Consumer Power Report: More False Flexibility From HHS

Published August 30, 2011

Welcome to the Consumer Power Report, which neither snow nor sleet nor 26 hours without power can stop.

One of the big questions for states regarding their ability to respond to the host of budgetary issues under President Obama’s health care regime has been, and will continue to be, flexibility in regards to Medicaid eligibility. As you know and as we’ve dealt with in past CPRs, the economic downturn exacerbated these problems and accelerated Medicaid’s unsustainable growth path, making what was once an off-year issue into a very clear and present danger to state budgets.

But not to worry: Obama’s law, we were told, promised states new flexibility in how to respond to these problems. It’s hard to find public remarks by Kathleen Sebelius where flexibility goes unmentioned, as she repeatedly invokes it against accusations of top-down mismanagement. The problem is finding any examples where this “flexibility” is actually being used: [when called to respond to state demands] when called to respond to state demands, Sebelius has dodged again and again.

Republicans have accused Sebelius of playing politics with flexibility in rejecting requests for waivers from Republican governors, to which my response is: of course she’s playing politics. She’s a politician! Politicians stop playing politics with the same frequency that Aaron Rodgers pauses mid-drive for a sideline game of Mario Kart! But now in Illinois, we have an example that shows the administration’s chief objection is to giving the states any power whatsoever to restrict Medicaid eligibility—even when proposed entirely by Democrats. Avik Roy writes:

Illinois has one of the most expansive Medicaid programs in the country, with annual state and federal spending of $15 billion. That compares to a state budget of $33 billion. In the Land of Lincoln, you can qualify for Medicaid if your income is under 200 percent of the federal poverty level—$44,700 for a family of four. Children qualify at 300 percent of FPL. One out of every five Illinoisans is on Medicaid, including one-third of all Illinois kids.

But in order to prove that you’re eligible for Medicaid in Illinois, all you have to do is provide a single pay stub. If that pay stub happens to be artificially low, suggesting a lower income than you actually have, it still counts as “proof” of Medicaid eligibility. As to proving Illinois residency? The nice people of Illinois merely ask that you write down your address. As a result, people earning more than the Medicaid threshold, and people who don’t even live in Illinois, are collecting Illinois Medicaid funds.

So in January, the State of Illinois, under a Democratic House, a Democratic Senate, and a Democratic Governor, passed a landmark Medicaid reform bill aimed at fixing this and other problems with the program. The new law required the state’s Medicaid recipients to provide a month’s worth of pay stubs, instead of just one, in order to provide evidence of residency and income. Not a big deal, you might think.

You’d be wrong. In July, the federal Centers for Medicare and Medicaid Services informed Illinois that the seemingly innocuous reform violated federal law, because Obamacare doesn’t allow states to restrict Medicaid eligibility, and this reform, they decided, was an eligibility restriction.

Small wonder that fraud abounds in such a system, where states can’t even take action to demand the most basic level of proof of qualification on the part of applicants. Despite the fact that the Congressional Budget Office calculated that “block granting” just one portion of Medicaid’s services—long term care—to the states would result in savings of $287.4 billion over the course of a decade, it appears now that the lip service given to the idea of flexibility is just that. The only actual flexibility proven by action is the leeway provided to states to allow for an explicit single-payer approach, as is currently underway in Vermont.

This law was never about competition, innovation, or flexibility. It was about the centralization of power and creating a delivery system for bureaucratic regulation. The only flexibility there is in how quickly you get on board with The Plan, and how quickly the hammer comes down if you don’t.

–Benjamin Domenech



Concerned that states aren’t getting on board that plan fast enough, HHS is rolling out a new approach which is designed to argue that state agencies and commissioners can set up the exchanges without any approval from troublesome state legislatures. How convenient!

Only 11 states have fully embraced the idea of taking federal money to set up their own state-run insurance exchange, a U.S. Department of Health and Human Services official said Tuesday. The exchange, a key part of Obama’s health care overhaul, is designed to help uninsured people buy coverage from a choice of plans with federal tax credits.

