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?

Alabama Traps More Children in Government Care

Alabama will soon make more children dependent on politics for their health insurance, and perhaps devastate the private insurance market for everyone else in the process.

According to the Birmingham News, "All Kids" will be able to enroll about 14,000 more children starting October 1, thanks to looser eligibility requirements. Right now, the program is limited to families with an income of two times the federal poverty level. It will go up to three times, so the number for a family of four will be $66,156. By contrast, the median household income in the state is under $41,000.

An advocate of increased government dependency is happy: "Jim Carnes, communications director for Alabama Arise, said the expansion takes All Kids to income levels Alabama is not accustomed to serving in public programs [emphasis added], but Carnes said that is not a bad thing."

A state official says the program–you've heard this before, haven't you?–says it's for people who make too much to qualify for Medicaid but too little to purchase insurance on their own.

Alabama gets a significant federal match–"most of the program is funded with federal dollars"–so it's no surprise the state has signed on. It's too bad, though, that the default government route to making insurance affordable is to subsidize it. For as Medicare, Dirigo and other programs demonstrate, subsidies are not financially sustainable and may in fact drive people out of the private market.

California Republican Legislators Hike Taxes: A vote for bigger government, more federal dependency

A budget crisis makes strange bedfellows.  Last week, the California state senate voted 27-8, and the assembly voted unanimously to hike taxes on privately insured Californians in order to grow government by roping more kids into health plans of the government's choice (SCHIP) instead of their families'.

Republican legislators, usually steadfast against tax hikes, wobbled on this one because the 2.35% tax on health insurers' gross revenues will replace a 5.5% tax that will expire in October.

You would have thought that the fact that 59% to 66% of California' suninsured kids are already eligible for SCHIP or Medicaid, but not enrolled (p. 14), might have prompted legislators to push "restart" when they had an opportunity to let the current tax die.

No sirree, California Republicans figured they got a pass by levying a tax just over half as big as the one that's expiring.  Well, the fact is that they are also responsible for a future federal tax hike as well, because President Obama's so-called "stimulus" bill dramatically jacked up federal matching payments to states which increase government dependence for health care.  The match used to be 50%, but now it's gone up to 62%.

That is, for every 38 cents of its own residents' tax dollars it spends on government-controlled access to medical services, California gets to haul down 62 cents from taxpayers in the 49 other states, as a colleague and I anticipated when the president signed the stimulus.

How patriotic!

State Budgeting by Stealth Tax Increases

Stateline.org looks at state health care programs, and finds that states are both expanding and cutting back on health welfare programs–and at the same time, further distorting the market for private insurance.

One big area of expansion is SCHIP, a program whose scope sometimes exceeds its name (State CHILDREN'S Health Insurance Program), and which can extend to families with incomes of $80,000 or more.

Why are states expending scarce dollars? Because of a federal match; they must pay only 30% of the total.

But states are also cutting back on paying for some services (for which states get fewer federal dollars), when federal law allows them to. (This relates to the so-called "optional" services.) It's all about incentives.

Speaking of incentives, what better way to "do good" than to do it a way that the cost doesn't reflect directly on your job? If states expand Medicaid or other programs, legislators must find dollars within the state budget (requiring not spending as much somewhere else), or sell the public on tax rate increases.

But legislators can also increase societal spending on health care by shifting the burden to insurance companies and in turn their customers. As Stateline notes, Ohio has both cut its state government spending AND enacted a slacker mandate that requires insurers to let "children" of up to 29 years old buy insurance on their parents' policies.

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.

Health Ownership & Failing States

Today's Wall Street Journal noted yours truly's U.S. Index of Health Ownerhip in its lead editorial.  Describing the "Albany-Trenton-Sacramento disease" of high-rolling state governments, bloated with tax revenue but in continuous budgetary crises, the editorial fingered bad health policies as a key element of the problem.

New York, New Jersey, and California are all in the tank of IHOP's measurements of individual ownership versus government control over health care.  The editorial quotes IHOP's diagnosis that "New York suffers from government health programs that are out of control, a grossly overregulated private insurance market and almost completely uncompetitive provider markets."

