Alaska Policy Forum » Health Care

Is Massachusetts Health Care a Microcosm for Alaska?

Online Editor — Thu, 06 Oct 2011 22:16:12 +0000

(New England Journal of Medicine) Massachusetts was the first state to enact near-universal health care coverage in 2006. Since then, premiums have increased and employment in the health care occupations (excluding nurses) and patient care occupations has risen dramatically. This rise in administrative/ancillary occupations may be caused by the administrative burden caused by this reform. [...]

Medicare Actuary: Obamacare will triple the net growth rate of health care costs

jthompson — Wed, 10 Aug 2011 17:50:52 +0000

From the Apothecary blog over at Forbes.com:

The Office of the Actuary in the Centers for Medicare and Medicaid Services recently put out its annual projections of national health care spending. And, contrary to the President, the actuaries find that Obamacare will dramatically increase the near-term growth rate of health care costs. In 2014, the actuaries find that growth in the net cost of health insurance will increase by nearly 14 percent, compared to 3.5% if PPACA had never passed. The growth rate of private insurance premiums will rise to 9.4 percent, from 5.0 percent under prior law: an 88% increase. (Read more…)

Rethinking the dogma of Electronic Health Records

jthompson — Tue, 09 Aug 2011 18:13:27 +0000

Alaska has made significant investments in the infrastructure needed for Electronic Health Records, but will EHR’s deliver on the grand promises made?

From the Pittsburgh Post-Gazette:

For an industry that relies on data and evidence-based measurements to make decisions on the clinical and pharmaceutical side, there isn’t a lot of evidence supporting the notion that electronic health records produce cheaper care or better outcomes.

What rigorous studies do exist, he said, often point in contrary directions.

One paper published this year by the Public Library of Science, written by U.K. doctors, notes that “there is a large gap between the postulated and empirically demonstrated benefits of eHealth technologies [and] their cost-effectiveness has yet to be demonstrated, despite being frequently promoted by policymakers and ‘techno-enthusiasts.’”

Another study, this one published in 2007 by the Archives of Internal Medicine, concluded that of the 325 or so million ambulatory visits in the U.S. that utilized “electronic health records” in some way, there was no significant difference in performance between visits with versus without [electronic health record] use for most quality indicators.

“There is no really good data that shows that [electronic health records] reduce hospitalizations,” Ken Adler, medical director of information technology at Arizona Community Physicians, told Health Data Management Magazine. “The nation is investing a huge amount of money on a hope and prayer.”

(Read more…)

Cadillac Benefits For Me, But Not For Thee

David Boyle — Thu, 02 Jun 2011 01:24:46 +0000

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (PL111-148), perhaps the most far reaching social and economic legislation since the 1930s. There are many unintended consequences resulting from this 2,400 page document which will impact most Americans. One consequence is the difference in coverage between Federal employees and military service members.

PPACA requires benefits and insurance providers to include young adults (ages 22-26) as child dependents in their health insurance plans after January 1, 2011 at no extra cost. So, if a family wants to keep their kids on their insurance plan until they are 26, the federal government says that the insurers must do so. The Federal government provides health insurance benefits to its civilian employees under the Federal Employee Health Benefit Plan (FEHBP) and is included in that rule; FEHBP covers the Senators and Representatives of Congress and their families.

But there are differences between the coverage that TRICARE offers and the coverage that FEHBP offers. For civilian federal employees, coverage is no extra charge. For TRICARE users, it will cost $186/month per young adult covered. If the 22-26 year old is married, they are eligible for coverage under FEHBP. But under TRICARE, they are not eligible for coverage. Finally, if the young adult has benefits provided through an employer, they are still covered. Not so for those on TRICARE.

FEHBP brings new meaning to the phrase “cadillac plan.”

As one can see, there is a significant cost difference between coverage for young adults of Federal employees and military members. The civilian employee has no added costs, the military member pays an additional $2,232 annually to insure each young adult. Why does it cost much more to insure a military young adult than a civilian young adult? To answer this question, one needs to look at the implementation of PPACA directed by Congress. Note that young adults of congressmen/senators are insured by FEHBP. Congress directed the DOD that there were to be no added costs from covering young adults under TRICARE. There was no similar direction to the FEHBP manager, the Office of Personnel Management. The taxpayer had to fund all costs for adding young adults under FEHBP.

There are other striking differences when it comes to insuring married young adults. Under FEHBP, married young adults are covered; under TRICARE, military young adults are not covered. Apparently, the DOD relied on the current policy of not covering married dependents and the OPM expanded coverage for married dependents, once again increasing costs for the taxpayer.

Finally, if one is an FEHBP young adult and is able to get health insurance from his/her employer, that person is still eligible for coverage under FEHBP. On the other hand, if one is a TRICARE young adult and eligible for health insurance from his/her employer, that person is not covered by TRICARE. This difference in coverage is not explainable.

In this case, it seems as if Congress has created a two tiered system, one for themselves and civilian employees, and one for military members. Maybe it does depend on who you are and, more so, who writes the rules. The purpose of highlighting this is not to say that this coverage should be made the same to everyone. It illustrates the double standard that we see today in the ruling class.

Building the Federal Obamacare Exchange: Should Alaska Do It?

jthompson — Fri, 08 Apr 2011 16:00:22 +0000

The Affordable Care Act (ACA) is unpopular, unwieldy, expensive, likely unconstitutional, and will shortly be a prime target for repeal. The dilemma for Governor Parnell is that the law is written with the assumption that the state will be burdened with the execution of many of its worst ideas. ACA requires states to establish “exchanges” to limit the health-insurance choices of many of their residents. This idea will not work in Alaska.

