Green Mountain Care Could Cost Vermonters Nearly $10 Billion a Year

December 13, 2011

Sarah McIntosh

A new report to Vermont lawmakers raises concerns about the costs of implementing Green Mountain Care, a proposed universal single-payer health care system for the state.

Earlier this year, lawmakers mandated a report from Vermont’s Joint Fiscal Office, the Department of Banking, Insurance, and Securities, and Health Care Administration to provide an “estimate of the costs of Vermont’s current health care system compared to the costs of a reformed health care system upon completion of Green Mountain Care and the additional provisions of this act.” The report, “Costs of Vermont’s Health Care System Comparison of Baseline and Reformed System,” was issued in November. According to its projections, Green Mountain Care would cost as much as $9.5 billion a year.

Costly New Government Bureaucracy

The new projection does represent a savings of $500 million compared to the status quo, according to projections. If Vermont continues on its current health care path, “Vermont health care spending will more than double from 2009 to 2019, from $4.7 billion to $10 billion,” the report states. But Darcie Johnston, founder of the free-market-oriented group Vermonters for Health Care Freedom, says that while health care costs will increase without reform, the choice is not between a universal system and the status quo.

“No one is suggesting doing nothing. But I expect a new government bureaucracy will be even more costly than predicted by this report,” Johnston said.

Johnston says excessive government involvement in the marketplace is the reason health care costs have risen so drastically already.

“Because Vermont has mandated health reforms for the last 20 plus years, that has only resulted in driving up the cost on health insurance, not reducing costs,” Johnston said.

Expect Lower Savings, Higher Costs

John McClaughry, president of the Ethan Allen Institute, a public policy think tank in Vermont, is also troubled by the prospects of Green Mountain Care.

“The state’s cost figures are based on a roughly 7 percent annual increase in health care costs with no new program, and a much lower increase—yielding ‘savings’—under Green Mountain Care, which will provide services to thousands more who are now uninsured,” McClaughry said.

Murky Description of Savings

The report provides suggested policy reforms to address the rising costs to the taxpayers of health care, which it claims if implemented can create savings starting in 2014. The suggested policies are in areas such as “administrative simplification and streamlining; benefits; changes in clinical processes, including care management, malpractice reform, organizational reform, payment reform, and quality improvement; planning and capital investment management; and prevention and public health.”

The report estimates by 2020, budget savings from these steps will range from $553 million (5.5 percent) to $1.8 billion (18.3 percent of total spending).

McClaughry notes the definition of these so-called savings are quite vague, and he says it’s unrealistic to expect these claims to produce at the level suggested by the report.

“The state is quite vague about exactly how these ‘savings’ will be made to appear. ‘Efficiency,’ ‘fraud control,’ and especially ‘payment reform’ appear to be the key factors, but many suspect the state can hit its savings targets only by Quebec single-payer methods: fewer providers, less equipment, and lower reimbursement,” McClaughry said.

Eliminating Existing Insurers

Eliminating health insurance companies under a single payer system is not the answer, says Johnston, because “it drives up cost, limits choice, and forces individuals out of investing in health insurance.”

“The largest tax increase in Vermont history, which this system will require, will destroy the Vermont economy and job growth,” Johnston said. “Green Mountain Care is projected to create a $2 billion deficit combined over five years.”

McClaughry warns against eliminating insurance companies, saying they provide an important service.

“True insurance against unlikely but potentially catastrophic events is important. Making others pay for your prepaid health plan with zero co-pays and deductibles is inevitably disastrous,” McClaughry said.

Consumer-Driven Alternatives

Eliminating insurance companies and implementing of a single-payer system is not the only option, McClaughry notes.

“The Ethan Allen Institute has promoted a consumer-directed, market-oriented insurance program since 1994, but Vermont’s teeming left wing declares that ‘health care is a human right’ and demands that taxpayers be required to pay for ‘appropriate care at the appropriate time in the appropriate setting.’ They won’t rest until health insurance companies are extinguished,” McClaughry said.

Johnston agrees there are other paths.

“The other options include developing a vibrant exchange, reforming medical malpractice, expanding BluePrint for Health and other healthy living incentives, and additional free market reforms similar to what the Maine legislature passed this past spring,” Johnston said.

Vermont lawmakers will wait to make their final decision early in 2012, after the election. A series of public meetings are being held in November and December of 2011 in an effort to judge the public’s response to the proposals. McClaughry hopes lawmakers will reconsider the idea.

“Green Mountain Care will inevitably degenerate into rationing, waiting lines, maddening bureaucracies, demoralized doctors and nurses, shabby facilities, obsolete technology, declining quality of care, and much higher taxation,” McClaughry said.