But states that have been slow to accept the idea, or outright rejected it in resistance to the law, will have another chance.

U.S. Department of Health and Human Services officials told Montana legislators Tuesday that the agency is working on a new partnership model to let state agencies help run the exchange — perhaps without the need for legislative authorization.

Marguerite Salazar, a regional director of the Department of Health and Human Services, said the proposal for the partnership is new within the past two months. State agencies are being invited to Washington D.C. next month to discuss it.

“I think it is going to be the option for states that are nervous about a full-fledged exchange,” she said in an interview.

Note that this follows Minnesota Gov. Mark Dayton’s decision to engage in exactly that kind of approach, just ignoring the legislature to slam an exchange forward.

SOURCE: Washington Post


What’s so ridiculous about this lack of flexibility is that in nearly every context, it appears the states do a better job of reaching their people. A report from the GAO requested by Sen. Mike Enzi (R-WY) uses the example of high risk pool difficulties to provide another illustration:

As of April 30, the Government Accountability Office found, the 27 states that operate their own pools had enrolled 15,781 people with pre-existing conditions. The federally-operated pool for the 23 other states and the District of Columbia, by contrast, only had 5,673 enrollees…

The report found that enrollment figures ranged from 0 in Vermont and 1 in Massachusetts (both operated by the Department of Health and Human Services) to 3,191 in the state-run Pennsylvania pool.

Democrats’ healthcare reform law set aside $5 billion to help people with pre-existing conditions obtain affordable coverage before insurance exchanges go online in 2014. The program has come under criticism for failing to meet expectations, with fewer than 22,000 people enrolled as of April 30, far short of the 200,000 to 350,000 that had been predicted.

The program’s early failure in Vermont is especially noteworthy because federal officials last year rejected two proposals by the Green Mountain State to run its own pool. Vermont had proposed expanding its existing health insurance programs or working with Blue Cross and Blue Shield to establish a new program, according to the Burlington Free Press, but HHS rejected the proposals in part because they would not have been effective soon enough to comply with the law.



Interesting new report from their health care office, conducted with the assistance of Gorman Actuarial, LLC and MIT’s Jonathan Gruber. Key findings:

Approximately 40% of consumers in the non-group market will be forced to purchase richer health insurance benefit packages than they need due to new requirements placed on health plans including rating and product limitations.

The PPACA calls for a “hidden tax” on Wisconsin families. Beginning in 2014, working class families will subsidize the purchase of health insurance for families making as much as $89,400.

Wisconsin’s traditional non-group health insurance market is expected to shrink from 180,000 individuals to 30,000 individuals because federal and state dollars will be used to cover individuals who are already covered by private health insurance today.

Individuals will be dropped from their employer’s health plans. It is estimated that 100,000 individuals will be involuntarily dropped from employer sponsored health insurance.

The majority of individuals in the non-group (individual) and small group (employers up to 50 employees) markets will pay more in premiums for health insurance by 2016 than they pay today.

Prior to the application of tax credits, 87% of individuals in the non-group market will receive an average premium increase of 41%. After the application of tax credits, 59% of the non-group market will receive an average premium increase of 31%.

The analysis shows that 53% of small employer groups will experience premium increases averaging 15%.

SOURCE: Wisconsin Office of Free Market Health Care


In the wake of [ James O’Keefe’s Medicaid sting in Maine, Gov. Paul LePage (R) calls for more anti-fraud efforts:

Gov. Paul LePage said Thursday that he wants to more than double the number of fraud investigators in the state to crack down on people who abuse the benefits provided by the Department of Health and Human Services.

“The last administration did not want to prosecute fraud,” he said during a town hall meeting. “We do.”

LePage said there are 11 fraud investigators across the state now, but he thinks there should be two per county — which would total 32. The comments came as LePage and members of his Cabinet answered questions from an audience of more than 150 people at the University of Maine at Presque Isle as part of his Capitol for a Day tour.

