Archive for the ‘Common sense’ Category
So when Rick and I started our series, we didn’t yet know what Congress was going to propose for certain, but they came out with the House plan now (March 8), so we decided to write up our impressions.
The draft House health insurance bill fails to correct the features of Obamacare that drove up health insurance and medical care costs and mainly just tweaks Obamacare’s financing and subsidy structure.
The bill focuses on protecting those who gained subsidized coverage through the law’s exchange subsidies and Medicaid expansion, while failing to correct Obamacare’s misguided insurance regulations that drove up premiums for Americans buying coverage without government subsidies.
The draft bill leaves Obamacare’s costly insurance regulations in place and attempts to offset those costs with the same basic approach.
Approximately 22 million individuals currently receive subsidized health insurance coverage through the exchanges (8 million) and the Medicaid expansion (14 million). For them, Obamacare’s higher insurance costs are offset by the law’s subsidies.
About 25 million Americans with unsubsidized individual-market coverage (10 million people) or small-employer plans (15+ million people) are the ones who most need relief from Obamacare that can only be supplied by repeal, and they probably don’t care about or for replacement. Their experience of Obamacare has basically been “all pain, no gain,” as they have been subjected to significant premium increases and coverage dislocations with no offsetting subsidies.
Unfortunately, the draft House bill provides no meaningful relief for that group of middle-class Americans who are most adversely affected by Obamacare and are most supportive of repeal.
The draft bill leaves Obamacare’s costly insurance regulations in place and attempts to offset those costs with even more subsidies.
The draft bill’s new Patient and State Stability Fund is particularly problematic. It would provide grants to states of up to a total of $100 billion over the nine years, 2018-2026. What are the significant problems with this new program? They’re substantial.
- It substitutes new funding for old Obamacare funding without adequately addressing the misguided Obamacare insurance market rules and subsidy design that made the exchanges a magnet for high-cost patients. Those Obamacare mistakes created an insupportable burden on the individual insurance market by concentrating expensive patients in only that small portion of the total market.
- Like Obamacare, it doesn’t actually reduce premiums, but rather uses subsidies to mask the effects of Obamacare provisions that drove up premiums in the first place.
- It creates a new entitlement for states.
Furthermore, without a resulting reduction in unsubsidized premium levels, future Congresses will likely face pressure from states and constituents to extend and expand the program. It will become a creeping Medicaid-like drain on resources that will destroy medical care access in this country. Under the Medicaid expansion, the federal government reimbursed states 100 percent of the cost of expanding Medicaid to able-bodied adults, with federal support eventually declining to 90 percent. These are able-bodied people who earn a living (in Alaska, up to $52,000 a year for a family of four) and their medical care is paid for by the taxpayers.
Yet, states continue to receive significantly less federal assistance (50 percent to 75 percent, depending on the state) for covering the more vulnerable populations (such as poor children and the disabled) that the program was intended for. That policy was both inequitable and unaffordable.
The draft bill does not correct that inequity, but rather reduces the enhanced match rate from 95 percent to 80 percent. The better approach would be to allow states to immediately cap expansion population enrollment, while also setting federal reimbursement for any new expansion enrollees at normal state match rates.
Such changes would likely limit the addition of new individuals to the program, and also substantially reduce the size of the federal revenue loss that expansion states will incur when the program terminates. That is because a significant share of current enrollees can be expected to leave the program for other coverage during the transition period.
Yet another policy mistake is the failure to take the first step toward providing more equitable tax treatment of health insurance.
The House version drops a proposed cap on the unlimited tax exclusion on employment-based health insurance contained in an earlier version, while retaining the so-called “Cadillac tax”—the 40 percent excise tax on so-called “high-cost plans”—and delaying its implementation until 2025.
Congress should kill this punitive excise tax and replace it with a cap on pre-tax funding so as to encourage employers & workers to evaluate the trade-off between higher health care spending and higher cash wages, to rethink how much of total employee compensation should be devoted to health benefits.
