Utah Legislature Recognizes “Authentic Charity Care”

One way to promote the accessibility of health care is to promote charity care. If you’re a health care professional, donate some of your time to the needy. If you’re not, donate some time behind the scenes at a clinic that serves the poor, or give money. Critics will point out many problems with charity care, but it’s better than nothing, and is morally superior to tanking everyone else’s health care choices through heavy-handed regulation.

For about five years now the Sutherland Institute has been advocating something it calls “authentic charity care” for Utah. The institute’s hard work is paying off; most recently, the Utah Legislature passed a resolution endorsing and commending the concept. Here’s an announcement from the institute:

On Friday, Feb. 26, Authentic Charity Health Care Joint Resolution – HJR 27was passed out favorably by the Senate Health and Human Services Committee on a unanimous vote of 5-0-1 (the one being absent from the meeting at the time of the vote).  On Thursday, March 4, it was passed unanimously by the Senate on a vote of 24-0-5.  The bill will be enrolled and sent to the Governor for signature.  Sutherland has supported this bill from its inception.

(Click the title of this post to find related posts on the subject.)

Utah’s Insurance Exchange Runs into Trouble

As the federal government continues to discuss reform — and especially the use of insurance exchanges — the lessons in Utah may be instructive. Utah opened its exchange for a limited period in August of 2009 in order to test the system, and to allow the legislature to make any necessary changes. It turns out the state found some major problems.

Insurers participating in the exchange predicted the experience of the new pool members would be worse than the general population (even with the proposed risk adjuster inside the pool), and as a result the rates in the exchange were 30% higher than those out of the exchange. The legislature’s approach to fix the exchange — contained in HB 294 — is to limit the ability of insurers to price exchange risks appropriately (requiring the same prices inside and outside of the exchange) and to require all insurers (including those insurers who choose not to participate in the exchange) to pay for the risk adjuster in the exchange.

Some conservatives are now objecting to this proposal because it is a redistribution of income, but that isn’t the real problem. The real problem may be that it will be very difficult to make insurance exchanges work with the adverse selection problem.

Freedom of Health Care Act Passes Utah House

The Utah House has laid down a marker to prevent any state-run health system from forcing Utah residents from being coerced into a state-run health care system. It also represents a challenge to any mandate by the federal government.

According to the Salt Lake Tribune, “Should it pass the Senate and gain Gov. Gary Herbert’s signature, it would require both the Legislature and the governor to sign off before state agencies start participating in any health care programs enacted by Congress.”

The governor has so far failed to endorse the legislation.

Opponents of the measure said that it would threaten the state’s ability to receive federal Medicaid money.  That’s as a good a time as any to point you to a commentary written for the Texas Public Policy Foundation by Talmadge Heflin. Heflin points out that “Free” money isn’t free, but negatively affects a state’s economy and tax receipts.

Utah Governor: We Have our Own Solutions, Thank You

Perhaps the Republicans should have let Gov. Gary R. Herbert of Utah give their response to the State of the Union address. At least he’s got some right ideas on health care. In his state of the state address, he had the following to say on the topic:

Rather than simply talk – or, more accurately, sometimes fight – about health care reform, Utah has stepped forward with solutions. Thanks to the efforts of medical professionals, citizens, members of the executive branch and Lt. Governor Greg Bell, and legislative leaders like Speaker Dave Clark, the Utah Health Exchange is now open for business.

This Utah-crafted solution is an innovative approach to increase transparency in the health care system, to increase access and to increase choice. Already, hundreds of Utahns have coverage in plans they have chosen for themselves. This is a revolutionary approach to health benefits that will soon be available to even more Utahns.

Our Exchange is one example of how states can – and should – lead the nation on health care reform. We don’t want or need a one-size-fits-all program that will balloon our national deficit and provide questionable care to our citizens.

Several weeks ago, I traveled to Washington D.C. and met with top leaders in Congress and at the White House. I strongly emphasized that the federal government should not do what state governments are already doing well in areas such as health care. The continued encroachment of the federal government into our businesses, our lives and our pocketbooks must be challenged

As the Salt Lake Tribune points out, only 13 employers  have thus far signed up in the exchange. But it’s a new experiment, and if it doesn’t work, the damage is limited to Utah–unlike a vast scheme imposed by Congress.

The Tribune also has a fascinating piece of information in this: “A poll conducted last week for The Salt Lake Tribune found that 52% of registered Utah voters support the state opting out of federal health reform efforts.” More than half!

Utah Legislator Ready for a Fight

Utah State Rep. Carl Wimmer (R-Herriman) has introduced H.B. 67, Health System Amendments, which says that Obama/Reid/Pelosi proposals “threaten the progress Utah has made towards health system reform.” The bill would erect various barriers to state implementation of health care “reform.”

Wimmer says, “I have no doubt whatsoever this bill will result in a lawsuit and will result in the state going to court against the federal government so we can enforce our law.”

Two States, Two Exchanges

Both Utah and Massachusetts have a government-sponsored health insurance exchange. They’re very different from each other. The Pioneer Institute has a new report drawing lessons from each exchange. I haven’t had the chance to read the report, so here’s the teaser that is currently on the institute’s home page:

Pioneer has released its newest paper, Drawing Lessons: Different Results from State Health Insurance Exchanges [PDF] to examine the design and implementation of health insurance exchanges in Massachusetts and Utah. The report finds very different results from each and provides clear, practical lessons for political and policy leaders. It also highlights the success and failures of state health insurance exchanges, a critical topic as federal officials debate the nature of national health reform.This report is a precursor to Pioneer’s upcoming series on health care reform, Interim Report Card. These reports examine various aspects of Massachusetts’ health care reform, including access, financing and affordability, administration, and cost-effective quality of care. This will constitute the first attempt to provide a comprehensive assessment of the Massachusetts reform.

