In the wake of Obama’s reelection, a number of states have announced that they will not implement a number of state required provisions of the new law. See, “Kansas, Missouri Won’t Set up Obamacare’s State-Run Health Insurance Exchanges “
The specific provision that a number of states object to is the requirement to set up an “Insurance Exchange.” The Insurance Exchange is basically a marketplace where consumers can go to price and purchase insurance.
The rejection of this provision by conservatives is ironic for two reasons: federalism and the free market.
It is odd that states’ rights conservatives are refusing to implement a state program and allowing the federal government to create and run the program for the state. This directly contradicts the basic idea of federalism, which is that states are better able to create and run programs that affect the state. While it is certainly understandable that state politicians don’t like the federal government telling them what to do – in this case establish an “insurance exchange” – any federalist worth his salt would say that even if the program is mandated the states are better able to create the specifics of the program for the state. I know that these politicians are refusing to act simply out of spite, but the irony of their behavior is laughable.
But the clear rejection of federalism is only one of the ironies. The other is the rejection of free market principles. The Insurance Exchange is a one stop market for health insurance. It is essentially an Amazon for health insurance. Currently a person shopping for insurance can go to different insurance companies and try to interpret their policies, and then must go to an insurance agent to actually purchase the insurance. As someone who has purchased health insurance as an individual I can tell you that this is a difficult process.
One principle that is supposed to be the foundation of the free market is the free availability of information. A free market only works if purchasers have access to all pertinent information about the product they wish to buy. A consumer can only make an informed choice in the free market if they have all the information they need about the desired product: the price, the quantity, the quality, the selection, the availability of alternatives. Theoretically the free market works best when consumers know the most about the products they want. It is only through that knowledge that consumers can buy the least expensive, or highest quality products, and thus, through the magic of supply and demand, drive costs down.
The purpose of the Insurance Exchange is for each state to provide a comprehensive list of all the available insurance options within the state. This allows the consumer to make an informed choice, and select the insurance policy that best meets their needs. It is a marketplace out of Adam Smith’s dreams. And yet conservatives reject it. It kind of makes me wonder if they think through their policy choices, or if every choice is a simple, and thoughtless, knee jerk reaction.