Tag: Health

For $460 Billion a Year, Medicaid Darn Well Better Save Lives

A study in this week’s New England Journal of Medicine finds that when three states expanded their Medicaid programs, mortality rates fell 6 percent relative to four neighboring states. The study found evidence that the mortality gains were concentrated in poorer counties – i.e., where people were most likely to become eligible for Medicaid.

As always, the study comes with caveats. The results “may not be generalizable to other states,” may have been driven by unobservable confounding factors, et cetera. Speaking only for myself, I hope these results are accurate. I hope Medicaid does save lives. That program spends nearly half a trillion dollars per year. It damn well better save lives.

Even so, that does not mean politicians should expand Medicaid. If saving lives is the goal, then politicians should instead find the lowest-cost way of doing so, because that enables the greatest number of lives to be saved with the available resources. It is generally accepted among health economists that other strategies (e.g., discrete health programs targeted at hypertension or diabetes) could save more lives per dollar spent than expanding health insurance. This study says nothing about how much it costs to save lives through Medicaid, much less whether alternative uses of those resources could save even more lives. It could be that other uses of the money would save – I don’t know – twice as many lives.

Absent evidence that Medicaid saves the most lives per dollar spent, expanding Medicaid does not show how much politicians care about saving lives. It shows how little they care about saving lives, because they are willing to forgo additional reductions in mortality for the sake of…whatever else expanding Medicaid gives them.

‘Leavitt’ Is Republican for ‘Solyndra’

Mike Leavitt is a Republican, a former Utah governor, a former Secretary of Health and Human Services under President George W. Bush, and now owns a firm called Leavitt Partners, which makes money by helping states implement ObamaCare’s health insurance “exchanges” and take advantage of ObamaCare’s Medicaid expansion. Let’s stipulate from the outset that Leavitt and his staff are doing what they think is best for the nation. Still, as this article in yesterday’s New York Times explores, it’s odd that Mitt Romney chose as one of his top advisers a guy who’s profiting from ObamaCare:

If Republicans in Congress agree on anything, it is their desire to eradicate President Obama’s health care law. But one of the top advisers to Mitt Romney, the party’s likely presidential nominee, has spent the last two years advising states and private insurers on how to comply with the law…

Mr. Romney has named Mr. Leavitt — a longtime friend, former governor of Utah and former federal health secretary — to plan the transition for what both hope will be a Romney administration.

Mr. Leavitt’s full-time job is running his consulting company, Leavitt Partners, which is based in Salt Lake City and has advised officials in Mississippi, New Mexico and Pennsylvania, among other states…

Michael F. Cannon, director of health policy studies at the Cato Institute, said: “It is strange to see Mr. Leavitt, a former Republican governor and former secretary of health and human services, helping and encouraging states to carry out this law for which Republicans have so much antipathy. It deepens suspicion as to whether Romney is sufficiently committed to repealing the Obama health care law.”

Twila Brase, president of the Citizens’ Council for Health Freedom, a free market group that is mobilizing opposition to an exchange in Minnesota, said: “Mike Leavitt is an enabler of Obamacare. He has taken advantage of Obamacare to expand his own business, instead of helping governors resist a federal takeover of health care.”

Secretary of Health and Human Services Kathleen Sebelius has thrown nearly a billion dollars at states in a desperate attempt to bribe them into establishing Exchanges. We do not yet know how much of that cash has found its way to Leavitt Partners:

Natalie Gochnour, a spokeswoman for Leavitt Partners, said its work with states was only part of its business, but she refused to say how much the company had been paid for such work.

Perhaps some day we will, and “Leavitt” will become synonymous with “Solyndra.”

Also, by my count the Times article devoted eight column-inches to such pro-Exchange nonsense as the idea that an ObamaCare Exchange could “run on free market principles” or Leavitt’s claim that “continued inaction by states risks an Obama-style federal exchange being foisted upon a state.” Yet the Times cited no one who challenges those claims. I have no problem with the Times posing difficult questions to Romney. Why should ObamaCare get a pass?

