Tag: medicaid

How Gov. Cuomo Can Fix New York’s Budget Mess

New York’s budget problem is actually a Medicaid problem.  In Sunday’s New York Post, I offer advice to New York Governor Andrew Cuomo (D) on how to fix a budget gap that will grow to $17 billion during his term:

Gov. Cuomo can’t fix Medicaid by himself. He needs the help of Congress.

There is a solution…

Block grants are how President Bill Clinton and a Republican Congress reformed welfare back in 1996, to spectacular success. Welfare reform forced New York to be smarter about welfare spending, just as a block grant would force New York to rededicate Medicaid to its original mission — providing necessary medical care to the truly needy.

There’s one place Gov. Cuomo can start on his own: Close the loopholes that allow well-to-do New Yorkers to feign poverty on paper so that Medicaid underwrites their long-term care. Medicaid exists for the poor, not to help well-off baby boomers protect their inheritance.

Steve Moses of the non-partisan Center for Long-Term Care Reform recommends that Cuomo take steps to ensure that New Yorkers with means pay for their own long-term care. These include reducing New York’s home-equity exemption from $750,000 to $500,000 (and seeking a federal waiver to reduce it to $0), expanding the use of liens and estate recovery and ending the abusive practice of “spousal refusal.”

Reducing Medicaid abuse won’t be easy. But Cuomo doesn’t have much choice.

In fact, what he has is an opportunity to become the leading national spokesperson for block grants, the quickest and easiest course to relief for states toiling under the unsustainable yoke of Medicaid spending.

For more on Medicaid reform, click here.  For more on abuse of Medicaid’s long-term care subsidies, click here.

ObamaCare Challenges Gain Steam

Today’s hearing in Pensacola built on Monday’s ruling out of Richmond: Judge Roger Vinson is likely to hold the individual mandate unconstitutional. And such a decision would be the most significant development possible at the district court level because the Florida case involved 20 states, with more joining the lawsuit when new governors and attorneys general assume office in January. It is unprecedented for this number of states – again, soon to be a majority – to sue the federal government and it shows the singular and extreme nature of the government’s assertion of raw power here.

As Judge Vinson said during the hearing, the Supreme Court has held that the outer bounds of Congress’s regulatory power under the Commerce Clause (as exercised via the Necessary and Proper Clause) is activity that has a substantial effect in interstate commerce. If the government were to prevail under its theory that Congress can regulate any decision with economic ramifications – as two district courts have unfortunately held – then there is no principled limit on federal power. At that point, we might as well throw the Constitution out the window and admit that Congress is the judge of its own authority.

Finally, while Judge Vinson was more skeptical of the Medicaid-related claim that is unique to the Florida lawsuit, it is similarly impossible to draw limits to federal power if we allow Congress to impose a Hobson’s Choice on states of either withdrawing from Medicaid or implementing budget-crippling regulations. At a certain point the strings that Congress attaches to federal funding become coercive – particularly when the new shape of a government program (here, Medicaid) radically transforms the compact states originally joined and have inextricably relied on.

Is Congress Above the Law?

The first item on this election campaign’s Contract with America was that, if elected (as they have been), the House Republicans would require that all laws that apply to the rest of the country also apply to Congress.  We’ll see if that and the other promised reforms materialize, but it does raise yet another issue in the context of Obamacare.

As my colleague Michael Cannon pointed out to me, the new health care law kicks congressmen out of the Federal Employees Health Benefits Program.  (The current FEHB is no different from the health coverage provided by any private employer -– federal employees choose from a series of private plan options (none of which is run by the government), and receive a subsidy from the federal government acting in its role as an employer.)

My first reaction to hearing this was:  Good – if the rest of us lose our health care freedom, so should those who forced this new atrocity on us.  But apparently this result was not intended, so the Obama administration has decided to ignore that part of the law.