The exoteric message of the ACA says that states will have “flexibility” in structuring exchanges, but whatever constructs the federal government may try to impose on Alaska’s health insurance economy are insufficient to overcome the fact that there is no free-market incentive to join an exchange, other than the motive to obtain subsidies. Two states, Massachusetts and Utah, already have exchanges.

The Massachusetts model is very expensive to operate because of its top-down strategy. It uses regulation and enforcement to achieve what it wants. But, if one of the problems in the insurance industry is too much overhead and not enough paid claims, this model doesn’t fix that. Massachusetts’ exchange spent more than $26.6 million on vendors and contractors in 2009, and $3.4 million on dozens of new employees. This comprises fully 3.5 percent of the money that businesses and enrollees paid into the exchange – on top of already bloated insurance bureaucracies.

Some believe that it is possible to design an exchange that increases consumer choice, and the Utah Health Exchange is often presented as evidence for this argument. Utah’s health exchange, supporters say, is a consumer-friendly model that can blunt the most harmful consequences of the federal health care legislation.

What does the Utah Health Exchange do? Here’s an example: the Utah Health Exchange allows spouses to aggregate defined contributions from different employers. For example, suppose a husband’s employer contributes $300 per month to the exchange for health insurance. His wife works for another employer which does the same. The household has $600 to spend on a family policy that they, not their employers, choose. The husband and wife can then decide to which of their employers they wish to affiliate, satisfying federal regulations for group coverage. If this is a good deal for the consumer, then there should be no problem letting the market set up their own exchanges. Consumers don’t need a government bureaucracy to funnel money from point A to point B.

So far, the results show that businesses in Utah have not stampeded to their exchange. Reports from only a few months ago describe the exchange as a disappointment. Twenty businesses enrolled on the first day of operations in August 2009, and 136 businesses in total signed up. But, only 13 remained enrolled as of last December.

Even if Utah’s Health Exchange model has figured out a way to increase consumers’ choices, it is unlikely that such choices will survive the other rules determined by the federal health care law. In 2014, federal rules mandate that insurance products sold in all state exchanges be “community rated” and “guaranteed issue,” two rules which have always led to higher insurance premiums wherever they have been implemented. Even if the U.S. Supreme Court says it is acceptable for the federal government to force everyone to buy health insurance, there is no evidence to suggest that these two rules alone would not lead to skyrocketing costs within the exchanges.

With the Utah model, there will be an adverse incentive for businesses to drop coverage for their employees and dump them into the exchange. There is a tipping point at which a business will find it is cheaper to pay the fine and dump the employee in the exchange rather than provide health benefits. Some analysts have estimated that anyone who earns less than $80,000 annually will be dumped into an exchange.
But the real question is whether exchanges will be able to push back against bad federal insurance policy that will come with the funding attached to it. Exchanges are meant to be faucets for federal subsidies. Official sources estimate that about half a trillion federal dollars will flow into state exchanges between 2014 and 2019, but the Congressional Budget Office is already adjusting its message, saying that the costs of these exchanges are much higher than originally portrayed (13).

If the feds write a check to the Alaska Exchange to expand Medicaid to include someone making an income at 500% of the federal poverty level, do you think state government will be able to resist taking it? Alaska has already lost a great deal of its flexibility to shape a sensible, effective Medicaid program because of the federal stimulus funds it accepted in 2009.

The real risk in setting up any exchange, whether small or large, is that it can always be used as a tool by unelected bureaucrats to bludgeon Alaska’s already thin health care insurance market. Even those in the legislature who advocate for an exchange see it as a tool to usher in a form of single payer. While Alaska needs to continue to debate that within our state, an exchange would outsource the discussion to the federal government. There is nothing stopping a future Health and Human Services secretary from imposing more regulations and costs on the exchange.

Governor Parnell has made some good moves by pushing back against the Affordable Care Act with a lawsuit and by refusing some of the funding made available for exchanges. If Alaska wants more flexibility, taking up the shackles of the federal exchange is not the way to achieve it. Instead, Alaska should be looking into loosening up the mandates on health insurance in its own laws to allow consumers to choose products that better fit their needs.

Jeremy Thompson is the Executive Director of the Alaska Policy Forum.

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Alaska Governor Rebuffs Federal Health Care Takeover

David Boyle — Tue, 04 Jan 2011 20:08:50 +0000

Governor Parnell appears to be asserting Alaska’s independence when it comes to Federal Obamacare and its mandates.

Is Health Care Reform Unraveling?

jthompson — Tue, 26 Oct 2010 14:50:07 +0000

Grace-Marie Turner thinks the Health Care Reform legislation passed earlier this year is unraveling. Here are her reasons why.

Broken Promises: Cutting Medicare to Pay for Health Care Reform

Online Editor — Mon, 20 Sep 2010 16:27:37 +0000

The Patient Protection and Affordable Care Act, or the recent health care law, was rushed through the political process touted as deficit neutral legislation. One of the of the ways it was supposed to pay for itself was through cuts in other programs.

State health care exchanges of 2014

Online Editor — Fri, 10 Sep 2010 15:57:21 +0000

(NCPA) With examples from Massachusetts' "Commonwealth Connector" law and California's proposed health care exchange, NCPA explains one of the new health care law's requirements and what it means to you.

Utah: Reforming health care since 2005

Online Editor — Thu, 26 Aug 2010 18:38:50 +0000

Utah continues its five-year-old health care reform plan, scheduled to take full effect in the fast approaching 2011 year, all while continuing the fight against the Patient Protection and Affordable Care Act.