While the Cadillac tax would force employers to alter the health benefit plans that they provide their workers, no such effect would result from the cap on the exclusion. It would instead limit the amount of employer health benefits that constitute pre-tax income to workers, which would make the tax treatment of employer-sponsored health benefits consistent with the tax treatment of other benefits (such as retirement savings plans, group life insurance, and dependent care) offered by employers.
Workers would still be able to use after-tax income to purchase additional coverage, just as they can with other employer benefits, and the employer would still be able to offer a plan whose value exceeds the level of the cap on pre-tax funding.
This bill misses the mark primarily because it fails to correct the features of Obamacare that drove up health care costs. Congress should continue to focus on first repealing the failed policy of Obamacare and then act to offer patient-centered, market-based replacement reforms. Stop making patients into a group where things are done to them and put them back in control of their own health care.
The United States medical care crisis has been a long time coming.
In 1910, the physician oligopoly was started during the Republican administration of William Taft. The American Medical Association lobbied the states to strengthen the regulation of medical licensure and allow their state AMA offices to oversee the closure or merger of nearly half of medical schools and also the reduction of class sizes. Those restrictions remain in place today, severely curtailing the number of doctors who can enter the market because the bar is very high to get into medical school.
In 1925, prescription drug monopolies begun after the federal government (under Republican President Calvin Coolidge) started allowing the patenting of drugs, essentially creating monopolies.
In 1945, buyer monopolization begun after the McCarran-Ferguson Act led by the Roosevelt Administration exempted the business of medical insurance from most federal regulation, including antitrust laws. (States have also more recently contributed to the monopolization by requiring health care plans to meet standards for coverage.)
In 1946, institutional provider monopolization begun after favored hospitals received federal subsidies in the form of matching grants and loans provided under the Hospital Survey and Construction Act, passed during the Truman Administration.
In 1951, employers started to become the dominant third-party insurance buyer during the Truman Administration after the Internal Revenue Service declared group premiums tax-deductible.
In 1965, nationalization was started with a government buyer monopoly after the Johnson Administration-led passage of Medicare and Medicaid which provided government-provided health insurance for the elderly and poor, respectively.
In 1972, institutional provider monopolization was strengthened after the Nixon Administration restricted the supply of hospitals by requiring federal certificates-of-need for the construction of medical facilities.
In 1974, buyer monopolization was strengthened during the Nixon Administration after the Employee Retirement Income Security Act exempted employee health benefit plans offered by large employers (e.g., HMOs) from state regulations and lawsuits (e.g., brought by people denied coverage).
In 1984, prescription drug monopolies were strengthened during the Reagan Administration after the Drug Price Competition and Patent Term Restoration Act permitted the extension of patents beyond 20 years. The government has also allowed pharmaceuticals companies to bribe physicians to prescribe more expensive drugs.
In 2003, prescription drug monopolies were strengthened during the Bush Administration after the Medicare Prescription Drug, Improvement, and Modernization Act provided subsidies to the elderly for drugs.
In 2014, nationalization was further strengthened after the Patient Protection and Affordable Care Act of 2010 (“Obamacare”) provided mandates, subsidies and insurance exchanges, and the expansion of Medicaid.
With each new law or set of new regulations, restrictions on the medical care market went further, until, at some point in the 1980s, people began to notice the cost of medical care had skyrocketed … soon to be followed by the cost of medical insurance.
As regulators allowed special interests to help design policy, everything from medical education to drugs became dominated by virtual monopolies that wouldn’t have existed if not for government’s notion that intervening in people’s lives is part of their job.
We started meddling in 1910, but costs didn’t go up immediately and that causes a lot of short-sighted people to think the regulation is not related to the increased costs. They’re wrong, but some regulation was more harmful than other regulation.
In 1972 President Nixon restricted the supply of hospitals and clinics by requiring institutions to provide a certificate-of-need, then in 1974, the president strengthened unions for hospital workers by boosting pension protections, which increased the cost for hospitals. This move began to force doctors who once owned and ran their own hospitals to merge into provider monopolies. These, in turn, are often only able to keep their doors open with the help of government subsidies, so increasing costs to taxpayers..