 

 

http://news.heartland.org/newspaper-article/2011/12/13/green-mountain-care-could-cost-vermonters-nearly-10-billion-year

 

Internet Info:

“Costs of Vermont’s Health Care System Comparison of Baseline and Reformed System”: http://www.leg.state.vt.us/JFO/healthcare/November%20Report%20-%20Final.pdf

Vermonters for Health Care Freedom: www.vthealthcarefreedom.org

The Ethan Allen Institute: http://www.ethanallen.org/

 

Banning Epinephrine Inhalers: FDA Making It Harder to Breathe

December 7, 2011

Sarah McIntosh

Asthmatics face a deadline of December 31, 2011 to switch from using epinephrine inhalers to other prescription treatment methods under an order from the Food and Drug Administration.

At issue is the chlorofluorocarbons (CFCs) contained in the inhalers, which are subject to regulation by the Environmental Protection Agency (EPA). Although President Obama’s administration recently allowed a bypass of new ozone regulations at the EPA which were cited as too costly, the administration has announced no intention to allow an inhaler exception.

Gregory Conko, a senior fellow at the Washington-DC based Competitive Enterprise Institute, says this crackdown on inhalers should not come as a surprise.

“The phase-out of asthma inhalers with CFC propellants has been going on since 2008, so the recent withdrawal of over-the-counter Primatene Mist was not surprising. Nor was it the first,” Conko said. “It’s also not surprising, although it is worrisome, that FDA would insist on their withdrawal for environmental reasons.”

In a press statement, the FDA said the ban on CFC inhalers is required under the Montreal Protocol on Substances that Deplete the Ozone Layer, which the U.S. signed in 1987.

Exception Allowance Ignored

Conko says several other prescription inhalers powered with CFCs that were arguably more important therapeutically have already been withdrawn.

“The Protocol allowed for a long and gradual phase-out of CFCs over the past 20 years in order to encourage the development of alternative products, but it does allow for exceptions to the phase out for ‘essential uses’ when there is no acceptable substitute propellant,” Conko said.

Trivial Amounts of CFCs

Even if you assume they have an environmentally negative impact, the amount of CFCs used by inhalers are minimal, Conko notes.

“Even if you buy into the belief that CFCs should have been phased out for general uses in refrigeration and other industrial processes in order to spare the ozone layer, the amount of CFCs used in asthma inhalers was trivial in the overall context of things,” Conko said.

Inhaled epinephrine has been on the market since before 1962, when FDA’s regulatory authority was substantially increased. Conko notes the product’s market approval was essentially grandfathered in.

“It would have been difficult for FDA to get it off the market through normal channels,” Conko said.

Alternatives’ Quality a Concern

Some types of inhalers, particularly ones containing albuterol, have been able to switch from CFCs to hydrofluoroalkanes (HFAs). But HFAs are fairly expensive, so not every product has been switched.

“Over-the-counter Primatene Mist just would not have been able to sustain the far higher price necessary to justify the switch to HFAs,” Conko said. “In many other cases, prescription inhaler manufacturers have been able to reformulate their products from aerosolized liquids that require a propellant to fine powders that require no propellant.

“That’s why FDA thought it was okay to phase out the CFCs: because manufacturers have alternatives available. It’s just not clear that the alternatives are as good,” Conko added.

A Public Health Negative

Conko says inhaled powers work for the majority of patients, but there have been numerous reports from people with severe asthma saying the inhaled powders are less effective.

Thus, “The CFC phase-out is troubling,” Conko said. “And I would argue that FDA should have taken advantage of the essential use exemption to keep CFCs available for these uses by those with severe asthma.”

Those suffering from asthma may be hurt by these regulations because the rules take a product off the shelves, Conko notes.

“The one really good thing about over-the-counter epinephrine inhalers is that asthma sufferers who run out of their prescription medicines at night or over the weekend or while on vacation, when a doctor wasn’t available to re-fill their prescriptions, could always go to a pharmacy and buy a product like Primatene Mist right away with no prescription,” Conko said. “Now they won’t have that option.

“And that’s not trivial,” he explained. “Severe asthma sufferers can die from their condition. And, although epinephrine inhalers do carry some significant health risks, having them available on the market almost certainly improved overall public health.”

http://news.heartland.org/newspaper-article/2011/12/07/banning-epinephrine-inhalers-fda-making-it-harder-breathe

 

 

More Private Insurers Using Medicare Rates for Out-of-Network Payments

July 27, 2011

Sarah McIntosh

Patients may start having to pay more money out of pocket for health care if they do not pay attention to their insurers’ pricing policies.

As health costs have continued to rise, private insurance providers have looked closely at any areas where they can cut costs. One of the easiest avenues to lowering costs is for these insurers to lower their out-of-network payments, as Aetna began doing in 2009, shifting their payment rates to resemble those paid by Medicare.

For individuals in plans where payment rates are shifted in such a manner, the cost for medical services received by out-of-network providers may be much higher than in the past.

