Access and Subsidies: Your Taxpayer Dollars at Work

Published October 23, 2012

Consumer Power Report #347

Much of the conversation during this election season has revolved around the word “access,” particularly within the health care space. What you ought to understand by now is that when most liberal politicians say “access,” what they mean is “taxpayer subsidies.” This is not exclusively the terminology of the left, but it is predominantly the way they speak–particularly when it comes to contraception, which is available in every pharmacy across the country for a very low entry fee.

One aspect of this “access” conversation that deserves cleaning up is the false assumptions many Americans and even some journalists have regarding the availability of abortion services across the country and the subsidies taxpayers provide for them. The Guttmacher Institute supplies an update about abortion policies here, running through a few of the details, albeit from a biased perspective.

One thing few people seem to be aware of is that while the Hyde Amendment prohibits federal funding of abortion except in cases of rape, incest, and life endangerment, state funding has no such prohibition. Medicaid is the primary payer here: Medicaid pays for 41 percent of births nationwide, 60 percent in New York City, 70 percent in Louisiana. It also pays for a sizable number of abortions.

States that currently fund abortions under their Medicaid programs for virtually any health related reason include: Alaska, Arizona, California, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Montana, New Jersey, New Mexico, New York, Oregon, Vermont, Washington, and West Virginia. If you pay taxes in these states, your tax dollars are used for this purpose.

By themselves, California and New York spend tens of millions of taxpayer dollars every year funding non-rape/incest/life of the mother abortions – New York remains the abortion capital of America, per capita. There were 133,000 publicly funded abortions in just those two states in 2010, representing roughly 10 percent of total abortions in the country. Taxpayers in those respective states paid for all of those.

The trendline for Medicaid-funded abortions has increased during the recession and under President Barack Obama, and it would of course increase dramatically under Obama’s Medicaid expansion. And funding has a dramatic impact – this survey of academic literature from Guttmacher notes: “Approximately one-fourth of women who would have Medicaid-funded abortions instead give birth when this funding is unavailable.”

The point is that subsidizing abortion with taxpayer dollars does change human behavior. There are fewer children today because abortions have been subsidized. The more government inserts itself into any process, the more it puts its hand on the scales of the marketplace and warps the outcomes, often in unexpected ways and with consequences few can foresee.

The more the left adopts the language of “access,” turning everything that exists – whether it’s a house, an education, or an abortion – into something each individual has the ability to claim as a birthright that must be subsidized by someone else, we head further down the path toward total government control of society, redistributing for anything and everything as it sees fit. There are always strings attached.

— Benjamin Domenech



So much for the opponents of reform citing the AMA:

I’ve had my disagreements with the AMA, which like its cousin the AARP, generates hundreds of millions of dollars in income from our existing, wasteful health-care system, and often stands in the way of needed reforms. But this past weekend, the AMA’s key policy committee, the Council on Medical Service, voted to endorse a Medicare reform plan that shares key traits with the ones put forth by Mitt Romney and Paul Ryan.

“The [AMA] policy identifies changes that must be made to strengthen the traditional Medicare program (i.e., restructuring beneficiary cost-sharing, including modifying Medigap rules, and changing the eligibility age to match Social Security),” the Council writes, “and expresses support for giving beneficiaries a choice of plans for which the federal government would contribute a standard amount (i.e., a ‘defined contribution’) toward the purchase of traditional fee-for-service Medicare or another health insurance plan approved by Medicare. The Council firmly believes that implementing a defined contribution system, with strong regulatory protections for patients, is a responsible and feasible approach to strengthening the Medicare program.”

Much like the old Ryan plan, the AMA proposal would let the government provide a specified subsidy – the “defined contribution” – to retirees’ health benefits, and let them choose among a range of plans. Unlike the old Ryan plan, but like the current Romney-Ryan one, the AMA committee endorsed preserving “traditional Medicare as an option” for seniors.

The AMA Council’s report states that it came around to this view not at the behest of Republican operatives or candidates, but after speaking with Bill Clinton’s former budget chief, Alice Rivlin, who along with Paul Ryan proposed a version of this plan. “Dr. Rivlin emphasized that defined contribution amounts should be sufficient to ensure that all beneficiaries could afford to purchase health insurance coverage, and that private health insurance plans should be subject to regulations that protect patients and ensure the availability of coverage for even the sickest patients.”

