Freedom of Choice in Health Care Act Introduced in Indiana

I’ve gotten word that a version of the Freedom of Choice in Health Care Act was introduced in Indiana. It’s HJR 8. May the movement continue.

Massachusetts, No; Indiana, Yes

Federalism–true federalism, in which states are more than mere administrative offices of the national government–allows Americans to test contrasting ideas for achieving the public good. When it comes to health care, Massachusetts took one path (to great public attention) and Indiana has taken another.

John Hood, president of the John Locke Foundation (a group that focuses on policy in North Carolina), reviews the experience of both states, and finds much to like in Indiana’s approach.

Here’s the key part:

[Massachusetts Governor Mitt] Romney’s plan was based on all the old, odd assumptions of the Left: that trying to force people to buy health plans they may not want is either practical or wise, that spending more money on health care will slow health care inflation, and that 2+2 equal whatever some politician wants it to equal, rather than having an objective reality.

[Indiana Governor Mitch] Daniels’ plan was based on past experience and human nature: that informed consumers can make wise health care decisions, that financial incentives matter and can be harnessed to advance reform, and that only if we stop making medical services appear virtually costless to patients will cost containment become feasible.

Indiana AG to Review Senate Bill

According to the Indiana Business Journal, “Attorney General Greg Zoeller says he’ll look at the constitutionality of parts of the federal health care bill, including the so-called Nebraska compromise that would give Nebraska funding for expanded Medicaid obligations.”

State-level Initiatives Thwarted by Federal Takeover

Gov. Mitch Daniels (R-Ind.) has been lobbying Indiana’s congressional delegation to protect the state’s government and people by voting against the health reform bills in the House and Senate.

Last month, for example, he sent a letter to the state’s House members. In the letter, he said that he feared the House bill would have “truly awful consequences for Indiana.”  Not only would it impose a great fiscal burden on the state, it would mean the elimination of Indiana’s own means of addressing some of the problems of health care, the Healthy Indiana Plan.

Indiana Guv: Bigger Medicaid a “Disaster”

Gov. Mitch Daniels (R-Ind.) is warning that expanding Medicaid, a key part of federal health reform legislation likely to pass, would be “a disaster for taxpayers.”Sen. Evan Bayh, a Democrat, is sympathetic to making Medicaid bigger, on the theory that the uninsured shift costs to everyone else, so putting more people in Medicaid would save money.

Such reasoning ignores the fact that the financial  burden that the uninsured put on other people is overstated, and that Medicaid programs typically end up being subsidized by people with private insurance. In other words, giving more people over to government will cost money, not, claims to the contrary, save it.

Indiana Cuts Medicaid Payments 5%

When you depend on government for your health care, you’re subject to the ups and downs of the economic cycle. The latest example comes from Indiana, where the Medicaid program will impose a 5% cut on payments it makes to hospitals for Medicaid patients.

How will hospitals make up the difference? They might become more efficient, though that’s unlikely. (See the chapter on hospitals in Who Killed Health Care?) They could, as the president of the state’s hospital association suggests, cut back on services they give to Medicaid patients. They could also engage in more cost-shifting to people who have insurance. The hospital association says that Medicaid already pays just half of its costs, so cost-shifting is already underway.

Lessons from the Healthy Indiana Plan

The Healthy Indiana Plan, a relatively new Medicaid expansion program, is now offering experience data that is meaningful in the context of health care reform, a new Milliman report shows.

The first year of this voluntary program revealed certain behavior by uninsured populations as they acquired coverage. Utilization levels for these populations were higher than average, and in many cases early adopters were also among the sickest and most costly, with healthier and less costly individuals joining later. The year of experience reveals various aspects of antiselection and pent-up demand. These results offer lessons for nationwide attempts to cover the uninsured, especially for any attempts that pursue such ends on a voluntary basis. Voluntary programs for covering the uninsured may exhibit similar results. These results have important cost implications.

States With Obama-Style Insurance More Expensive

Most Americans receive the health coverage they cherish through their employer. Chances are, if it's a large employer, it's a self-funded plan, and (as with Medicare) the insurance company is merely administering the program.

It's only smaller employers and people seeking policies in the individual market who actually buy insurance from carriers.

The individual market is where people face the most choices and have the most choice — except in those states with Obama-style regulations. People are spending their own money and so must confront directly the value of more insurance protection versus other uses of their cash. Not surprisingly, they often opt for less generous coverage with less onerous premiums.

