The Three Czars of New Hampshire

Writing from New Hampshire, Charles Arlinghaus writes on the web site of the Josiah Bartlett Center for Public Policy (MS Word document)

“If Washington’s health care fiasco isn’t bad enough, Sen. Maggie Hassan wants to create a new state agency to set and control hospital prices and manage health care. The new Health Services Cost Review Commission is based on the belief that the secret to better, more cost efficient management is to create a new government agency.

A large new bureaucracy that sets its own taxes and dictates prices does nothing to affect the economics of health care. A Health Czar in Washington is a bad idea. Three Health Czars (“cost commissioners”) in Concord isn’t any better.

On the other hand, a state-focused efforts at taking over health care  might limit the damage to only certain states rather than the whole country.

Guaranteed Issue, Community Rating Lead to High Premiums

Reason Magazine takes a look at the dismal track record of state “reform” efforts to date. It cites New York as “exhibit A” for its guaranteed issue and community rating provisions. It says, “In 1994 just under 752,000 individuals were enrolled in individual insurance plans, about 4.7%  of the nonelderly population. This put New York roughly in line with the rest of the U.S. Today that figure has dropped to just 0.2%. By contrast, between 1994 and 2007 the total number of people insured in the individual market across the U.S. rose from 4.5% to 5.5%.”

It adds Washington state as another example.”In 1996 similar reforms in Washington state preceded massive premium spikes in the individual market. Some premiums increased as much as 78% in the first three years of the reforms-10 times the rate of medical inflation.” And it cites a Health Affairs study as saying, “in addition to Washington and New York, the individual insurance markets in Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, and Vermont “deteriorated” after the enactment of guaranteed issue.”

It also notes about Massachusetts that, “Health insurance premiums in the Bay State have risen significantly faster than the national average, according to the Commonwealth Fund, a nonprofit health foundation. At an average of $13,788, the state’s family plans are now the nation’s most expensive.”

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.

More Medicaid, Fewer Services

Governors in various states have expressed concern that a federal expansion of Medicaid, which will achieve the much-heralded goal of covering the uninsured, will leave their budgets exposed. It may also mean fewer doctors for people to actually see.

As our friends in Canada have found, owning a government-issued insurance card doesn’t guarantee treatment.

The Concord (New Hampshire) Monitor has a story on the concerns of that state’s governor, Democrat John Lynch, which revolve around New Hampshire being left with new liabilities. Congress may force states to offer Medicaid to more and more people, but do little-to-little to help states pay for the expanded costs. In other words, we’re looking at a classic unfunded mandate.

Lisabritt Solsky, New Hampshire’s deputy Medicaid director, suggests that patients will be hurt:

“Our big fear is that by throwing that many more people into the system, we’ll have to address the (reimbursement) rate structure to keep the system stable. We need to keep health care providers interested in serving these people. And if the rates don’t cover their costs, it’s harder to keep them interested.”

And if providers aren’t interested … you’re going to see longer lines for service. De facto rationing.

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.

Try Freedom for a Change

Kudos to the editors of the New Hampshire Union-Leader, who're able to see through the "false premise" and "nonsense" the Obama administration is relentlessly pushing to drive their oppressive health care agenda.

The free market in American health care is not kaput - nor is it the "status quo" – as the statist power-centralizers would have it. Market innovation and ingenuity has for decades been suppressed by government. Real reform, says the Union-Leader, starts by rolling back the powers of politicians and bureaucrats, not expanding them.

There are numerous health care reform options that don't involve massive government takeovers of health care. For example, reducing state coverage mandates could reduce premiums by thousands of dollars and allow people the option of buying basic, low-cost coverage. The Federal Trade Commission and the U.S. Department of Justice's Antitrust Division have both found that state certificate of need laws, which require state approval of new medical devices and services, don't keep costs down and can actually increase them.

There are many other reforms that could cut costs without expanding federal control. Obama would prefer that the public not hear about them. The media would do the American people a great service by making sure that they know about all the options, not just the ones the administration is pushing.

New Hampshire To Expand Healthy Kids Program

The New Hampshire Senate recently passed SB 115 which expands membership eligibility for their Healthy Kids Corporation. This law would allow individuals under the age of 26, who cannot be included on their family's insurance, and whose incomes are at or below 400% of the federal poverty line, to purchase health insurance from the Health Kids Corporation.

