High Risk Designation Reinforces Problems in Louisiana’s Medicaid Expansion

That the federal Centers for Medicare and Medicaid Services (CMS) recently designated Louisiana’s Medicaid expansion to the able-bodied as “high risk,” following the release of a “deeply troubling” report by the state’s Legislative Auditor late last year, should surprise no one. As the Pelican Institute first reported last year, enrollment in Medicaid expansion has exploded, with state officials only now scrambling to detect waste and fraud in the program.

At the time of Medicaid expansion, officials first stated that enrollment could reach 306,000, only to up its projections later. By the time Pelican released its report last January, enrollment had exceeded 466,000—well above the state’s highest estimates. As of this March, enrollment now stands at 502,647, nearly a 10% increase compared to January 2018.

With enrollment nearly two-thirds higher than original projections, it should not have come as a shock to the state that ineligible individuals had enrolled in Medicaid expansion. As enrollment in expansion grew and grew, seemingly without limit, the state’s Department of Health should have spent more time scrutinizing enrollees, to make sure only eligible individuals receive program benefits.

Yet the auditor’s report last November found that out of 100 randomly selected applicants, fully 93 of them did not qualify for Medicaid benefits at some point during their coverage. Nearly two-thirds (66.3%) of the dollars given to insurers on these individuals’ behalf was improperly paid. Based on this sample, the auditor estimated that the Medicaid program spent up to $85.5 million providing benefits to ineligible individuals.

The applicants selected by the legislative auditor reported incomes to the state well beyond the threshold where they would qualify for Medicaid expansion. One Medicaid enrollee reported an income of $145,146—this for a one-person household. By comparison, Louisiana’s governor, John Bel Edwards, earns only $130,000 per year. So why did an individual making more than the state’s governor spend a full 12 months on a program for “low-income” individuals?

The Department of Health now claims that it has updated its enrollment systems to allow for more frequent eligibility checks, in the hopes of reducing the types of abuses uncovered by the legislative auditor. But if the Department of Health really wants to serve as a good steward of taxpayer dollars, it should go much farther, and propose solutions to the problem of Medicaid expansion crowding out private coverage.

In 2015, the Legislative Fiscal Office estimated that approximately 30-40% of Medicaid expansion enrollees would drop their private coverage to enroll in Medicaid. In other words, taxpayers would spend between $900 million and $1.3 billion over a five-year period providing insurance to individuals who already had coverage prior to expansion.

The dramatic increase in program enrollment, well beyond original projections, indicates that Medicaid expansion is indeed crowding out private coverage. An LSU survey released last year provided further confirmation, suggesting that approximately 75,000 individuals dropped employer-based or private coverage to enroll in Medicaid during the expansion’s first year alone. Yet the Department of Health has failed to acknowledge this problem, let alone propose solutions to fix it.

As the Pelican Institute report last year noted, Medicaid expansion has led to an explosion of government spending, taking the program away from the vulnerable populations for whom it was originally designed. Policy-makers should develop a way to phase out the expansion over time, while applying for a state-based waiver to reform—and transform—the Medicaid program.

This post was originally published at the Pelican Institute.

The Real Threat to Seniors: Single Payer

No sooner had the president’s budget arrived on Capitol Hill last Monday than the demagoguery began. Within hours of the budget’s release, Sen. Brian Schatz (D-HI) tweeted that “One party wants to expand Medicare and Medicaid and the other wants to cut them.” The facts, however, show a different contrast—one party attempting to keep a promise to seniors, and another abandoning that promise to fund other priorities.

First, the budget would not “cut” Medicare. As multiple administration officials explained during congressional hearings on the budget, Medicare spending would continue to rise every year under the president’s proposals. Only in a government town like Washington could lawmakers say with a straight face that a reduction in projected spending increases constitutes a “cut.”

Third, the budget proposals would yield tangible benefits to seniors through lower Medicare cost-sharing. A proposed rule released in July found that one of these changes would lower beneficiary co-payments by $150 million in one year. If enacted in full, seniors would see billions of dollars in savings over the ten-year budget window.

Fourth, and most importantly, legislation Schatz supports wouldn’t “expand” Medicare and Medicaid, it would eliminate them. Sen. Bernie Sanders’ single-payer bill, which Schatz has co-sponsored, would, in addition to ending Medicaid, liquidate the Medicare trust funds, using the proceeds to finance the new government-run program. As I noted last year, that makes Sanders’ bill, as well as similar legislation introduced in the House last month, not “Medicare for All” but “Medicare for None.”

