Democrats in Congress Won’t Let Andrew Cuomo Fight Medicaid Fraud

Over the past several weeks, Gov. Andrew Cuomo has taken several shots at Sen. Chuck Schumer, his fellow New York Democrat, about the coronavirus “stimulus” bills passed by Congress. Cuomo has repeatedly attacked Schumer for not looking out for their home state’s interests, calling the most recent measure, which cost more than $2 trillion, “terrible” for the Empire State.

The intraparty feuding seems all the more noteworthy for one reason Cuomo found the “stimulus” terrible: It precludes New York from taking steps to right-size its Medicaid program. That senior Democrats in Congress tied the hands of a governor from their own party as he works to enact reforms, and combat fraud, in the costly program speaks to how leftists will fight tooth-and-nail to maintain every facet of the welfare state.

New York’s Medicaid Mess

Even prior to the coronavirus pandemic, New York’s state Medicaid program faced major difficulties. In fiscal year 2018, New York’s Medicaid program spent nearly as much ($74.8 billion) as California’s ($83.9 billion), even though California has more than twice the population (39.5 million vs. 19.5 million for New York).

Some of New York’s high Medicaid spending stems from rampant waste and fraud. A 2005 in-depth investigation by The New York Times quoted a former investigator as saying that 10 percent of all Medicaid spending constituted outright fraud, with another 20-30 percent representing “unnecessary spending that might not be criminal.”

New York’s Medicaid program also spends disproportionate sums on institutional care for individuals with disabilities. The state spends more than twice as much on nursing home care ($5.5 billion) as California ($2.5 billion), despite having less than half the population. New York also exceeds California’s spending on intermediate care facilities for the intellectually disabled.

Smart reforms to Medicaid would attempt to keep individuals in their own homes wherever possible. Paying for home and community-based services would save taxpayers money. More importantly, it would also treat patients in the location the vast majority of patients prefer: Their own homes. Changes to move in this direction, coupled with efforts to fight waste and fraud, would bring long-overdue reform to Medicaid in New York.

Cuomo Tried to Fix the Problem

Prior to the pandemic, New York faced a $6 billion budget shortfall that Cuomo blamed (correctly) on the Medicaid mess. He asked a commission to recommend reforms, and the commission came back with a series of proposals that would save more than $1.6 billion in state dollars during the coming fiscal year, and additional sums thereafter. (Because the federal government provides at least a 50 percent Medicaid match to New York, the changes would save federal taxpayers at least as much as they would save state taxpayers.)

While the recommendations do include across-the-board reductions in provider payment levels, changes to long-term care represent the largest amount of savings ($715 million of the $1.65 billion total). The package includes a focus on home- and community-based services, tightens restrictions on households who attempt to hide assets to have Medicaid cover their long-term care costs, and includes reforms to program integrity as well.

Did Schumer Stop Reform?

As New York’s Democrat governor proposed a Medicaid reform package, what did New York’s senior senator do? By one account he worked to ensure that his fellow Democrat could not enact the needed changes.

As I previously noted, the second “stimulus” bill included a Medicaid bailout for states, coupled with maintenance of effort provisions. These provisions prohibit states from making any changes to eligibility or benefits in exchange for the 6.2 percent increase in the federal Medicaid match (which will last for the duration of the coronavirus public health emergency). States that increase cost-sharing, change benefits, impose premiums—pretty much any change to the Medicaid benefit package, other than arbitrary reductions in provider payments—lose eligibility for the increased federal match.

Cuomo railed against these restrictions: “Why would the federal government say, ‘I’m going to trample the state’s right to redesign its Medicaid program, that it runs—that saves money?’…I don’t even know what the political interest is they’re trying to protect.”

The governor appeared to win the argument—at first. Section 3720 of a draft version of the third “stimulus” bill (beginning at page 394 here) would have amended the second “stimulus” bill to allow New York to go ahead with its reforms, while still receiving the 6.2 percent increase in the federal Medicaid match.

But Section 3720 of the version that made it into law (page 147 here) stripped out the original language that allowed New York to proceed with its Medicaid changes. Rep. Lee Zeldin (R-N.Y.) claims Schumer got the language removed, presumably because he opposes Cuomo’s reform package:

Lee Zeldin

@RepLeeZeldin

Re-upping here for additional background on what Gov Cuomo is talking about right now re FMAP and the stimulus bill.

McConnell offered Schumer exactly what Cuomo asked for on this fix and Schumer rejected it. https://twitter.com/RepLeeZeldin/status/1243210360334815232 

Lee Zeldin

@RepLeeZeldin

Gov. Cuomo just said the stimulus package could’ve & should’ve provided additional support for the NYS budget.

He is right.

Here’s the context not mentioned:

McConnell offered the FMAP language Cuomo asked for & Schumer blocked it, resulting in the loss of SIX BILLION for NY.

Stop Defending Fraudsters

Who exactly nixed the language helping New York, and why, may remain a mystery. But it seems highly unlikely that Senate Republicans would have insisted on its removal. Most conservatives support states’ Medicaid reform proposals, and fought maintenance of effort requirements included in the 2009 “stimulus” and Obamacare that thwarted state flexibility. The objection that led to the New York provision’s removal almost certainly came from the Democrat side of the aisle.