As the number of hospitals and clinics became further restricted and the medical care industry became obsessed with simple compliance, patients were the first to feel abandoned. According to Business Insider, the average doctor has thousands of patients, and each visit lasts less than 30 minutes. As many in my parents’ generation can attest, doctors listened to their patients prior to the government’s slow but absolute control of medical care, doctors listened to the patients and medical care was easily affordable. Now, doctors can hardly recall the conversations they have with the people they are supposed to be looking after.
Insurance is not the same thing as medical care, but President Barack Obama pushed further restrictions on the insurance industry by touting the Affordable Care Act as a piece of legislation that would make insurance more affordable. That didn’t work out. Insurance had already been increasingly slowly over the years, but since the passage of the ACA, there’s been an average increase of 153% in premiums. And as a result, a new group of independent medical care professionals ignited one of the most liberating revolutions in recent U.S. history. As ACA became increasingly suffocating to patients and providers, many doctors ditched the system altogether while others went into the primary care business.
On average, members of these direct primary care clinics pay as little as $60 per month, with couples paying about $150, which is a lot less than the cost of full medical insurance. Without having to handle heavily regulated middlemen, patients have a clearer picture of how much they spend on their health by being members of such practices. They also enjoy the peace of mind of knowing their doctor.
Studies have already demonstrated that when there is good communication between doctors and patients, treatments are more efficient. This is not simply because doctors are giving patients attention, but also because they are able to tailor a certain treatment to that patient’s lifestyle, health, and activities.
What many people don’t understand about government-run medical care is that government bureaucrats apply a one-size-fits-all mentality to everything, but what bureaucrats fail to understand is that they do not possess all the answers. Only a doctor who is paying attention will be better able to help the individual patient. Those needs cannot be addressed by a few thousand new regulations under either the ACA or the AHCA.
What this growing movement seems to suggest is that, even if doctors and patients are unaware of the interventionist forces driving the cost of doing business and receiving medical attention, they’re still driven into the open arms of the free market at some point or another.
I believe that we all have a right to medical care, but not in the way the progressives want us to believe. My belief is similar to the belief I have in the right of free speech and the press. You have a right to write and publish and to gain access to the tools to do so, but you don’t have a right to compel others do do it for you. So, if the local newspaper doesn’t want to run your article, it doesn’t have to, but if you pay for a blog or your own printing press, nobody has a right to stop you from publishing.
I have the same belief in the right to medical care. You have a right to access care that you pay for, but you don’t have a right to compel others to provide it for you.
Sadly, the United States government at both the state and federal level have erected barriers that limit your access to medical care. The steepest of those barriers are the licensing laws. Removing those barriers should lower costs while improving quality.
Both of my children and two of Rick’s grandchildren were delivered by direct-entry midwives, but barriers against such practitioners in many states limit access, driving up prices and, if you compare US outcomes to European outcomes, endangering the lives of mothers and their children.
Regarding the different classifications of midwives, the regulations vary from state to state. Nurse-Midwives are legal nationwide but different states have different regulations that cover what they may do, if they can work independently of a doctor, or if they must be supervised by one.
Certified Professional Midwives (CPMs) have been to a school for training but are not nurses. Twenty-six states allow CPMs to practice with some variations in what they legally can do.
Direct entry midwives typically study as an apprentice under someone else before beginning their individual practice, and their practice varies from state to state. Their legal standing is not clear in some states.
Since Medicaid pays for almost 50% of all births, midwives offer the nation an opportunity to save tax dollars while providing mothers with another choice. Europe uses direct entry midwives for 80% of their deliveries, nurse-midwives for most all of the others and their mortality rate for mother and child are much much lower.
It isn’t just the barriers to midwives that have created problems for patients. Other workers have seen their professions restricted as well, and with that comes physical and financial harm to patients. Nurse practitioners should be at the top of any list of professionals allowed to work without restrictions nationwide.
