The question of whether to create a state Obamacare insurance benefit “exchange” is a source of great confusion for state legislators and governors nationwide. Proponents of the exchanges, among them Obamacare's ideological supporters and many of the private businesses hoping to profit from exchange contracts, are adding to the confusion by claiming, “conservatives favor creating an exchange.” They often point to the Heritage Foundation, which helped develop the exchange concept and was involved in the creation of “Romneycare” in Massachusetts, cited by some as the prototype for Obamacare.

However, Heritage explicitly opposes Obamacare exchanges. In a recent report, Heritage health policy expert Edmund F. Haislmaier writes, “Health insurance exchanges are a good idea — if they are used to implement patient-centered and market-based health reforms that enhance choices and value for customers. The exchanges prescribed by Obamacare will have the opposite effect.”

Elsewhere in the report Haislmaier says:

“The first point to understand is that the entire design for health insurance exchanges in the PPACA is a perversion of the core concept of what is an otherwise sound approach to improving health insurance markets.

". . . Rather than serving as a mechanism for expanding health insurance choice, variety, and competition, and for spurring plans and providers to innovate and offer customers better value, Obamacare exchanges will impose new regulations, administer new subsidies, standardize coverage, and restrict consumer choice and insurer competition more than it is already. Thus, in the PPACA Congress has perverted the exchange concept into a bureaucratic tool for federal subsidization, standardization, and micromanagement of health insurance coverage by the Department of Health and Human Services.”

At the annual meeting of the American Legislative Exchange Council in New Orleans last week, I engaged in a colloquy with Mr. Haislmaier, who was serving on a panel discussing the concept of exchanges. I asked him to respond to this statement:

“So you and Heritage are not recommending that legislators create an Obamacare exchange. Instead, you are just saying that, theoretically, the concept of an exchange as described by Heritage — which is very different from an Obamacare exchange — may have value. But Obamacare exchanges do not have value and you do not support them.”

Several different formulations of that statement were offered, and Mr. Haislmaier vigorously agreed with each.

Bottom line: The conservative Heritage Foundation does not support Obamacare exchanges.

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See also Michigan Creeps Closer to Obamacare 'Exchange'