DO INSTEAD?

It makes far more sense to implement free market health care than government health care, and to lessen the state’s dependence on Washington rather than to increase it. The state should:

  • Eliminate all insurance coverage mandates. This would reduce prices for consumers, provide more competition in the insurance market, and open the door for new companies to emerge and for out-of-state companies to sell policies in South Carolina.
  • Decrease health care regulations, such as burdensome Certificates of Need (CONs), which allow politicians to determine if and where health care facilities can be built.  Such regulations stifle competition, drive up costs and lessen heath care options, and thus quality of care.
  • Lower the tax burden: Higher taxes are inevitable with any government health care plan. An across-the-board tax cut such as an income tax reduction would give citizens more money to pay for health care costs, regardless of what happens in DC.
  • Cut SC dependence on DC dollars: Review all health care programs, recommend elimination of those that are unnecessary and place a moratorium on any new federal grant money, returning all federal dollars that are unnecessary, including those sent to “study” the state-based exchange.
  • Apply for Medicaid waivers that would allow for the creation of innovative reforms, such as:
    • Capping state and federal Medicaid spending.
    • Giving the state flexibility to modify benefits.
    • Encouraging care management reforms and home/community-based treatment options.
    • Implementing performance-based contracting and reducing waste and fraud.
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