No joke.  Here is the Congressional Research Service report on the provisions that oust members of Congress from their health insurance.  And here is the letter in which an Obama appointee announces that the administration will ignore the law.  These two articles also provide important information.

Now, assuming that something constitutionally problematic is going on here, what can anyone do about it?  To put it in legal terms, who has standing to sue for this apparent constitutional violation?  It’s a tough row to hoe – taxpayers cannot bring suit based on generalized grievances – but off the top of my head, I can think of two possibilities: (1) members of Congress suing the president or the Department of Health and Human Services for essentially passing new law and therefore infringing on congressional prerogatives (thereby violating the separation of powers); or (2) an insurance broker or carrier who would otherwise be signing up new clients.

And there are two additional related questions:

1. Why did Congress expand Medicaid while refusing to participate in it themselves?  Obamacare expanded Medicaid to an estimated 18 million new Americans, none of whom will have a choice of private plans, instead being dumped into Medicaid, a program notorious for access problems (and which in Arizona now doesn’t cover organ transplants).  Yet all Senate Democrats voted against an amendment enrolling members of Congress in the new Medicaid program (all Republicans voted for it, except one who was absent).

2. Will members of Congress use their own salaries to pay any fines assessed because their employees have “unaffordable” health coverage?  Obamacare includes a $2,000 per worker penalty for any employer that does not provide “affordable” coverage, beginning in 2014.  Many junior staffers have incomes below 400 percent of the federal poverty level ($43,320 for a single person, or $88,200 for a family of four), and thus could be subject to the new statutory test of whether their health insurance options are “affordable.”  While it’s unclear how this particular provision will be implemented for Hill staff – due to the “significant unintended consequences” of sloppy drafting – it’s entirely possible that member offices could be assessed a $2,000 penalty for every worker needing insurance subsidies because they have no “affordable” alternative.  If that scenario happens, will the members of Congress who voted for the law pay the penalty out of their own salaries or will they rely on taxpayer funds to finance an obligation they imposed on themselves?

Obama’s Fiscal Commission and Health Care Spending

Following up on what Dan and Chris have said …

If the co-chairs of President Obama’s fiscal commission were serious about reducing federal spending and deficits, they would have proposed eliminating the federal deficit, rather than “reduc[ing] it to 2.2 percent of GDP by 2015.”  Yawn. They would have proposed cutting federal spending (currently, 24 percent of GDP and rising) to match federal tax revenue (currently at 15 percent of GDP).  But the co-chairs proposed only to “bring spending down to 22 percent and eventually 21 percent of GDP.”  Not only does that elicit another yawn, but since the co-chairs only asked for half a loaf, they won’t even get that much.

If the co-chairs were serious about reducing federal spending and deficits, they would have proposed a balanced-budget amendment.  They would have proposed block-granting Medicaid.  They would have proposed implementing Medicare vouchers immediately.  (Vouchers are the only way to reduce Medicare spending while protecting seniors from government rationing.  They would also change the political dynamics that repeatedly stymie efforts to reduce Medicare spending.)  Instead, the co-chairs propose the same ol’ failed strategy of trying to limit Medicare and Medicaid spending using government price-and-exchange controls, which they euphemistically describe as “rebates” and ”payment reforms.”  Along the same lines, they propose strengthening IPAB, ObamaCare’s rationing board.  IPAB’s mandate is – you guessed it – to ration care by fiddling with Medicare and Medicaid’s price and exchange controls.  It will therefore inevitably fall prey to the same political buzzsaw.  To appease Republicans, the co-chairs propose unwise and unconstitutional federal rules that would prevent patients injured by negligent physicians from recovering the full amount they are due (euphemism:  medical malpractice liability “reform”).  Finally, the co-chairs propose that if federal health spending continues to grow faster than GDP growth plus 1 percent, Congress should consider “a premium support system for Medicare” (which could mean vouchers) and “a robust public option and/or all-payer system” for people under age 65 – a debate that wouldn’t even begin until 2020.