As to why, consider this quote from Politico: “Critics argue…that even if there is some sense in targeting waste and fraud, it also makes sense to raise taxes on the wealthy to support a program that poor New Yorkers rely on.”

Yes, by all means let’s raise taxes during the midst of an economic cataclysm. If we crack down on fraud too much, the fraudsters might go out of business—and they need to eat just like the rest of us!

It’s exactly this kind of mentality that left the United States with $23 trillion in debt (and rising). Cuomo rightly called out the members of his own party for their socialistic games, because the American people deserve better than the left’s welfare-industrial complex.

This post was originally published at The Federalist.

No, $400 in Routine Health Care Costs is Not a Reason to Socialize Medicine

Sometimes, even heated discussions on Twitter can bring both light and heat by illuminating policy discussions. On Wednesday evening, Elizabeth Bruenig wrote a since-deleted tweet, using her transition from a writing position at the Washington Post to one at The New York Times to argue for single-payer health-care system:

Vance made a compelling point on policy, but one that conflated two issues. I wholeheartedly agree with his position on wanting to make coverage portable. But I don’t believe that a movement to de-link health coverage from employment means the government should pay for the health costs of comparatively affluent individuals.

Need for Portability

In her tweet, Bruenig admitted her period of uninsurance came from switching jobs. As a mother of two, including a newborn, Bruenig quite likely—and understandably—arranged some time between her two positions to spend with her young children.

On that front, I agree with both Bruenig and Vance about the good policy reasons to move away from individuals obtaining health coverage from their employers. As I outlined in prior writings, much of the problem of pre-existing conditions comes from our employer-based health insurance system: When you lose your job, you lose your coverage, which causes understandable worry for employees who have pre-existing conditions.

Making health coverage portable would allow individuals to take their insurance from job to job. This change would eliminate the friction people like Bruenig face when they’re between jobs, and greatly reduce (but not eliminate) the problem of pre-existing conditions, because people who develop such conditions during their working careers would own their own coverage, purchased before they became ill. The Trump administration has taken big strides on that front, publishing a regulation that will allow individuals—not their employers—to select and own their own health coverage, while still receiving an employer subsidy to cover some or all of the cost of their premiums.

However, people on the left talk about making health coverage portable not by giving power to individuals but by giving power to government. To borrow a medical metaphor, most liberals and socialists focus on the symptom (pre-existing conditions) rather than the underlying disease (lack of portable insurance). They favor either government regulation regarding pre-existing conditions, which encourages people to wait until they become sick to buy insurance, or in Bruenig’s case, an entirely government-run system.

Affordability for Individuals—And Taxpayers

While I agree with both Bruenig and Vance on the need to improve coverage portability (even if I disagree with the former on the way to go about it), I disagree in this instance about the separate question of who should pay for those costs.

But context matters, and in this case, the context looks quite different. Bruenig’s husband Matt also works; a former attorney for the National Labor Relations Board, he heads the People’s Policy Project, a socialist think-tank. As a result, their family has a second source of income, and another source of employer-based health insurance. (While Bruenig referenced health bills for her children, she didn’t say that her children faced an insurance gap. Given that context, I assume, but do not know for certain, that her husband’s insurance covers her children.)

Consider also the most recent breakdown of IRS tax filing data by income. As of 2017, households with adjusted gross income exceeding $97,870 represented the top quintile (i.e., top 20 percent) of filers, and households with adjusted gross income exceeding $145,135 represented the top 10 percent of filers. Bruenig and her husband almost certainly exceed the threshold to put themselves in the top 20 percent, and quite possibly the top 10 percent as well. Do I believe someone with that kind of income should receive government assistance for health insurance costs? In a word, no.

I haven’t yet completed my tax returns for 2019, but based on my paperwork compiled to date, I expect to declare just over $100,000 in income from my business last year. Of course, because I run my own business, I have to pay my own health insurance premiums. And my age (I’m roughly ten years older than Bruenig) means I pay more in premiums for Obamacare exchange coverage than she would if she bought temporary insurance there—and I do it month after month, not just when I have a gap between jobs.

In short, the Twitter mob calling me an “elite” for my tone and comments about savings ignore the fact that, based upon their station in life, Bruenig and her husband qualify on that front too. Unlike them, however, I don’t believe the federal government has a place subsidizing my insurance costs.

A Question of Priorities

I’ll give the last word to a Democrat: Maryland Rep. Steny Hoyer. As I mentioned in my book, in 2009, Hoyer, then as now the House majority leader, took to the House floor to make this compelling statement about entitlement spending and federal priorities:

At some point in time, my friends, we have to buck up our courage and our judgement 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. [Emphasis added.]

I agree with both Vance and Bruenig on the need to make health coverage more portable. But on the separate question of who pays, and saving scarce taxpayer resources for those who need them most, I stand with Hoyer.

This post was originally published at The Federalist.