To discover this world of choice, just go to ehealthinsurance.org. Pop in your state, age and gender, and then ponder a myriad of choices to secure protection from catastrophic health expenses, the proper function of insurance.

A 55-year-old man in Allentown, Pa., can choose from 99 plans starting as low as $141 a month for hospital coverage. A zero-deductible HMO plan costs $418 a month. Or he can pick a more flexible PPO, with a higher deductible and pay less monthly out-of-pocket for the premium.

Young people, "the invincibles," often skip insurance, because they have few assets to protect and little fear of getting sick. The congressional Democrats' solution is a tax increase by another name: Force employers to keep paying for them on their parents' expensive plans until age 26.

Yet the market has responded with products targeted at the needs of the young, such as Wellpoint's Tonik, which offers excellent protection, prescription drugs and preventive care for less than $100 a month for the under-30 set.

So if 50-somethings can get a plan at less than $200 a month and youngsters can sign up for less than $100 a month, where's the problem? Why, it's in New York and New Jersey — precisely the states that have adopted Obama-style reform — restricting insurers from charging rates based on age and preventing them from saying no due to poor health.

Change the zip code from Pennsylvania to neighboring New Jersey, and choice plummets even as the cost per plan skyrockets. In New York, our 55-year-old has only 12 plans to choose from.

The reason is simple: When people can buy fire insurance after their houses are burning, only those with a fire in the attic apply for insurance. Soon, only those who expect a blaze can afford the high premiums.

Massachusetts enacted such a system in April 2006. A CEO of a major health network reports exactly this problem: Despite the state mandate that everyone buy and keep insurance, his company is experiencing a drastic increase in people who purchase new coverage, run up big bills that are fully covered and then drop the plan.

People are simply gaming the system. Since they can acquire insurance any time, regardless of health, why pay the premium in times of good health?

This is the future of ObamaCare executed by a liberal Congress whose leaders long for a government-dominated system.

The current health-care environment offers all of the components that are touted as true reform — health co-operatives, health-insurance clearinghouses and tax subsidies for low-income Americans that ensure access to health care. But it doesn't give Washington control of reimbursement rates or health plan design, or the power to force people into insurance plans.

Healthy Indiana a “Great Resource”: Modeled “in the spirit” of high-deductible, HSA insurance

One good thing about federalism is that we can learn from experimentation from 50 different states, instead of trying to get everything right on the national scale. One such experiment is Healthy Indiana (official web site), which Health Affairs says is "the first Medicaid expansion in the nation to be modeled in the spirit of a high deductible health plan (HDHP)/ health savings account (HSA)."

HIP is open to adults ages 19-64 who have been uninsured for at least six months and who aren't eligible for employer-sponsored health insurance. It's limited to people who have a household income of 200% of the federal poverty level or less ($44,000 for a family of four; the median household income in the state is $47,000). There is no asset test. One financial adviser calls it a "great resource for lower income families."

It gives each person $500 each year worth of preventative services. Anything above that must be paid out of an HSA-like account called a POWER account, to which the state funds the first $1,100. It has an annual benefit limit of $300,000 and a lifetime cap of $1 million, so it's generous but not unlimited.

HIP pays for the following: "physician services, prescriptions, diagnostic exams, home health services, outpatient hospital, inpatient hospital, hospice, preventive services, family planning, and case and disease management." It does not cover vision, dental, or maternity services. Mental health coverage is generous (at parity?), since it "is similar to coverage for physical health, and includes substance abuse treatment, inpatient, outpatient, and prescription drugs."

People enrolled in the plan pay into the POWER account based on a sliding scale so that at most, a person will pay 5% of his or her income for HIP.

HIP is in addition to other state programs such as Medicaid and Hoosier Healthwise.

People who use HIP choose between two insurance companies selected by the state. If you apply, the application asks a number of questions about your health, but you won't be denied coverage based on health. On the other hand, if you have cancer, AIDS/HIV or a few other conditions, you may be placed in the Enhanced Services Plan (PDF), which includes case and disease management–and not pay any more in premiums.

HIP is underwritten by a cigarette tax, with all the attendant benefits and weaknesses.

Gov. Mitch Daniels is concerned, however, that a federal expansion of Medicaid would threaten HIP.

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.