Nurse practitioners are an often overlooked source of health care and, according to Kaiser Family Foundation, can “manage 80-90% of care provided by primary care physicians.” Research shows that patients are just as satisfied with the quality of care provided by nurse practitioners as by primary care physicians.
An Institute of Medicine Report, from 2011, The Future of Nursing: Leading Change, Advancing Health, states that “what nurse practitioners can do once they graduate varies widely for reasons that are related not to their ability, education or training, or safety concerns, but to the political decisions of the state in which they work.”
Twenty states allow nurse practitioners to work independently of physicians to diagnose and treat patients. Twelve states require physicians to supervise nurse practitioners. Nineteen states allow them to practice as long as they have an agreement to work in collaboration with a physician. Other laws limit their scope of practice by not allowing practitioners to prescribe drugs.
With the aging of society, we will see an increase in the need for medical care, but layer upon layer of regulations makes it hard for practitioners to enter the field and thereby makes care expensive, complex and frequently unavailable.
Removing these barriers is key to improving access to medical care and lowering costs. Obamacare made those barriers even higher, but now we have an opportunity to remove the barriers entirely and allow the open market to work as it should. Let’s lead the way!
Mark Meadows, the head of the House Freedom Caucus, balked at passing an ACA-like sub rosa bill because they don’t have any proof that the American Health Care Act will fix the death spiral caused by the ACA’s poorly thought provisions.
Good for them and good for us. We shouldn’t be in such a hurry to replace Obamacare that we make all new, but equally grave mistakes, not to mention keeping the very provisions that are causing the ACA to fail – the pre-existing conditions mandate and the community ratings. Alaska is down to one insurer in the individual market and two in the group market. The problem is less severe in some states, but it will only get worse.
Unfortunately, the AHCA, as currently proposed, is not the answer to what ails Obamacare, so it is good that the Freedom Caucus stopped passage of this bill.
Hi. This is Rick. I’m a research doctor, which means that I work on salary for a major medical center. I won’t name it here, but you’ll probably figure it out by what I’m about to write. That I work on a salary meant that I made the exact same amount of money before Obamacare was enacted that I made after. In other words, I can’t be accused of trying to line my own pockets. My concern is the care my patients receive, not how much it costs them … but, I should say that we’ve offered ample evidence that it cost them more under Obamacare. But I want to suggest that medical insurance is not going to fix our health care problems because coverage is not the problem. We are!
For the first time in my adult life, I voted Libertarian in 2016. I started out as a somewhat liberal Democrat, son of working-class folks who’d always voted Democrat until the Party was hijacked in 1972. I voted for Carter both times, then for Reagan’s second term (so did a lot of moderate Democrats). I was in Europe for Bush 1’s election, so missed it entirely, then went back to voting Democrat for Clinton’s first term. But Hillarycare REALLY bothered me. As a doctor, I knew it was a very dangerous thing for patient care. I’d worked in Europe for several years and I can tell you that universal health care doesn’t work as advertised. So I voted against Clinton’s second term, then found myself agreeing with the Contract with America (yeah, I was surprised too). I voted for GW Bush the first time, was out of country and forgot to vote the second time, voted for Barack Obama the first time and then stopped being a Democrat entirely and stayed home in protest of his truly terrible policies (and not just Obamacare) the second time. I was planning to stay home last fall too when Lela said she was voting for Gary Johnson out of protest for the devil’s choice the Clinton-Trump face-off made for us. I actually heard Johnson speak a couple of times. He would have been a good choice for president, though he never had a chance.
The Trump presidency is kind of a scientific marvel to me. There are diseases I’ve studied that are a curse that also impart some brilliant advantages. That’s sort of my view of the Trump presidency. Lela likens it to watching a horror film through your fingers. I guess that’s my reaction too. The repeal and replacement of Obamacare is, for me, the most important domestic issue of the year … possibly the century, followed closely by the Supreme Court nominations.