Warren Advisor Admits Her Health Plan Raises Middle Class Taxes

That didn’t last long. Five days after Sen. Elizabeth Warren released a health plan (chock full of gimmicks) that she claimed would not raise taxes on the middle class, one of the authors of that plan contradicted her claims.

In an interview with Axios published on Wednesday, but which took place before the plan’s release, Warren advisor and former Centers for Medicare and Medicaid Services Administrator Donald Berwick said the following:

Q: Many people may not know their employers cover 70% or more of their entire premium — money that otherwise would go to their pay. Is this the main problem when talking about reforms?

DB: The basics are not that complicated. Every single dollar — every nickel spent on health care in this country — is coming from workers. There’s no other source. [Emphasis mine.]

Compare that phraseology to what Joe Biden’s campaign spokesperson said on Friday about Warren’s plan and its effects:

For months, Elizabeth Warren has refused to say if her health care plan would raise taxes on the middle class, and now we know why: Because it does….Senator Warren would place a new tax of nearly $9 trillion that will fall on American workers. [Emphasis mine.]

In response to the Biden campaign’s criticism, Warren said last Friday that her health plan’s projections “were authenticated by President Obama’s head of Medicare”—meaning Berwick. Unfortunately for Warren, Berwick, by virtue of his comments in his interview with Axios, also “authenticated” Biden’s attack that her required employer contribution will hit workers, and thus middle-class families.

Warren also tried to defend her plan on Friday by claiming that “the employer contribution is already part of” Obamacare. Obamacare does include an employer contribution requirement, but that requirement:

  • Is capped at no more than $3,000 per worker, far less than the average employer contribution for workers’ health coverage—$14,561 for family coverage as of 2019— which will form the initial basis of Warren’s required employer contribution;
  • Does not apply to employers at all if the firm offers “affordable” coverage—an option not available under Warren’s plan, which would make private insurance coverage “unlawful;” and
  • Will raise an estimated $74 billion in the coming decade, according to the Congressional Budget Office—less than 1 percent of the $8.8 trillion Warren claims her required employer contribution would raise.

While Obamacare and Warrencare both have employer contributions, the similarities pretty much end there. Calling the two equal would equate a log cabin to Buckingham Palace. Sure, they’re both houses, but differ greatly in size. Warren’s “contribution”—which Berwick, her advisor, admits will fall on middle-class workers—stands orders of magnitude greater than anything in Obamacare.

Public Accountability?

In the same Axios interview, Berwick highlighted what he termed a tradeoff “between public accountability and private accountability.” He continued: “By not having a publicly accountable system, we are paying an enormous price in lack of transparency.”

His comments echo prior justification of his infamous “rationing with our eyes open” quote in a 2009 interview. As he explained to The New York Times as he departed CMS in late 2011, “Someone, like your health insurance company, is going to limit what you can get….The government, unlike many private health insurance plans, is working in the daylight. That’s a strength.”

Except that Berwick, as CMS administrator, went to absurd lengths to hide from public scrutiny after his series of remarks. He would gladly meet with health-care lobbyists behind closed doors, but refused to answer questions from reporters, going so far as to duck behind curtains and request security escorts to avoid doing so.

Warren apparently has taken a lesson in opacity from Berwick’s time as CMS administrator. At first, she avoided releasing a specific health care proposal at all, only to follow up by issuing a “plan” containing so many absurd assumptions as to render it irrelevant as a serious blueprint for legislating.

Unfortunately for her, however, Berwick committed the unforgivable sin of speaking an inconvenient truth about the effects of her proposal. Eight years after leaving office as CMS administrator, Berwick, however belated and however unwittingly, delivered some much-needed public accountability for Warren’s health plan.

This post was originally published at The Federalist.

In Defense of the Senate Filibuster

On Monday, former Senate majority leader Harry Reid (D-NV) wrote an op-ed in The New York Times calling for the full abolition of the Senate filibuster. Reid claimed that the Senate’s current rules—which require 60-vote majorities to pass legislation—have prevented the enactment of climate change and gun control legislation, turning the Senate into an “unworkable legislative graveyard.”

The facts, however, suggest otherwise. For both philosophical and practical reasons, conservatives should support retaining the Senate filibuster.

It’s Good to Make Legislating Difficult

In all seriousness, the filibuster requires the type of deliberation the Constitution’s Framers originally intended. Remember, the Constitution guarantees citizens a republican form of government—not a direct democracy, where public opinion directly determines laws. The filibuster helps to ensure that lawmakers will not fall into the temptation to “do something” every time a policy problem arises, enacting knee-jerk legislation that could lead to unintended consequences.

Ronald Reagan famously opined about the nine most terrifying words in the English language: “I’m from the government and I’m here to help.” By making it more difficult to pass major new expansions of the welfare state when we cannot afford our current entitlement commitments, the filibuster prevents more ill-considered legislation from intruding the federal government even further into our lives.

Harry Reid Helped Create the Problem

On one level, Reid’s criticism of the Senate as an “unworkable legislative graveyard” has merit. After all, the Senate has held votes on a grand total of 18 amendments all year, falling far short of senators’ self-important claims that they serve in the “world’s greatest deliberative body.”