That raid on the Medicare trust funds represents not just an accounting gimmick, but a statement of Democrats’ priorities—or, rather, the lack of them. Medicare has long-term funding problems, which the president’s budget attempts to address. But in using the Medicare trust funds as a piggy bank to finance a single-payer system—the full cost of which Democrats have no idea how to fund—the party shows how, in trying to provide all things to all people, it will abandon the most vulnerable.

Perhaps the best rebuttal to “Medicare for None” came from, of all people, Rep. Steny Hoyer (D-MD). In a speech on the House floor in September 2009, Hoyer said:

At some point in time, my friends, we have to buck up our courage and our judgment and say, if we take care of everybody, we won’t be able to take care of those who need us most. That’s my concern. If we take care of everybody, irrespective of their ability to pay for themselves, the Ross Perots of America, frankly, the Steny Hoyers of America, then we will not be able to take care of those most in need in America.

Therein lies the true flaw in the left’s logic. Whereas the president’s budget would work to protect Medicare for vulnerable seniors, Schatz, Sanders, and their supporters would liquidate the Medicare trust fund to finance “free” health care for Mark Zuckerberg and Elon Musk. The choice between the two paths seems as obvious as it is clear.

This post was originally published at The Federalist.

Single Payer’s Road to Rationing

The reintroduction of Democrats’ single-payer legislation has some families contemplating what total government control of the health-care sector would mean for them. Contrary to the rhetoric coming from liberals, some of the families most affected by a single-payer system want nothing to do with this brave new health care world.

As this father realizes, giving bureaucrats the power to deny access to health care could have devastating consequences for some of the most vulnerable Americans.

Determining the ‘Appropriate’ Use of Medical Resources

To summarize the Twitter thread: The father in question has a 12-year-old son with a rare and severe heart condition. Last week, the son received an implantable cardioverter defibrillator to help control cardiac function.

But because the defibrillator is expensive and cardiologists were implanting the device “off-label”—the device isn’t formally approved for use in children, because few children need such a device in the first place—the father feared that, under a single-payer system, future children in his son’s situation wouldn’t get access to the defibrillator needed to keep them alive.

The father has reason to worry. He cited a 2009 article written by Zeke Emanuel—brother of Rahm, and an advisor in the Obama administration during the debate on Obamacare—which included the following chart:

The chart illustrates the “age-based priority for receiving scarce medical interventions under the complete lives system”—the topic of Emanuel’s article. If a picture is worth a thousand words, then this chart sure speaks volumes.

Also consider some of Emanuel’s quotes from the same article, in which he articulates the principles behind the allocation of scarce medical resources:

Adolescents have received substantial education and parental care, investments that will be wasted without a complete life. Infants, by contrast, have not yet received these investments.
The complete lives system discriminates against older people….[However,] age, like income, is a ‘non-medical criterion’ inappropriate for allocation of medical resources.

If those quotes do not give one pause, consider another quote by Zeke Emanuel, this one from a 1996 work: “[Health care] services provided to individuals who are irreversibly prevented from being or becoming participating citizens are not basic and should not be guaranteed. An obvious example is not guaranteeing health services to patients with dementia.” When that quote resurfaced during the debate on Obamacare in 2009, Emanuel attempted to claim he never advocated for this position—but he wrote the words nonetheless.

The Flaw in Centralized Decision-Making

The father in his Twitter thread hit on this very point. Medical device companies have not received Food and Drug Administration approval to implant defibrillators in children in part because so few children need them to begin with, making it difficult to compile the data necessary to prove the devices safe and effective in young people.

Likewise, most clinical trials have historically under-represented women and minorities. The more limited data make it difficult to determine whether a drug or device works better, worse, or the same for these important sub-populations. But if a one-size-fits-all system makes decisions based upon average circumstances, these under-represented groups could suffer.

To put it another way: A single-payer health care system could deny access to a drug or treatment deemed ineffective, based on the results of a clinical trial comprised largely of white males. The system may not even recognize that that same drug or treatment works well for African-American females, let alone adjust its policies in response to such evidence.

A ‘Difficult Democratic Conversation’

The chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here….There is going to have to be a conversation that is guided by doctors, scientists, ethicists. And then there is going to have to be a very difficult democratic conversation that takes place.

Some would argue that Obama’s mere suggestion of such a conversation hints at his obvious conclusion from it. Instead of having a “difficult democratic conversation” about ways for government bureaucrats deny patients care, such a conversation should center around not giving bureaucrats the right to do so in the first place.

This post was originally published at The Federalist.

