A conservative state believes it has a better answer to the health-care question
GARY HERBERT, the governor of Utah, loathes everything about Barack Obama’s health-care reforms, not least, he says, the way “Obama has come along and spoiled the name ‘exchange’.” After all, Utah conceived its own version of health reform, called the Utah Health Exchange, long before Barack Obama signed his Patient Protection and Affordable Care Act in 2010. Utah’s reform is “market-based”, says Mr Herbert, whereas “Obamacare” is a big-government monstrosity. But it too relies on exchanges, so now the word is tainted. Republican governors in New Mexico and New Jersey have even vetoed attempts by their legislatures to build health-care exchanges.
For Utah this means that its reform needs a new brand name. “We’ll have a contest,” says Mr Herbert. Beyond that, Utah will continue its fight, with 25 other states, to get Mr Obama’s reforms repealed, something that could happen as soon as next month, if the Supreme Court rules against them. But however that turns out, Utah will push on with its own reform, because “we think it’s really cool,” and a potential model for the other 49 states, says Norman Thurston, the man chiefly responsible for getting it up and running.
The history of the Utah Health Exchange is a reminder of the bizarre, tangled genealogies of America’s various health-care reforms. Utah’s was nursed into being in the past decade when Jon Huntsman, a Mormon Republican, was governor. At that time the main alternative reform was being cooked up in Massachusetts by its then-governor, Mitt Romney, also a Mormon Republican. Both men advocated a “mandate” that required everybody to buy insurance, an idea that originated in a conservative think-tank. But Mr Huntsman and Utah subsequently dropped that idea, whereas Mr Romney held on to it. Since then, and unexpectedly, the notion of mandates has become toxic in conservative circles.
Utah also decided that government subsidies should play no part in its reform, whereas the one in Massachusetts was based on them. Thus Mr Romney’s plan became, more or less, the basis for Obamacare, whereas Utah started seeing its plan as a free-market alternative. (This year Mr Huntsman lost to Mr Romney in the Republican presidential primaries, which has not stopped most Utahns from swinging their support behind Mr Romney, a local hero not only because he is Mormon but also because he was brought in to rescue the Salt Lake City winter Olympics.)
So the Utah Health Exchange is decidedly not Romneycare or Obamacare. But what is it? At first glimpse, it is a snazzy web portal where four of Utah’s five largest health insurance companies offer about 140 plans to about 6,600 employees of 285 small businesses. Each employer determines in advance how much he will contribute to an employee’s insurance, as in a defined-contribution pension plan. The employee then filters the plans and selects his favourite—again, as he might choose mutual funds in his defined-contribution pension plan.
As Patty Conner, the exchange’s director, explains, this has advantages over traditional corporate health insurance. In the old system employers had no certainty about premiums, which often rise abruptly. And employees, offered little if any choice, often got stuck with inappropriate plans. Small businesses, specifically, offered no insurance in Utah. Their employees and families account for many of the state’s 300,000 uninsured, more than 10% of the population.
So the fledgling exchange is by intention not very radical. A more fundamental reform, for instance, would have tried to break free of the American peculiarity that ties most private health insurance to employers rather than individuals. Indeed, Utah originally wanted to do just that, says Mr Thurston, but then decided that such a step would have to wait until federal tax law stops favouring employer contributions over individual contributions. At present, the exchange merely aims to “plant the seed for defined-contribution health care”, he says.
But the hope is very much that the exchange, which is now coming out of its test phase and into full-scale operation, will blossom quickly so that within a few years most or all small businesses will sign up, then individuals as well, and finally even large employers—in short, almost everybody. And that would indeed be revolutionary. Utah would then do the proper conservative thing, says Mr Herbert, and privatise the exchange—like a stock exchange, say. If other states then want to copy Utah’s example, good. If not, adds Mr Herbert, that is fine too, because as a conservative he does not believe that one model should fit all.
And that, too, turns out to be another veiled jab at Mr Obama. If the Supreme Court upholds the federal law, says Mr Thurston, the Utah Health Exchange would not be derailed, but its adoption would remain limited to small business. Utah’s reform would necessarily stay modest, in short. But if the federal law falls, Utah thinks it has a model to fill the void.
this article appeared on the Economist on 5/26/12