May 20, 2015

Medicaid and Why We Can’t Have Nice Things

Have you ever been in Best Buy (or, for you millennials, on Amazon) and looked at a nice 70-inch 4K Ultra HD television that made you desperate to buy one? I know I have, but the thing that stops me from splurging is the knowledge that I would like to eat this month, pay rent, and heat my home. Now, a lot of government spending isn’t like buying a nice television, but the analogy holds. It’s like what people tell their kids: Sometimes you face a choice of either buying what you want or what you really need. Wonder why we aren’t fully funding the foundation formula or why spending for corrections is relatively flat (after adjusting for inflation)? The explosive growth in Medicaid might not be the sole reason why, but it’s probably playing a big part.

For this upcoming fiscal year (which begins on July 1), the state has appropriated close to $9.4 billion to Medicaid. This includes more than $1.86 billion in general revenue (state funds that include your income taxes and most of your sales taxes). This is an increase of close to $200 million ($110 million in general revenue) over this year. That sounds like a lot of money, and it is, especially considering that Medicaid continues to take up a larger portion of the state’s budget.

The two charts below show the effects of Medicaid growth on state general revenue expenditures:

Inflation3 Inflation5


As you can see, as Medicaid grows, other programs like higher education and the foundation formula shrink as a portion of the budget. That isn’t to say that such shrinking is good or bad, but since the state has a balanced budget amendment, appropriators don’t have much choice in the matter either way.

With Medicaid costs growing, one would understand a desire to get costs under control. However, there is a concerted effort in this state to actually expand Medicaid. My colleague Patrick Ishmael has highlighted several reasons why this would be a bad idea, but solely from a budget perspective, expanding the program would be disastrous.

We need to reform Medicaid, not expand it. Ishmael has laid out ways to improve our Medicaid system. If the state can save more on Medicaid or at least stop its growth, it would grant financial flexibility to policymakers to either spend on other important items or return more money to the people who pay the bills, taxpayers.

May 6, 2015

Passed: Direct Care Bill Moves On to the Governor

On Tuesday, the Missouri Senate passed HB 769, which protects medical retainer agreements, or “direct care,” from undue regulatory interference from the state’s Department of Insurance. We’ve talked about the importance of the direct care issue before and highlighted HB 769′s progress. Its passage is a win for Missouri patients.

Removing barriers to care should be a priority over simply guaranteeing Americans “coverage,” which is the focus of Obamacare. The problem with prioritizing mere coverage over actual care is that in many cases being “covered” only provides the illusion of protection, like many Medicaid beneficiaries have found, and not much else.

If the doctor won’t see me, what good is any “coverage” I might have?

That’s where direct care agreements come in. Here, the care is contracted directly with a doctor, cutting out the middleman insurer whose networks may not actually fit my care needs. Can health insurance supplement direct care arrangements? Sure, but the arrangement itself is not insurance. And that’s what HB 769 reaffirms—that direct pay arrangements are care, not just coverage.

Kudos to the general assembly.

May 5, 2015

Obamacare Expanders’ Emergency Room Claims: Still False


Supporters of the Affordable Care Act’s Medicaid expansion have claimed for many years that implementing Obamacare would reduce emergency room visits. In a press release distributed on New Year’s Eve 2013, Missouri Gov. Jay Nixon suggested that by expanding Medicaid fewer people would show up to emergency rooms.

Tomorrow, businesses in these states [that expand Medicaid] will have a significant competitive advantage—because as more people get health coverage, fewer people show up in emergency rooms, putting downward pressure on private health premiums. [Emphasis mine]

We’ve noted before that this isn’t true, and news released yesterday from the American College of Emergency Physicians confirms this yet again.

A survey of 2,098 emergency-room doctors conducted in March showed about three-quarters said visits had risen since January 2014. That was a significant uptick from a year earlier, when less than half of doctors surveyed reported an increase. The survey by the American College of Emergency Physicians is scheduled to be published Monday.

Medicaid recipients newly insured under the health law are struggling to get appointments or find doctors who will accept their coverage, and consequently wind up in the ER, ACEP said. Volume might also be increasing due to hospital and emergency-department closures—a long-standing trend.