But why has the Senate voted on only 18 amendments all year? Because Mitch McConnell (R-KY), Reid’s replacement as majority leader, has chosen to focus nearly all the Senate’s floor time on confirming nominees—Cabinet appointments, sub-Cabinet officials, and federal judges.

And why has McConnell focused almost exclusively on confirming nominations? Because in 2013, Reid and Senate Democrats abolished the filibuster for all nominations except Supreme Court appointments. (Senate Republicans abolished the filibuster for Supreme Court appointments in 2017, to confirm Neil Gorsuch as an associate justice.)

Nominations thus require a simple, 51-vote majority for passage, as opposed to the 60 votes required for legislation. Since President Trump took office, McConnell has focused on the former to the near exclusion of the latter.

If Reid hadn’t pulled the trigger on the so-called “nuclear option” back in 2013, the Senate might have spent more time this year legislating, instead of simply approving nominees. Since he exacerbated the Senate’s status as a legislative graveyard, few should trust Reid’s prescription for fixing a self-inflicted problem.

Leaders Want to Rig the Process

Most members rarely take the first approach. Republican senators have said the lack of votes on amendments “sucks.” But unless and until a group of senators offer an effective threat to grind the Senate to a halt—for instance, Republican senators voting down President Trump’s nominees—to demand an open process for legislation, the status quo will never change. As the old saying goes, if you’re not part of the solution, you’re part of the problem.

Worth noting: The Senate did vote on a Rand Paul amendment to the budget deal earlier this month—because conservatives demanded that vote in exchange for allowing the process to move forward.

With the second, members of Congress say they want an open process, but the instant such an open process would result in legislative outcomes they disagree with, they immediately seek to ditch transparency, and to manipulate outcomes through backroom deals. Either they do not realize that such efforts neuter their own power as backbenchers—by empowering a select group of leaders to negotiate bills behind closed doors—or, more likely, they secretly support this move, because it absolves them of responsibility for legislating.

This post was originally published at The Federalist.

Three Things to Know about “Surprise” Medical Bills

In recent months, lawmakers in Washington have focused on “surprise” medical bills. In large part, this term refers to two types of incidents: 1) individuals who received pre-arranged treatment at an in-network hospital, but saw an out-of-network physician (e.g., anesthesiologist) during their stay, or 2) individuals who had to seek care at an out-of-network hospital during a medical emergency.

In both cases, the out-of-network providers can “balance bill” patients—that is, send them an invoice for the difference between an insurer’s in-network payment and what the physician actually charged. Because these bills can become quite substantial, and because patients do not have a meaningful opportunity to consent to the higher charges—many patients never meet their anesthesiologist until the day of surgery, and few people can investigate hospital networks during an ambulance ride to the ER—policy-makers see reason to intervene.

1. Few Hospitals Comprise Most of the ‘Surprise’ Incidents

As a chart from The New York Times demonstrates, most hospitals had zero, or close to zero, out-of-network emergency room bills in 2015, according to a study by three Yale University professors:

“Surprise” bills applied in 22 percent of ER visits, but as a Times reporter noted, they are “not happening to some random set of patients in every hospital. [They’re] happening to a large percentage of patients in certain hospitals.”

As noted above, most hospitals don’t have this problem, because they keep their ER physicians and other doctors in-network. Unfortunately, however, the one-quarter or so of hospitals that have not forced their physicians in-network have made life difficult for the rest of the hospital sector.

The hospital industry should have done a much better job of policing itself and weeded out these “bad actors” years ago. Had they done so, the number of “surprise” bills likely would not have risen to a level where federal lawmakers demand action. However, the fact that these incidents still only occur in a minority of hospitals suggests reason for continued caution—because why should Congress impose a far-reaching solution to a “problem” that doesn’t affect most hospitals?

2. The Federal Government Has Little Reason to Intervene

Over and above the question of whether “surprise” bills warrant a legislative response, lawmakers should also ponder why that response must come from the federal government. Even knowledgeable reporters have (incorrectly) assumed that a solution to the issue must emanate from Washington because only the federal government can address “surprise” bills for self-funded employer plans. Not so.

ERISA, in this case, refers to the Employee Retirement Income Security Act of 1974, which regulates employer-provided health insurance. ERISA states that its provisions “shall supersede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan.”

But as that language indicates, ERISA applies only to the regulation of employee benefit plans—i.e., the employer as an insurer. It does not apply to the regulation of providers—i.e., hospitals, doctors, etc. As a Brookings Institution analyst admitted, states can, for instance, require hospitals to issue an in-network guarantee, ensuring that all doctors at an in-network hospital are considered in-network.

For most of the past year, interest groups have lobbied Congress on “surprise” billing. As one might expect, everyone wants a solution that takes patients out of the line of fire in negotiations between doctors, hospitals, and insurers, but no one wants to take a financial haircut in any solution that emerges.

The lack of agreement on a path forward indicates that Congress should take a back seat to the states, and let them innovate solutions to the issue. Indeed, several states have already enacted legislation on out-of-network bills, suggesting that Congress might do more harm than good by weighing in with its own “solution.”

