The risk in rushing an Illinois health exchange

The Chicago Tribune reports:

“Tns of thousands of Illinois residents will sign up for coverage under Obamacare over the next few months. Many of them wouldn’t be able to afford the insurance without a federal subsidy to help pay the premiums.

Those subsidies, however, are in jeopardy because the Affordable Care Act was poorly, hastily written. The U.S. Supreme Court will decide next year whether the subsidies are legal in Illinois and many other states that use, the federal Obamacare website.

Illinois could ensure that its citizens don’t lose their subsidies by setting up the state’s own health care exchange. Illinois officials recently submitted an application for federal funds to help set up a state-based exchange. But lawmakers in Springfield would have to agree to fund the exchange’s future operations. There’s a tight deadline for the application: The feds will take their money — as much as $300 million, proponents say — off the table at the end of the year.

Sound like a deal Illinois should grab? Not so fast. Remember, Illinois is broke.

The Illinois Senate has passed a bill to set up a state exchange but it has stalled in the House, primarily because
members were reluctant to put another burden on taxpayers and consumers. Illinois would be on the hook for the
exchange’s operating expenses, infrastructure updates and other costs. The state would likely impose fees or taxes on insurers, who would likely pass the costs on to their customers.

Launching a complex site to handle health care applications is a formidable task. There’s no guarantee a state­run
site would work any better or more efficiently than the federal government’s famously glitch­prone site. Illinois’
track record is not encouraging: Just look at the state’s struggle to clear a massive backlog of Medicaid
applications, part of the Obamacare expansion.

To take advantage of the federal cash, lawmakers would have to rush through a complicated bill in a lame­duck
legislative session. Some states created exchanges with little trouble, but some have been expensive disasters.
Oregon famously spent about $250 million and failed to sign up a single private insurance customer online.
Oregon, along with Nevada, has retreated to use the federal site this year. Lawmakers in about a dozen states this
year have considered bills that would authorize state­run exchanges, but no state has decided to make the switch,
according to the National Conference of State Legislatures.

Other pitfalls loom for Illinois: A state exchange would be run by a state board appointed by the governor.
Depending on how the law is written, that board could have immense power over insurers and coverage options
available to consumers. With immense power comes immense potential for cronyism and pay­to­play politics.
California’s state­run health insurance exchange reportedly awarded $184 million in no­bid contracts, with some
of that money finding its way into the coffers of a firm whose employees have strong ties to the California agency’s
executive director.

We understand the risk to some Illinois residents who could lose Obamacare subsidies if the Supreme Court rules
that the Affordable Care Act doesn’t permit them through the federal exchange. But it’s difficult to predict what will
happen if the court decision goes against the Obamacare subsidies. That could — should — force a fundamental
rethinking of a badly flawed law, including the provision of subsidies.

Illinois should watch this play out. Resist the rush to establish a state health care exchange