Before the session, LePage answered questions from the local media, including an inquiry into four firings at DHHS that were announced earlier in the day. The department said in a news release that four “political appointees” from previous administrations had been dismissed.

When asked if the department was being restructured, LePage said, “Absolutely.”

“The state of Maine has to change its culture,” he said. “If you want to change, we will work with you. If you don’t want to change, sayonara.”

SOURCE:Portland Press Herald


James Wootton and James Capretta weigh in. Their “Replace” portion is of note:

Congress will soon be asked to cut the deficit by $1.2 trillion over a decade. It can’t meet that objective without reform of Medicare and Medicaid. It can make a good start by repealing the entitlement expansions in the health law and replacing them with far less costly programs that address the real problems in American health care.

The contours of such alternatives are clear. They must cover pre-existing conditions without an individual mandate and eliminate gaps left by previous attempts to improve the portability of health coverage.

People without good employer-provided plans, including the uninsured, should get help paying for their insurance. Large and medium-size employer plans should be left in place, with new incentives to help reduce their costs.

Federal requirements should be minimal, and states should retain their role as regulators of health insurance.

Most important, any replacement must make it easier for consumers to seek high-quality, low-cost health care without the law’s hopeless bureaucracy.

Honest observers can no longer deny the problems with Obamacare. Congress should freeze it before more damage is done and pass legislation to improve health care with less spending.

SOURCE:Washington Examiner


Spencer Harris and Brad Zarin write on the impact of PPACA’s regulations on Texas POH’s:

Texas, with more POHs than any other state, is hit harder by the new regulations than any other state. According to a 2009 study by the Health Economics Consulting Group, Texas POHs contributed approximately $2.9 billion in economic activity to the state per year, including the provision of 22,226 full time jobs. Figures 4 and 5 show the comparison with seven other states.

The impact of the PPACA is not just economic; it also affects the quality of care delivered to Texans. A report by the Center for Medicare Services shows physician-owned hospitals in the Dallas, Houston, Austin, San Antonio, and Rio Grande areas ranked higher than general hospitals in every area and every category, including facility cleanliness, staff attentiveness, and promptness of service.

POHs are vital to Texas’ economy and ability to deliver quality health care to our citizens, but the new Health Care Law puts all of that in jeopardy. Such is the case with the Texas Spine and Joint Hospital (TSJH), a Tyler-based POH that specializes in diseases and injuries that affect the spine and joints. The level of care received at TSJH has been recognized on multiple occasions as among the highest in the nation.

SOURCE:Texas Public Policy Foundation


Jane Orient writes on the Governor’s stem cell procedure:

While all medical procedures have risks, the use of the patient’s own cells is a one-on-one procedure that is logically part of the practice of medicine. It does not entail the public health risk of products manufactured for a large number of recipients. There is no FDA oversight for procedures like grafting a leg vein into the patient’s own coronary artery, and minimal oversight of transplanting tissues from cadavers. The FDA is always trying to expand its regulatory authority—causing enormous increases in costs and lengthy delays in making new treatments available to patients.

“Vetting” procedures by researchers also costs millions of dollars and stifles and delays innovation. And what do researchers do? Like doctors, they do the procedure on human beings—they differ from doctors in that they follow a protocol in order to collect data on a group of experimental subjects, instead of following the procedure they think is best for an individual patient…

Powerful vested interests —big universities, big government, big pharma—want to control what patients are or are not allowed to have. A past president of the International Society for Stem Cell Research accused Perry of “setting the wrong example for ailing patients.”

On the contrary. Governor Perry is setting the right example for Americans: a patient exercising his own freedom to seek the care he thinks is best, and a physician doing what he believes is best for his patient.

I wrote about this issue for Investor’s Business Daily last week. I expect we’ll see more of it in the future. Whether for the individual or the state, flexibility is a thing of the past. Just do what you’re told.


SOURCE:The Cypress Times