Fiscal Commission members, congresscritters, and citizens who are serious about reducing federal spending and deficits – and who are looking for specific ways to cut government spending – should instead consult Cato’s excellent web site DownsizingGovernment.org.

A Less-Than-Rigorous ObamaCare Fact Check

Kaiser Health News and The Washington Post have posted a piece titled “Campaign Claims: Health Law Myths And Facts,” which examines these common criticisms of ObamaCare:

  1. “The law amounts to a ‘government takeover’ of health insurance and health care.” The article’s conclusion: “it falls far short of a government takeover.”  That conclusion rests largely on the fact that “Medical care will be provided by private hospitals and doctors.”  But as I explain in this study, “it is irrelevant whether we describe medical resources (e.g., hospitals, employees) as ‘public’ or ‘private.’ What matters—what determines real as opposed to nominal ownership—is who controls the resources.”  Obama health official Jeanne Lambrew acknowledges as much: “the government role in socialized medicine systems [can include] public financing of private insurance and providers.”  And as I concluded in this study, “Compulsory ‘private’ health insurance would give government as much control over the nation’s health care sector as a compulsory government program.”  I wonder if the article’s authors spoke to anyone who raised this perspective.
  2. “The law will gut Medicare by cutting more than $500 billion from the program over 10 years; seniors will lose benefits and won’t be able to keep their doctors.” Conclusion: “The gutting of Medicare claim goes too far…What this means for seniors is a bit murkier.”  True enough: even if ObamaCare’s implausible Medicare cuts take effect, they clearly would not “gut” Medicare.  (BTW, click here or here for a politically sustainable way to restrain Medicare spending.)  The authors also note that Medicare Advantage enrollees would lose some benefits.  But when the article claims that ObamaCare will not eliminate any “basic” Medicare benefits, it neglects to mention that Medicare’s chief actuary estimates that the law could cause 15 percent of hospitals, home health agencies, and other providers to stop accepting Medicare patients.  If your hospital no longer accepts your Medicare coverage, is that not a benefit cut?
  3. “The law will cause 87 million Americans to lose their current coverage.” Conclusion: “How true is it?  Partly, at best. But evidence is limited.”  The House Republicans’ Pledge to America claims that ObamaCare “will force some 87 million Americans to drop their current coverage.”  The word drop is a bit strong; it’s more accurate to say that many Americans will have to switch to another plan, even if it’s just a more-expensive version of their current plan.   Indeed, HHS estimates that 69 percent of employer plans will have to do so by 2013.  Yet some people are being dropped from their current health insurance.  When Principal Financial Group leaves the market, its nearly 1 million enrollees will lose their current health plan.  Industry analysts expect more such departures.  Why no mention of that?
  4. “The law is driving up costs and premiums and will continue to do so over the next several years.” Conclusion: “There may be very small increases initially.”  Here the article is kinder to ObamaCare than even ObamaCare’s supporters are.  May be?  Even ObamaCare’s supporters admit the law will increase premiums for some people.  Very small increases?   Even HHS estimates that the requirement that consumers purchase unlimited annual coverage could increase premiums for some by 7 percent.  (There’s no mention of Blue Cross and Blue Shield of Connecticut, which says ObamaCare will increase premiums for some of its customers by nearly 30 percent.)  And why only initially?  Do the authors expect that there will be no premium increases when HHS eventually stops issuing waivers?  Or when HHS sets a minimum level of coverage that Americans must purchase in 2014?  Or that ObamaCare has solved the tragedy of the commons?  For support, the article claims, “the Obama administration, citing [various] estimates…says the law isn’t responsible for any increase greater than 1 to 2 percent.”  Actually, that’s not what the administration says – it’s what they want you to think they’re saying.  Read this letter and other administration utterances carefully.  They say “1-2 percent” when speaking of ObamaCare’s average effect on premiums, and “minimal” when speaking of anything other than the average effect.   (The administration’s threshold for “minimal” is presumably somewhere north of 7 percent.)
  5. “The law’s expansion of Medicaid will put massive pressure on state budgets at a time when many are already in crisis.” Conclusion: “The impact will probably be small, but it’s hard to say for sure.”  The article only cites figures generated by supporters of the law, who say the impact will be small.  Why just mention that there are figures from the other side?  Why not include them?
  6. “The new law uses tax dollars to pay for abortions.” Conclusion: “Open to interpretation.”  This was a missed opportunity to examine two crucial questions.  First, would federal insurance subsidies truly be segregated from the separate premiums that consumers in ObamaCare’s exchanges would have to pay for elective-abortion coverage?  Or would this just be an accounting gimmick?  What would happen, for example, if there were more abortions than an insurer anticipated, and those separate premiums proved insufficient to pay for them?  How would you keep one side of the ledger from spilling over into the other?  Second, would the availability of federal subsidies for health insurance plans that make elective-abortion coverage available as a rider increase enrollment in those plans?  If so, wouldn’t that implicitly subsidize elective abortions?  Rather than examine those questions, the article punted.