De Facto Nationalization

According to Devon Herrick, a senior fellow for the National Center for Policy Analysis, the increased reliance on Medicare rates is further reducing the differences between private and public insurance payments and coverage.

“Private insurers have always looked to Medicare for guidance. If Medicare refuses to cover a given treatment, private insurers often refuse cover it,” Herrick said. “If other insurers follow suit, this practice could easily become commonplace. Medicare pays doctors 81 percent of what private insurers typically pay. Medicare fees are similar to the cost-sharing many insurers require for out-of-network providers.”

Increases Hospital Footprint

Merrill Matthews, a resident scholar with the Institute for Policy Innovation, says this shift is one reason why more doctors are taking jobs in large hospitals.

“If insurers do move in this direction, it will increase the importance of their networks of physicians, because that’s the only way patients know they will get the discounted price,” explains Matthews. “Of course, more and more doctors are taking jobs with hospitals.  That trend, if it continues, might diminish the practice, because physicians will likely fall under the hospital’s contract with the insurers.”

Matthews maintains this shift illustrates the growing role of Medicare’s price controls.

“The practice highlights the disparity between what physicians claim is their standard charge and the negotiated price for those in an insurer’s network.  Those differences can be steep,” Matthews said. “Insurers can make a reasonable case that paying Medicare rates plus, say 10 percent or 20 percent, is a fair reimbursement: ‘Isn’t that what the government pays?’ Many physicians will disagree.

“When the government imposes price controls on a large swath of a population, in this case patients, no one should be surprised if insurers begin using those lower prices as a basis for their own reimbursements,” Matthews explains.

Limiting Consumer Choice

Michael Cannon, director of health policy studies at the Cato Institute, says the decision insurers are making is logical given their options.

“Generally I don’t think there is anything wrong with insurers using Medicare prices to either set in-network or out-of-network rates, because it is not coercive when private insurance companies use the Medicare prices any more than it would be coercive if they used a bunch of numbers written in Egyptian hieroglyphics,” Cannon said.

Cannon says the ideal solution—more consumer choice—is unlikely to come into play.

“Ideally, consumers would be able to choose insurance plans based on how much they pay in-network providers and out-of-network providers, because that will determine how much access they have to each type of provider and how much out-of-pocket expose they will face,” Cannon said. “But instead of giving consumers that choice, what Obamacare is going to do is encourage state and federal governments to regulate these features of health plans even more.”

Growing Trend

Cannon expects more insurance companies to switch to this payment method in the future.

“They are switching to various measures to try to hold down premiums. I expect them to pay out of network providers less,” answers Cannon. “Is it a good policy? That depends on whether if you prefer access to out of network doctors or lower premiums. If you prefer lower premiums, it is a good policy; but if you want the out of network doctors and less out of pocket exposure, then it isn’t.”

Cannon says this move won’t help halt rising premium costs in the long term.

“Health insurance premiums are continuing to rise, even though Obamacare was supposed save us from that. This payment rate shift is how markets are supposed to respond to increasing costs—by taking steps that will guide patients to lower the cost of care, in this case in-network providers,” Cannon said. “Insurers are looking for ways to control premium increases. And they really want patients staying in the negotiated network of providers.  Adopting a Medicare-plus reimbursement will accomplish both goals.”

More Problems for Medicare

This shift could portend additional problems stemming from Medicare reimbursement rates down the road.

“Unfortunately, Medicare’s price controls are causing all sorts of problems within Medicare. While politicians will respond to that, we aren’t going to respond to the consumers who are captive in plans their employers offer them, which are even more heavily regulated under Obamacare,” Cannon said.

Matthews agrees.

“Doctors complain that Medicare doesn’t pay enough and are increasingly declining to take new Medicare patients. If insurers begin reflecting Medicare rates, even more doctors may look for an alternative, such as moving to a cash-only practice or retiring, exacerbating the growing difficulty in finding a physician,” Matthews said.

Sarah McIntosh, Esq. (mcintosh.sarah@gmail.com ) is a constitutional scholar writing from Lawrence, Kansas.

The original article can be found online at: http://news.heartland.org/newspaper-article/2011/07/27/more-private-insurers-using-medicare-rates-out-network-payments

 

Starbucks CEO Switches View on Obamacare’s Employer Mandate

Written By: Sarah McIntosh

Published In: Health Care News > June 2011

Publication date: 05/10/2011

Publisher: The Heartland Institute

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In the latest round of public opinion shifts among employers regarding President Obama’s health care law, Starbucks CEO Howard Schultz has done an about-face.  Originally a strong supporter of Obamacare, he has now expressed worry about how the employer mandate to provide insurance may harm businesses, including his own.

Burdensome Mandate

In an interview with The Seattle Times in March, Schultz responded to a question about health care costs saying that the cost for Starbucks in 2010 was roughly $250 million.

