Health Care Solutions Still Depend on State Efforts

A month ago, federal health care legislation seemed all but certain to pass. This legislation appeared to obviate the need for many state-based health care initiatives, especially efforts that dealt with Medicaid and insurance markets. In addition, Minnesota’s general assistance medical care (GAMC) program seemed to need only a temporary fix to bridge the gap between now and when new federal programs kicked in. However, as everyone knows, political winds took a dramatic shift in January. The election of Scott Brown (R-Massachusetts) to the U.S. Senate eliminated the Democrats’ filibuster-proof majority, which has effectively required Congress to step back and carefully re-examine their entire plan to transform America’s health care system.

The lesson here is that Minnesota cannot rely on the federal government to take responsibility for our health care system. Therefore, Minnesota policymakers should continue efforts to make health care more accessible and affordable through Medicaid and insurance market reforms. Also, initiatives to fix GAMC need to start taking a longer view, in terms of both the program and the state’s budget mess (PDF).

The Age Wave is Hitting

When I started studying the long-term care financing problem 25 years ago and conducted the Health Care Financing Administration and Inspector General studies here (PDF) and here (PDF), my message was this:

“If we don’t do something to divert most Americans away from Medicaid-financed LTC and toward private insurance, we’ll face a fiscal crisis of epic proportions in 25 years when the Age Wave hits.”

My message today is simpler: It’s Happening.

Most state and federal officials haven’t figured it out yet, but they are undergoing a sea change in public sentiment and policy that will swamp the old ways of doing things and force government to pull back the benefits that have crowded out the long-term care insurance market.

Here are some items in the news that show Medicaid and Medicare must retrench leaving a huge vacuum for personal responsibility and private LTC insurance to fill.

• Medicaid rolls swell by 3.3 million nationwide, Columbus Dispatch
• States consider Medicaid cuts as use grows, New York Times
• States’ pension plan funds fell $1 trillion short in 2008, USA Today

I’ve always said targeting Medicaid to people truly in need is a good thing because it enables government to provide better services to fewer people and it brings more private financing into the service delivery system which makes care access and choice better for everyone.

Where Will the Money Come From?

Governor Martin O’Malley of Maryland has proposed a budget that relies on nonexistent federal Medicaid funds to balance it. This is bad budgeting, certainly, but it’s also the result of the policymakers’ failures to reform Maryland Medicaid, as I write in a recent op-ed:

Instead of looking for ways to control Medicaid’s growth, the governor and legislators expanded the program in 2007.

While other states, such as Florida and Georgia, were restructuring their Medicaid programs to contain costs, Maryland policymakers preferred to ignore the problems in the system.

Without Medicaid reform, Maryland will continue experiencing budget difficulties, especially during recessions. The refusal of O’Malley and the General Assembly to address Medicaid’s structural problems has resulted in the budget trickery we see this year. The governor rightly deserves condemnation for his reliance on nonexistent federal funds, but state policymakers deserve even more condemnation for their continual refusal to fix Medicaid’s spending problems.

If You Like Fraud, You’ll Like Medicaid

The Commonwealth Foundation reports that Medicaid fraud may cost Pennsylvania taxpayers up to $320 million a year.

And to think that expanding Medicaid is a centerpiece of health “reform” today.

In Florida, Medicaid Change May Wither

When he was governor of Florida, Jeb Bush pushed through some sweeping changes of Medicaid, a program that needs some reform.

The changes, which were limited by the legislature to just a few counties, have never gained much support. The experiment, in fact, may end next year, reports the Miami Herald.

Cost to North Carolina: $400 Million per Year

Last fall, this site helped publicize a number of research reports showing that ObamaCare would increase budgetary pressure on state government budgets, and in turn, state taxpayers.

Some people may have dismissed those reports, since they were published by various pro-market state think tanks, and authored by a principal with an econometrics firm owned by Arthur Laffer.

But it’s  not just free-market fans and supply siders who have recognized the economic costs of putting government into the health care business. The North Carolina Department of Health and Human Services has reported that a requirement to allow more people in $400 million per year.