These principles are echoed in the Romney plan for Medicare reform, which guarantees that seniors will be 100 percent covered for the standard package of benefits that traditional, government-run Medicare provides today.

SOURCE: Forbes


The senior advisor to Intel has several thoughts to share:

In a transparent health care market, pricing and other patient data can be consolidated and analyzed to yield new insights. A previous head of the Prostate Cancer Foundation, Leslie Michelson, once said that every clinical examination contains the elements of a clinical trial. “Life itself is the greatest clinical trial of them all,” he said. “It’s just a little too big.” But new database tools could speed up the processing of information and allow a clinician to gain useful information from a single patient – in real time. Managing comparisons of data matrices, unthinkable just a few years ago, is entirely practical today. With computers developed for this purpose, correlations could be analyzed, relationships between diseases and treatments studied, and individual treatments generated. In short, the “blinded” patient would benefit from technology, with results much more easily obtained. Meanwhile, every new patient changes the database by adding real-life data elements to the collection. The resulting “digital sticker” would play a major role in bringing order to chaos. It could potentially have just as much impact on the health care business as the MSRP had on the automotive business.

This opportunity will flourish only if a new mindset spreads throughout the health care industry, starting with doctors. The use of new technology, its cost and deployment, all must be taken as seriously as the technology itself. Today it is not. I have particular interest in the nascent discipline of translational medicine, which moves discoveries from the proverbial lab to the bedside. I helped initiate one such effort in this field: a graduate program offered jointly by UC San Francisco and UC Berkeley. The curriculum took off in record time, but disappointingly 91 percent of the students registering for it are engineers and scientists, not doctors. This limits the special value of this effort.

The health care business is about patients. But the patient population has been largely powerless and remains so even as the members of the medical community – hospital chains, nationwide insurers, large employers – have become much more powerful. Over time, the patient – the raison d’être of the health care business – has been reduced to merely another raw material.

This should not last. What technology can do is change the game – change the basis of competition, change what it takes to win in the health care marketplace. In time, some players will compete better than others by making good use of technology. In this competitive environment, patient use of the available pertinent information, with all its benefits, is going to be critical, giving them more economic power. They will likely demand to know more about their various conditions and what their dollars are being spent on. That’s how American consumers have always operated, and I predict they will here as well.

But what they’ll need is transparency in treatment, cost, and institutions – in other words, a digital sticker. Getting that transparency has to be Job One.



Michael Cannon could use your help:

Adler and I claim that Congress specifically, repeatedly, and unambiguously precluded the IRS from imposing those taxes or issuing those subsidies through federal “fallback” Exchanges. We maintain the below video shows ObamaCare’s chief sponsor and lead author – Senate Finance Committee chairman Max Baucus (D-MT) – admitting it. Jost says Baucus’s comments have “absolutely nothing” to do with the matter. You be the judge, and tell us what you think.

A bit of background will help to frame what’s happening in the video: Both sides agree this issue hinges on whether the statute authorizes “premium assistance tax credits” through both state-created and federal Exchanges, or only state-created Exchanges. The video is from a September 23, 2009, Finance Committee markup of ObamaCare. In it, Baucus rules out of order a Republican amendment on the grounds that medical malpractice lies outside the committee’s jurisdiction. Sensing a double-standard, Sen. John Ensign (R-NV) notes that Baucus’s underlying bill directs states to change their health insurance laws and to establish Exchanges, matters which also lie outside the Finance Committee’s jurisdiction, and asks why aren’t those provisions also out of order. Okay, go.

SOURCE: Cato at Liberty


Should Obama’s law survive November, this will be the next big challenge:

When the national health law takes effect on January 1, 2014, some 30 million uninsured people will be able to sign up for subsidized health insurance for the first time. Many will become eligible for Medicaid and others will qualify for federal tax credits.

As challenging as that initial process is expected to be for consumers and state administrators, it won’t end there. As people’s incomes shift, nearly a third of those who sign up for Medicaid in 2014 will become ineligible for the program by the end of the year, according to a study by The Urban Institute. Among those who use federal tax subsidies to buy insurance through a health insurance exchange, more than half will lose their eligibility within a year.