“We have faced double-digit increases for almost five consecutive years with no end in sight. So when I was invited to the White House prior to health care being reformed, I was very supportive of the president’s plan, primarily because I felt it was literally a fracturing of humanity for almost 50 million Americans not to have health insurance,” Schultz said.

While acknowledging the need for people to be insured, Schultz said the mandates within the law would pose a heavy burden.

“I think as the bill is currently written and if it was going to land in 2014 under the current guidelines, the pressure on small businesses, because of the mandate, is too great,” Schultz said.

Harms Businesses, Employees

Beverly Gossage, director of HSA Benefits Consulting, agrees the mandates will be harmful.

“The government will dictate the type of plans offered, usually raising the cost of the plans. An extra layer of accountability is added as the business must determine the ‘family’ incomes of its employees to calculate if they qualify for subsidies,” Gossage said.

“Businesses must interface with the federal government for reimbursement for these subsidies. Companies must make certain their plan offerings meet the ever-changing government guidelines. Companies like Starbucks with a revolving door of employees will have to hire extra HR staff to keep up with all the tracking and paperwork,” she added.

Supporters Turning Away

Christie Herrera, director of the Health and Human Services Task Force at the Washington, DC-based American Legislative Exchange Council, says Schultz is not alone in his concerns.

“Starbucks CEO Howard Schultz is just the latest in a string of about-faces from health law supporters. What Howard Schultz is realizing now is something that we’ve known from the start: The so-called Affordable Care Act will cripple small business growth,” Herrera said.

“Businesses should be focused on employing our workforce and growing our economy, not worrying about mandates from the federal government,” Herrera added.

Advocating Portability

Gossage suggests a different course for Starbucks.

“For businesses like Starbucks who care about their employees’ access to health insurance, they could accomplish a win-win by doing the following: Lobby to repeal Obamacare, then increase their employees’ salaries by the amount paid for their health insurance benefit, less any tax deduction difference lost from going from benefit to salary,” Gossage said. “This allows the employees to have expendable cash to go to the open market and buy a private policy just like they do now for auto, home, and renter’s insurance.”

Gossage points out moving to a private policy would give employees a portable solution—if they leave their job at Starbucks, they don’t lose their insurance.

“Employees get more plan choices, more affordable options, fewer worries. They can’t be kicked off a plan because they get sick, and their rates can’t be raised due to their personal claims,” Gossage said. “Employers can drastically reduced HR staff, have no hassles with dealing with COBRA, carriers, TPAs, and claims issues, and will find it easier to budget the cost of hiring an employee while providing more competitive salaries.”

Employee Flexibility

Gossage says empowering these younger workers to enter the marketplace, will give them more flexibility while benefiting the employer’s bottom line.

“Employees today, particularly younger workers like Starbucks generally has, are more mobile and want a portable policy,” Gossage said. “They don’t like their employer or the government selecting their health insurance package any more than they want them to pick their cell phone package.”

Sarah McIntosh, Esq. (mcintosh.sarah@gmail.com) is a constitutional scholar writing from Lawrence, Kansas.

 

Jindal Joins Other Governors in Declining to Set Up Health Care Exchange

Written By: Sarah McIntosh

Published In: Health Care News > June 2011

Publication date: 05/19/2011

Publisher: The Heartland Institute

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Louisiana’s Republican Governor, Bobby Jindal, has announced his state will not create a health insurance exchange mandated by the Patient Protection and Accountable Care Act.

Confirming an earlier report in Health Care News, Gov. Jindal’s press office released a statement on the anniversary of Obamacare’s passage indicating the governor would be directing the state government not to implement an exchange. PPACA requires every state to submit a plan for their exchange to the Department of Health and Human Services by January 1, 2013.

“Obamacare is a terrible policy that needs to be repealed and replaced. It creates enormous new costs and future unfunded liabilities for states financing their Medicaid programs,” Jindal press secretary Kyle Plotkin said in a statement.

Not Alone in Opposition

Other Republican governors, such as Nathan Deal in Georgia, Susana Martinez in New Mexico, Rick Perry in Texas, and C.L. “Butch” Otter in Idaho, have announced opposition, vetoed bills, or issued executive orders as ways to prevent implementation of a health exchange.

Florida’s governor, Rick Scott, also a Republican, has stood adamantly against the exchanges. Scott has spoken out against Obamacare from the start and first became a candidate after his strong opposition to the legislation.

John Graham, director of health care studies at the California-based Pacific Research Institute, points out both Jindal and Scott have backgrounds in health care. Jindal was Louisiana’s state secretary of health before becoming governor, and Scott helped run one of the world’s largest health care providers.

“I believe that they learned—correctly—that anti-Obamacare state politicians should not be collaborating in Obamacare in any way. There is no way for a state to put ‘market-friendly’ elements in a state-based exchange,” Graham said.