Circumventing Constitutional Requirements

President Obama proposes that  the federal government send another $25 billion to states for their Medicaid programs. John Hood says this is “a continuing assault on constitutional government.” Thanks to the way Medicaid is financed–part from state budgets, partly from the federal budget, “Washington [has] used its borrowing authority to assist states in circumventing their constitutional requirements to enact balanced budgets.”

Doctor Shortages and Socialized Medicine

Writing for the Michigan State University Capital News Service, Chenqi Guo reports the following:

Several thousand physicians have left the state after their residency programs or during their practices, according to Gregory Forzley, board chair of the Michigan State Medical Society (MSMS). The situation could be worse since an 8 percent cut in Medicaid and Medicare reimbursement rates was approved on Sept. 30, 2009. The total number of physicians licensed in Michigan is 42,960 and about 27 percent of them work outside Michigan, according to the state’s 2009 physician licensure report.

One of the realities driving the push for a government takeover of the American health care market is the unsustainability of current government health care programs, including Medicaid, which provides coverage for low-income persons. (In Michigan, spending on this and related health programs for the poor has skyrocketed from $8.2 billion in 2000 to nearly $13 billion this year.)

Medicaid is a good example of how “coverage” does not equal “care.” In addition to a declining number of doctors, the number of those who report that they accept Medicaid patients is also down, according to the annual survey cited above, from 89 percent in 2006 to 85 percent in the 2009 report. And that was before the last year’s compensation cuts kicked in. Also, many of these doctors report that their practice is “full” or “nearly full,” and the number of Medicaid patients they actually accept is not reported, so challenges for a person seeking care under this government program (even though he or she has “coverage”) are greater than even these figures suggest.

Medicare (the government health program for the elderly) also pays below-market compensation rates to providers, but not as low as Medicaid. The government health care takeover pending in Congress would essentially convert the entire system into a version of Medicare/Medicaid, subject to all the same perverse incentives and dysfunctions.

Single-payer fans always seem to ignore what happens when the forgotten man of socialized medicine – the doctor – just “shrugs” and walks off the job.

(Last fall the Mackinac Center for Public Policy documented the painful consequences suffered by some individuals currently living under such system.)

Medicare & Medicaid Melt Down in Michigan

Another day, another report in the local newspaper about the shortage of doctors, driven by the policies and pay under which government programs expect physicians to labor.

The latest is from the South Bend Tribune, which reports that several thousand physicians have stopped practicing in the Michigan. The Michigan State Medical Society assigns primary blame to a recent 8 percent cut in Medicare and Medicaid fees.

These government programs are nothing short of miraculous: Per capita spending on both Medicare and Medicaid have increased one third more than private health spending, from 1970 through 2008. Nevertheless, their dependents are rapidly losing access to medical services, because reimbursements are too low. Only government could have a track record like that, and keep proposing their expansion.

Instead of fixing these broken programs, the health “reform” proposes to decimate Medicare Advantage, a program which reduces Medicare’s hidden tax on private plans, and provides better care to beneficiaries than the traditional Medicare monopoly.

If the government succeeds, the flow of patients escaping government-rationed care across the Ambassador Bridge between Windsor (Ontario) and Detroit might well reverse itself.

Then, Assume a Miracle

There’s a New Yorker-style cartoon in which two scientists or mathematicians are talking in front of a blackboard. The blackboard is covered with complex formulas, but in the  middle of it is a cloud, in which we read the words, “a miracle occurs here.”

I thought of that cartoon when I read this article about the Maryland budget. It quotes Marc Kilmer, a policy analyst who sometimes writes for this site. One newspaper says, “Gov. Martin O’Malley’s inclusion of $389 million in federal aid for Medicaid in his $13.2 billion budget represents a bet that Congress is again going to bridge a growing cost that has the potential to cripple states struggling to emerge from the recession.” Last year Congress came through with $775 in “stimulus” money.

O’Malley’s budget counts on there being a Son of Stimulus to bring in more money. As Kilmer points out, however, the governor should have taken some reforms last year to save money. Now any problem the state faces will be worse.

I’m afraid that there many states in this situation.