Arkansas Fails to Calculate Long-term Liabilities, Verify Income

How much will it cost you to expand that government health program? The problem is that sometimes we have no idea what the long-term implications of  a government program are.

One such program is ARKids, which is Arkansas’ version of SCHIP, which, roughly, is Medicaid for children. Writing about the program, the Arkansas Policy Foundation says “The state of Arkansas has never disclosed the true cost of the program to taxpayers by calculating the long-term liabilities under various eligibility scenarios using the mechanism of an independent audit.”

That sounds like pretty foolish planning.

On a related note, the Robert Woods Johnson Foundation, a fan of government health programs, praised ARKids for encouraging fraud. OK, they didn’t put it that way, but it did say the state increased enrollment by “Switching to self-declaration of families’ income (from verification of income).”

No calculation of liabilities? No verification of income?

The Rich Get Richer: Senate’s Medicaid Proposal Gives Bigger Bailout to Wealthier States

People were rightly upset when they learned about the “Cornhusker Kickback,” the deal whereby Sen. Ben Nelson of Nebraska sold his vote in favor of the Senate’s health bill in exchange for his state never having to pay for any of the Medicaid expansion in the bill.

However, the biggest problem with the Medicaid expansion in the Senate health bill is not the “Cornhusker Kickback,” but that it leverages an already flawed formula to determine federal payments to state Medicaid programs. The Senate bill would motivate states to invest more resources in recruiting higher-income residents into Medicaid, rather than traditionally eligible beneficiaries, including the blind and disabled. The Senate bill also gives richer states a bigger Medicaid bailout than lower income ones. New Hampshire, Maryland, and Connecticut get the biggest handouts, while Mississippi, West Virginia, and Arkansas are short-changed, according to my just published analysis.

The Federal Medical Assistance Percentage (FMAP) is the federal financing formula that encourages each state to spend its own taxpayers’ money irresponsibly in order to maximize its take from other states. For example, California’s FMAP was traditionally the 50 percent minimum: For every dollar California spent, the U.S. Treasury would kick in one dollar. However, the FMAP is supposed to give more federal dollars to states with more poor people. So, Mississippi has had the highest FMAP, 75.67 percent: For every dollar Mississippi spent on Medicare, the U.S. Treasury would kick in $3.11.

The Senate bill proposes a much higher FMAP, averaging 90% nationwide, in 2019. However, the higher FMAP would only apply to the relatively higher-income, able-bodied, newly eligible, beneficiaries. People eligible under the current law will still draw the previous FMAP. States with FMAPs of 50 percent would see them increased to 82.3 percent for the newly eligible beneficiaries. Imagine yourself a county public-health bureaucrat who would attract one federal dollar for every dollar spent on a blind or disabled Medicaid beneficiary, or $4.65 for every dollar spent on an able-bodied young man. Obviously, you would invest your energy in recruiting the able-bodied youth.

Furthermore, the expanded FMAP gives more federal fiscal leverage to rich states: Each thousand-dollar increase in money income per capita is associated with a one-percent increase in the FMAP under the Senate bill, and this statistically significant regression explains over one-third of the variance in the change in FMAP.

For example, New Hampshire’s money income is $68,175 per capita, which is $16,942 greater than the national average of $51,233. Its FMAP would increase from 50 percent to 82.3 percent, an increase of 65 percent. This is 18 percent greater than it would have been if higher per capita incomes did not explain the Senate’s “generosity.” On the other hand, Mississippi’s FMAP increases by only 20 percent: From the current 74.73 percent to 95 percent. This increase is 15 percent less than it would have been if the state’s low income did not explain its poor outcome in the Senate’s FMAP allocation.

Instead of leveraging the FMAP, Medicaid reform should jettison it entirely, in favor of easily understood block grants.

An Unremarkable Headline: “Health care will be issue through election”

Ya think? The article is about Sen. Blanche Lincoln (D-Ark.), who says that residents of her state will like the health care “reform” that emerges from Congress will once they learn all about it.