With Republicans set to control the federal legislative and executive branches next year, the hyperbole of the last six years has soared to new heights. You’ve got suppossedly reputable media outlets insisting that 21 million … or 40 million … or 300 million people will lose coverage if Obamacare is replaced.
Others have tried to ground the discussion in reality, focusing on the details of the most comprehensive replacement plans floated to date: that’s what Lela and I have been doing. Speaker Paul Ryan’s “A Better Way,” and Avik Roy’s “Transcending Obamacare.” both provide market-based approaches to comprehensively overhauling the health care system in America, while also addressing the numerous (and now abundantly-clear) problems of Obamacare.
While avoiding many of the defects of Obamacare, Ryan and Roy’s plans both have two fundamental and interrelated flaws: first, they focus on health insurance
- they focus on health insurance coverage rather than medical care.
- they fail to take into account that a large number of Americans are too dysfunctional to benefit significantly from the proposals.
Providing truly affordable health insurance coverage might equate to obtaining health care, but any proposed reform to our health care system must take account of the limitations of the populace it will serve.
Politicians and policy wonks are often too far removed from true dysfunction to understand how pervasive it is, and how it prevents even the most perfectly devised plan from succeeding as intended. Politicians residing in the D.C. bubble are unlikely to have seen the lives of the truly dysfunctional – those suffering from severe mental illness, drug or alcohol addicts, or just run-of-the-mill adults who lack basic skills to manage their own affairs and that of their families. They usually have no idea how to reach out to a politician and so them the reality of their world.
I grew up in an average working-middle-class home in Washington State. I didn’t know these people existed until I went off to medical school, living in an apartment I could afford, and started spending weekends in that same lower-income neighborhood’s “free clinic”. There I got a close-up view of urban poverty. Later I would spend two years in rural Wisconsin and find out that the same dysfunctionality exists all over.
An appropriate health care plan, whether fully or nearly fully subsidized, will be beyond these people’s capabilities. Providing tax credits to offset the cost of privately purchased insurance will be lost on the transient worker who already lacks the knowledge and wherewithal to claim the Earned Income Tax Credit. Signing up for Medicaid might be easier, but that does not translate into health care. There is an extremely limited number of doctors willing to accept the low reimbursement rates, for one. And, then Medicaid recipients actually seek out and find those doctors.
Many cannot or wish not to, which is why they do not regularly obtain preventative care and why, when sick, they end up in the emergency room. In reality, 25% of children in foster care do not receive the required check-ups. These children are in the care of “professional” parents cleared by the government as appropriate caregivers and their medical coverage is government provided. Do you think their dysfunctional birth parents could do better?
I am absolutely in favor of repealing Obamacare and replacing it with something that makes sense, or better yet, with a low-income medical care system that makes sense. Don’t judge the success of replacement legislation on the number of people with health insurance coverage, whether private or governmental. It tells us nothing about medical care or health outcomes. Until we address the lack of medical care as evidenced by poor health outcomes, we aren’t fixing our health care crisis. Medical care is a separate issue and outside of the insurance and Medicaid structure. Here are a few ways to do so.
A huge part of America’s health outcomes problem comes from lifestyle choices – drug addiction, smoking, high-fat diets, lack of nutritious eating, overeating, alcoholism. Many health conditions and illnesses are preventable. Congressman Paul Ryan highlighted this point in his predecessor legislative initiative, The Patients’ Choice Act, writing:
“[F]ive preventable chronic diseases (heart disease, cancer, stroke, chronic obstructive pulmonary disease, and diabetes) cause two-thirds of American deaths while 75 percent of total health expenditures are spent to treat chronic diseases that are largely preventable. In government programs, the problem is even worse with chronic disease spending consuming 96 cents of every Medicare dollar and 82 cents of every Medicaid dollar.”
