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.”

One Program Expansion Deserves Another

Both the House and Senate bills put more people on Medicaid, and (at least for a while) have the federal government underwrite most of the costs incurred by that move.

The states that would add more people are concerned that they’ll be left holding the bag, eventually, for higher costs. But other states, such as Minnesota and Vermont, expanded their Medicaid rolls a long time ago, so they’re not happy about underwriting Medicaid expansion elsewhere. There will be new money flowing off the federal printing press, and they’re not going to get any of it.

One health policy official in Vermont, for example, said “All the federal money for this Medicaid expansion, the majority would be going to states that have not taken the steps that Vermont has (taken).”

It’s a great example of how government programs have a self-perpetuating logic. I sympathize with officials and taxpayers in Vermont, who, having already expanded their own obligations with minimal help from elsewhere, are now faced with underwriting more spending elsewhere.

The easiest political way to address the objection may be to throw more federal money at Vermont, which it can then use to expand Medicaid well into the middle class.

How About More Non-Government Options, Gov. Dean?

Howard Dean, ex-"of Vermont and former head of the Democratic National Committee, recently spoke in Vermont to stump for the Democrats health care plans.

It's not an argument about single payer versus insurance, the fundamental question is, who gets to choose. And the genius behind the Obama plan is that we believe instead of having the Congress and bureaucrats and the insurance companies and employers and politicians make this choice, the American people ought to be able to make this choice for themselves. … We're not saying you have to be in it. There are a lot of people who like their employer-based system. But we are saying we ought to make that a choice," he said.

Governor, if you think that choice is important, why don't you call for measures that truly promote consumer choice, such as cross-state sales of health insurance, making high-deductible insurance paired with HSAs available, and removing regulations that restrict the supply of medical services? Instead, you're promoting legislation that arguably will make HSAs illegal and eventually drive private insurance companies out of business?

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.

Vermont Says: Bring us Washington Control

In Vermont, the only state that has elected an openly declared socialist, 130 members of the legislature have signed a letter to President Obama and Congress asking for a "public option" (Medicare for all).

Sen. Doug Racine (D-Chittenden), chairman of the Senate Health and Welfare Committee, signed on. So did Shap Smith (D-Morristown), Speaker of the House. Racine "the influence of that money" for the fact that we do not have "true health reform." (Hmm. Yes, money does influence everything that happens in health care, including the desire of politicians to buy votes by expanding the obligation of the public fisc.)

Rep. Bernie Sanders, the state's only member of the U.S. House of Representatives (he's the socialist) advocates Congress letting states assemble a compact to pursue a single-payer plan.

"There is a lot of support among the American public for this," he said. "But there are also a lot of lobbyists who are fighting this."

And, I suggest, a lot of people who aren't lobbyists. Or does opposition to GovernmentCare automatically make you one of the dreaded lobbyists?

Folks Who Ought to Read ‘Health Care is Not a Right’

Just in time for May Day comes this article from Vermont:

Billed as the one of the largest rallies in Vermont's history, "Heathcare is a Human Right" converges on the Statehouse lawn today.

Is health care a right? Paul Hsieh answers.

Wyeth v. Levine Ruling Undermines the FDA?

In the SCOTUS drug-harm liability opinion released today, dissenting Justices Alito, Roberts and Scalia wrote that the majority turned "a common-law tort suit into a frontal assault on the FDA's regulatory regime for drug labeling."

If that's true, then there's just no way it can be all bad.

Wyeth v. Levine: States’ Rights Trump Federal Pre-emption

This morning, the U.S. Supreme Court announced a 6-3 decision in favor of the plaintiff in Wyeth v. Levine. The case addressed whether the Vermont Supreme Court erred in upholding damages, based on Vermont's product-liability law, against Wyeth for supplying a drug without adequate warning of its risks. I've written a series of blog entries on this case, expressing great dissatisfaction with Wyeth's argument that the federal government should exert a legal monopoly over information that a drug-maker can put on its label.