Lowlights of Democrats’ New Single-Payer Bill

Some might think that, having embraced socialism and taking away the health coverage of millions of Americans, the Democratic Party couldn’t move further to the left. Think again.

House Democrats introduced their single-payer bill on Wednesday, and claimed that it’s a “significantly different” bill compared to versions introduced in prior Congresses. It definitely meets that definition—because, believe it or not, it’s gotten significantly worse.

What Remains

Abolition of Medicare—and Most Other Insurance Coverage: As I noted last year, the bill would still eliminate the current Medicare program, by prohibiting Title XVIII of the Social Security Act from paying for any service (Section 901(a)(1)(A)) and liquidating the current Medicare trust funds (Section 701(d)). Likewise, the bill would eliminate the existing insurance coverage of all but the 2.2 million who receive care from the Indian Health Service and the 9.3 million enrolled veterans receiving care from the Veterans Administration.

Taxpayer Funding of Abortion: As before, Section 701(b)(3) of the bill contains provisions prohibiting “any other provision of law…restricting the use of federal funds for any reproductive health service” from applying to the single-payer system. This language would put the single-payer system outside the scope of the Hyde Amendment, thereby permitting taxpayer funding for all abortions.

Lack of Accountability: As with the prior bill, the legislation would give massive amounts of power to bureaucrats within the Department of Health and Human Services (HHS). For instance, the legislation would establish new regional directors of the single-payer system—none of whom would be subject to Senate confirmation.

What Lawmakers Added

More Spending: Section 204 of the new bill federalizes the provision of long-term supports and services as part of the single-payer benefit package. Prior versions of the bill had retained those services as part of the Medicaid program, implemented by states with matching funds from the federal government.

In addition, the revised bill eliminated language in Section 202(b) of the Sanders legislation, which permitted co-payments for prescription drugs to encourage the use of generics. With the co-payments (capped at an annual maximum of $200 in the Sanders bill from last Congress) eliminated, the bill envisions the federal government providing all health services without cost-sharing. This change, coupled with the federalization of long-term supports and services, will result in increased spending—as more people demand “free” health care.

Faster Elimination of Private Coverage: Rather than envisioning a four-year transition to the single-payer system, the revised bill would eliminate all private health insurance within a two-year period. Over and above the myriad philosophical concerns associated with single-payer health care, this accelerated transition period raises obvious questions about whether the new system could get up and running so quickly. After all, Obamacare had an implementation period of nearly four years—yet healthcare.gov failed miserably during its initial launch phase.

In theory, moving away from a fee-for-service method of paying medical providers would eliminate their incentive to perform more procedures—a worthy goal. But in practice, global budgets could also lead to de facto rationing, as hospitals that exceed their budgets might have to stop providing care to patients—just as under-funding within Britain’s National Health Service (NHS) has led to chronic hospital overcrowding.

Compensation Caps: Section 611(b)(5) of the new bill would limit “compensation costs for any employee or any contractor or any subcontractor employee of an institutional provider receiving global budgets,” by applying existing pay restrictions on government contractors to hospitals and facilities in the single-payer program. These restrictions might lead some to wonder whether hospitals could truly be considered independent entities, or merely an arm of the state.

Effective Abolition of For-Profit Medicine: Section 614(a) of the revised bill states that “payments to providers…may not take into account…or be used by a provider for” marketing; “the profit or net revenue of the provider, or increasing the profit or net revenue of the provider;” any type of incentive payment—“including any value-based payment;” and political contributions prohibited by government contractors.

Liberals would argue that eliminating the profit motive will encourage doctors to provide better care, by focusing on patients rather than ways to enrich themselves. But the profit motive also encourages individuals to invest in health care—as opposed to other sectors of the economy—by allowing them to recover a return on their investment.

Effective Elimination of Patents: Section 616(c)(1) of the bill states that “if the manufacturer of a covered pharmaceutical, medical supply, medical technology, or medically necessary assistive equipment refuses to negotiation a reasonable price, the Secretary shall waive or void any government-granted exclusivities with respect to such drug or product,” and shall allow other companies to manufacture the product. By allowing the federal government to march in on a whim and seize a company’s intellectual property, the bill would discourage individuals from investing in such intellectual property in the first place.

“Reasonable” Prices and Rationing: As noted above, Section 616 of the bill requires HHS to determine when the prices of drugs and medical devices are “not reasonable,” by taking into account among other things “the therapeutic value of the drug or product, including cost-effectiveness and comparative effectiveness.” This provision could lead to the federal government denying patients access to drugs deemed too expensive, as occurs currently within Britain’s National Health Service.

This post was originally published at The Federalist.