Weekly Newsletter: May 12, 2008

War Supplemental Attempts to Override Medicaid Fiscal Integrity Regulations

News reports surfaced in recent days that House Democrats will attempt to attach to the wartime supplemental appropriations bill provisions of legislation (H.R. 5613) that would impose moratoria on several proposed regulations issued by the Centers for Medicare and Medicaid Services (CMS) to restore fiscal integrity to the Medicaid program. Other reports also suggest that much of the increase in Medicaid spending on anti-fraud oversight, inserted into the legislation at the behest of Energy and Commerce Committee Ranking Member Joe Barton (R-TX), will not be included in the appropriations measure.

In addition to the concerns many conservatives may have about unnecessary domestic spending provisions being attached to a bill funding troops in harm’s way overseas, some conservatives may also be concerned by congressional actions to block regulations that respond to more than a dozen Government Accountability Office (GAO) reports released since 1994 highlighting the various ways states have attempted to “game” the Medicaid program and increase the amount of federal matching funds received. The history of these abuses has prompted the Administration to threaten a veto of any measure attempting to block CMS’ attempts to restore the fiscal integrity of the Medicaid program.

Reports also suggesting that the Senate version of the supplemental may attempt to pay for part of the costs associated with the Medicaid regulations by enacting additional restrictions on physician-owned hospitals. Some conservatives may therefore be concerned that Senate Democrats are attempting to override critical regulations to restore integrity to the Medicaid program—and paying for the moratoria by enacting bureaucratic restrictions that will stifle an important source of innovation in health care.

RSC Briefs on the federal-state Medicaid relationship can be found here, here, here, and here.

An RSC Policy Brief on physician-owned hospitals can be found here.

Ways and Means Hearing Scheduled on HSAs

This Wednesday, the House Ways and Means Health Subcommittee will hold a hearing designed to undermine the growth of Health Savings Accounts (HSAs). The hearing comes on the heels of a Government Accountability Office (GAO) report requested by Subcommittee Chairman Pete Stark (D-CA) that Democrats used to assert that HSAs are nothing more than a tax shelter for wealthy individuals.

Some conservatives may be strongly skeptical of the Democrat conclusions, particularly as the GAO report utilized tax data from a year when the number of HSA policy-holders was one-sixth its current level. In addition, many conservatives may applaud the data demonstrating that individuals are building real savings in their HSA accounts to use for health expenses—money that consumers, not insurance companies or government bureaucrats, can control and spend for health care needs. These data on the amount of savings accumulated by HSA holders fly in the face of statements by Subcommittee Chairman Stark that HSAs are “woefully inadequate” as a means to provide health care coverage.

What is clear is that HSAs have proved tremendously popular in the four years since their introduction. America’s Health Insurance Plans recently reported that more than 6.1 million individuals are covered by HSA-eligible insurance, and that enrollment in HSA plans had increased by 35% during 2007 alone. Given the widespread adoption of this new consumer-directed product, and its impact on reducing the growth of health care costs, many conservatives may object to any Democrat proposals to eliminate HSAs or make them unattractive through unnecessary bureaucratic regulations.

An RSC Policy Brief providing background on HSA enrollment can be found here.

Articles of Note: Washington’s Other Health Care Mess

Two articles in The Washington Post in the past week highlighted growing opposition to a measure designed to provide universal health care in the District of Columbia. The proposed program, similar to one enacted in Massachusetts two years ago, would impose an individual mandate on all individuals to purchase health insurance coverage, and would expand public insurance subsidies for those individuals not eligible for current government-run health care programs.

Much opposition has centered on the new taxes necessary to finance the expansion of government-run health care—a doubling of the District’s tobacco tax, a new tax on Health Maintenance Organizations, and an increase in taxes on all health insurance premiums. The health insurer with whom the District had expected to contract for the program has also expressed reservations about its willingness to participate.

Advocates of the District’s health care plan face the same obstacles that have plagued the Massachusetts experiment: unpopular new taxes that can stifle economic growth, an individual mandate that can prove difficult to enforce, and few controls on spiraling health care costs that form the root cause of many access and coverage shortcomings in the current system. Some conservatives would therefore advise District leaders that, rather than establishing a new entitlement program with unknown future obligations, policy-makers would be best advised to reform health care markets to create the kind of consumer-oriented innovations that can slow the growth of health care costs, thereby increasing affordability of coverage.

Read the articles here: “Speakers Express Division on Bill to Mandate Health Care Coverage
Provider, Doctors May Pull Out of Program