October 29, 2014

Indebting Missouri’s Children and Expanding Government? That’s Just Wimpy

Although the Popeye the Sailor cartoons were made long before I was born, I was a connoisseur of the VHS copies I had as a kid. Along with Popeye, the shows typically featured his nemesis, Bluto, and his love interest, Olive Oyl, but perhaps the most memorable character from the series outside of Popeye himself was his companion J. Wellington Wimpy. Unfortunately, he’s memorable for all the wrong reasons.

Wimpy is soft-spoken, very intelligent, and well educated, but also cowardly, very lazy, overly parsimonious and utterly gluttonous. He is also something of a scam artist and, especially in the newspaper strip, can be notoriously underhanded at times.

In the animated cartoons, Wimpy comes off as someone who not only is unreliable in his words but, ultimately, self-aggrandizing in his behavior. His signature phrase, “I’ll gladly pay you Tuesday for a hamburger today,” hints that Wimpy will never pay you at all.

Even as a kid, Wimpy’s character was troubling because, like most children, I was well-acquainted with the idea of “fairness.” Wimpy was always willing to make others worse off for his own immediate benefit, and because of Wimpy’s generalized character issues, it was just hard to like him.

Wimpy would make you worse off . . . and he’d do it with a smile. When I think about how government and its politicians operate, that is, unfortunately, one of the images that comes to mind.

Perhaps this Wimpy image is most appropriate when it comes to the Obamacare debate in Missouri. On the one hand are the true believers who, despite evidence to the contrary, believe that government health care is the best health care. On the other hand are the Wimpys of the debate, whose support of Obamacare’s Medicaid expansion has more to do with their near-term interests than the long-term consequences of their actions. Those consequences include billions of dollars in new spending and debt saddled on future generations to fund a failing and flailing health care program, meant to explicitly benefit the well-connected and highly profitable hospital industry. So before we pick up the Obamacare expansion fight in 2015, let’s be clear: that’s just wrong.

I have no problem disagreeing with and debating folks who have a worldview that expanded government is better policy than small government. We can win that debate on the facts. But I have a serious problem with those out there who have concluded that expanded government is better politics—the contingent that’s calculated that they won’t be paying for their hamburger when the bill comes due.

That’s just Wimpy. Missouri needs genuine Medicaid reform. Fix Medicaid. Don’t expand it.

October 22, 2014

Missouri’s Medicaid Program Striking Out Intended Beneficiaries

In baseball, getting a hit three out of 10 at-bats could make you an All-Star, and maybe even a Hall of Famer if you do it consistently enough. But while batting .300 is pretty good for the National Pastime, in most other contexts succeeding only three out of 10 times won’t get you accolades.

That point was hit out of the ballpark over the past few days.

Last week mid-Missouri’s ABC 17 reported on the story of a pregnant woman who had been trying to sign up for Medicaid benefits, only to have her paperwork lost and her calls unreturned by the Department of Social Services (DSS). When the issue came up at a House hearing, the DSS admitted it had to do better, but it also admitted something astonishing (emphasis mine).

The Department says thirty percent of its callers are having their needs met, which Campbell acknowledges is too low. She says staff are being reassigned to taking calls and other changes are being made to improve that percentage, but [State Rep. Sue] Allen says the situation remains frustrating.

“In a company, in a private business, people would be gone,” observes Allen.

Missouri’s Medicaid program is deeply broken, and yet some of our politicians think now is the time to expand it with Obamacare. It isn’t. In baseball and business, step one would be to fix what is wrong and then build upon successes, not to double-down on a bad system and bad players. That’s what Missouri should be doing: fixing Medicaid, not making an already bad situation worse—especially for the patients the program was supposed to help.

Missouri’s Medicaid system is institutionally well below the Mendoza line. It’s time to rethink the program.

October 15, 2014

Increasing the Health Care Supply to Meet Health Care Demand

Robert Graboyes is a senior research fellow for the Mercatus Center. Later this month Dr. Graboyes will release a report about health care innovation, which I intend to talk about at some length on this blog. In the meantime, I want to re-up the Reason video from earlier this year. The video features Dr. Graboyes talking about a wide array of reforms that would get care to the neediest among us. If you’ve read our work before, you’ve probably heard of many of the recommendations he talks about, including regulatory, Medicaid, certificate of need, and scope of practice reforms. I highly recommend the video, particularly the section about prosthetics and 3-D printing, which captures well how quickly the market for health care could change in the coming years.