“There was a grand theory the law would reduce ER visits,” said Dr. Howard Mell, a spokesman for ACEP. “Well, guess what, it hasn’t happened. Visits are going up despite the ACA, and in a lot of cases because of it.” [Emphasis mine]

Obamacare didn’t fix what was wrong with Medicaid. It simply doubled-down on a broken status quo—adding beneficiaries to a limited and narrowing network better known for its terrible health outcomes and dysfunction than for its care. If we want to make health care for the neediest in this state better, then we have to actually reform the current Medicaid program, not repackage Obamacare’s expansion and overlay it onto actual reform proposals.

Missouri needs Medicaid reform, both for beneficiaries and for taxpayers. Expanding Obamacare doesn’t get us there.

April 23, 2015

Health Care Bills On the Move from the House to the Senate

We’re approaching the end of the session, and it’s worth highlighting a few health care-related bills that are winding through the Missouri General Assembly.

  • HB 769 makes “medical retainer agreements” exempt from regulation by the state’s Department of Insurance. MRAs are direct-pay arrangements—where a patient and a doctor contract directly for care. Such contracts are not a matter of insurance, but in other states there have been pushes to regulate them under the “insurance” umbrella. HB 769 would preempt such a move.
  • HB 985 enhances Missouri’s Medicaid eligibility verification system by leveraging the resources of a third party. Over the past year MO HealthNet has been hit by a series of embarrassing reports of waste and mismanagement. Suffice it to say, money wasted is money that cannot go to the poor beneficiaries who need it most. HB 985 tries to tackle the problem of waste on the enrollment side by trying to make sure those limited dollars flow to beneficiaries who, in fact, qualify for them.
  • HB 319 expands on an existing state law dealing with MO HealthNet telemonitoring services, also known as telemedicine. Telemedicine allows medical professionals to diagnose medical problems remotely, which for people in medically underserved communities is a great technological innovation and benefit. Section 208.670.1 of current law already allows for reimbursements for telehealth “in the same way as reimbursement for in-person contacts”; HB 319 pushes MO HealthNet to further adopt and advance telemedicine practices.

April 17, 2015

What Does It Mean to “Have Health Care”?

This question has come into sharp focus just five years after the Affordable Care Act’s (ACA) passage. Does it mean having insurance? Or does it mean having accessible, affordable, and fundamentally personal care?

These may sound like philosophical questions, but the answers have very real consequences, as this story in the New York Times shows.

Alison Chavez, 36, who is self-employed, signed up for a marketplace plan in October 2013 that she hoped would be an improvement on her previous plan. She had recently been given a diagnosis of breast cancer and was just beginning therapy, so she was careful to choose a policy on the Covered California marketplace that included her physicians.

But in March, while in the middle of treatment, she was notified that several of her doctors and the hospital were leaving the plan’s network. She was forced to postpone a surgery as she scrambled to buy a new commercial policy that included her doctors. “I’ve been through hell and back, but I came out alive and kicking (just broke),” she wrote in an email.

Obamacare tries to treat the symptoms of a sick American health care system—the rising cost of insurance—but it doesn’t really treat the underlying sickness, the rising cost of care. And that’s ultimately what we expect when we “have health care”: care. It’s just not necessarily what people receive under the ACA.

In that context, it’s understandable that many Americans are looking for alternative care models that meet their needs, not the needs of a government bureaucrat. The “direct care” model is one of the most promising. The direct care model is simple; for a set fee, patients and doctors can contract for health care services. These care “subscriptions” guarantee access to a doctor of the patient’s choosing, oftentimes because the doctor is limiting the number of total patients he or she will take over that period. Instead of paying for insurance and getting poor care or no care at all, patients pay for care and receive . . . care. Imagine that.

An article published in Time Magazine late last year sums up what makes direct care arrangements attractive.

