Healthcare Analyst: Insurance Exchanges Will Save Money

Nov 16, 2012

The federal Affordable Care Act requires states to have health insurance exchanges. This Friday, Nov.16, is the deadline for states to tell the government whether they will set up exchanges on their own or let the federal government do it for them.

David Hood is Senior Health Care Analyst for the non-partisan Public Affairs Research Council of Louisiana.
Credit WRKF

Gov. Bobby Jindal confirmed to the Huffington Post on Tuesday that Louisiana would not be implementing its own exchange and a rejection letter will be sent to the federal government on Friday.

David Hood is an adviser for the Public Affairs Research Council of Louisiana on healthcare issues. He thinks the insurance exchanges will ultimately save the state and taxpayers money.

WRKF's Ashley Westerman asked him how that's possible when they are expected to cost millions of dollars annually to run.

HOOD: Well, there's definitely a cost involved. I think everybody realizes that. You can't do this for free. Somebody's going to have to go through the establishment process and then you'll need workers there to make sure that it operates correctly. There's subsidies involved and all those things contribute to the overall cost. So the question is, given those costs, where are the savings? Quite frankly I think, you know, this is something that time is going to tell us just how much we can save by doing this and whether we can bend that cost curve we see now. We'll just have to see.

I personally think this will save money in long run once it's up and running and consumers will have a better grasp of what they're getting into when they purchase health insurance.

WESTERMAN: Does it makes a difference if Louisiana sets up their own exchange or if the federal government does it for them?

HOOD: Well obviously the state would have more authority and a better grasp of how this works to the extent that the state wants to customize its healthcare system in some way or do this or that particular thing. The exchange is a very important element in our healthcare system. So it is rather surprising that a conservative republican governor - and Gov. Jindal's not the only one there are many states doing this - are going to turn it over to the federal government. That just seems like a rather ironic thing that's going on here. Although I suspect that the federal government is going to come in and they're going to make every effort to work closely with our people at the Department of Health and Hospitals, the Department of Insurance and so on because, you know, they don't want any problems in setting it up.

WESTERMAN: Louisiana's insurance commissioner Jim Donelon supports the health care exchanges, because he thinks it will spur competition. But opponents of the exchanges say it will stifle competition. So which is it?

HOOD: Well, I agree with Donelon. I think it can't help but help with competition and, you know, if you're a person who needs insurance and you go to one of these exchanges and you can see lined up right in front of you just what the exact costs are going to be from one plan to the next and you need to pick the cheaper one and, you know, I think other plans are going to save to themselves, "Well, maybe we need to take another look at this. We're not getting as many people in here as we thought we would. What can we do about that?" So, from that standpoint I think there will be more competition.

WESTERMAN: So why is Gov. Jindal refusing to set up an exchange?

HOOD: I guess most of us thought that it was a political decision. The election is not over and I think the Republican governors around the country just might soften up a little bit on these kinds of decisions. But never the less, this whole thing is designed to make insurance coverage more affordable, and more accessible, and higher quality and less cost. It's a very difficult equation to, you know, to comprehend. As I said, I think time will tell that this was a good step for us to take as a nation and as a state.