October 14, 2014

Free-Market Health Practitioners Get a Group

Late last month, supporters of the newly established Free Market Medical Association (FMMA) converged on Oklahoma City for the organization’s first ever annual conference. As the name suggests, the organization is intended to bring doctors and providers together to share ideas and defend “the practice of free market medicine without the intervention of government or other third parties.” Given the sorts of reforms American health care needs these days, the FMMA’s entry onto the national stage is a welcome one.

Along with noting the FMMA’s existence, there’s also a reason worth teasing out for why the FMMA held its first conference in Oklahoma City. The short answer is “it’s where the FMMA’s organizers are based,” but a more complete answer is it’s where some very interesting free-market business models are being put into practice.

Advocacy of free market health care is the longtime passion of Dr. Keith Smith, co-founder of the Surgery Center of Oklahoma [and the FMMA]. The center began to post fixed prices for common medical procedures years ago, and has provoked widespread admiration within the medical profession for efficiency, reasonable cost and frequent support for those who are less fortunate.

At the Surgery Center, Dr. Keith Smith and Dr. Steve Lantier have established an operational structure and market-oriented billing as explicit alternatives to the third-party payer systems that now dominate U.S. health care.

The center posts online an up-front price for medical procedures in diverse areas of practice, including orthopedics, ear/nose/throat, general surgery, urology, ophthalmology, foot and ankle, and reconstructive plastics. In all, a total of 112 procedures are listed.

Translation? Transparent pricing plus direct pay works out to a pretty good business model premised on competition and service. Price transparency is huge because it’s generally pretty difficult to price shop in the U.S. health market, in part because the third-party payer system disincentivizes it, and because many providers aren’t willing to publish those prices. That makes it difficult to force prices down through competition. Posting prices should be common practice in the industry; unfortunately, it’s not.

It’s good to see folks in the movement getting organized when it comes to demonstrating that, yes, free-market reforms to health care do exist and can work. In the coming months, Show-Me readers will hear a lot more about free-market health care alternatives. Stay tuned.

August 1, 2014

Show Me Better (Part 4): Certificate Of Need And Market Power

How far are you from the nearest hospital? Maybe you wonder why there is a single mega-hospital 10 miles away but aren’t any smaller ones nearby. Part of the explanation may be certificate of need (CON) regulations.

A 2004 report by the U.S. Department of Justice and Federal Trade Commission found that CON programs “pose serious anticompetitive risks that usually outweigh their purported economic benefits.” So far, I have written about how CON regulations can limit access to care and have been shown to not effectively control costs. CON regulations have the potential to stifle competition and grant existing hospitals monopolies over certain regions. Some existing hospitals may even attempt to use these regulations to prevent competition from entering the market.

How does this play out in Missouri?

In the past, any time a new hospital wanted to open up in Missouri, it had to apply for a CON – irrespective of its size and cost. A revision to Missouri’s CON rules changed the criteria for review from every new hospital to every new hospital whose cost is at least $1 million.

In April 2010, Patients First Community Hospital expressed its intent to build a small hospital in Saint Louis County that did not meet the new threshold for certificate of need review. Shortly thereafter, a regional rival, St. John’s Mercy Health System, filed a lawsuit against the Missouri Health Facilities Review Committee and Patients First. St. John’s challenged the legitimacy of the new $1 million amendment and construction of the new hospital. In 2012, the Missouri Supreme Court ruled that the new criteria for review was perfectly legal, thus giving Patient’s First the green light for the project.

Despite the ruling against St. John’s, this is an excellent example of a hospital using the legal system in an attempt to stomp out the competition, all under the pretense of CON regulation. It took about two years for Patients First to have its plan approved. These sorts of delays can deprive patients of new, much-needed medical facilities.

The state should not allow such an environment to exist.

July 29, 2014

Show Me Better (Part 3): Certificate Of Need And The Cost Of Care

As consumers, we like to get more for less – especially when it comes to our health. Usually we feel ripped off if we receive a lower-quality service for the same (or higher) cost of a better service. In a previous blog post, I discussed how, in some cases, certificate of need (CON) programs can be the very reason patients are forced to receive inferior care from less-skilled doctors. Additionally, CON regulations likely do not save patients much money, if any.