The driving insight here is that primary care and specialized care have two very different missions. Americans need more of the first so they’ll need less of the second. And each requires a different business model. Primary care should be paid for directly, because that’s the easiest and most efficient way to purchase a service that everyone should be buying and using. By contrast, specialty care and hospitalizations—which would be covered by traditional insurance–are expenses we all prefer to avoid. Car insurance doesn’t cover oil changes, and homeowners’ insurance doesn’t cover house paint. So why should insurance pay for your annual checkup or your kid’s strep swab? [Emphasis mine]

You can think of it as “a la carte care” or “concierge care,” or something else, but it is indisputably care—care that the patient has chosen and can actually access. The potential for direct care extends even to more specialized care, too. At the Surgery Center of Oklahoma (SCO), the surgeons post the prices of their services online, with prices oftentimes a fraction of what other hospitals and insurance companies charge patients. This 2012 video from Reason TV explains the lower-cost, and arguably more personal, SCO model.

It is no wonder several proposals now floating around the Missouri Legislature aim not only to protect direct care arrangements, but also to facilitate them. One proposal would insulate direct care arrangements from undue bureaucratic interference; another would initiate a pilot program to make direct care available to the poor. Both are well worth the consideration of Missouri legislators, especially before the legislature’s session comes to a close next month.

Direct care has the potential to help patients like Alison find and keep the doctors they want—and not have that relationship jeopardized by some middleman insurance relationship. Amidst all the problems of America’s post-Obamacare medical system, direct care represents a bright shining possibility for a better model for our health care: one that puts the patient first, not the government.

March 30, 2015

Audit: Medicaid Program Rife With Problems

At this point, it goes without saying that Missouri’s Medicaid program has issues. From technical snafus to indisputable quality and access problems, the state’s Medicaid program has a long track record of failure that should dissuade responsible lawmakers from compounding the problem with an expansion of the program.

This fact is made all the more obvious by this story, reported last week.

Missouri’s Medicaid program could have recovered as much as $27 million from more than 30,000 estates of deceased patients but did not file claims in time, according to a statewide audit of federal programs released Tuesday.

Federal and Missouri laws allow the state to recover Medicaid funds spent on a participant as a state debt but a claim against the person’s estate in probate court must be filed within a year of their death. Of 9,321 cases closed in fiscal year 2014 by the MO HealthNet Division, an average of $15,000 was recovered from 6 percent of those, according to the audit.

The $27 million estimate is based on a similar estimated recovery rate for the 30,000 cases that were past the deadline to file. . . .

According to the audit, “MHD personnel indicated there are not sufficient staff in the Probate and Estate Unit to process all probate estate cases timely and cases are not prioritized in an effort to maximize recovery.” The department says it will work to fix the problem but that response is a recurring theme in audits of Missouri’s Medicaid program.

Indeed, there were more problems uncovered by the audit that a short news story frankly can’t get to, including documentation, oversight, payment, and coding problems. In fact, the sentence construction of “As noted in X previous audits” dots the report’s summary. In other words, many of these are enduring, not passing, problems.

If you believe in good government, the department’s semiannual refrain of “We’ll do better next time” should be intolerable. The solution isn’t growing the program; it’s fixing it. There are ways to make the Medicaid program in Missouri better. Expanding a broken status quo is not one of those ways.

March 20, 2015

Mark Your Calendars, Kansas City and St. Louis: Michael Cannon is Coming to Town

Michael Cannon is the director of health policy studies at the Cato Institute and is one of the most prominent figures in the free market movement today. Cannon’s national influence extends to a wide swath of health care issues, but lately it’s his work focusing on the health insurance subsidies of Obamacare that has been most prominent. With Case Western Reserve law professor Jonathan Adler, in 2013 Cannon co-wrote “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits under the PPACA.”

If that topic sounds strangely familiar to you, fear not; it is indeed the topic at the center of the King v. Burwell case, which is currently before the Supreme Court. Cannon has been instrumental in not only providing the research that undergirds the plaintiffs’ case, but he has also been instrumental in delivering clear, concise and compelling explanations of what the government did with these subsidies (and why it matters) to audiences across the country. Michael’s Washington Journal segment below, recorded for C-Span earlier this month, provides a good preview of what he’ll be talking about next week.

I hope you’ll be able to join us, either in Kansas City on March 25 at 5:30 pm at the Kansas City Club, or in St. Louis on March 26 at 5:30 pm at Saint Louis University. Both promise to be excellent events.