Getting Insurance from Arkansas, or Missouri, or …

Duke University professor Don Taylor does not think insurance companies would be willing to sell insurance across state lines. But he admits large interstate employers already offer their workers insurance across state lines when they self-insure against health risks. Taylor suggests that insurance companies, who make their money on calculating risk, cannot figure out how to do for paying customers what companies in myriad other industries already do for their own workers.

He cites the higher Medicare payments in McAllen, Texas, compared to El Paso as an example of how costs can vary based on how individuals receive health care. But again he undermines his own argument by recognizing that McAllen and El Paso are in the same state. If the insurers in Texas can figure out how to make a living selling policies to people in such varied cities within a state, surely at least some of them can figure out how to do that for people in different states. His example utterly undermines his contention that “variation in how care is practiced is the main reason a premium quoted in one state won’t hold in another.”

Insurance regulations, which Taylor dismisses because they do not explain the Medicare cost differential in Texas, raise the cost of insurance, not care. These regulations are indeed a significant reason insurance in North Carolina is less expensive than in the Northeast but fifty percent more expensive than a similar policy purchased in Missouri.

Even if Taylor were correct in stating that variations in the practice of medicine were the key, insurance companies still have another tool at their disposal. They build networks of doctors who are willing to take negotiated payment rates for their services. Every doctor in North Carolina would likely be out-of-network and so leave little additional downside for an insurer.

So why not give it a try? The worst outcome, if Taylor is right, is that it does not help as much as expected. The best outcome is getting insurance for as many as 15 million people who are currently uninsured at no additional cost to the other 285 million Americans. Seems to fit right in with the Hippocratic oath, unlike the Pelosi overhaul.

U.S. Index of Health Ownership 2nd Edition Is Here

Pacific Research Institute has published the 2nd edition of the U.S. Index of Health Ownership, the only ranking of health care in the states that uses criteria of individual choice.

Americans lack the basic freedom to make their own health care decisions. The Index measures the degree to which individuals, be they patients, health professionals, entrepreneurs, or taxpayers, “own” the health care in their states.

The lack of health ownership is a real problem. Almost half of the country’s health care spending is in the hands of the government, instead of patients themselves. The other half is governed by regulations inflicted upon doctors, health plans and patients.

The Index uses 24 variables to quantify how state laws and regulations affect the liberty of citizens involved in state government health plans (primarily Medicaid), the private health-insurance market, and the provision of medical services. It also assesses the effect of medical tort on people’s freedom to engage health services.

Alabama, Montana, Nebraska, North Dakota, and New Hampshire finished in the top five, as the states that allow their citizens the highest degree of health ownership. Alabama leads the pack primarily because of a lightly regulated private insurance market, and good control of state government programs. Also, the state performs well on medical tort indicators. Alabama’s regulatory environment for providers favors competition, and government health programs run more effectively than in most states.

New York, Massachusetts, Rhode Island, Vermont, and North Carolina rounded out the bottom five, as the states in which the government has taken the most undue control of health care from its citizens. This is the second year that New York was in last place. The state suffers from government health-care programs that are out of control, a grossly overregulated private-insurance market, and almost completely uncompetitive provider markets.

A full listing of all 50 states and their rankings is contained in the Index.

The Index will give concerned citizens a good basis to demand reforms from their state politicians that will put American families in charge of American health care, instead of government and special interests.

Autism Mandates Advancing in Ohio, Arkansas

A House committee in Ohio earlier this week passed legislation mandating that insurance companies cover autism treatment. While the legislation has a provision that small businesses can opt out if aggregated insurance costs increase by more than 1% because of this mandate, other provisions designed to reduce the bill's burden on health insurance purchasers were rejected.

As the Gongwer News Service($) reports, the committee rejected amendments to exempt companies that have fewer than 50 employees, limit per-person outlays to $36,000, require providers to be certified to provide quality care, and tie rates to Medicaid prices. The committee also rejected an effort to cover autism services through the state's Medicaid program.

