Jindal’s Refusal of Health Insurance Exchange Draws Criticism

Jindal’s Refusal of Health Insurance Exchange Draws Criticism

Story tools

Comments

A A AResize

Print

Share and Email

 

The re-election victory of President Barack Obama settled the argument as the potential repeal of the Health Care Reform—the Affordable Care Act—known to Republicans by the moniker Obamacare.

Regardless, Governor Bobby Jindal has refused to create health insurance exchanges here in Louisiana, allowing companies—particularly small businesses—access to insurance policies at lower costs than they could obtain on the open market on their own. Democratic Party Chair Karen Carter Peterson has worried that this could deny 500,000 Louisianians—at the least—access to health insurance they would have otherwise had if the governor had embraced all aspects of the Affordable Care Act.

Republican Insurance Commis?sioner Jim Donelon who supports the exchanges, bordered on serious criticism of Jindal last week in his refusal to embrace the exchanges. “Under the health care law, starting in 2014 most people will be required to have health insurance or pay a penalty. The state exchanges are meant to provide a place where individuals or small businesses can easily compare plans, with proponents also saying they hope transparency and standardized rules foster competition.”

Former Democratic Speaker Nancy Pelosi often argued that the Health Care Reform Act was bipartisan even though it enjoyed no GOP support. Her reasoning rested on the idea “that it had Republican ideas”, none more than the insurance exchanges which were supposed to provide a free market solution to rising healthcare costs. The concept was pioneered by the conservative think tank Heritage Foundation editorialized in favor by the Wall Street Journal.

However, Jindal rejected the creation of a state exchange because of an often ignored provision in the Federal Health Care Act. Businesses in states without exchanges are not bound by the Employer Mandate to provide Health Insurance. All companies with more than 50 employees must, under the law; however, if a state opts out of creating its own exchange, the business mandates do not apply. Corporations are exempt if states do not enact exchanges.

This has real potential economic impact, Jindal worried. Several of his aides noted that for businesses with more than 49 full-time employees will not just be fined if they do not offer insurance coverage, but the fine will apply starts with the 31st employee, not the 50th.

At $2,000 per employee after the first 30, these fines add up fast. A business that surpasses the threshold by just one full-time employee will face $40,000 each year in penalties.

As Jillian May Melicor wrote in the National Review magazine, “Businesses that can easily substitute part-time for full-time labor — in particular restaurants, hotels, and retailers — will have a strong incentive to do so. The Wall Street Journal reports that Carl’s Jr., Hardee’s, Red Lobster, and Olive Garden are already planning to hire part-timers instead of full-timers at some or all of their locations. Other employers will restrict their current full-time employees to 30 hours a week so that they will be considered part-time under the law. And, of course, some businesses will opt to stay smaller. France provides an instructive example: There, 50 employees is the magic threshold for whether labor regulations apply. And — no surprise — the country ‘has more than 2.4 times as many firms with 49 employees as with 50.’”

“All this is terrible news for an already bleak labor market. Congressional Budget Office director Doug Elmendorf has estimated that Obamacare as a whole will cost something like 800,000 jobs, and a CBO analysis noted the pressure that many companies will face to hire fewer full-time workers.

She and Jindal both postulate that minority job seekers, and the young already slammed by the bad economy, will be among the most harmed. Earlier this year, the Associated Press found that more than half of those under 25 with a bachelor’s degree were either jobless or underemployed. The Obamacare penalty will cut full-time jobs in some of the primary employment havens of struggling graduates

Democratic Party Chair-person said that Jindal might have had a better argument for refusing the exchange if he had embraced the Affordable Care Act’s increase in Medicaid funding. Over 500,000 Louisianians would have qualified for free health care, at no cost to the state budget.

While companies may be exempt from a fine, individuals—in particular these half of a million members of the working poor—will still have to pay a $750 tax penalty if they do not have health insurance coverage. She believes that the Pelican State has missed a singular opportunity.

As she explained, “When the Affordable Care Act was signed into law, one of the main components, the creation of Health Insurance Exchanges, was poised to lower insurance costs and increase competition in our state. I filed SB744 to provide for the creation of a Health Insurance Exchange for our state in the previous legislative session. As is the case with many positive policy opportunities we’ve discussed, Governor Jindal’s administration moved to block the legislation so that the governor could appeal to extremists in his own party.”

“The governor committed the same malfeasance when he blocked the expansion of Medicaid in Louisiana, an aspect of the Affordable Care Act that would have provided health coverage for thousands of Louisianians. Now, despite the Governor’s intransigence on the provision of quality and affordable health care in this state, Health Insurance Exchanges are finally coming to Louisiana. Ironically, Governor Jindal’s reflexive rejection of the Affordable Care Act’s means that Louisiana missed its chance to set its own exchange rules. Instead, Louisiana will be now placed in the ‘one size fits all’ category.”

Peterson noted that Len Nichols, a health expert at George Mason University, has argued that states that opt not to create their own exchanges are giving up the opportunity to shape the system to fit local markets. They’re also forgoing the expertise of the state insurance agency in evaluating the companies that already offer plans in the state.

As Nichols outlined, “By refusing to participate, they are making it one-size-fits-all by default,” he said.

It remains unclear how many states will start their own exchanges. A Kaiser Family Foundation review found that 15 states, plus the District of Columbia, had embraced state-based exchanges. Another four states plan to get into ‘partnerships’ with the federal government, while 11 have ruled out operating an exchange.

That leaves 20 states still weighing their options or not indicating what they will do.

Leaving it up to the feds means Louisiana will get a particular kind of exchange, said Jennifer Tolbert, Kaiser’s director of state health reform. So far, the Louisiana State Department of Health and Hospi?tals has refused to explain its particular course of action. Never?theless, the federal exchange will be a “market facilitator,” which means it will allow any plan to participate as long as it meets certain requirements, she said.

Some GOP-leaning states have created domestic exchanges despite the national political arguments. In Arkansas, where the Republicans captured the entire legislature on November 6, preparations have already begun to create a state health-care exchange.
 

Comments

 

Disclaimer: Comments do not necessarily reflect the views of New America Media. NAM reserves the right to edit or delete comments. Once published, comments are visible to search engines and will remain in their archives. If you do not want your identity connected to comments on this site, please refrain from commenting or use a handle or alias instead of your real name.