March 16, 2015

How to Fix the Evergreen Clause

I previously wrote about how less than 16 percent of home care workers were able to force the rest of the people involved in that program to accept representation from the Missouri Home Care Union. If you followed that issue I doubt you’ll be surprised to hear that when the union negotiated a contract with the state it made sure to include an evergreen clause in the deal. An evergreen clause makes a labor agreement, and all of the work rules and policies provided for in that agreement, unchangeable without the union’s consent.

evergreen2See for yourself:

This Agreement shall take effect upon signature of the Parties and shall run for a period of thirty (30) months. If a successor Agreement has not been reached upon the expiration of this Agreement, the Agreement will continue in effect until a successor Agreement is finalized.

This is how an evergreen clause works. The agreement has a term, in this case 30 months, but after that term is up, the policies set by the agreement remain in effect until both parties settle on a new agreement. In this way, a union that wins a contract with an evergreen clause gets veto power over any new policies proposed by government representatives or the people. This shift of power from democracy to union negotiations is the real danger.

Senate Bill 549 aims to correct this egregious practice by limiting government labor agreements to a term of two years. If it passes and the courts decide to apply it correctly, then it’ll be a big win for anyone interested in good, flexible, democratically accountable government.

March 12, 2015

Bill Would Give Workers a Vote

Imagine you could vote for the president only one time, and then you were stuck with the results until he or she were impeached. This wouldn’t be very democratic would it? For many of our government employees, including teachers and firefighters, this is the sort of democracy used to determine whether workers are unionized.

I previously wrote about the government union transparency gap and a bill addressing it, but if you are a government worker subject to union representation, not knowing where your dues go is only part of the problem. In many cases, you also have very little say in who represents you, and you have no recourse to ensure that your voice is heard. That’s why we need reform that would give all unionized public employees the ability to vote in regular union elections.

voteConsider the example of personal care attendants enrolled in the state’s consumer-directed health care program. Attendants get paid out of a state-managed program to take care of home-bound Missourians. In 2009, the attendants had an election to determine whether they would all be represented by the Missouri Home Care Union, a joint local union affiliated with both AFSCME and SEIU.

Out of 13,151 eligible voters, only 2,085 voted for the union. According to the state board running these elections, 294 ballots were challenged and 1,405 voters voted against the election. The challenged ballots plus the number of votes against the union were not enough to affect the outcome of the election. So in a low-turnout election with hundreds of challenged ballots, less than 16 percent of personal care attendants were able to force union representation on every other person enrolled in this program.

You might think, “Well, that’s just democracy. If you don’t vote, you deserve the representation you’re given.” The problem is that after a one-time election there will not be another election unless workers organize and go through a notoriously difficult decertification process. Depending on how a union contract is written, the union may even sue workers for trying to decertify the union or supporting another union. There’s nothing democratic about voting for a representative once and then being stuck with the results indefinitely.

If public employees are going to be subject to union representation against their will, then they at least should get a regular vote so that they can hold their union accountable. The Missouri Legislature has a bill, SB 549, that would require these regular elections. Regular union elections could help ensure that public employees, like teachers, police, and firefighters, are only subject to unions that work for them.

March 4, 2015

Proposed Senate Bill Would End Obamacare Medicaid Expansion Nationwide

Last month, a trio of U.S. senators released their version of an Obamacare replacement bill, which they called the Patient Choice, Affordability, Responsibility, and Empowerment Act (Patient CARE Act). The legislation would initiate a host of changes to how health care is delivered in the United States . . . and that includes a wholesale rollback of Obamacare’s Medicaid expansion.

03/492 According to the Center for Health and Economy,

The federal funding for the Medicaid expansion provided by the ACA is no longer available under the Patient CARE Act. Additionally, the current Medicaid funding mechanism will be replaced with capped, per-beneficiary allotments that are indexed to inflation. States will receive pass-through grants for certain high-risk populations and defined budgets for long-term and elderly care.