On the whole, I’d say this fact check may have been very kind to the new law.

RomneyCare Advocates: We Swear, This Time Centralized Planning Will Work

You know things aren’t going well in Massachusetts when supporters of RomneyCare write “there’s some evidence that the reforms signed into law by Mitt Romney in 2006 are struggling.”  That’s how The Washington Post’s Ezra Klein puts it in a post defending RomneyCare.  The New Republic’s Jonathan Cohn offers a similar defense.

Klein mentions only a few of the difficulties confronting Massachusetts.  Here are a few more:

  • The Commonwealth Fund reports that even though Massachusetts already had the highest health insurance premiums in the nation, premiums rose faster post-RomneyCare than anywhere else; 21-46 percent faster than the national average.
  • A recent study estimates that RomneyCare has so far increased employer-sponsored health-insurance premiums by an average of 6 percent.
  • The success that Klein sees in Massachusetts’ individual market – which accounts for just 4 percent of the private market – is merely the product of shifting costs to workers with job-based coverage.
  • Contrary to Klein’s post hoc spin that RomneyCare “was never an attempt to control costs,” Romney himself promised that “the costs of health care will be reduced.”
  • Aaron Yelowitz and I find evidence suggesting that uninsured Massachusetts residents are responding to the individual mandate not by obtaining coverage but by concealing their insurance status.  Coverage gains may therefore be less than official estimates suggest.
  • Evidence is mounting that, despite stiffer penalties than ObamaCare will impose, increasing numbers of people are gaming the individual mandate by only purchasing health insurance when they need medical care. Such behavior could ultimately cause the “private” insurance market to collapse.

Nevertheless, the Klein/Cohn thesis is basically that costs have been climbing and employers have been dropping/curtailing health benefits for decades.  So you can’t blame that stuff on RomneyCare.  We should instead be thankful that Massachusetts enacted a new raft of government price controls, mandates, and subsidies to protect residents from those features of “the American health-care system.”

The only problem is that “the American health-care system” is the product of the old raft of government price & exchange controls, mandates, and subsidies.  The largest purchaser of medical care in the country (and the world) is MedicareMedicaid is second.  The Left complains so much about fee-for-service medicine fueling rising health care costs and reducing quality, you’d never know that their beloved Medicare program is the primary reason for its dominance.  Likewise, the reason why employers are dropping and curtailing coverage is that the government turned the private health insurance market into an unsustainable employment-based system that is doomed to unravel.  Cohn’s book documents the inhumanity of that system so well, you’d think it would sour him on the sort of centralized planning that created it.  I could go on…

RomneyCare and its progeny ObamaCare are attempts by the Left’s central planners to clean up their own mess.  If Klein and Cohn want to defend those laws, pointing to the damage already caused by their economic policies won’t do the trick.  They need to explain why government price & exchange controls, mandates, and subsidies will produce something other than what they have always produced.