The rejection of Medicaid coverage is especially interesting. If these legislators were so interested in helping autistic children, they why don't they use government funds to do so? Why, instead, do they insist on passing the burden onto people with health insurance? I suspect it is because they know how expensive this treatment is and do not want to make the politically unpopular decision to either raise taxes or trim other government programs to pay for it. Instead, they want to force insurance companies to raise their rates to pay for it. Politicians get the credit; insurance companies get the blame — it's a pretty good system if you are a politician.

The Arkansas Senate also approved an autism mandate by unanimous vote this week. Unlike the Ohio mandate, there is a $50,000 per person annual cap on services in this legislation.

Hand Over the Needle

On Friday, legislators in Arkansas passed a bill allowing physicians and podiatrists to delegate tasks to unlicensed employees.  In a narrow vote the House approved Senate Bill 239, which requires the Arkansas State Medical Board and the Arkansas Board of Podiatric Medicine to adopt rules allowing the delegation of some medical procedures to unlicensed workers. 

It now awaits the governor’s signature.

One of the procedures authorized by the bill is administering drugs (as long as the drugs don’t require special skills or judgment and are given in the office of the physician who delegated the procedure). 

The Arkansas Nurses Association opposes the bill and in particular dislikes the part about injections being allowed.  The nurses claim that it would be unsafe for the injections to be delegated to unlicensed employees. 

No doubt these nurses are worried they might lose out on some work if unlicensed individuals were allowed to administer injections.  But as Rep Shelby, an ER doctor who carried the bill said, “Unlicensed does not mean untrained.”

Hopefully the governor will sign this bill and other states will take notice.  It’s time to stop allowing government officials to determine who can give a shot and let the doctor decide.  The liberalizing of laws like this can help contribute to cheaper health care by freeing up the doctor’s time to focus on acute situations. 

So sign the bill and hand over the needle. 

Make 85% of Median Household Income? There’s a Place for You

Arkansas took another step towards womb-to-tomb coverage. The Arkansas House voted to raise the income limit for families enrolling their children in the state's ARKids First Medicaid program.

If the measure is approved by the Senate and governor, families earning up to 250% of federal poverty level would qualify. In other words, you could be within shouting distance of the household median income and still qualify for a government handout. Talk about the expansion of the welfare state.

I understand the desire to help families with their medical bills. But instead of inviting more people to come into a government program (and one dependent on other people smoking!), lawmakers ought to look at ways to make private insurance and medical care less expensive.

In another health care measure, the Senate voted to play the Medicaid matching funds game, levying a tax on hospitals (but only privately owned ones). The idea is that the tax will result in more money coming into Arkansas from New York, California, Texas, and other states through federal matching funds.

No IVF Mandate, Says Arkansas Legislator

Only 13 states require that all insurance policies sold in the state cover in-vitro fertilization. Arkansas is one of them. If Rep. Dan Greenberg, R-Little Rock, gets his way, there will be 12 states with the mandate next year, as he will introduce legislation to repeal the requirement.

Mandated benefits are not the only factor driving up the cost of insurance, but addressing them is a start.

Costs for Teacher Insurance Up in Arkansas

Imagine this: teachers actually get less of their insurance paid for by the taxpayer than other government employees.

Here's the situation in Arkansas:

"Statistics provided to the state show teachers cover about 56 percent of rate costs for their health insurance, while state employees pay in only about a third of the overall cost. But estimates show that bringing teachers into the same plans as state employees would cost the state an additional $229 million for the next two-year budget. In the 2013-2015 budget, estimates put the cost at $395 million."

Compensation comes in a combination of cash and benefits, including health insurance. In a normal business, an increase in money for insurance premiums offsets increased money for salaries. But in the case of public sector employees, it's probably more like "more for government employees, less for taxpayers."