In a world of limited resources and virtually unlimited wants, we are forced to make trade-offs. A decrease in the quality of health care might be acceptable if CON led to lower costs. Proponents of CON argue that this regulation does contain the cost of care by preventing the “duplication of services” in a given geographic area. To illustrate this chain of reasoning, let’s say that Barnes-Jewish Hospital and Saint Louis University Hospital buy “too many” MRI machines – as a result, many of the new MRI machines go unused. Because of the outlay, CON proponents assume the two hospitals will probably charge higher prices for MRI scans to make up for the mistake.

There is evidence to suggest that theory is not well founded. One evaluation of Illinois’ CON program found that “there is little direct broad proof that overcapacity duplication leads to higher charges.” CON regulations may result in “tangible savings on the actual costs of specific medical technologies” but these programs tend to “redirect expenditures to other areas.” In other words, CON may actually prevent hospitals from spending too much on a certain type of medical technology, but any savings will be spent on other items instead of being passed onto patients. One study even suggests that strict CON programs may actually increase health care costs by as much as 5 percent.

What use is a program that can be delivering sub-optimal health care without cutting costs?

July 22, 2014

Show Me Better (Part 2): Certificate Of Need And Access To Care

One of the benefits of free markets is their ability to match buyers with sellers. Potential customers assess the supply of goods and services, the parties agree to the prices, and, generally speaking, purchases are efficient – delivering comparable value to both parties.

Unfortunately, Missouri’s certificate of need (CON) program may be erecting barriers to the market functioning efficiently when matching care providers and care consumers. A recent working paper by the National Bureau of Economic Research examined how hospital entry deregulation in Pennsylvania affected the market for cardiac revascularization. Because Pennsylvania eliminated its CON program in 1996, economists were able to compare clinical outcomes before and after the program’s repeal — the ideal conditions by which to conduct an experiment. The researchers found that “free-entry improves the match between underlying medical risk and treatment intensity” and “improved access to care.”

Another study conducted in the same state, on the same topic, found that the post-deregulatory market did a better job at matching the appropriate procedure to the appropriate risk level. After deregulation, better doctors also saw an influx in demand for their services.

Removing the CON program in Pennsylvania empowered patients to attain better care from better doctors. Certainly, a market uninhibited by cumbersome regulations does a better job at matching the right patient to the right procedure, performed by a better doctor, than a nine-member regulatory board. Missouri could follow Pennsylvania’s lead in doing away with the micromanagement and creating a system conducive to competition and innovation.

July 21, 2014

Show Me Better: Assessing Certificate Of Need In Missouri

One of the most obvious examples of a massive government burden on our health care system is the Affordable Care Act (Obamacare), but Obamacare does not have a monopoly on onerous government regulations in Missouri. In fact, some state-run regulatory programs, such as certificate of need (CON), may also play a role in increasing the cost of care and decreasing access to care for some of the state’s neediest patients.

A certificate of need is a legal document the state issues to allow a health care provider to expand, modify, or construct certain health care facilities. In Missouri, a nine-member committee reviews applications for certificates of need and administers them in accordance with its own rules. For example, last year, the Lafayette Health Center received a CON to construct a new $40 million hospital. Based on the committee’s rules, Lafayette likely paid the review committee a hefty $40,000 application fee.

One of the original purposes of the program was to guarantee health care access by limiting competition in a particular region. Proponents assert that, with less competition, the likelihood of a hospital going out of business will be reduced, hopefully ensuring a sufficient level of care for citizens near the health care provider. Yet, empirical evidence suggests that CON programs neither control costs nor improve health outcomes. Indeed, they may actually hamper access to care and patient choice, at least under some circumstances.

If the certificate of need law could be hurting the people it was intended to help, should it be reformed? Abandoned? These questions are central to why we, as Missourians, ought to take a serious look at the necessity and efficacy of the state’s CON program. In future posts, I will review how CON regulations impact health care costs, access to care, and clinical outcomes.

July 14, 2014

‘Right To Try’ Law Gets Gov. Nixon’s Signature

Today is the last day for Missouri Gov. Jay Nixon to veto or sign legislation that the 2014 General Assembly passed. So, with the state’s “Right to Try” proposal still sitting on his desk, I started my workday with a smidgen of trepidation. “Right to Try,” you might remember, would empower patients with terminal illnesses to more freely seek experimental medications in hopes of finding something that could help them.

