SPN Blog
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• Ensuring Budget Problems by Expanding MedicaidMedicaid
  The Baltimore Examiner today published an op-ed by me discussing the fiscal irresponsibility of the Maryland General Assembly expanding Medicaid during a special session to address the budget deficit:"Given the historic spending patterns of this program, expanding it in today’s economic and fiscal climate makes little sense. Even with the recent tax increases, it is unclear if the state will have enough revenue to satisfy current spending trends. And it is likely that economic growth will not be very robust in the next few years, while Medicaid’s growth will be substantial. New Medicaid spending will put even more strain on the state’s taxpayers."As in most states, Maryland lawmakers have found it very difficult to accurately budget Medicaid spending. Usually, they do not allocate enough and must make up the difference during the following year's budget. So when facing a deficit, it seems strange that they would expand this program. As was clear when the General Assembly overwhelmingly voted to approve the expansion, my view is in the minority.
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• Buying Insurance Across State LinesHealth Care
  The health-insurance market can be divided into three segments. The first consists of mostly large employers, with self-funded plans, and are regulated by the federal Employee Retirement Income Security Act (ERISA) and thus not subject to state regulation. The two remaining segments of the health-insurance market are heavily regulated by states: those that serve small-group plans (typically covering two to 50 people), and individuals who pay for their own insurance. The Health Care Choice Act, proposed by Rep. John Shadegg (R-Ariz.) would allow residents in one state to buy health insurance that is available in and regulated by another state. It would only apply to the individual market.Because regulations vary from state to state, the cost of health insurance for these last two segments of the insurance market vary widely. Some states ensure that residents have access to a wide range of affordable policies. Others -- New Jersey, New York, Massachusetts, for instance -- have all but destroyed their individual health-insurance markets with over-regulation.One of the most expensive state-level regulations is "guaranteed issue," which requires insurers to sell insurance to anyone willing to buy it, regardless of their health, or other factors that may make it much more expensive to cover them. New Jersey, for example, enacted guaranteed issue in 1994. At the time, a family policy could be purchased in the state for as little as $463 a month or as much as $1,076, depending on which of the 14 participating insurers a family chose. Now there are just 10 insurance companies offering plans in the state and the cost has soared to $1,726 per month on the low end and $14,062 on the high end.In New Jersey then, residents who buy their own insurance have to pay at least $20,000 a year for the cheapest family policy. Meanwhile, in neighboring Pennsylvania similar health-insurance policies cost a third of what they cost in New Jersey. What Mr. Shadegg wants to do is to let New Jersey residents buy what's now for sale in Pennsylvania.Mandates are another reason the cost of health insurance varies from state to state. States impose those mandates on what an insurance plan must cover -- such as chiropractic care or mental-health services. The Council for Affordable Health Insurance, which tracks mandates, estimates that there are more than 1,900 state mandates nationwide. These mandates can increase the cost of health insurance by as much as 50%, which can then force residents in many states to decide between "Cadillac coverage" -- insurance that covers nearly everything and costs a mini fortune -- or no coverage at all.Typically, state mandates are justified by the belief that they make health insurance more comprehensive. But consider this: Idaho has just 14 state mandates, the fewest in the nation, while Minnesota, with 63, has the most. Yet, the people of Idaho aren't dying in the streets for lack of mandates.Critics of the Health Care Choice Act claim that it would limit the ability of states to protect their residents. The assertion is that cross-state health-insurance purchases are a risky experiment. In truth, millions of people already have access to health insurance across state lines. Employees of large companies with plans covered by ERISA are one example.But there are others. Some small businesses cover employees working across state lines. And, because people are mobile, some people buy individual insurance in one state and then end up moving to another. In many cases, they can take their health-insurance policies with them. A person living in Pennsylvania with an individual policy now could retain that policy even if he moved to New Jersey. Premiums would likely increase, but they would be cheaper than if he had started out with a New Jersey policy.If states are worried about losing regulatory control over health insurance, they might try
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• A Health-Insurance SolutionHealth Care
  Merrill Matthews of CAHI (and frequent contributor to this blog) has an editorial featured in today's Wall Street Journal on John Shadegg's Congressional proposal to allow individuals to purchase health insurance from any state. He uses a comparison of health insurance costs in New Jersey compared with Pennsylvania - which works for New Jersey residents. Coming from Pennsylvania, I have used a comparison to Ohio for similar effect.
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• Canadian Approach UnsustainableHealth Care
  Provincial health care spending continues to grow at an unsustainable rate and will consume more than half of all revenues in six of 10 Canadian provinces by 2035 unless changes are made, according to a study from the Vancouver-based Fraser Institute. Nova Scotia and Newfoundland and Labrador are the most urgent cases, where health spending could consume half of all revenues as early as 2017 and could hit 60% of all revenues by 2022 in Newfoundland and Labrador and 2026 in Nova Scotia. The report concludes that public health insurance, as it is currently structured in Canada, tends to produce rates of growth in health spending that are not financially sustainable through public means alone and makes several recommendations as an alternative to the "pay more, get less approach," including encouraging the efficient use of health care by requiring patients to make co-payments for any publicly funded medical goods and services they use; relieving cost pressures facing the public health insurance system by legalizing the right of patients to pay privately for all types of medical goods and services; and allowing health providers to receive reimbursement for their services from any insurer whether government or private.
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• Postal Health Care at its FinestHealth Care
  During the health reform debate in the 1990s, former Senator Phil Gramm often said that he was working to protect us from a health care system that operated like the post office – with its long waiting lines, inefficiency, and limited services. Well, we are entering the next round of the health reform debate, and we have a fresh example of why we still don't want our health sector to become a monopoly like the postal service. Here's what happened: The post office near our offices in Alexandria, Virginia, where we receive our mail, announced this fall that it was moving a few blocks up the street. But then they told us that because THEY are moving, WE must change our mailing address. I suspect that some postal service bureaucrat just forgot to tell a vendor to keep the old numbers on the new boxes. No one is taking responsibility, of course. And since there is no competition, we are stuck. If this were the private sector, they would certainly have figured out a way to let us keep our same box numbers. But it isn’t and they didn’t. So now we must notify you and all of our colleagues – and also order new letterhead, business cards, brochures, etc. This is a perfect example of why we don't want the government running our health care system!
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• Avoiding Grief by Not Offering InsuranceHealth Care
  The primary reason for the decline in the number of small businesses providing health insurance appears to be that owners of new firms are reluctant to introduce health benefits, according to a National Federation of Independent Business Small-Business Poll. The poll on purchasing health insurance found that 52% of small-business owners do not offer either employee health insurance or an insurance purchase subsidy. "It's much better for employee morale if a small-business owner never offers health benefits, than it is to offer them and then be forced to take it away because it is too expensive to continue," said the NFIB's William Dennis. Also, the survey showed that agents and brokers did not raise the subject of HSAs in 59% of cases involving their discussion of employee health insurance with small employers. Those small employers offering coverage had deductibles averaging $929 in 2005, compa