Translation? In many respects, Medicaid would return to its intended focus of assisting those in poverty—that is, those at and below the federal poverty level—rather than those above the poverty line. That’s extraordinarily important. Obamacare’s Medicaid program basically makes able-bodied, childless adults not in poverty a federally preferred class of beneficiaries, with the federal government paying a greater share of the cost for many adults above the poverty line (90/10 federal to state) than it does for all sorts of beneficiaries below it (roughly 60/40).

Are adults between 100 percent and 133 percent of the federal poverty level rich? No. Are they in poverty? Also no, by definition.

Keep in mind, too, that the Patient CARE Act is only one of many proposed overhauls of the country’s health care system. All of its provisions, as well as the provisions of competing reform legislation, need to be debated on their merits in the weeks and months ahead. (We have our own ideas for key reforms of our health care system, of course.)

Make no mistake: Taxpayers have every right to be skeptical of the federal commitment to fully fund its portion of the Medicaid expansion indefinitely as the government swims in trillions of dollars of fresh debt. As the unsustainable fiscal realities of the Medicaid program and this Obamacare alternative both demonstrate, taxpayer skepticism of the expansion’s future is fully warranted.

March 2, 2015

King v. Burwell: A Quick Preview

Last month, constitutional law expert Josh Hawley visited with Show-Me Institute supporters to discuss a wide array of health care policy issues. While he was with us, he offered some great insights into this Wednesday’s King v. Burwell oral arguments. If you can set aside about 45 minutes, watch the video of the whole event; you’ll be glad you did.

If you’re short on time, however, the case deals with what happens when a state declines to set up an insurance exchange under Obamacare, forcing the federal government to do so instead. Here’s the big question in King: Does the Affordable Care Act (ACA) block federal subsidies from going to insurance plans purchased in government exchanges that were not, as the law says, “established by the State”? If the answer is yes, it could simultaneously take subsidies away from millions of insurance plans and protect millions of taxpayers from the law’s mandates. It’d be a body blow to the law.

Why would Congress condition subsidies on states building their own exchanges? The answer is reasonably straightforward: Congress didn’t want the burden of creating exchanges to be on the federal government—that is,—and thought offering the subsidy as a carrot would get states to do the heavy lifting. Congress never thought the federal government would be running the exchanges for basically two-thirds of the country, as it’s doing today.’s rollout disaster was part and parcel of this miscalculation by Congress.

Supporters of Obamacare now contend the “established by the State” language was a drafting error, but there is lots of evidence that runs against that claim. The state exchange “carrot” strategy had appeared in prior, contemporaneous bills that were combined to form the ACA—suggesting that at least some legislators were well aware of the system they were creating. In fact, in the years that followed, Obamacare architect Jonathan Gruber famously repeated what the consequences of states not building their own exchanges would be:

With most states declining to create their own exchanges, the Internal Revenue Service then wrote rules that would extend the federal subsidies not only to exchanges “established by the State,” but also to federal exchanges. The problem is that since the federal subsidies are the basis for penalties that, thanks to the IRS, would suddenly apply to tens of millions of Americans in states that didn’t create exchanges, those subsidies could be an illegal tax. Thus, we have the King litigation.

After Wednesday’s oral arguments, we’ll likely see a decision handed down on the case sometime this summer. How will it turn out? We’ll keep you posted.

February 26, 2015

Constitutional Law Expert Joshua Hawley Weighs in on Obamacare at Policy Forum

Joshua Hawley, a professor of law at the University of Missouri, was gracious enough to join the Show-Me Institute in Columbia last month to talk about a wide array of health care and Obamacare issues, including King v. Burwell, a case before the Supreme Court the week of March 2.

Much could be said about Hawley. A graduate of Stanford University and Yale Law, Hawley went on to clerk for Chief Justice John Roberts. He was one of the attorneys for Hobby Lobby in last year’s Burwell v. Hobby Lobby case, and he has been a highly sought-after speaker on a wide variety of legal and historical matters for a number of years. His book, Theodore Roosevelt: Preacher of Righteousness (2008), is available on Amazon. Hawley also happens to be a graduate of my alma mater, Rockhurst High School, in Kansas City.

His talk is definitely worth your time. A short version is embedded below, and the complete talk can be found here.

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