3. Some Republicans Support Socialistic Price Controls

Both the comparatively isolated nature of the problem and the lack of a clear need for federal involvement suggest that some on the left continue to raise the “surprise” billing issue as part of a larger campaign. By establishing that the federal government should regulate the prices of health-care services—even those in private insurance plans—liberals can lay down a predicate for a single-payer health-care system that would do the exact same thing, just on a larger scale.

Sure enough, congressional Republicans, like Oregon Rep. Greg Walden and Tennessee Sen. Lamar Alexander, have endorsed legislation establishing a statutory cap on prices for out-of-network emergency services. (Remember: In policy-making, bipartisanship only occurs when conservatives agree to liberal policies.)

Both the House Energy and Commerce Committee and Senate Health, Education, Labor, and Pensions Committee have introduced proposals that would engage in such federal price-fixing, although lawmakers recently modified the House bill to allow for binding arbitration between doctors and hospitals where the disputed sums exceed certain thresholds. Alexander wants to move his legislation on the Senate floor within weeks.

Last month, Alexander said he “instinctively” liked the in-network guarantee approach—which requires hospitals to have their physicians in-network, while letting insurers, hospitals, and doctors negotiate those in-network prices without setting them through government fiat. However, he told reporters that he ultimately endorsed the price-fixing approach because the Congressional Budget Office (CBO) called it “the most effective at lowering health care costs.”

The retort to Alexander’s comment seems obvious: Of course, price-fixing will lower health care costs. Indeed, CBO said the price-fixing provision would save by far the greatest amount of money of any section of the nearly 250-page bill, because it “lower[s] payment rates” to physicians.

If Alexander suddenly wants to use price controls to lower health care costs, then why not regulate the prices of all health care services ($129.95 for surgery, anyone?)—or move to full-on single-payer? Because the quality of care will suffer too—as will American patients.

A Spoonful of Socialism, Anyone?

I noted above that the hospital industry caused the “surprise” billing problem in the first place. I have little love for hospital executives, many of whom behave like greedy monopolists, and who represent the single biggest argument for single-payer health care I can think of.

Yet however much hospital executives may have earned opprobrium by their conduct, the American people don’t deserve a single-payer system, with its massive economic disruption and its inferior care, foisted on them. They deserve better than federally imposed price controls as a “solution”—whether as the mere “spoonful of socialism” in the “surprise” billing legislation, or an all-out move to single-payer.

This post was originally published at The Federalist.

Note to Britain: You Can Have Your NHS

As expected, the American press has heavily covered President Trump’s visit to Europe, including his time spent in Great Britain. But a row (that’s British for “argument”) that has gone under-reported on this side of the Atlantic also holds major implications for American patients.

Based on comments the President made earlier in the week, British politicians now believe they need to protect the country’s National Health Service (NHS) from “privatization” at the hands of American corporations. But even as they do so, another controversy—about the ways in which Britain denies life-saving treatments to patients, solely on cost grounds—illustrates the problems with socialized medicine, which the left wants to export to the United States.

Concern about Trade Agreements

During a press conference in London Tuesday, a British reporter questioned Trump about a post-Brexit trade deal between the U.S. and Britain. The reporter specifically asked whether “the entire economy needs to be on the table” in those discussions, “including the NHS.” Trump responded that “everything with a trade deal is on the table.”

Those comments—which Trump later attempted to walk back—prompted outrage that Britain’s “beloved” NHS was at risk. British politicians across parties raised concern that American companies could receive NHS contracts (even though subsidiaries of U.S. corporations have already done so), or that a free trade agreement could supersede legislative efforts by Parliament to prohibit additional private contracting within the health service.

The Health Secretary, Matt Hancock—an announced candidate in the race to succeed Theresa May as Conservative Party leader and Prime Minister—epitomized the sentiments, claiming that “the NHS

NHS Denying Patients Care

The controversy continued at Prime Minister’s Questions in the House of Commons Wednesday. In that hourlong session, no fewer than five questions asked whether the NHS was “for sale,” or some variation thereof. But the sixth NHS-related question, by Labour MP Karl Turner, proved the most revealing:

Twelve months ago, the Prime Minister told this House that she wanted a speedy resolution to the funding row between NHS England and Vertex regarding the drug Orkambi to treat cystic fibrosis. My seven-year-old constituent Oliver Ward wrote to the Prime Minister recently asking what progress she has made. Could the Minister please give Oliver some good news and tell him that he need not get up every day worrying about this terrible injustice?

Turner’s question referred to Orkambi, a drug that could help thousands of British patients currently suffering from cystic fibrosis. But the NHS refuses to pay for the drug—not because it does not work, but because it does not meet cost thresholds that government bureaucrats have set.

Britain’s National Institute for Health and Clinical Excellence decided in 2016 that the NHS would not pay for Orkambi at the price set by its manufacturer. For the three years since, British patients have not found that decision very NICE at all.

A Precursor of an American Single-Payer System?

Unfortunately, however, liberals want to export the British model of rationing health care on cost grounds to the United States. Recall President Obama’s comments about the issue a decade ago:

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.