Check it out.

Politics Dooms Choice of Ambulance

It shouldn’t be surprising that businesses lavish money on politicians, when the politicians decide who will be in business.

From Utah comes the tale of an incumbent ambulance company, a start-up that has tried to provide competition, a bucketload of cash, and anti-competitive legislation:

Since 2006, the year Southwest [ambulance] set up shop in Salt Lake City, Gold Cross has funneled more than $154,000 to political campaigns through dinners, barbecues and golf tournaments. Southwest has donated $15,900, all of it in 2008.During those four years, Southwest employed a who’s who of lobbyists to try to change a nearly 7-year-old state law and open nonemergency ambulance transport to private competition. Gold Cross countered with its own star-studded lobbying team – and Utah’s influential League of Cities and Towns – to kill the bills. In two of the years, those measures never even reached a vote.

Southwest, the challenger, may soon shut its doors.

I’m slightly surprised that the article says Southwest “has lost a half-million dollars a year due to free-market barriers.” Uhm, no. Southwests has lost money–and patients will lose a choice–because of political barriers to free-market services.

Utah AG Threatens Lawsuit

Mark Shurtleff, the attorney general of Utah, says that the federal government may find itself in court should Congress pass health reform that usurps the powers of states. He warns “it will be seriously reviewed for possible state constitutional violations.”

He also appreciates the value of people making free choices, rather than being conformed to the whims of politicians and bureaucrats, especially those in Washington, DC: “We need to allow the free market to work openly as opposed to the way the current federal legislation seems to be headed.”

Utah Law Promotes, Personal, Portable Insurance

Gov. Gary Herbert (R-Utah) spoke with The Heritage Foundation about his state’s new insurance exchange. Simply put, it’s a way that employers can help their workers get health insurance. The money gets spent on a tax-free basis (as is the case with all employer-sponsored insurance today), but there are several important differences.

First, the worker, not the boss, picks the plan, so it’s more likely to be tailored to the worker’s wants and needs. Second, the plans are (I believe) portable, which means that if you have one of these arrangements, you don’t lose your insurance plan when you leave work. Third, and this is the part that employers like, they a defined contribution rather than a defined benefit plan, which means that the amount they shell out for insurance is more predictable. Workers may not, however, like this aspect, as it makes explicit what has been true all along: Insurance premiums increase from year to year.

Here’s the video of the governor answering a few questions:

A Health Exchange Doesn’t Need to be Expensive, Top-Down

The State of Utah recently launched a new program that lets employees of small businesses shop for a health insurance plan that best suits them and their families and purchase a policy at affordable rates. Called the Utah Health Insurance Exchange, it demonstrates why state-level policy innovation–not top-down, federal planning–is the key to improving America's health sector.

Run by just two Utah officials with almost no new taxpayer money, the Exchange provides an online portal where employees of small businesses can combine contributions from their employers with their own pre-tax dollars to purchase the policy of their choice. Because participating employers don't have to take on the administrative burden of setting up an insurance plan, this service promises to substantially cut down on the cost of offering health coverage.

The Exchange allows employers to simplify benefits management. Instead of the headache of administering their own health plan, they can offer employees a "defined contribution," or a specified amount of pre-tax dollars that is set aside for employees to apply toward premium costs. Then employees, rather than employers, compare options and select the health plan that works best for their needs and circumstances.

As more employers choose to offer health benefits on a defined contribution basis via the Exchange, more workers will be able to take their coverage with them from job to job. This will substantially improve the state's insured rate. Right now, 60% of Utah's workers are employed by a small business. In the past, these firms have had difficulty offering insurance to their employees since insurance tends to cost more for small firms than it does for larger ones. The Exchange will help these employers offer insurance and allow their employees to choose from a menu of different plans and prices.

In just the first two weeks since the Exchange was launched in August, it enrolled 136 employer groups with a total of 2,333 employees. And while officials have capped total enrollment at 150 businesses for now, they plan to open the Exchange up to many more employers as soon as possible.

There are many benefits for employees, as well. The Exchange allows employees of the same firm to have different plans; some may choose an HMO and others a Health Savings Account instead of getting stuck with whatever health care plan their employer chooses.

The Exchange is also expected to drive prices down. There are currently 72 plans offered by five private insurance companies, with individual premiums as low as $35 a month (and family premiums as low as $135). As the number of plans grows, competition should force prices down.

The Utah Exchange also helps make insurance portable. Because of the historic link between health insurance and employment, individuals often lose their coverage when they change or lose jobs. Since Exchange plans aren't linked to any particular job, participants can keep their insurance even when their employment situation changes, avoiding a break in coverage.

Because it's working so well, one might argue that the Utah Exchange should be replicated at the national level. But the Exchange has been successful because Utah lawmakers, led by House Speaker David Clark, were able to create a market-based program tailored to the unique needs of their residents.

The Exchange being contemplated in Washington is very different: It would put Congress in charge of determining what constitutes acceptable insurance coverage with limited options of costly, impersonal, one-size-fits-all programs dominated by benefit mandates and pushed by lobbyists and special interest groups, not consumers.

Right now, intrusive federal regulations threaten to stifle the kind of innovation responsible for the success of this program. Federal lawmakers should scrap the top-down reforms championed by President Obama and Democratic leaders in Congress and encourage state policymakers to create programs tailored to the specific challenges of their states–just as Utah has done.