The Supremes' majority held that Wyeth promoted a "cramped reading" of pre-emption in the Food, Drug, & Cosmetics Act, and noted that Congress had never asserted the FDA's pre-emptive power. Rather, this was inserted by the Bush Administration in regulatory language as recently as 2006. Finding no Congressional intent to pre-empt, the majority found against Wyeth. The majority also found that the FDA erected no legal obstacle to Wyeth's amending its label to conform to Vermont law.

Concurring, Judge Clarence Thomas went even further. (Thanks to a Lexis/Nexis subscription, I've been able to read the whole decision.) While the majority suggests that Congress could have asserted pre-emption if it wanted to, Thomas argues that the 10th amendment to the U.S. Constitution deprives the Congress power to pre-empt states' product-liability laws at all. Thus, he finds himself in opposition to other cases where the Court has upheld pre-emption.

So, Wyeth's (and, by extension, the research-based pharmaceutical industry's) campaign for pre-emption has ground to a halt. And it is not likely to pick up steam under President Obama and the current Congress, who surely favor trial lawyers.

Defeat? No: Rather an opportunity to re-think creative ways to reform product-liability law while preserving states' sovereignty, as I've suggested before.

Vermont Senate Says ‘Name Names’

All but one state senator in Vermont has signed on to legislation that would require drug companies to disclose the names of doctors to whom they had made payments of any kind, for any purpose, product samples, or presumably, pens.

The legislation seems to be sold on several levels. First is the high-minded one: Who can argue against disclosure? Conflicts of interests are bad; doctors are doing not what is good for patients, but what earns them more cash … or coffee mugs.

But there's a whiff of condescension and politician-knows-best. Sen. Peter Shumlin has said that "I want to put an end to the practice where pharmaceutical companies spend millions of dollars to draw consumers and providers to more expensive drugs."

But what if the more expensive drugs are more effective, cause fewer side effects and are more likely to induce patient compliance?

There's also a fiscal matter, too: Since government pays so many of the health care bills, its leaders have a strong incentive to make your health their business.

Meanwhile, the forced disclosure could have some serious unintended or undesirable consequences, such as providing incentives for doctors to drop out of participating in clinical trials.

Two More State Screw-ups

Vermont is considering cuts in its Catamount health program. This is the state’s version of Maine’s Dirigo Care and it isn’t faring much better. It became effective in the fall of 2007 after the legislature was promised it would cut Vermont’s uninsured rate to 4% by 2010 and enroll 25,000. As of November, 2008 it had 6,120 people enrolled in the subsidized version and 932 people in the unsubsidized version of the plan. But the program is budgeted at $19.2 million for this fiscal year. That is $3,173 per enrollee – on top of whatever the enrollees are paying for the coverage.

An article in the Rutland Herald tries to support the program with a couple of anecdotes. One is a 29 year-old woman who is paying $65/month while the article supposes private coverage would have cost her $400/month. Another is a young couple that the article supposes would have paid $1,300/month. It seems unlikely that private coverage would cost that much, and if it does perhaps the state should fix its regulations to make such coverage more competitive.

And in Colorado, health insurance “reforms” mean higher costs for most employers, according to an article by Katie Redding in the Aspen Times. She writes, “As the second part of a law reforming state health insurance takes effect this month, some Aspenites with group health plans could see their premiums rise by as much as 25 percent. The bump is in addition to regular annual increases.”

This is because state legislators decided it would be nifty to require community rating for employer groups of 50 and more employees. So it did away with an existing law that allowed carriers to discount premiums by 25% for companies with healthier employees.  This is after already dumping a provision that allowed a 10% rate-up for companies with less-healthy employees.

The article reports that brokers in the state arranged to have their clients renew their coverage in December to avoid the rate increase in January, so the full impact won’t be felt for another year.

Now what kind of thinking leads a politician to conclude that the best way to deal with the problem of the uninsured is to raise prices by 25% for those who are already insured? Good Grief!