Months after those comments, the New York Times ran an article, entitled “Why We Must Ration Health Care,” that argued for bringing a British-style rationing model to our shores.

This prevailing mentality among intellectual elites explains why neither the House nor Senate single-payer bills prohibit a government-run health plan from implementing cost-effectiveness research. In fact, the House bill explicitly provides for cost-effectiveness research as a method of determining drug prices, because most liberals believe that bureaucrats can and should have the power to restrict access to care on cost grounds. Most Americans, on the other hand, would strongly object to this rationing of care.

As for British politicians saying the NHS “isn’t for sale,” I could not care less—I wouldn’t want to buy it even if it were. The American health care system has its flaws, to be sure, but I have little interest in creating a system where government bureaucrats have near-total control over patients’ medical decisions, and use that power to deny access to life-saving care. I think most Americans would agree.

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.

Did Obamacare Increase the National Death Rate?

Researchers have raised legitimate questions about whether a policy change included in Obamacare actually increased death levels nationwide.

Some may recall that two years ago, liberals engaged in no small amount of hyperbolic rhetoric insisting that repealing Obamacare would kill Americans. They viewed that fact as a virtual certainty, and spent more time arguing over precisely how many individuals would die under the law’s repeal.

About the Readmissions Program

The Obamacare change sparking the policy debate involves the law’s hospital readmissions program. Section 3025(a) of the law required the Department of Health and Human Services to reduce Medicare payments to hospitals with higher-than-average readmission rates. The program began in October 2012, and since October 2014 has reduced payments by 3 percent to hospitals with high readmission rates for three conditions: heart failure, heart attacks, and pneumonia.

The program intended to make hospitals more efficient, and encourage them to treat patients correctly the first time, rather than profiting on poor care by receiving additional payments for “repeat” visitors. However, several data points have called into question the effectiveness of the policy.

First, a recent article in the journal Health Affairs concluded that data proving the readmissions program’s effectiveness “appear to be illusory or overstated.” The study noted that, right before the readmissions program took effect, hospitals could increase the number of diagnoses in claims submitted to Medicare. After controlling for this difference, the Harvard researchers concluded that at least half of the “reduction” in readmissions came due to this change.

By contrast, a December study in the Journal of the American Medical Association found an even darker outcome. The JAMA study, which examined a total of 8.3 million hospitalizations both before and after the readmissions penalties took effect, found that the program “was significantly associated with an increase in 30-day postdischarge mortality after hospitalization for [heart failure] and pneumonia, but not for” heart attacks. This study suggests that, rather than incurring penalties for “excess” readmissions, hospitals instead chose to stop readmitting patients at all—and more patients died as a result.

Is This ‘Alarmist’ Rhetoric?

In a blog post analyzing the debate at the New England Journal of Medicine, former Obama administration budget director Peter Orszag pointed out the two studies arrive at conclusions that are likely mutually contradictory. After all, if the readmissions policy didn’t affect patient outcomes, as the Health Affairs analysis suggests, then it’s hard simultaneously to argue that it also increased patient mortality, as the JAMA paper concludes.

But Orszag also criticizes The New York Times for an “unduly alarmist” op-ed summarizing the JAMA researchers’ results. That article, titled “Did This Health Care Policy Do Harm?” included a subheading noting that “a well-intentioned program created by the Affordable Care Act may have led to patient deaths.”

  • Washington Post: “Repealing the Affordable Care Act Will Kill More than 43,000 People Annually”
  • Chicago Tribune: “Repealing Obamacare Will Kill More than 43,000 People a Year”
  • Vox: “Repealing Obamacare Could Kill More People Each Year than Gun Homicides”

These headlines don’t even take into consideration the comments from people like former Sen. Harry Reid (D-NV), who said, “If you get rid of Obamacare, people are going to die.” Then there were the “analyses” by organizations like the Center for American Progress, helpfully parroted by Sen. Bernie Sanders (I-VT), that said “getting rid of Obamacare is a death sentence.”

Alongside this rhetoric, the supposedly “alarmist” Times article seems tame by comparison. It didn’t use the word “Obamacare” at all, and it couched its conclusions as part of a “complex” and ongoing “debate.” But of course, the contrast between the mild rhetoric regarding hospital readmissions and the sky-is-falling tone surrounding Obamacare repeal has absolutely nothing to do with liberal media bias or anything. Right?

Democrats, the Science Deniers

The Times article concludes by “highlight[ing] a bigger issue: Why are policies that profoundly influence patient care not rigorously studied before widespread rollout?” It’s a good question that Democrats have few answers for.

Liberals like to caricature conservatives as “science deniers,” uninformed troglodytes who can barely stand upright, let alone form coherent policies. But the recent studies regarding Obamacare’s hospital readmissions policy shows that the Obama administration officials who created these policies didn’t have any clue what they were doing—or certainly didn’t know enough to implement a nationwide plan that they knew would work.

Given this implementation failure, and the staggering level of willful ignorance by the technocrats who would micro-manage our health care system, why on earth should we give them even more power, whether through a single-payer system or something very close to it? The very question answers itself.