Currently, New Hampshire law limits those joining the program to those under the age of 18. This represents an attempt to decrease the number of uninsured in the state.

A better solution would be to decrease the costs of individual health insurance by decreasing state mandates for coverage. Individuals should be encouraged to join the private market. If the state still wants to provide subsidies, better they go to a private plan than a state-run plan.

This represents just another attempt by state government to expand the Medicaid net.

Judge on Feds’ New State-Friendly Medi-Pot Policy: Can I Get That in Writing?

A California federal judge has requested that U.S. Attorney General Eric Holder’s justice department explain, on paper and in black and white, just precisely what in blazes the administration has in mind regarding its much buzzed-about shift in medical marijuana policies.

Pot law reform advocates have been flying high on rumors that Obama’s kinder, gentler Drug Enforcement Administration – in a 180-degree reversal of Bush- and Clinton-era policies – is set to turn over a new leaf and start respecting the democratic wishes of state voters regarding cannabis laws.

However, the sentencing judge in a high-profile California medical marijuana case seems a tad skeptical – or maybe just a little confused. U.S. District Judge George H. Wu wants to know if Obama’s federal law enforcement braintrust has actually devised a legitimate, coherent new states’ rights-respecting prosecutorial policy.

Wu on Monday postponed sentencing the owner of a Morro Bay medical marijuana dispensary convicted of five federal counts, including distributing drugs.

(Wu) said he will hold off sentencing Charles Lynch, 47, until prosecutors provide a written clarification from the Justice Department on the Obama administration’s newly revised position that federal agents target marijuana distributors only if they violate state and federal law.

Judge Wu may suspect the administration is just blowing some capricious smoke into the air, hoping it’ll narcotize the medical marijuana activist constituency, most of whom no doubt Voted for Change, without actually doing or indeed changing anything of substance (or in writing) at all.

But if indeed there’s been a true and documentable shift in federal medical marijuana policy, then there are likely a whole lot of federal prosecutors around the country who aren’t even close to being on the same page as the newly minted higher-ups on the issue. For example, Thom Mrozek, a spokesman for the U.S. attorney in Los Angeles, was quoted just Monday after Wu issued his request saying that the Lynch case “involves a violation of federal law, and that’s really all that matters.”

Lynch’s attorney, Reuven Cohen, reminded reporters on Monday that throughout his client’s trial, the federal government did all it could to keep any discussion whatsoever of medical marijuana’s legality under California law entirely out of jury earshot.

“At least the statements that we have from Attorney General Holder thus far indicate that somehow state law is now relevant to these prosecutions,” said Cohen. “Well, the government, as everyone here who covered the trial knows, argued for days to keep state law out of it. And the reason they did that is that Charlie was in complete compliance with state law.”

New Hampshire State Employees to Pay More

If the New Hampshire Legislature approves, state government employees will have to start paying for their health insurance benefits in retirement.

Don't feel too badly for them; the $200 a month for a retiree and spouse that would be levied is still a bargain. After all, many private sector employees don't get any post-retirement health benefits.

8 States, 8 Plans for Small Business

Money magazine recently published a quick review of last year's health policy initiatives in 8 states. As you might expect, there's good, bad, and ugly.

Alabama now offers a refundable tax credit for both small businesses and their employees.

Maryland started an insurance subsidy for small businesses that purchase insurance policies for their employees. It's means-tested.

Montana says smoke, it's for your health– or at least for a health care policy subsidized by cigarette taxes. Again, the emphasis is on bolstering the employment-based system of selling insurance.

In Connecticut, the Legislature passed (in 2008) a measure to let small business owners and employees buy into the plan for state employees. The governor vetoed it.

New Hampshire more or less enacted price controls on policies. Wonder how long it will be before companies start leaving the state?

Oklahoma can now use Medicaid funds to subsidize businesses that have up to 250 employees.

In February of 2008, South Carolina amended its law on pooling by small businesses. It hasn't caught on. In fact, the president of the NFIB chapter says it is not aware of any employers that have taken advantage of the law.

The governor of Wisconsin tried to outlaw the purchase of insurance outside of a state-run exchange. He failed. The president of the state's NFIB chapter said "I don't know if BadgerChoice would fail, but I think a lot businesses would probably fail under it."