Rhode Island Looks to Convert Health Exchange into Government Dependency Portal

Unless Rhode Island lawmakers move decisively to defund Gov. Lincoln Chafee’s Unified Health Infrastructure Project, the smallest state in the union could have an oversized impact on the availability of social welfare programs across the country.

That’s because the “dependency portal” Chafee has inserted into Rhode Island’s health care exchange system can be easily emulated throughout the country, according to researchers and policy specialists with the Rhode Island Center for Freedom and Prosperity.

On the same day the U.S. Supreme Court issued its ruling upholding the Patient Protection and Affordable Care Act, otherwise known as Obamacare, top officials in Chafee’s administration made some revealing comments available on audiotape about how they intended to use the state’s health benefit exchange system.

Photo Credit: Getty Images
Photo Credit: Getty Images

Health and Human Services Secretary Steven Costantino, Lt. Gov. Elizabeth Roberts, and Health Benefit Exchange Director Christine Ferguson, the exchange director, told reporters that health benefits could be interwoven with a range of social welfare benefits including food stamps. That’s what UHIP is all about.

But a new legislative proposal to abolish the state level exchange system and shift its responsibilities over to the federal government would also serve to pre-empt Chafee’s plans for expanded welfare services. A new report from the Center, which warns against the rising costs of the exchange, calls on lawmakers to support The Rhode Island Health Benefits Exchange Act (H7817 and S2740) .

The report says:

“The combination of high costs with low enrollment levels creates an extreme challenge of identifying funding sources for the state’s exchange. Bipartisan, bicameral legislation to prohibit state revenue from being used to fund the ongoing operations of the Rhode Island health benefits exchange has been introduced in both the House and Senate in the 2014 General Assembly session. The legislation would also halt the unified health infrastructure project, a $209 million initiative with the core purpose of making it easier for the state to find recipients for government assistance programs.”

Under Obamacare, each state had the option of either creating its own exchange system for health insurance, or to pass this responsibility onto the federal government.

Chafee decided to create a state exchange by executive order in 2011 over the objections of the General Assembly. Government officials operating HealthSourceRI’s fiscal year 2015 budget assumes that the feds will cover these costs for at least the next few months. But there is no disputing the fact that federal assistance will expire at some point in the not too distant future. This combined $38 million cost can be avoided if the General Assembly defunds HealthSourceRI.

Screenshot from HealthSourceRI.
Screenshot from HealthSourceRI.

That’s what Mike Stenhouse, CEO for the Rhode Island Center, told lawmakers in testimony before the House Finance Committee on behalf of H7817:

“The question at hand today is $38 million or nothing? We can add a new layer onto our already massive structural budget deficits, we can increase taxes on already stressed taxpayers, we can charge fees to companies or individuals participating in the insurance market, or we can pay nothing, charge nothing, tax nothing and get essentially the same product by letting the federal government pay for its own mandate and by letting it operate our state’s health insurance exchange, as is already the case in most other states.”

If the bill were to pass, Rhode Island would be first state to dismantle a “successfully operating” exchange, Ferguson told the committee.

The Center, however, has vigorously challenged HealthSourceRI’s cost estimates and success rates in its research. One outstanding question that must be addressed if Rhode Island does proceed with the transfer to the feds is the impact this might have on those who are currently enrolled in HealthSourceRI.

In its study, the Center concludes that “Defunding the exchange and transferring its management to the feds would do little to change the way Rhode Islanders would obtain coverage and subsidies through it.” Rhode Islanders would simply shop for their benefits on a federal web portal, the report says.

But in her comments to the committee, Ferguson expressed concern that the transition over to the federal government would not be so smooth. She also suggested the state could be fined if the exchange is dismantled.

In his testimony, Stenhouse, the Center’s CEO, countered that there is “no legal, technical, or financial barriers to making such a move” and that there is a greater risk to taxpayers under the current arrangement.

He also warned against the potential for greater government dependency associated with UHIP:

“The Unified Health Infrastructure Project is a $200+ million technology project, related to the exchange, and will add $15 million to the state’s FY2015 budget, or a total of about $50 million total in future years. Further, the design of this project is to bring more and more Rhode Islanders onto the public assistance rolls by linking information obtained during the healthcare application process to other state assistance programs. If you think the increase in Medicaid costs is a budget problem, wait until you see the increases, across the board, in other state entitlement programs; the administration called this ‘one stop shopping’, we call it promoting dependency. By passing this bill, the state will save tens, if not hundreds of millions of dollars, by also eliminating this UHIP program.”

Rhode Island was the first state among the 13 colonies to declare its independence from British rule. The opportunity here is for free market activists to uproot the worst that Obamacare has to offer before it spreads.

Kevin Mooney can be reached at Kevin.MooneyJ@gmail.com and followed on Twitter @KevinMooneyDC. Please visit KevinMooney.Net for additional information and previous reports.

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