This post was originally published at The Federalist.

Exclusive: Inside the Trump Administration’s Debate over Expanding Obamacare

Last August, I responded to a New York Times article indicating that some within the Trump administration wanted to give states additional flexibility to expand Medicaid under Obamacare. Since then, those proposals have advanced, such that staff at the Centers for Medicare and Medicaid Services (CMS) believe that they have official sign-off from the president to put those proposals into place.

My conversations with half a dozen sources on Capitol Hill and across the administration in recent weeks suggest that the proposal continues to move through the regulatory process. However, my sources also described significant policy pitfalls that could spark a buzz-saw of opposition from both the left and the right.

The Times reported that some within the administration—including CMS Administrator Seema Verma and White House Domestic Policy Council Chairman Andrew Bremberg—have embraced the proposal. But if the plan overcomes what the Times characterized as a “furious” internal debate, it may face an even tougher reception outside the White House.

How It Would Work

After the Supreme Court made Medicaid expansion optional for states as part of its 2012 ruling upholding Obamacare’s individual mandate, the Obama administration issued guidance interpreting that ruling. While the court made expansion optional for states, the Obama administration made it an “all-or-nothing” proposition for them.

Under the 2012 guidance—which remains in effect—if states want to receive the enhanced 90 percent federal match associated with expansion, they must cover the entire expansion population—all able-bodied adults with incomes under 138 percent of the federal poverty level (just under $35,000 for a family of four). If states expand only to some portion of the eligible population, they would only receive their regular Medicaid match of 50-76 percent, not the enhanced 90 percent match.

The Internal Debate

The August Times article indicated that, after considering partial expansion, the administration postponed any decision until after November’s midterm elections. Since that time, multiple sources disclosed to me a further meeting that took place on the topic in the Oval Office late last year. While the meeting was originally intended to provide an update for the president, CMS staff left that meeting thinking they had received the president’s sign-off to implement partial expansion.

Just before Christmas, during a meeting on an unrelated matter, a CMS staffer sounded me out on the proposal. The individual said CMS was looking for ways to help give states additional flexibility, particularly states hamstrung by initiatives forcing them to expand Medicaid. However, based on my other reporting, I believe that the conversation also represented an attempt to determine the level of conservative opposition to the public announcement of a decision CMS believes the president has already made.

Why Liberals Will Object

During my meeting, I asked the CMS staffer about the fiscal impacts of partial expansion. The staffer admitted that, as I had noted in my August article, exchange plans generally have higher costs than Medicaid coverage. Therefore, moving individuals from Medicaid to exchange coverage—and the federal government paying 100 percent of subsidy costs for exchange coverage, as opposed to 90 percent of Medicaid costs—will raise federal costs for every beneficiary who shifts coverage under partial expansion.

The Medicare actuary believes that the higher cost-sharing associated with exchange coverage will lead 30 percent of the target population—that is, individuals with incomes from 100-138 percent of poverty—to drop their exchange plan. Either beneficiaries will not be able to afford the premiums and cost-sharing, or they will not consider the coverage worth the money. And because 30 percent of the target population will drop coverage, the partial expansion change will save money in a given state—despite the fact that exchange coverage costs more than Medicaid on a per-beneficiary basis.

Why Conservatives Will Object

I immediately asked the CMS staffer an obvious follow-up question: Did the actuary consider whether partial expansion, by shifting the costs of expansion from the states to the federal government, would encourage more states to expand Medicaid? The staffer demurred, saying the actuary’s analysis focused on only one hypothetical state.

However, the CMS staffer did not tell me the entire story. Subsequent to my “official” meeting with that staffer, other sources privately confirmed that the actuary does believe that roughly 30 percent of the target population will drop coverage.

But these sources and others added that both the Medicare actuary and the Congressional Budget Office (CBO) agree that, notwithstanding the savings from current expansion states—savings associated with individuals dropping exchange coverage, as explained above—the partial expansion proposal will cost the federal government overall, because it will encourage more states to expand Medicaid.

For instance, the Council of Economic Advisers believes that spending on non-expansion states who use partial expansion as a reason to extend Medicaid to the able-bodied will have three times the deficit impact as the savings associated with states shifting from full to partial expansion.

Because the spending on new partial expansion states will overcome any potential savings from states shifting from full to partial expansion, the proposal, if adopted, would appreciably increase the deficit. While neither CBO nor the Medicare actuary have conducted an updated analysis since the election, multiple sources cited an approximate cost to the federal government on the order of $100-120 billion over the next decade.

One source indicated that the Medicare actuary’s analysis early last summer arrived at an overall deficit increase of $111 billion. The results of November’s elections—in which three non-expansion states voted to accept expansion due to ballot initiatives—might have reduced the cost of the administration’s proposal slightly, but likely did not change the estimate of a sizable deficit increase.

A net cost of upwards of $100 billion, notwithstanding potential coverage losses from individuals dropping exchange coverage in current expansion states, can only mean one thing. CBO and the Medicare actuary both believe that, by lowering the cost for states to expand, partial expansion will prompt major non-expansion states—such as Texas, Florida, Georgia, and North Carolina—to accept Obamacare’s Medicaid expansion.