Some Republicans on Board

Not all governors are standing with Jindal and Scott, however. Mississippi’s governor, former Republican Governors Association chairman Haley Barbour, has publicly announced support for an exchange, and Virginia Gov. Bob McDonnell has supported an exchange law, albeit with restrictions against payments for abortions.

That is shortsighted, Graham says. “The federal Obamacare legislation states very clearly that state laws which establish exchanges cannot impose rules that differ from the U.S. Secretary of Health and Human Services’ regulations, which will change through time,” Graham said. “If the Supreme Court finds Obamacare constitutional, it means that the Supremacy Clause will give the Secretary the power to nullify state law.”

Graham said governors and legislators who oppose PPACA have several other options to defy the mandate, as well.

“States have more power to resist Obamacare exchanges than they believe, because the federal law also states that the Secretary can only allow health plans to participate in an exchange if they are licensed and in good standing with the state,” Graham notes. “This gives state legislators and insurance commissioners a lot of leverage over the health plans that are right now lobbying to establish exchanges.”

Sarah McIntosh, Esq. (mcintosh.sarah@gmail.com) is a constitutional scholar writing from Lawrence, Kansas.

 

Louisiana Joins Eight Other States Seeking MLR Waivers

Written By: Sarah McIntosh

Published In: Health Care News > June 2011

Publication date: 05/05/2011

Publisher: The Heartland Institute

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Louisiana is the most recent state to seek a waiver from the medical loss ratio (MLR) requirements in President Obama’s health care law from the U.S. Department of Health and Human Services.

The MLR is the amount of the premiums spent directly on medical costs. Under Obamacare, individuals and those in small group markets must have an MLR of 80 percent. If not, the insurer is required to reimburse the insured for the additional amount.

Devon Herrick, a senior fellow at the National Center for Policy Analysis, notes that the 80 percent MLR is higher than most insurance companies can afford. Some states are worried insurers will simply drop out of the market.

“Proponents of MLR regulations believe they can force insurers to spend premiums largely on medical care rather than executive salaries, marketing, and overhead,” said Herrick. “The unanticipated result is insurers dropping out of certain markets and lessening of incentives to hold down medical spending. For instance, an insurer runs the risk of efficiently managing medical expenditures only to have to rebate premiums to policyholders.”

“An example of this is efforts to reduce fraud. Fraud detection is considered overhead, while funds spend on fraudulent medical bills would be counted as medical care,” Herrick noted.

Follows Other States

Louisiana’s request notes the state’s reading of Obamacare “raised concerns that there may be unintended yet harmful provisions included.”

“These provisions will, if implemented as written, be disruptive and detrimental to Louisiana’s market,” the request stated in part. “As currently proposed, implementing the 80% loss ratio in the individual market will act to decrease consumer choice, make coverage more expensive and less readily available, and work to drive valuable trained producers out of the market just when they are needed most.”

The other states that have requested waivers include Maine, where a waiver to a 65 percent level was issued; New Hampshire, which is in the public comments stage; Nevada, Kentucky, Florida, Georgia, North Dakota, and Iowa—as well as the territory Guam—all of which are under review by HHS, with public comments pending.

Study Examiness Impact

The American Journal of Managed Care recently issued a report on impact of the MLR requirements on the individual health insurance market.

Under Obama’s new MLR definition, “we estimated that 29% of insurer-state observations in the individual market would have MLRs below the 80% minimum, corresponding to 32% of total enrollment” as of 2009, the report found.

“Nine states would have at least one-half of their health insurers below the threshold,” the study noted. “If insurers below the MLR threshold exit the market, major coverage disruption could occur for those in poor health; we estimated the range to be between 104,624 and 158,736 member-years.”

Waivers Make Sense

Kevin Kane, president of the Pelican Institute in Louisiana, says the waiver request makes sense.

“This is a good move in that it increases the likelihood that insurers will remain in Louisiana, providing consumers with a wider array of options,” Kane said. “The fact that states are requesting waivers puts the lie to President Obama’s claim that people would be able to keep their current insurance policies. How do you keep your policy if the company you have been doing business with exits your state?”

“Fortunately, Louisiana policymakers have been pushing back against ObamaCare,” said Kane. “The state should aggressively seek opportunities to get more control over this costly failure.”

Herrick says it’s wise for Louisiana to pursue this course, but he notes it’s only a temporary fix.

“It makes sense for Louisiana and all states and companies to apply for waivers,” Herrick said. “But most waivers are only good for a year at a time, so the solution is only a temporary one. I don’t believe backers of Obamacare realized how much the new regulations would create upheaval in the insurance market. Without waivers, several million people could find themselves without health coverage. “

“The market does a better job of deciding how companies should allocate their resources than a group of Washington bureaucrats,” said Herrick.