This phenomenon – known as “churn” – already affects millions of Medicaid recipients whose incomes fluctuate. Starting in 2014 as Medicaid eligibility rules change and new federal tax credits become available, the number of people who will be forced to switch health plans is expected to increase. In many cases, members of the same family will lose Medicaid coverage while others remain enrolled.

To mitigate the disruptive effects of churn on families and the health care providers who serve them, some states are easing application and renewal requirements so that Medicaid beneficiaries can maintain coverage for at least 12 months.

In Tennessee, where nearly all Medicaid enrollees are covered by a managed care plan, state officials are seeking federal approval for a program called “one family, one card.”

Presenting at last week’s annual meeting of the National Academy for State Health Policy in Baltimore, Brian Haile, director of Tennessee’s exchange initiative, said the plan is designed to “minimize the times people get a letter from us (saying their eligibility has changed) and maximize their focus on keeping health care coverage and staying healthy.”

A longstanding problem in the Medicaid program, churn not only causes loss of coverage, but higher administrative costs and disruptions in ongoing medical treatments. It also makes it difficult for doctors to invest in preventive health care programs and for researchers to study their effects on patients.



Welcome news from Washington:

Sen. Orrin Hatch (R-Utah) has more questions about the federally run insurance exchange created under the Affordable Care Act.

Hatch, the top Republican on the Senate Finance Committee, has raised several concerns about the federal exchange, which will operate in any state that doesn’t set up its own marketplace. His latest letter to Health and Human Services Secretary Kathleen Sebelius, delivered Friday, asks about contractors for the federal exchange.

Some of the companies that received contracts to help build the federal exchange have been acquired since winning their contracts, Hatch said. He wants to know what HHS has done to ensure that the new owners don’t present a conflict of interest.

Hatch’s latest request is far-reaching – it seeks a list of every contractor and subcontractor working on the federal exchange, as well as documents related to their bids and selection.

He also asked for internal HHS communications about contractors that have changed hands “and a detailed description of the process used by HHS to ensure that those changes did not materially impact the initial contract award.”

Considering this federal exchange could be put in place in as many as 35 states, we know very little about it.

SOURCE: The Hill


An interesting point from John Tamny:

Happily, and logically due to a profit motive that enriched those who found cures for former life-ending diseases, we live in a safer world today regardless of our individual income statements. The problem is that we’ve not fixed everything. Indeed, as it stands now, those who hurt their knees in the near term, and those who find themselves with cancer or heart disease, won’t be as lucky when those problems reveal themselves.

That’s the case given a political class desperate to “bend the healthcare cost curve downward.” Put more plainly, politicians are telling doctors that “We don’t care how much sleep you lost, how much debt you accrued while in medical school, or how many hours you worked to be the best in order to pay it back. We feel our constituents are paying too much for your services, so by decree we’re going to lower your prices.”

Though medical advances have historically elongated life all the while making it more livable, and cheaper, politicians think healthcare is too expensive. Because they don’t like the cost of something they deem essential, they’ve decided to restrict the ability of physicians to offer up their own skills at a price they think appropriate.

Voters and commentators who should know better no doubt cheer when they hear allegedly visionary politicians decree healthcare a “right” that should be dispensed inexpensively, but they tragically fail to consider the unseen.

As mentioned before, doctors are increasingly being told that they can offer their services not at prices that the market will bear, but for prices deemed acceptable by allegedly compassionate politicians. But just as artificially cheap rent controls lead to apartment scarcity, soon enough we’ll see a scarcity of doctors, and worse, a slowdown in the cures that would have otherwise elongated and enhanced our lives.

A generation ago doctors were rich, but now they’re increasingly being told that their profession and their skills are not theirs, that in fact they’re a public good; the dispensation of same a function of what an unelected board of bureaucrats considers correct. Sadly for politicians, and tragically for all of us, the talented who might have otherwise chosen a career in medicine are watching.

Eager to enter a profession in which their earnings and their potential to thrive are not limited by governmental decree, they see medicine as a bad deal thanks to politicians ever eager to give to others something of theirs for nothing. In short, politicians have decided to the applause of the naïve that healthcare should be cheap. Because they have the poor and middle class are soon going to learn the hard way just how expensive and life shortening is “cheap” healthcare.

SOURCE: Forbes