Who Will Support This Proposal?

Based on the description of the scoring dynamic my sources described, partial expansion, if it goes forward, seems to have no natural political constituency. Red-state governors will support it, no doubt, for it allows them to offload much of their state costs associated with Medicaid expansion onto the federal government’s debt-laden dime. Once CMS approves one state’s partial expansion, the agency will likely have a line of Republican governors out its door looking to implement waivers of their own.

But it seems unlikely that Democratic-led states will follow suit. Indeed, the news that partial expansion would cause about 30 percent of the target population to drop their new exchange coverage could well prompt recriminations, investigations, and denunciations from Democrats in Congress and elsewhere. Because at least 3.1 million expansion beneficiaries live in states with Republican governors, liberals likely would object to the sizable number of these enrollees who could decide to drop coverage under partial expansion.

Conversely, conservatives will likely object to the high net cost associated with the proposal, notwithstanding the potential coverage losses in states that have already expanded. Some within the administration view Medicaid expansion, when coupled with proposals like work requirements, as a “conservative” policy. Other administration officials view expansion in all states as something approaching a fait accompli, and view partial expansion and similar proposals as a way to make the best of a bad policy outcome.

But Medicaid expansion by its very nature encourages states to discriminate against the most vulnerable in society, because it gives states a higher match for covering able-bodied adults than individuals with disabilities. In addition to objecting to a way partial expansion would increase government spending by approximately $100 billion, some conservatives would also raise fundamental objections to any policy changes that would encourage states to embrace Obamacare—and add even more able-bodied adults to the welfare rolls in the process.

Particularly given the Democratic takeover of the House last week, the multi-pronged opposition to this plan could prove its undoing. Democrats will have multiple venues available—from oversight through letters and subpoenae, to congressional hearings, to use of the Congressional Review Act to overturn any administration decisions outright—to express their opposition to this proposal.

A “strange bedfellows” coalition of liberals and conservatives outraged over the policy, but for entirely different reasons, could nix it outright. While some officials may not realize it at present, the administration may not only make a decision that conservatives will object to on policy grounds, they may end up in a political quagmire in the process.

This post was originally published at The Federalist.

The Sordid History of the FDA’s Menthol Decision

Late last week, The New York Times reported that the Food and Drug Administration (FDA) will issue a regulation proposing a ban on menthol flavoring in cigarettes, potentially this week. This represents merely the latest development in a long and winding history of the mint-flavored additive lasting nearly a decade.

The Times report quoted FDA Commissioner Scott Gottlieb saying “it was a mistake for the agency to back away on menthol” regulation. Depending upon one’s perspective, the “menthol loophole” either represents a reasonable example of legislative compromise, or policymakers in both the legislative and executive branches valuing African-American lives less dearly than the lives of other Americans.

A Troubled Legislative History

Beginning 3 months after the date of enactment of the Family Smoking Prevention and Tobacco Control Act, a cigarette or any of its component parts (including the tobacco, filter, or paper) shall not contain, as a constituent (including a smoke constituent) or additive, an artificial or natural flavor (other than tobacco or menthol) or an herb or spice, including strawberry, grape, orange, clove, cinnamon, pineapple, vanilla, coconut, licorice, cocoa, chocolate, cherry, or coffee, that is a characterizing flavor of the tobacco product or tobacco smoke.

That language created two policy problems. First, as I noted in my summary of the bill at the time, because the bill banned other cigarette flavors manufactured overseas, while permitting menthol-flavored cigarettes manufactured domestically, the law would likely result in World Trade Organization (WTO) complaints for unfair trade practices. Indeed, Indonesia, which manufactures clove cigarettes, filed just such a complaint following the law’s passage—and won its case at the WTO.

The Times alluded to the other complication presented by the “menthol loophole” in its article this week: “According to the N.A.A.C.P.’s Youth Against Menthol campaign, about 85 percent of African-American smokers aged 12 and up smoke menthol cigarettes, compared with 29 percent of white smokers, which the organization calls a result of decades of culturally tailored tobacco company promotion.”

That “decades of culturally tailored tobacco company promotion” also included contributions to organizations like the NAACP and the Congressional Black Caucus Foundation. Industry documents released as part of the 1998 master settlement agreement demonstrated that “the tobacco industry established relationships with virtually every African-American leadership organization”—both to increase tobacco use, and to head off tobacco control efforts.

The FDA Looked the Other Way

Despite the condemnation from the HHS secretaries for its double standards against African-Americans, the bill passed as written in 2009. In an irony of ironies, the first African-American president signed it into law in June that year.

While it did not ban menthol outright, the legislation required a study on its effects, and gave the FDA the authority to ban the additive. Despite occasional rumors that FDA might outlaw menthol—and appeals from the African-American community for a ban—the Obama administration did not take action on the matter.

As a small government conservative, I question the value of establishing and maintaining an FDA bureaucracy to regulate an inherently unhealthful product. I by no means condone the decades of deception the tobacco industry used to sell their products.

This post was originally published at The Federalist.