Despite Cost Overruns, Medicaid Offers Insufficient Services

North Carolina has some budgetary problems with its Medicaid program. Joe Coletti, who occasionally blogs here, has some thoughts at Carolina Journal. The problem with Medicaid, he concludes is that there are cost overruns but people who actually needcare don’t get it.  ”That’s the crux of Medicaid,” he concludes.

North Carolina is Deep in Health Care Debt

The financial troubles of state governments extends in many cases to their health plans. The John Locke Foundation, which focuses on North Carolina, recently conducted a radio interview with Rep. Dale Folwell, R-Forsyth, about the $28 billion in unfunded liabilities in the plan that serves state employees and retirees. The debt is 20% bigger than the operating budget for state government for an entire year.

Health Care Protection Act in North Carolina

Joe Coletti, a fiscal policy analyst with the John Locke Foundation, and contributor to State House Call, recently talked with Carolina Journal Radio about the Health Care Protection Act, which was passed by the North Carolina General Assembly.

You can watch a video of the short interview here.

Re: COBRA’s bite

John,

Thanks for highlighting John Hood’s column this morning. When people who purchase insurance on their own become unemployed, they are three times as likely to remain insured than those who were insured through their employers, even with COBRA. But COBRA is expensive and entails a big jump in premiums, so just 19 percent of unemployed people had purchased coverage that way. Federal subsidies doubled the percentage of unemployed taking up the continuation of coverage benefit as they cut the cost to individuals by 65 percent. As noted, COBRA is a bad idea, with or without subsidies.

Recent research goes further still, and questions the value of group insurance. The authors find that benefits from individually-based insurance more than offset any cost savings from getting insurance in a group plan.

Individual policies provide more choice, more security, and cost less for the unemployed without raising cost to taxpayers. Why do Republicans and Democrats alike want to build on the current employer-based system?

cross posted at Locker Room

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.

It pays to pay for care

Before Canadians could legally pay for private medical care, they were stuck on waiting lists until their condition became dire. Americans on Medicare, in contrast, used their income to pay for specialist visits when they felt a need.

That is not the conclusion of a paper in the January 2010 International Journal of Health Services, a publication more driven by political beliefs than by facts, or of a prominent progressive in North Carolina, but it is a logical conclusion from the findings.

The study used data from a 2002-2003 health survey. Canada’s Supreme Court did not strike down provincial government-run health insurance monopolies until 2005. So Canadians age 65 and older had to go on a waiting list instead of seeing a specialist. As Sally Pipes explained, her mother died in Canada because it took too long to get the care she needed for her colon cancer.

That is why North Carolina should follow the lead of Arizona and protect our freedom of health care choice.

Crossposted at johnlocke.org

Heath Fund for NC Employees has $28.6 Billion Gap

The State of North Carolina, like many units of government, pays health insurance benefits for its retired workers. But that promise could be weighing greatly on the state’s residents in years to come. That’s because “the state’s medical benefits for retirees have about a $28.6 billion hole in funding and need an annual contribution of about $2.7 billion to make up the difference.” To put that in perspective, that’s 13% of the state’s general fund–just to pay for service long since rendered.

As Sen. John Edward noted, there really are two Americas.

We need more ORs, we have too many, we need more

The one good thing about North Carolina’s efforts to control medical capital investment is that they don’t create five-year plans. In 2008, regulators thought Wake County (Raleigh and Cary, NC) needed four operating rooms (ORs). By the time they granted approval to a hospital and orthopedic center in 2009, state regulators said the county had too many ORs. For 2010, they now say Wake County needs three more ORs, plus another two for somewhere in the Wake-Orange-Durham Triangle area.

High-risk insurance pools

When North Carolina passed its high-risk insurance pool, the legislature managed to do it without raising taxes and with the inclusion of high-deductible, HSA-eligible insurance options. The high-risk pool started enrolling people this year. It still makes more sense than regulating how insurance companies price their policies, but should be seen as a transitional product until we have consumer-driven markets. I made these points in an interview with Carolina Journal Radio. You can read the transcript here.

Medicaid expansion’s true cost

Dick Morris estimated what Medicaid expansion would cost North Carolina taxpayers. His guess is wrong in two ways. First, state spending would increase about half that amount (description below). More importantly, taxpayers would bear the cost of both the state and federal spending. According to my quick math, the total cost of Medicaid expansion in North Carolina would be $3.3 billion, with $330 million paid from state taxes and the other $3 billion paid from present and future federal taxes.

This is in addition to the higher federal taxes that will be passed on to consumers, the loss of freedom in choosing health insurance and providers, and the higher cost of the insurance plans that will be available.

For those of you who are interested, I used data from the Kaiser Family Foundation’s statehealthfacts.org website to estimate these costs.

Children are already covered in some cases to 200% of poverty and pregnant women are covered to 185% of poverty. That leaves just childless adults, who are covered to 51% of poverty, and other groups, 65%. The number of people in these two categories is 750,00, including pregnant women. Medicaid spent $6.5 billion on acute care in NC in FY2007, 35% of that was state money – $2.4 billion. Spending on long-term care is another $3 billion, with $1.1 billion from the state. Eighty percent of that $3.5 billion in state money, and nearly all of the LTC spending was for adults leaving about $1.1 billion for acute care of adults.

Roughly 26% of North Carolinians are at 133% of poverty or less, but a quarter of them are children and already covered by Medicaid, so we’re looking at increasing the adult Medicaid population to 2.5 million people, roughly tripling the number of people on the program.

Let’s triple the $1.1 billion for acute care of adults, which gives us $3.3 billion. Ten percent of that is $330 million, or roughly half (55%) of Dick Morris’ estimate of $599 million. But again, the full $3.3 billion has to be paid by taxpayers somehow.