Center Calls on R.I. Lawmakers to be Proactive as New U.S. Health Insurance Landscape Takes Shape

FOR IMMEDIATE RELEASE: March 7, 2017

Lawmakers Encouraged to Plan for New Landscape

Providence, RI – With the initial release last night of the U.S. Congressional Republicans’ plan to repeal and replace Obamacare, the RI Center for Freedom & Prosperity today calls on state lawmakers to proactively consider how to fashion the upcoming budget to deal with the shifting federal landscape on health insurance.

Under the new federal plan, gone would be many of the features that led to the implosion of Obamacare’s government-mandated insurance strategy. Soon to be extinct will be the onerous individual and employer mandates and penalties, the costly taxes, state and federal exchanges, and unlimited expansion of Medicaid.

Remaining are popular features such as pre-existing conditions, dependent children coverage up to age 26, and a new form of cash assistance for private-insurance premiums.

“The new law will mean changes and loss of funds to Rhode Island’s health care industry, including Medicaid,” said Gary D. Alexander, adjunct scholar to the Center, who formerly held the positions of Secretary of Health and Human services for Rhode Island and Secretary of Public Welfare for Pennsylvania. “The state should quickly analyze the impact and begin planning how to change course and move to a more of a market-based system that ensures greater budget certainty, care quality, and affordable access.”

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As it warned two months ago, state lawmakers will have to find a way to be smarter with state and federal funds. The Center also accurately projected in 2013 that the Obamacare exchange in Rhode Island, HealthSourceRI, would not meet its original goals and would become a burden on the budget. Under the new federal approach, the state-run exchange will soon become a relic of the past. It appears that some of the market-based approaches the Center then recommended must now be considered in order to best complement the pending new federal law.

The Center suggests that the state, perhaps by forming a legislative commission and/or via a gubernatorial created task-force, should immediately begin planning for a number of likely eventualities:

• How to save state funds by shutting down HealthSourceRI as soon as feasible and returning health insurance sales to the federal government during the transition period away from Obamacare
• How to reverse the long-term planned increases in Medicaid enrollment and funding that the state was expecting
• Proactively allow for out-of-state insurers to compete in the Rhode Island market
• Determine which state-level health-insurance mandates should be repealed so as to allow insurers greater flexibility to craft a variety of plans and pricing levels that meet the demands of would-be enrollees.
• How to re-work the core strategy for the state’s broken UHIP computer system so as to not encourage increased dependency on government assistance programs
• Unclear after initial review of the law were the anticipated “block grant funding” and “cross-state” sales models, although they still eventually may be introduced as amendments to the new federal law. These features would be welcome for conservatives, who believe that added competition effectively reduces costs and that states should determine their own policies as opposed to being forced to comply with federal mandates.

However, conservatives are going to have to accept that the new law is an “entitlement”, and that federal and perhaps state funding for health-insurance tax-credits to many Rhode Islanders are a political necessity.

Likewise, liberals are going to have to accept that not as many people will be enrolled in Medicaid. The Center believes it is necessary to limit the current out-of-control growth of Medicaid, which Rhode Island itself has recently experienced.

It is also likely that “health savings accounts” (HSAs) will become more of the standard. HSAs feature lower monthly premiums that cover major medical problem, but also mean higher out-of-pocket expenses for elective and other diagnostic care.

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