Analysis: Illinois Task Force Favors Government Over Markets

More than two years ago, in August 2004, Illinois Gov. Rod Blagojevich (D) signed into law the Health Care Justice Act, a measure aiming to ensure access to good, affordable health care for everyone statewide.

A key component of the law was the creation of the Adequate Health Care Task Force (AHCTF), which conducted its first meeting 14 months ago. The task force has 28 members, appointed by the governor and the four leaders of the state’s General Assembly.

From October 2005 through April 2006, the AHCTF held monthly “themed” subject-matter hearings featuring testimony from experts and stakeholders, and separately conducted public hearings to garner citizens’ input on health care access issues.

Since May 2006, the AHCTF has been meeting with its consultants, Navigant Consulting and Mathematica Policy Research, to further deliberate over proposals presented by the stakeholders and consultants. At press time, only one scheduled meeting remained, to be held October 26.

Although the final outcome of the task force’s work is unknown, what took place at its July 25 and August 15 meetings suggest the private sector will not have much of a role to play in the future of Illinois health care … other than perhaps being asked to pay its “fair share” for workers through some form of employer mandate.

Stakeholder Interests Identified

At the July 25 AHCTF meeting, the consultants presented a “hybrid” proposal intended to address the task force members’ common interests, which were identified during the April 26 and May 23 meetings through interest-based negotiation–a common technique used to reach compromise.

On August 15, the consultants presented key items and their judgment as to whether each had high, moderate, or low consensus, based on its prevalence in the five stakeholders’ proposals.

Task Force Votes Taken

In an effort to provide the consultants with further direction, the 22 task force members present at the August 15 meeting voted by a show of hands on several consensus items, including:

• 13 votes in favor of increasing taxes of some kind at the state level (move from low to moderate consensus);

• 12 votes in favor of an individual mandate (move from low to moderate consensus);

• 12 votes in favor of an employer mandate (move from low to moderate consensus);

• 12 votes against including a significant role for the private sector in the plan that is recommended (move from moderate to high consensus);

• nine votes to move the use of health savings accounts (HSAs) from low to moderate consensus;

• eight votes to move the use of HSAs or Medicaid personal savings accounts to provide flexible benefits from low to moderate consensus; and

• seven votes to move implementation of a single-payer system from low to high consensus; after this vote failed, a second vote was taken to move single-payer from low to moderate consensus, but that proposal received only 10 votes.

Afterward, a formal roll call vote was taken on a motion to adjust the hybrid proposal to reflect areas where task force members have high consensus, without dismissing items having at least a moderate consensus. The vote was 12-9, with one abstention.

Observations

Having attended most of the task force’s meetings, I’d like to offer some observations about the process and its likely outcome:

• The AHCTF’s application of interest-based negotiation has prevented meaningful discussion and debate on a subject everyone should agree is very complex.

• Few, if any, of the stakeholders’ proposals appear to have taken into account the broad-based testimony given by experts between October 2005 and April 2006. That is regrettable.

• The consultants made recommendations concerning possible future health insurance market changes–for example, collapsing rate bands in the small group market and moving to guaranteed issue in the individual market. But it does not appear they paid much attention to the actual market conditions in Illinois. The consultants’ hybrid proposal seems to be based on market assumptions that may be true in Maine, Massachusetts, Vermont, and other states that already have destroyed or seriously damaged their commercial and individual health insurance markets, but those assumptions are not appropriate in Illinois, given its reasonably competitive private market.

• The consultants’ analysis appears to have focused almost entirely on the insurance component of health care, excluding the cost drivers underlying service provision. Moreover, they seem to have understated the administrative cost assumptions in their modeling for public insurance and overstated them for the private market. Some of the task force members presented third-party data on this subject from credible sources, calling into question the overall accuracy of the assumptions used. The consultants largely ignored that data.

• The business community is a major stakeholder in the debate over how health care should be financed, but it has had little representation in these discussions. The accompanying table shows a breakdown of the task force members’ professional affiliations.

• One of the operating principles the task force adopted this year was the need to consider the possible unintended consequences of any proposed health system changes. To date, there is little evidence to show that principle has been meaningfully applied.

• On July 25, someone asked whether any kind of economic impact study of the proposals would be done. The question was not answered in a meaningful way. I do not believe either of the consultant firms is able to claim economic forecasting as a core firm competency.

• One clear bias of the AHCTF process is that government is preferred over free-market competition as a means of allocating scarce health care resources. Given the August 15 votes, it appears the task force’s eventual recommendations will include some expansion of state government’s involvement in health care.

• The three stakeholders’ proposals scoring highest–Campaign for Better Health Care/Health and Disability Advocates, single payer, and the consultants’ hybrid proposal–relied on employer and individual mandates.

• The consultants’ hybrid model has the look and feel of a template. Given how Medicaid is busting states’ budgets nationally, similar task force initiatives are being convened in a number of states. A fairly small number of consultants, including the firms engaged by the Illinois Department of Public Health, are being awarded consulting projects from state governments to look at everything from 2005 Deficit Reduction Act Medicaid amendments to Medicaid waivers and general health care system financing changes inclusive of Medicaid.

Inaccuracies

States are becoming homogenous in their treatment of health care. Factually inaccurate statements made by one of the consultants at the July 25 meeting about the individual health insurance market in Illinois, and some underinformed recommendations for rate regulation changes in the small employer market, lead me to criticize the consultants on this point.

Illinois’ spring 2007 legislative session promises to be lively. Regardless of who is elected governor in November, there will be much pressure to do “something” about the uninsured and to increase health care access and affordability.

It is certainly possible that the “something” will be a government takeover of health care in Illinois.

John Garven ([email protected]) is a Heartland Institute policy advisor and cofounder and president of Benico Ltd., an employee benefits consulting firm in Huntley, Illinois.