Bill Graham wants to let the free market work on health care.
But whether the Republican gubernatorial candidate's proposal for a health-insurance exchange works will depend on how the state manages the system, says a Duke University professor.
Chris Conover, director of Duke University's health policy certificate program, said Graham's proposal borrows a central plank from Massachusetts Gov. Mitt Romney's state plan and a federal proposal put forward by U.S. Sen. Richard Burr.
The proposal calls for an exchange in which private companies would offer insurance plans to businesses, the self-employed and interest groups.
After the jump, three questions from Conover about the plan.
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* How much management? If the state runs the exchange simply as a clearinghouse, no one may show up to use it. But if the state micromanages it—forcing insurers to offer certain features in each plan—it could lose the market competition. There's also a risk that state politicians could put their thumb on the scale to benefit certain companies. "Look at the state fair," Conover says.
* How much risk? If the state tightens eligibility too much, high-risk people would not be able to use the exchange for insurance. But if it's too generous, low-risk people could do better in the open market. Over time, that would leave only the most expensive-to-cover in the exchange, driving up premiums and undermining the point of the exchange.
* What about free-riders? One of the big problems in the insurance industry is so-called "free riders," young, relatively healthy people who gamble that they won't get sick and refuse to sign up for insurance in order to save money. Romney's plan covered this problem by mandating coverage for all residents, but Graham's does not address the issue.
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