Threat to ObamaCare Is No ‘Drafting Error’

It turns out that ObamaCare makes an essential part of its regulatory scheme—an $800 billion bailout of private health insurance companies—conditional upon state governments creating the health insurance “exchanges” envisioned in the law.

This was no “drafting error.” During congressional consideration of the bill, its lead author, Sen. Max Baucus (D-MT), acknowledged that he intentionally and purposefully made that bailout conditional on states implementing their own Exchanges.

Now that it appears that as many as 30 states will not create Exchanges, the law is in peril. When states refuse to establish an Exchange, they are blocking not only that bailout, but also the $2,000 per worker tax ObamaCare imposes on employers. If enough states refuse to establish an Exchange, they can effectively force Congress to repeal much or all of the law.

That might explain why the IRS is literally rewriting the statute. On May 24, the IRS finalized a regulation that says the law’s $800 billion insurance-industry bailout will not be conditional on states creating Exchanges. With the stroke of pen, the IRS (1) stripped states of the power Congress gave them to shield employers from that $2,000 per-worker tax, (2) imposed that illegal tax on employers whom Congress exempted, and (3) issued up to $800 billion of tax credits and direct subsidies to private health insurance companies—without any congressional authorization whatsoever.

Some supporters of the law claim that Congress never intended to give states the power to block ObamaCare’s insurance-industry bailout. No doubt there are many in Congress who held that position. But they lost. If they’re unhappy now, they should take it up with Max Baucus.

What they should not do is set a precedent where the IRS can, on its own discretion, tax one group and subsidize another to the tune of $800 billion.

For more, see Jonathan Adler’s and my forthcoming Health Matrix article, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA,” which has been featured in The Wall Street Journal, The New York Times, The Washington Post, Politico, and NPR.

Wisconsin Health Secretary: ‘No Such Thing as a State-Run Exchange’

Dennis Smith directed the Medicaid program for President George W. Bush and was a health care analyst at the Heritage Foundation before becoming Wisconsin Gov. Scott Walker’s (R) secretary of health. The following excerpts are from a [subscription only] article at WisPolitics.com:

In his first extensive interview since a U.S. Supreme Court ruling largely upheld the federal law, the Department of Health Services chief said fed deadlines are likely to change and that the lack of guidance on setting up the exchanges makes any state-run exchange “a fantasy.”

Part of the reason why Smith says Wisconsin hasn’t moved forward with a health exchange plan is because he believes the deadlines will be pushed back.

“We have no other plan that we are taking because we think the reality is the federal government cannot meet its deadlines for implementing PPACA,” Smith said. “No one knows what a federal exchange looks like. The two major components that an exchange is supposed to do, which is determine eligibility and to complete the business transaction to pay premiums to health care plans that millions of Americans are supposed to pick, nobody knows what those look like. The administration has failed to release a credible business plan where objective observers could conclude that they’re going to pull this off.

Smith also said that none of the states currently setting up exchanges would likely meet federal regulations and that there’s “no such thing as a state-run exchange.”

“They were going to be asking for the resumes for the people who sit on the board of overseeing an exchange,” Smith said. “They were micromanaging the governance structure. They didn’t have to do that, they chose to do that. But that’s slowing the process and the decision making.”

The secretary especially pointed to questions on who will be eligible for the exchanges and the appropriate level of tax credits for participants. He claimed the rules on determining accuracy of tax credit payments were too “nonchalant,” and could result in the IRS having to recover thousands of dollars because of potential inaccuracies.

“It’s not that they don’t have answers because they’re withholding it from us, it’s that they don’t have answers because they don’t have answers,” Smith said. “These are critical policy issues, critical technical issues. Again, what are you building if you don’t know who’s eligible? What are you building if you don’t know what the flow is out of the treasury to the health plan?”

…”They have a mess on their hands,” Smith said… “You have to fundamentally say, ‘No, that just isn’t working, we have to go back to the drawing board.’

“And that is not being partisan in the slightest. That is facing reality.”

And that’s from a guy who continues to support the concept of a government-created health insurance exchange.

