Stick with the exchange

State Representative Steve Gottwalt (R-St. Cloud) and State Senator David Hann (R-Eden Prairie) have introduced what they say is an improved alternative to a health insurance exchange. Their plan is to provide health premium accounts (HPAs) to Minnesotans, a plan that Sen. Gottwalt calls “consumer-driven and market-based.” But the health premium account plan is hardly superior to an exchange.

First, allowing people to pool their money from different sources, as the HPAs would do, doesn’t mean that they will be able to afford coverage. The insurance exchange would create a marketplace where individuals and small businesses could compare the price and benefits of different plans. Competition and clarity would control premium costs so that these customers could afford coverage. The HPA plan doesn’t create this kind of marketplace, leaving individuals and small businesses to navigate the current, confusing insurance market.

Second, the creation of a health care exchange is crucial for the implementation of other provisions of the reform bill. For example, the bill provides tax credits that will help people to afford coverage, which are only available if the individual buys coverage through the exchange. Creating a system of health premium accounts would forfeit these subsidies.

Third, it is still unclear whether the HPA plan would be enough to satisfy the federal government’s requirement that the state create an exchange. If Minnesota is not sufficiently prepared to implement such a program by January 1, 2013, the federal government will step in to implement its form of the exchange. It’s in Minnesota’s best interest to create an insurance exchange that is tailored to the needs of Minnesotans.

Last month, an AARP survey (.pdf) of registered Minnesota voters ages 30-64 found that 74 percent supported “an exchange that negotiates competitive prices for consumers.” Is that not enough evidence that Minnesotans are demanding an insurance exchange?

Sen. Gottwelt says that HPAs are “the Minnesota way.” They most certainly are not.