The concern: Would the governor veto “Right to Try” this year, much like he vetoed the Volunteer Health Services Act last year?

The answer: Nope. He just signed it.

The Governor signed two health-related bills, which will provide Missourians in specific situations with additional options for medical treatment of illness and disease. House Bill 1685 allows drug manufacturers to make available investigational drugs, biological products, or devices to certain eligible terminally ill patients. House Bill 2238 allows the use of hemp extract to treat some individuals with epilepsy and also allows the Department of Agriculture to issue licenses to grow industrial hemp strictly for research purposes. House Bill 2238 contains an emergency clause.

I talked about this bill a lot in the last few months. This was, to me, an obvious opportunity to empower people to make each other’s lives better. The government should open doors for people to care for one another, not erect and maintain barriers to helping each other. “Right to Try’s” enactment is not only a victory of reform-minded policy, but more importantly, it is a victory for Missourians in need.

Congratulations to the Missouri House and Senate for sending the bill to the governor, to the legislators who sponsored the bill and powered this important conversation, and to the governor for making the right decision by adding his support to the unanimous votes of the legislature. Well done.

June 18, 2014

Thank Obamacare: Buchanan County, Mo., Tops List For Insurance Rate Hikes On Men

Last year, Forbes published a story about how much insurance rates were expected to rise across the country because of Obamacare. Today, Avik Roy and his crew published their follow-up. The study has bad news for just about everybody, but our own Buchanan County appears to have been hit especially hard by the President’s signature legislation. (Emphasis mine.)

Our new county-by-county analysis was led by Yegeniy Feyman, who compiled the county-based data for 27-year-olds, 40-year-olds, and 64-year-olds, segregated by gender. We were able to obtain data for 3,137 of the United States’ 3,144 counties….

Among men, the county with the greatest increase in insurance prices from 2013 to 2014 was Buchanan County, Missouri, about 45 miles north of Kansas City: 271 percent. Among women, the “winner” was Goodhue County, Minnesota, about an hour southwest of Minneapolis: 200 percent. Overall, the counties of Nevada, North Carolina, Minnesota, and Arkansas haven experienced the largest rate hikes under the law.

Amazingly, that 271 percent figure conceals something else about Buchanan that is just jaw-dropping. If you use Forbes’ national rate navigator, you discover that a 27-year-old man in Buchanan County can expect an individual insurance policy rate increase of — get this — 411 percent.

This is “affordable”? How can any politician tell his or her constituents with a straight face that Obamacare is working, or that we need to help the Feds implement this disaster in Missouri? Missouri needs market-based insurance reforms, not Obamacare and its Medicaid expansion. Our people deserve better than this raw deal.

May 16, 2014

Landmark ‘Right to Try’ Legislation Crosses The Finish Line

As the session was coming to a close this afternoon, the Missouri House and Senate both passed the “Right to Try” bill and sent the legislation to the governor. As I’ve written and testified in the past, the law will allow greater flexibility for terminally ill patients. Specifically, it allows these patients to seek medications that the drug companies have developed and the FDA has determined to be safe for humans, but are not yet sold on the market. Assuming the governor does not block it, Missouri is set to become one of the first states in the country to enact such legislation. Following the passage of last year’s Volunteer Health Services Act, Missouri is certainly on a roll when it comes to enacting forward-looking and people-empowering health care reforms. Right to Try’s passage is a victory for Missourians.

Congratulations to the legislators who made the bill happen, to the Goldwater Institute, which has pioneered the idea, and most importantly, to the patients and families who will benefit from this law’s enactment.

Medicaid Expansion Push Fails Again; Ditch The Spending And Enact Real Reform

This Wednesday, the Obamacare crowd introduced, and then withdrew, their final attempt at Medicaid expansion in Missouri. That means the state will not expand Obamacare for another year, and that’s good news for Missourians. It isn’t “conservative” to strap a spending bomb to substantive Medicaid reforms and then call the whole thing a “transformation.” Legislators were right to reject it.

Instead of suggesting that special interests will block substantive Medicaid reform, Missouri’s policymakers should stand up, fight the special interests rather than carry their legislation, and deliver the Medicaid fixes we have been promised for years. That some lawmakers would articulate specific reforms and yet would block their progress as a way to force an expansion is as cynical as it is disappointing.

No doubt, expansion supporters will promise that the Medicaid fight will continue next year. And they’re correct. We’ll see you then.

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