Number Games to Lock Us In to Government Medicine

And here (via Instapundit) comes news that Hawaii is giving up on its state-based ObamaCare health benefits exchange.  The amount of enrollment makes the exchange not “sustainable,” in the opinion of public officials.  Funny thing is, they don’t look much different from Rhode Island’s experience with HealthSource RI:

Enrollment never reached the 300,000 number then-Gov. Neil Abercrombie, a Democrat, enthusiastically predicted at the opening press conference launching the Connector. The enrollment number also never hit 70,000, the minimum needed to stay financially solvent. At its peak, enrollment reached 37,000, a fraction of the state’s 1.4 million people.

This raises the question of what “sustainable” means.  Obviously, if the state government wanted to force taxpayers to subsidize the exchange, it would be “sustainable,” in the sense that it wouldn’t run out of money.  According to Rhode Island Speaker of the House Nicholas Mattiello (D, Cranston), that’s the sort of sustainability that HealthSource will have after the next budget passes:

But the House speaker said an agreement has been reached to keep HealthSource RI, the state Obamacare program, under state control for at least two more years, with a $2.6-million annual appropriation to cover technology and call-center contracts, and a scaled-back version of the new surcharge Raimondo proposed on health insurance premiums. 

In an interview at the State House, Mattiello said he would not have signed on unless HealthSource administrators had significantly reduced their cost projections to the point where the surcharge could be “at or below’’ the level it would be if the state handed the exchange over to the federal government (roughly 3.5 percent).  

According to House Policy Adviser Lynn Urbani, the proposal on the table would vary from one insurance carrier to another, but it has been reduced from what Raimondo had originally proposed to 2.86 percent on average on individuals’ monthly premium, and .059 percent on average for small-business groups’ monthly premium.

This whole thing is a government-budgeting shell game, and if the news media and the public fall for it, we definitely deserve the government we get.  For one thing, that $2.6 million “annual appropriation to cover technology and call-center contracts” is new to the mix, so it’s little wonder that the new HealthSource tax went down.  We’re just going to be paying for it through our regular taxes.

For another thing, as I’ve been saying, the federal 3.5% rate is calculated differently from the HealthSource tax.  The federal rate is imposed only on plans in the exchange and then spread out.  The rates being cited by the Speaker’s office simply spread the budget out over all individual and small group premiums in the state.

That’s important for three reasons.  First, the effective federal rate is much lower.  Two, it’s difficult to know what compares with what, because the estimates for enrollment matter a great deal. (Estimating enrollment high, for example, makes the effective federal rate look smaller, while enrollment in the exchange doesn’t matter at all for the HealthSource tax.)  Third, the federal rate puts the risk on the federal government — the exchange gets a certain amount of money, and that’s it — while the HealthSource tax will simply pass costs on to consumers at whatever rate it takes.

Maybe shifting money around and playing with estimates makes the project look comparable this year, but we can be confident that it’s at best a one-year illusion, during a year when the state exchange is still operating for much of the year with federal money.

  • No products in the cart.