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What States Should Build Instead of Obamacare’s Health Insurance Exchanges

At Forbes, Avik Roy writes:

Health insurance exchanges, as liberals have been happy to point out, were originally a conservative idea. But the conservative idea of health insurance exchanges is quite different from the one expressed by Obamacare. Indeed, Obamacare’s exchanges are more accurately a perversion of the term. …

Exchanges were conceived by conservative health-policy experts as a way to work around the original sin of the U.S. health-care system: the fact that our tax code encourages Americans to obtain insurance through their employers, instead of buying it for themselves. …

The original, market-oriented exchange concept was designed as a way around this problem. Today, most employers buy coverage for their workers on adefined-benefit basis: employers buy insurance with a certain set of benefits, such as hospitalization coverage, and take the cost out of workers’ wages. As the cost of insurance goes up, employers maintain coverage for their workers, but take the cost out of workers’ take-home pay. …

ut states that decline to set up Obamacare exchanges shouldn’t sit on their haunches and do nothing. Instead, they should strive to show that free-market reforms can do a better job of offering affordable health insurance. In this way, should Obamacare’s exchanges falter, those who have been skeptical of the law will gain a mandate for reform.

What these states should do is set up a free-market version of a health insurance exchange: what [Ed] Haislmaier and [Paul] Howard call a “clearinghouse.”

The health insurance “clearinghouse” is meant to capture the original conservative idea for an exchange, and separate that idea from Obamacare’s exchanges. The key principle in a clearinghouse is that it caters to any willing seller of certified health insurance products. As Tom Miller and Scott Gottlieb write in the Wall Street Journal, “Any willing insurers already licensed to operate in a state should be able to offer plans. [Clearinghouse] operating rules would focus on providing better information to consumers, rather than limiting the types of plans available.”

Read the whole article: What States Should Build Instead of Obamacare’s Health Insurance Exchanges – Forbes.