Preventing disease by encouraging lifestyle choices and immunizations would greatly reduce medical care costs. Private insurers use “wellness programs” to promote preventative care, weight loss, and smoking cessation programs; they offer reduced premiums or other rewards when certain goals are met. That’s not feasible for Medicaid and relying on advertising campaigns designed by social marketing professionals that focus on health promotion and disease prevention don’t work.
All the advertising in the world will not provide access to healthier food options and even if it did, that will not change eating behaviors. Lower-class Americans do not need more marketing. They need more markets. “America’s Worst 9 Urban Food Deserts” highlighted this problem:
[T]he United States Department of Agriculture reports that about 23.5 million Americans currently live in food deserts, including 6.5 million children. Typically, food deserts are defined by:
- the lack or absence of large grocery stores and supermarkets that sell fresh produce and health food options; and
- low-income populations living on tight budgets.
These food deserts are also signified by high levels of obesity, diabetes and cardiovascular disease in the community, which result from residents buying their food from corner stores that sell processed foods, and plentiful fast food options.
The solution is to create health oases. Unfortunately, Democratic control of large cities has often led to resistance to “big-box” retailers. That’s code for non-union superstores, such as Wal-Mart. These Democratic governments throw up barriers that prevent large grocery stores from opening in urban areas. Detroit has recently done adopted business-friendly policies to encourage grocery stores to enter the inner city, attracting the regional super-store Meijers, which is now looking to open a third store within the city. Not only does this provide access to healthy food options, it also provides employment opportunities that are lacking in the inner city.
Promoting the expansion of large grocery stores within the inner city will also greatly reduce the rampant fraud in the government food stamp (SNAP benefits) and WIC programs. Large corporate-run grocery stores have internal controls in place that prevent cashiers from trading government benefits for cash, ineligible items (alcohol, cigarettes), and even counterfeit apparel. Corner stores, owned and run by individuals and families and with unmonitored access to cash, have the means to misappropriate government funds. Check out the Chicago Tribune article “Why Food Stamp Fraud is ‘Fairly Rampant’ at Corner Stores in Some Chicago Neighborhoods.”
Large grocery stores often have in-store pharmacies, which have the capability to provide vaccinations. Some states also allow nurse practitioners working out of pharmacies to prescribe basic antibiotics for common conditions, such as ear infections and strep throat. Further legislation to encourage the expansion of store-run pharmacies and access to nurse practitioners will further assure medical care access, making such super-stores truly health oases.
I am personally opposed to abortion, so my next suggestion should not be misunderstood. Fund crisis pregnancy centers. Pro-“choice” advocates regularly accuse pro-lifers of caring only about the baby—not the mother—and then only until the baby is born. While that might make a pithy talking point, it bears no resemblance to reality. Most crisis pregnancy centers offer a wide-range of services, from pregnancy testing, ultrasounds, counseling, goal setting, prenatal care or referrals, parenting classes, and “reward” programs by which moms can earn necessary baby and household items. Oftentimes, counselors end up serving as birth coaches for women abandoned by the father and their family. And these relationship and services continue long after the baby is born.
What better place, then, to assure women and children obtain preventative care and nutritional guidance? Rather than dump more money into the Medicaid system, which has shown no better results for recipients than the uninsured have, we should shift funding to states and experiment with providing grants to crisis pregnancy centers.
These grants could fund hiring nurse practitioners, who could see children while parents work with goal counselors. Parents could earn “points” or rewards for meeting certain targets, such as obtaining routine vaccinations or smoking cessation. Stop funding more government public service announcements, and instead fund nutritional education, smoking cessation, and “rewards” implemented during parenting classes. And fund smoking cessation programs out of the centers. Many centers are already doing some of these things, with great results.