Sarah McIntosh, Esq. is a constitutional scholar writing from Lawrence, Kansas (mcintosh.sarah@gmail.com).

Internet Info:

The American Journal of Managed Care: “Regulating the Medical Loss Ratio: Implications for the Individual Market”: http://www.ahipcoverage.com/wp-content/uploads/2011/03/AJMC-MLR-Paper.pdf

 

Vermont Considers Single-Payer System

Written By: Sarah McIntosh

Published In: Health Care News > April 2011

Publication date: 04/01/2011

Publisher: The Heartland Institute

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The Vermont legislature, which has considered imposing a single-payer health care system in the past, is discussing the step once again in the current legislative session.

William Hsiao, the K. T. Li Professor of Economics at the Harvard University School of Public Health, was commissioned by the legislature to conduct an examination of Vermont’s health care system. Hsiao, who was directly involved in developing single-payer systems in Taiwan and eight other countries, testified in favor of such a system for Vermont before the legislature on January 19.

“Despite its valiant efforts, Vermont has not been able to provide high-quality, affordable health care for all of its residents. It is fair to say that the system is broken,” Hsiao said in his testimony, expressing doubts that President Obama’s law would solve the state’s long-term problems.

Three Options Offered

Hsiao was tasked with developing three options for reform to present to the legislature in the report, which he coauthored with Jonathan Gruber of the Massachusetts Institute of Technology. He compared a state government-administered and publicly financed single-payer health benefits system, to a state government-administered, public option that “would allow Vermonters to choose between public and private insurance coverage,” and proposed as a third option a “public/private single-payer system.”

Hsiao endorsed this third option, claiming it was designed to provide an “essential” benefits package, which would be administered by an independent board and run by a third party after a competitive bidding process.

“Beyond yielding greater cost savings, we believe Option 3 is most feasible because it is likely to be accepted by the broadest cross-section of Vermont stakeholders,” Hsiao testified, calling the approach “economically responsible and politically palatable.”

Complete Government Control

Yet Hsiao’s plan is not moving forward without criticism. John McClaughry, president of the Vermont-based Ethan Allen Institute, observes several problems with a single-payer system.

“From 1990 to the present, liberal legislators have voted millions of dollars for study and design projects to bring the wonders of single payer health care to the people of Vermont,” said McClaughry. “Under a single payer system, health insurers and premiums become history. The government determines the type and location of medical facilities to ensure that all benefits are equal and available to everybody. The government levies progressive income and payroll taxation to pay for all health care. No one can be allowed to use their own money to purchase health care covered by the single payer plan, because that would introduce another payer and inequality.”

Despite these critiques, Vermont Governor Peter Shumlin (D) is moving forward. He announced plans in February to create a health reform board to make recommendations for the single-payer plan.

Sarah McIntosh, esq. (mcintosh.sarah@gmail.com) is a constitutional scholar writing from Lawrence, Kansas.

 

Study: ObamaCare Significantly Increases Texas Medicaid Spending

Written By: Sarah McIntosh

Published In: Health Care News > April 2011

Publication date: 04/01/2011

Publisher: The Heartland Institute

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Already facing a challenging budget picture, Texas received more bad budgetary news with the release of the Texas Public Policy Foundation’s study Final Notice: Medicaid Crisis, A Forecast of Texas’ Medicaid Expenditures Growth.

The study by Jagadeesh Gokhale, a senior fellow at the Cato Institute, warns President Obama’s Patient Protection and Affordable Care Act (PPACA) will vastly increase the amount of money states have to spend on their Medicaid budgets.

Big Impact on Texas’ Budget

Gokhale’s study forecasts Texas Medicaid expenditures will increase by between $2.5 to 3 billion per year over the next decade if Obama’s law is implemented in its current form, primarily because people who are currently eligible but not enrolled will be forced into the program due to the individual mandate to obtain health insurance.

“The PPACA will increase Texas budget expenditures on Medicaid because the law will induce many more of those previously eligible for Medicaid to enroll into the program,” writes Gokhale. “Unlike those who are made newly eligible for Medicaid under PPACA, the federal government will not fully pay for the Medicaid benefits of new enrollees among such ‘old eligibles’.”

Problem Not Limited to Texas

Gokhale also examined the Medicaid trends in Illinois, New York, and Florida, finding those states are facing similarly dire situations. This is one of the reasons Texas Gov. Rick Perry (R) and other governors have spoken publicly about possibly opting out of the program—something Gokhale does not find fiscally feasible.

“State lawmakers have been considering opting out of Medicaid; but that option is not practical because it would involve the loss of billions of federal dollars that go toward supporting the health care needs of the indigent, elderly, the blind and disabled, those in nursing homes, pregnant women, children, and so on,” Gokhale writes. “State governments do not have the resources to pay all of those costs.”

