Federal Government Better at Exchanges Than Some States: Lehrer

November 21, 2012

The federal government is likely to do a better job of running health exchanges than some states, according to an insurance think tank executive.

Eli Lehrer, president of the conservative R Street Institute consulting firm in Washington, contends that a number of states are simply not capable of running their own health exchanges.

“If I lived in, say, the District of Columbia — where I do not live — where the government is widely known to be incompetent, I would prefer that the federal government run a local health exchange rather than the state doing it,” Lehrer told Insurance Journal in a recent interview.

But other states might be able to handle exchanges, if they choose to do so.

“If I lived in a well-governed state like Virginia, where I actually do live, or Utah or Michigan or another state that really knows how to run a government, I think the state probably could run it better. And as such, it is really different from state to state.”

The Affordable Care Act calls on states to set up online health insurance marketplaces where consumers will be able to buy private coverage at federally subsidized rates. States must decide whether to set up their own exchanges, partner with the federal government on one, or let the federal government do it by itself.

According to some estimates, 17 states have already said that they will create their own exchanges. But many of the 30 states run by Republican governors have either said they will leave it up to the federal government, or they are still deciding what to do. The deadline is Dec. 14 for states to decide whether to build one on their own or leave it up to Washington.

The exchanges must be ready to accept applicants by Jan. 1, 2014.

More than 12 million people are expected to sign up for health insurance through the exchanges.

Lehrer says he does not think that federally run health exchanges will be a disaster.

“I think the federal government probably can pull it off reasonably well. There will be hiccups. You’re basically going to an entirely new healthcare system for many people about 15 months from now. And there are going to be hiccups in that.

But…I don’t think…I don’t think it’s going to be that big a deal,” he said.

In an interview with Insurance Journal, Lehrer discussed the recent election and its possible effects on Dodd-Frank and insurance programs for floods, crops and terrorism risk.

He said Superstorm Sandy will almost certainly mean the National Flood Insurance Program will have to ask Congress for additional funding.

“Congress, I think, will have to say yes to them. I don’t see any other way that Congress could say, ‘No, we can’t, and we will default on the agreement,'” Lehrer said.

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