The Women’s Care Center is one such center. Formed in 1984 in South Bend, Indiana by Dr. Janet Smith, the Women’s Care Center now serves women in eight states. (I served on the Women’s Care Center Board of Directors and as the Treasurer for seven years.) A recent newsletter showcases one example of how crisis pregnancy centers can achieve what the government cannot:
The Federalist highlighted a pro-life center, Turning Point, in this piece by Jay Hobbs. As Hobbs explained, “Started in October 2010, Turning Point opened as a fully medical clinic, with ultrasound and STD/STI testing, in addition to material aid that meets the needs of a city where 30 percent residents live at or below the federal poverty rate—twice the national average.” Hundreds (I suspect thousands) of similar crisis pregnancy centers already exist throughout the country. These centers have the infrastructure and experience and the relationships that government bureaucrats cannot forge that are necessary to assure that health coverage translates into medical care and healthier outcomes.
Just as the Women’s Care Center and Turning Point model how crisis pregnancy centers can reach at-risk populations, the San Antonio police department’s mental health squad showcases a new and ideal prototype for reaching the mentally ill. NPR featured this unique program in its piece “Mental Health Cops Help Reweave Social Safety Net in San Antonio.” As NPR explained, select officers receive Crisis Intervention Training; when a 911 call comes in involving a mental health emergency, those officers are dispatched.
Furthermore, San Antonio built a Restoration Center as a separate facility that offers “a full array of mental and physical health services.” According to NPR, “[m]ore than 18,000 people pass through the Restoration Center reach year, and officials say the coordinated approach has saved the city more than $10 million annually.”
This approach should be mirrored throughout the country to address not just severe mental illness, but also the escalating problem of drug addiction. Addicts and those suffering severe mental illness, even if they are competent enough to obtain health coverage, do not have it within their means to access medical care. And as Dallas Police Chief David Brown said after the murder of five of his officers: “We’re asking cops to do too much in this country. We are. Every societal failure, we put it off on the cops to solve. Not enough mental health funding, let the cops handle it.”
While the police will always be our front line of defense, with proper training and the funding to address the health care needs of addicts and the severely mentally ill, over time, the demands will be less. And more people in need of health care will receive it in an appropriate setting, rather than in prison.
As the debate continues over Obamacare’s appropriate replacement, politicians and policy experts should not pretend that a perfect plan can reach all segments of our society. Congress should instead recognize that health “coverage” is an imperfect proxy for health “care” and “outcomes,” and refocus a portion of its attention and funding on policies and programs that provide health care to the severely mentally ill, the addicts, and dysfunctional members of society.
This approach will also go a long way toward providing employment opportunities, combatting fraud, reforming the criminal justice system, and assuring our first responders have access to the resources they need when confronted with impossible situations.
Rick shared our write-up on the Patient Freedom Act (Cassidy Collins, if you prefer) with a coworker and she asked if she could write up her impressions and publish under me. As I’ve said, if you’re not in private practice, it’s dangerous for a doctor to say “boo” about Obamacare. I don’t mind being used by doctors to get the message out.
First, the PFA would dramatically expand taxpayer funding for abortions, even when compared to Obamacare, something Rick realized he’d missed on our write-up.
The PFA (text available here, and a summary available here) gives states a choice of three options regarding the health care system within their borders. They can either:
- keep Obamacare in place
- use an allotment, based on 95 percent of a state’s Obamacare spending, to create their own insurance regime (albeit with several federal mandates remaining)
- go out on their own and not receive any federal funds.
Section 104 of the bill contains a complicated formula to determine state allotments for option two—the default option for states under the PFA. Section 104(b)(2) provides that states that did not expand Medicaid under Obamacare will receive 95 percent of the amount they would have received had they accepted the Medicaid expansion.
Instead of reducing Obamacare’s spending, the Patient Freedom Act could well increase by giving new Medicaid funds to states that declined to expand.
Medicaid reform should not disadvantage states that did not expand Medicaid under Obamacare, but the proper solution does not lie in adding to nearly $2 trillion in Obamacare spending over the coming decade. Instead, it lies in freezing enrollment in the Medicaid expansion, unwinding that new spending, and transitioning beneficiaries over time off the rolls and into work.
The Patient Freedom Act does not repeal any of Obamacare—the word “repeal” doesn’t appear anywhere in its 73 pages—but, it effectively ends the current HSA regime, making Health Savings Accounts less attractive to individuals.