Limited Cost Control Options

Gokhale finds the domino effect of Obama’s law will likely result in dramatic cuts in other areas outside of health care.

“The federal expansion and takeover of health care through PPACA risks forcing many states into cutting education and other key public services,” warns Gokhale.

Gokhale notes a possible way for states to deal with this problem is to recover income taxes their residents pay that go toward funding federal Medicaid matching grants to the states, or pushing for the federal government to block-grant the Medicaid funds directly to the states. But he notes organizing such a change would require substantial altering of current law and hence may not be feasible.

“Alternatively, states could apply for waiver programs to cover the health care needs of these populations, including capped federal financial support in lieu of their current Medicaid programs,” Gokhale notes.

Silver Lining?

Arlene Wohlgemuth, executive director of the Texas Public Policy Foundation, says although Gokhale’s study indicates dire figures, the cloud has “a silver lining.”

“PPACA forces states to examine sooner rather than later their participation in Medicaid. The federal government is forcing their hand, and the states are looking at their cards,” Wohlgemuth said. “Just as there is a national cry to ‘repeal and replace’ because the PPACA is too misdirected and convoluted to repair, the states are helpless to innovate under the current Medicaid program.”

Wohlgemuth suggests that by burdening the states with this heavy financial cost, Obama and his allies created significant pressure for further reform as states face daunting budget challenges.

“We need true reform of health care. It must be simple, as opposed to hundreds and hundreds of new bureaucrats and huge costs to the states, and it must reconnect the patient with the provider in a financial relationship,” Wohlgemuth said.

“Consumers make value decisions every day, from grocery store purchases to the cars they drive. They are perfectly capable of making decisions about their health care,” she added.

Sarah McIntosh, esq. is a constitutional law scholar writing from Lawrence, Kansas (mcintosh.sarah@gmail.com).

Internet Resources:

Final Notice: Medicaid Crisis, A Forecast of Texas’ Medicaid Expenditures Growth:  http://www.heartland.org/custom/semod_policybot/pdf/29153.pdf

 

States, Citizens Fight ObamaCare Individual Mandate

Written By: Sarah McIntosh

Published In: Health Care News > December 2010

Publication date: 11/08/2010

Publisher: The Heartland Institute

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Since the passage of President Obama’s health care law earlier this year, there has been a backlash across the country from citizens and states in response to the individual mandate to purchase health insurance. Twenty-two states’ attorney generals have joined a lawsuit against the federal government on the issue.

Missouri passed a ballot initiative against the mandate, and Arizona, Colorado, and Oklahoma will all have similar constitutional amendments on the ballot this fall.

According to individuals involved in these legal and ballot responses at the state level, the response from citizens has given them hope the individual mandate will ultimately be rejected by the courts. Failing that, they hope the mandate will prove so politically unpopular Congress will be forced to reconsider it.

Grassroots Campaign in Missouri

Missouri State Senator Jane Cunningham helped lead the effort in favor of Missouri’s health care amendment, which passed by 71 percent of the vote.

“In Missouri, this started with citizens because they were worried and frightened. They began contacting their legislators and forming groups,” Cunningham said. “We at the legislature decided how we could best respond and decided to use the American Legislative Exchange Council’s model bill.”

“When we introduced it, citizen groups networked—they rallied multiple times at the capitol, emailed, and called. They didn’t let off until we responded,” Cunningham said. “They started a grassroots campaign like I’ve never seen before, from the bottom up, designing their own bumper stickers, banners, flyers, and held their own parades.”

“The people,” Cunningham said, “came to the polls resolute.”

Small Businesses Join Fight

A key addition to the legal fight has been the National Federation of Independent Business. Karen Harned, executive director of the NFIB’s small business legal center, said the organization made the decision to join the larger state lawsuit mostly based on timing.

“NFIB decided to join the states in a lawsuit filed on May 15^th,” Harned said. “Currently, there are two leading cases on the Obamacare issue; they are the leading cases due primarily to timing. Virginia decided to file its own case because it has a state statute against the individual mandate; they filed their case before we did. So we decided to join the twenty states.”

Harned says they joined the fight against the mandate in response to member demands from small-business owners.

“Health care has been the number one issue for small business owners since 1986. Small business owners need reforms that decrease costs, and this law just makes matters worse,” Harned said. “Our members have demanded that NFIB take action. Sole proprietors are especially hard-hit by this, but even for small businesses in general there are struggles right now. Our members are upset to have the government tell them how to spend their discretionary money.”

Colorado’s Ballot Initiative

Jon Caldara, president of the Independence Institute, a nonprofit think tank based in Denver, Colorado, has been a key figure in his state’s ballot initiative.

“In the fall we will have a constitutional amendment on the ballot, and we are really thrilled,” said Caldara. “The difference between our amendment and the Missouri Amendment is that ours goes into the Constitution’s bill of rights. It secures the right to health care choice. It says that the state on its own or at the insistence of the federal government cannot force anyone into private insurance and that the state cannot ban direct payment for health insurance.”

