The Issue. Rhode Island is leading the nation in the advancement of a larger entitlement culture via its planned expansion of social services through a health benefits exchange, a component of the controversial federal healthcare law. When collecting detailed personal financial and household information from individuals seeking health insurance support, the state intends to proactively enroll participants in other state programs for which they are eligible. Will this create and expanded culture of dependency?

Statement from CEO, Mike Stenhouse. “This is an extreme case of misguided public policy. The expansion of government and special interest control over our personal healthcare decisions, along with the culture of dependency being freely advocated by this administration, should be viewed as an assault on our deeply held American value of self-reliance.

“Imagine turning to the RI health benefits portal because your employer cancelled your insurance and finding yourself on a government-created expressway to a life of dependency. Wouldn’t we all be better off, instead, if the state encouraged residents to become independent, productive members of society?”

What the Center is calling a “dependency portal.”  The dependency portal is a not-so-hidden goal of Rhode Island’s version of the health benefits exchanges described in the Patient Protection and Affordable Care Act (PPACA, commonly known as ObamaCare).

Although the final design has not been developed in specific detail, the idea of the exchanges is to enable healthcare consumers to use a government Web site to review their available options for insurance and to determine their eligibility for public subsidies.  Most likely, a series of Web-based forms will ask the user for a variety of highly personal information regarding health, income, and family circumstances in order to determine what health plans and public assistance amounts he or she is eligible for.

Whether such information will be requested of all residents who seek to use the site or only of those explicitly seeking subsidies remains an open question.

The exchange will become a dependency portal when other forms of public assistance — from food stamps to cash-payment welfare to child-care subsidies — are integrated into the system and promoted to the exchange user based on information that he or she provides while seeking health coverage — perhaps automatically enrolling people with the merest expression of consent.

At a recent press conference, Rhode Island Health and Human Services Secretary Steven Costantino referred to this “hidden element” of the exchanges as “one-stop shopping.”

Why is that bad? As a free market think tank, the Center is certainly not opposed to practices that encourage efficiency and the use of technology to improve the access that customers and clients have to services. Information technology, in particular, has empowered individuals to accomplish easily and inexpensively tasks that once required expert consultants.

From a business perspective, the Internet and the proliferating technologies that use it, now including smartphones and tablets, smooth the path from a potential customer’s initial interest all the way to final purchase.  Technology enhances businesses’ ability to market and sell their products and services, and they seek to accomplish those ends in order to grow their revenue and expand their market share.

That model is not appropriate to government in dispensing taxpayer-funded services.

In the private sector, bundling of services has become commonplace, and it is easy to understand why companies would pursue the strategy.  Think of the merging technologies of television, Internet, and telephone; it makes sense for a company with an advantage in, say, television, to use various marketing techniques, such as reduced-price packages, cross advertising, and one-stop shopping, to gain an edge in other markets.

However, the public clearly has a sense that these methods can go too far.  Indeed, at the turn of the millennium, the federal government sued Microsoft on the grounds that it was hindering competition by using its operating system dominance (with Windows) to gain an insurmountable advantage in the Web browser market (with Internet Explorer).

In the case of government, all of the same incentives exist for the organization to expand its reach.  The difference is that government has three inherent competitive advantages:

1. In its ability to simply confiscate money to pay for, or at least subsidize, its services
2. In the fact that the people whom it entices to its services are not paying their full cost
3. In its control of the marketplace by means of regulation

Over time, government programs are therefore less and less “public services” that taxpayers agree to support through the people whom they elect and more and more bureaucratic offerings that use the enrollment of some citizens as justification for claiming more authority and confiscating more money from others.

One can see evidence of this intention in the process by which Rhode Island’s exchange was initiated.  In the face of (to be mild) public uncertainty about the PPACA, the Democrat president and Congress pushed it through.  It creates financial incentive for states to build the exchanges (by making taxpayers from other states pay for it), and it hands an astonishing amount of policy discretion to the unelected Secretary of Health and Human Services.