Current law makes HSAs tax-privileged in two ways. First, contributions to an HSA can be made on a pre-tax basis—either via a payroll deduction through an employer or an above-the-line deduction on one’s annual tax return. Second, HSA distributions are not taxable when used for qualified health expenses under Obamacare.
The Patient Freedom Act would abolish the first tax preference while retaining the second. Individuals must contribute after-tax dollars to an HSA, but their contributions could grow tax-free, and distributions would be tax-free when used for qualified health expenses, as under current law. Section 201(b) prohibits additional contributions to “traditional” HSAs following enactment of the bill, instead diverting new contributions to the Roth HSAs created by the measure. While the bill does not require individuals to convert their existing HSAs to the new Roth HSAs, account administrators at banks and mutual funds could require their customers to do so at some point, which could result in a hefty tax bill .
Health Savings Accounts are a proven vehicle to help control the growth of health costs. In fact, expansion should have been used before Obamacare was ever considered. While Obamacare included new restrictions on HSAs, Democrats did not upend the accounts nearly as much as contemplated by the Patient Freedom Act. Significantly reducing the tax preferences for Health Savings Accounts would not lower health care costs. If anything, it would raise them.
In recent years, some Americans have faced the problem of “surprise” medical bills. These can occur when individuals seek emergency care at an out-of-network hospital, or when some providers at a facility remain outside an insurer’s network (for example, a surgeon and the hospital are in-network, but the anesthesiologist is out-of-network). To address these issues, Section 1001 of Obamacare included new mandates that insurers not impose prior authorization requests on emergency care, and require only in-network cost-sharing for all emergency care, regardless of whether the patient was treated at an in-network hospital or not.
Section 121(a)(2) of the Patient Freedom Act goes further than Obamacare, imposing maximum charges for emergency services: 85 percent of insurers’ usual, customary, and reasonable charges for physician care; 110 percent of Medicare payment rates for inpatient and outpatient hospital care; and acquisition costs plus $250 for drugs and biological pharmaceuticals.
While the issue of “surprise” medical bills does present a policy problem—individuals caught in the middle of stand-offs between providers and insurers regarding payment rates—there are other ways to resolve it short of government price controls.
Sections 105(c) and 107(c) of the PFA create parameters through which states can automatically enroll their residents in health insurance—complete with restrictions on the type of coverage states can auto-enroll individuals in. While individuals can opt out of insurance should they wish to do so, this mandate that doesn’t call itself a mandate could prove even more problematic than Obamacare’s requirement that all individuals purchase health coverage.
Automatic enrollment represents bad policy. Much of it comes down to two questions:
- With the most recent enrollment estimates in Obamacare’s exchanges from seven months ago (June 30), how will states determine who is insured, and who should be auto-enrolled in coverage, in real time?
- Even if states could compile all that data, why should individuals have to give their personal insurance details to another government database?
Nearly four years ago, tSen. Bill Cassidy said this about the IRS’ power in enforcing Obamacare:
Obamacare requires thousands of IRS agents to implement the law…They’re going to go through the small businesswoman’s books, to make sure that she actually has the number of employees that she claims, and that she has adequate insurance. That’s a little scary when you see what the IRS has been doing with their political targeting.
Granted, the PFA doesn’t have an employer mandate to enforce, but why is Sen. Cassidy’s “solution” to big government overreach at the federal level allowing states to impose their own intrusive requirements on individuals and businesses…?
Conservatives seeking to repeal Obamacare should be disappointed by the ways in which the Patient Freedom Act exceeds Obamacare in several key respects, while liberals will undoubtedly oppose any attempt to devolve or deregulate health care coverage to the states. Its Senate sponsors notwithstanding, the bill appears to lack a natural constituency and it doesn’t really address the very real problems with Obamacare. It appears just to transfer them to the states. The question is — would making an intrusive, inefficient federal health care coverage system into an intrusive, inefficient state health care coverage somehow make it more palatable?