Caldara explained why Colorado decided to pursue a constitutional amendment rather than a state statute as Missouri did.

“In Colorado there is no petition difference for a statute rather than a constitutional amendment,” Caldara said. “So for me it was a no-brainer to go for the constitutional amendment. This should be seen as a fundamental constitutional right to health care choice. This could also make Colorado a medical tourism destination in the states because of the cash and pay feature of the amendment.”

‘Fundamentally Unconstitutional’

Harned says the states and many of her members believe the individual mandate violates the U.S. Constitution.

“The individual mandate is fundamentally unconstitutional,” Harned said. “Even the government now sees they have a problem. Congress said they were passing this law under the Commerce Clause powers, as if the failure to buy health insurance is an economic inactivity that affects commerce.”

Harned said Congress’s promises don’t match up with the Obama administration’s legal arguments.

“They, and the president, were adamant that this is not a tax bill. But legally, they believe they have a stronger argument under their taxing power than under the Commerce Clause and even argued under this taxing power in their brief,” Harned said.

Tenth Amendment Key

Harned notes the Tenth Amendment will be a key element for the courts to consider.

“The states argue they are being commandeered by the federal government to provide health care coverage to an unprecedented number of Americans. This isn’t part of the contract they bargained for when they agreed to pay for part of Medicaid. The federal government is trying to use them as a cash cow,” explains Harned. “The states are not agents of the federal government, but this law treats them like they are.”

Harned expects the federal district court decision on their case to come in the spring of 2011, which will likely be appealed to the Eleventh Circuit Court of Appeals, which will decide the matter in 2012. After that, an appeal to the Supreme Court is almost certain.

“It’s clear to Americans that this mandate is unconstitutional,” Harned said. “It’s important for judges to know people think so.”

Sarah McIntosh, esq. (mcintosh.sarah@gmail.com) is a constitutional scholar writing from Lawrence, Kansas.

 

Privacy Rights Under Fire in Minnesota Ruling on Baby DNA

Written By: Sarah McIntosh

Published In: Health Care News > December 2010

Publication date: 10/28/2010

Publisher: The Heartland Institute

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The Minnesota Court of Appeals has affirmed a lower court’s ruling dismissing a lawsuit against the Minnesota Department of Health. The nine parents involved in the suit had claimed the MDH’s collection, retention, and use of baby DNA is unconstitutional and a violation of Minnesota’s Genetic Privacy Act.

DNA Is Government Property

At issue were baby DNA bloodspots collected and retained by the MDH which can then be used for studies and tests, said Twila Brase, president of the Citizens’ Council on Health Care, a nonprofit organization based in St. Paul, Minnesota.

“The Court of Appeals went back to condoning the broad authority of the commissioner to conduct studies and tests; therefore she has the authority to use the material as long as she calls it newborn blood,” Brase said. “It’s as though because she is the commissioner and she has this general authority, the sky is the limit.”

In the unanimous ruling, written by Judge Stephen Muehlberg, three appellate court justices conceded Minnesota’s newborn screening statute “does not directly address” the health department’s authority to conduct research using DNA of newborns. But they ultimately found the commissioner’s general powers to “conduct studies and investigations, collect and analyze health and vital data, and identify and describe health problems” provide sufficient authority to “retain blood specimens after testing to be used for further newborn screening-related research . . . or to otherwise refine the newborn screening program for public health purposes.”

Potential for Abuse Cited

The ruling opens the doors for potential abuse, according to Brase.

“Once the government has the blood, they can do whatever they want with it,” said Brase. “Because of this ruling, there is no genetic privacy at birth—you lose it immediately.”

According to Brase, one good result of the ruling is that it can be interpreted as counting biological material as genetic information.

“This could potentially mean that the ruling would hold that anything outside of non-newborn screening would require consent,” Brase said. “The genetic privacy law would actually cover biological material.”

Monetizing Privacy Invasion

Brase notes the Newborn Screening Saves Lives Act, signed in 2008 by President George W. Bush, has made more money for research and programs in support of the Health and Human Services secretary’s advisory committee on heritable diseases.

“This research money is an undisclosed way for health departments to profit from newborn DNA. But that’s monetizing an invasion of privacy. Health departments like MDH should get out of the newborn screening altogether,” said Brase. “You should own the DNA and test results unless you say someone else could have them.”

Brase says she and her organization intend to push for more legal protections for parents and newborns.

“It is so important that individual ownership of DNA is clarified and underscored in law,” Brase said. “Research doesn’t trump the right of personal ownership of one’s DNA.”

Sarah McIntosh, Esq. (mcintosh.sarah@gmail.com) is a constitutional scholar writing from Lawrence, Kansas.