In Rhode Island, Governor Lincoln Chafee broke with common understanding of separation of powers in order to create the exchange by means of executive order, committing the state to pay for the site’s maintenance once it is operational.  Similarly, the state executive branch has simply determined to agree to a related Medicaid waiver, expanding free healthcare services in the state and adding to its expenses.  No legislative input; no public hearings; in short, no public statement of agreement with the programs being developed in the people’s name.

As the government exchanges claim increasing shares of the market nationally, unelected state and federal officers will be authorized to determine everything from minimum benefits to price controls to payment schedules.  The board that Governor Chafee appointed to initiate the exchange illustrates that special interests will have an outsized role, as well.

With the addition of other welfare programs to the mix, it will be even more difficult for the people of the state to change course.

What it means for you. Losing control of activities done in the public’s name may not be the most dire consequence of the dependency portal approach.  Rather, the fatal part of the trap is the fast lane to a culture of universal reliance on government and a pervasive sense of entitlement.

Whenever the topic of welfare arises, conversation turns toward those who “know how to work the system” and thus become the fabled “welfare queens.”  For them, incentives toward good behavior have been reduced or reversed, and democracy has devolved into an exchange of political power for handouts.

The real danger of the dependency portal is that it sets up a chute so that previously self-reliant Rhode Islanders will increasingly fall into an entitlement existence.  Why else would the exchanges offer health care subsidies to a family of four with income of $92,200?

Just as technology has simplified tasks that once required expert consultants, the dependency portal will make “working the system” a simple matter of clicking a few buttons.

Tracing the progress of the portal in Rhode Island. RI Health & Human Services Secretary Steven Costantino, Health Benefits Exchange Director Christine Ferguson, and Lt. Governor Elizabeth Roberts describe Rhode Island’s nation-leading steps toward the dependency portal (June 28, 2012):

Elaboration on why Rhode Island and the United States should resist the pull toward dependency portals:

• August 13, 2012: “What the Dependency Portal Changes“

RI Center for Freedom & Prosperity first identifies the dependency-portal dynamic as one reason to reject the health benefit exchange and the Medicaid expansion:

• July 9, 2012: “Why RI Should Opt Out of Exchanges and Medicaid Expansion”
• July 10, 2012: “Exchanges and Medicaid Expansion Move Health Care in the Wrong Direction”

The pieces needed to turn the exchange into a dependency portal are being put into place:

• July 26, 2012: “Rhode Island Sees Long-Term Potential for Expanded Welfare Services Through Health Care Exchange”
• August 22, 2012: “Pieces in Place for Dependency Portal with Health Exchange Board Members“

RI officials acknowledge intention to implement Medicaid expansion, without any indication of legislative or public input:

• August 1, 2012: “Rhode Island State Officials to Proceed with Medicaid Expansion Under ObamaCare”
• August 13, 2012: “Gov. Chafee’s Use of Executive Orders Viewed as Anti-Democratic“

Documents related to the dependency portal begin to reveal the direct connection between those pushing the concept and those involved with Rhode Island’s health benefits exchange:

• August 8, 2012: “Bringing the Dependency Portal into Focus“

The dependency portal in concert with eliminated work requirements for welfare may mark the return of the “welfare queen” and a “majority coalition” for big-government activists:

• August 9, 2012: “Ronald Reagan’s ‘Welfare Queens’ Re-emerge as Debate Intensifies over ‘Dependency Portal’“
• September 25, 2012: “President Obama’s Early Inklings of the Dependency Portal“

Documents. The federal government and national non-profits describe the dependency portal and the related “express lane eligibility”:

• Coalition for Access and Opportunity: “The Health and Human Service Integration Opportunity Toolkit: Five Reasons to Integrate Human Services into Health Care Reform Now.“
• Coalition for Access and Opportunity: Moving to 21st-Century Public Benefits: Emerging Options, Great Promise, and Key Challenges
• Center on Budget and Policy Priorities: Coordinating Human Services Programs with Health Reform Implementation: A Toolkit for State Agencies
• Dep’t of HHS, Centers for Medicare & Medicaid Services: “Re: Express Lane Eligibility Option“
• Families USA: “Express Lane Eligibility: What Is It, and How Does It Work?“
• Kaiser Commission on Medicaid and the Uninsured: “Building an Express Lane Eligibility Initiative: A Roadmap of Key Decisions for States.“