IHOP edition 3 is due to be published later this summer.  I don't want to leak the results, but if you are a betting man, I would not recommend putting any money on New York moving up the rankings.

Politicized Benefit Design

When you're in a government health care plan, you get the services that the politicians decide to give you. Unless, of course, an outside interest group succeeds in a lawsuit.

In four states, SCHIP does not pay for contraceptives. In Montana, Planned Parenthood has filed suit against the ban.

Whatever you think about giving contraceptives to minors, the point here is that benefits have the stuff of political and legal battles. Expect the same to continue, if not increase, with programs such as Medicare/Medicaid for all.

Middle-Class Medicaid in Texas

The Texas Public Policy Foundation on the expansion of SCHIP:

HB 2962, which expands the Children’s Health Insurance Program (CHIP) from 200 percent to 300 percent of the Federal Poverty Level, is on the House Major State calendar tomorrow. Not only will this have a negative effect on the budget, but extending CHIP to families making up to $66,000 per year morphs the program into an expensive entitlement for the middle class. Expanding this program while 170,000 children projected to be eligible for CHIP are still not participating is a wasteful decision. Additionally, HB 2962 creates a buy-in program for families whose net income is between 300 percent and 400 percent of FPL.

Last week, the House Human Services Committee passed HB 1541, expanding eligibility for the children’s Medicaid program from six months to 12. The Legislature should resist efforts to expand this program as it was intended to provide health care to our poorest citizens, and a six-month eligibility period ensures that the services provided are to the truly needy. Increasing the continuous eligibility period will increase the number of Medicaid recipients by more than 250,000 and cost taxpayers almost $300 million in state funds over the next biennium. The 12-month eligibility proposal will be a significant burden at a time when the state needs to restrain spending ahead of a projected budget shortfall in 2011.

The Allure of Free Money

Texas is one of the most fiscally conservative states in the country, right? Well, even most members of the Texas Legislature could not resist the allure of "free" federal money.

The state is spending more on Medicaid than it has the money for. So what did the Legislature do? Increase spending on SCHIP, an add-on to Medicaid.

Michael Quinn Sullivan reports in this YouTube video.

The Real Trojan Horse

New York Times columnist Paul Krugman, writing about the alignment of private sector groups saying they want to cut $2 trillion in health care spending over 10 years, wonders aloud if their offer isn't really a Trojan horse.

A way to look like they support reform while fundamentally undermining reform — by which he means something close to a government-run health care system.

But the real Trojan horse isn't coming from the private sector, but the health care reform advocates. They want a "public plan" modeled on Medicare, presumably with myriad restrictions and price controls.

But because it has become clear that a heavy- handed public plan is a deal breaker for many of the groups that now have a seat at the table — or, at least that's what the groups say — public-plan proponents have begun to soften the public option. Thus, my friend economist Len Nichols has been tossing out a public-plan option he thinks won't be that onerous. And others, including Senator Chuck Schumer, have made similar suggestions.

I can't speak to the motives of these proponents; but any public plan, even a neutered one, could be the vehicle for creating a government-run plan that won't just compete with the private sector, but seek to destroy it. Not at first, perhaps, but eventually. Senator Baucus may hold out for a workable public plan, but the Pete Starks and Henry Waxmans would keep coming back with efforts to undermine any reasonably structured public plan.

Remember that the State Children's Health Insurance Program (SCHIP) was only intended to be a safety net program covering poor children with incomes too high for Medicaid. And it was for years, until Democrats pushed through a massive increase this year. The only thing that kept Congress from pushing the expansion earlier was a Republican-controlled Congress for most of those years — and a Bush administration that would veto it.

That's all gone now. President Obama campaigned on the creation of a public plan, and most Democrats want one. Give it to them, in any form, and expect it to grow into a Medicare-like (or probably Medicaid-like) monster that consumes everything in its path — especially the private sector.