McConnell Had It Right: Government Should Not Pursue Universal Coverage

I’m a bit late to this party, but Senate Minority Leader Mitch McConnell (R) was of course right to tell Fox News’ Chris Wallace last weekend that the federal government should not pursue universal coverage:

Wallace: In your replacement [for ObamaCare], how would you provide universal coverage?

McConnell: Well, first let me say the single best thing we can do for the American health care system is to get rid of ObamaCare…

Wallace: But if I may sir, you talk about “repeal and replace.” How would you provide universal coverage?

McConnell: …We need to go step by step to replace it with more modest reforms…that would deal with the principal issue, which is cost…

Wallace: …What specifically are you going to do to provide universal coverage to the 30 million people who are uninsured?

McConnell: That is not the issue. The question is, how can you go step by step to improve the American health care system…

Wallace: …If you repeal ObamaCare, how would you protect those people with pre-existing conditions?

McConnell: …That’s the kind of thing that ought to be dealt with at the state level…

Naturally, the Church of Universal Coverage caught the vapors. But Time’s Mark Halperin says McConnell’s stance, while embarrassing, is “not a politically dangerous place to be”:

McConnell would have seemed less evasive and could have stopped Wallace in his tracks had he said, “We will not pursue universal coverage because that causes more people–not fewer–to fall through the cracks in our health care sector.”

‘Health Law Critics Prepare to Battle Over Insurance Exchange Subsidies’

The New York Times:

WASHINGTON — Critics of the new health care law, having lost one battle in the Supreme Court, are mounting a challenge to President Obama’s interpretation of another important provision, under which the federal government will subsidize health insurance for millions of low- and middle-income people.

Starting in 2014, the law…offers subsidies to help people pay for insurance bought through markets known as insurance exchanges.

At issue is whether the subsidies will be available in exchanges set up and run by the federal government in states that fail or refuse to establish their own exchange…

“The language of the statute is explicit,” Mr. Blumstein said. “Subsidies accrue to people who obtain coverage through state-run exchanges. The I.R.S. tries to get around that by providing subsidies for all insurance exchanges. That interpretation will almost certainly be challenged by someone.”

The most likely challenger, Mr. Blumstein said, is an employer penalized because one or more of its employees receive subsidies through a federal exchange. Employers may be subject to financial penalties if they offer no coverage or inadequate coverage and at least one of their full-time employees receives subsidies.

Michael F. Cannon, director of health policy studies at the libertarian Cato Institute, said the link between subsidies and penalties was a crucial part of the law.

“Those tax credits trigger the penalties against employers,” Mr. Cannon said. If workers cannot receive subsidies in states with a federal exchange, their employers cannot be penalized, he said.

Tax credits are not subsidies, of course. But ObamaCare’s $800 billion of refundable premium-assistance tax credits and cost-sharing subsidies are three parts subsidy (i.e., government spending) and only one part tax reduction.

HHS Offers to Pay Six Years of Operating Costs for Some States’ ObamaCare Exchanges

That’s my read of this.

ObamaCare gives HHS the authority to make unlimited grants to help states create Exchanges. But that authority expires on December 31, 2014. HHS just issued an announcement that they will issue grants right up to midnight on December 31—and that some of those grants will be so big that they will last for five years:

Q4: What is the last day that a State can spend its award?

A4: Grantees are encouraged to drawdown funding within their budget period (up to one year for Level One and up to three years for Level Two grants); however, at the recommendation of CCIIO’s State Officer and at the discretion of the Grant Management Officer, grantees may receive a no-cost extension that will allow them to spend funding up to the expiration date of the project period. At HHS’s discretion, a project period can be extended for a maximum of five years past the date of the award. Note, however, that all spending of §1311(a) funds awarded under a cooperative agreement must be consistent with the scope of the statute, FOA, and terms and conditions of the awarded cooperative agreement. [Emphasis added.]

The last sentence is there just to make sure no one suspects them of violating the law, wink-wink.

Since HHS can make unlimited grants in the first year that Exchanges are supposed to operate (2014), this means HHS is trying to pay for the operating expenses of some states’ Exchanges for six years (2014-2019).