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Rob Natelson: Three Cheers for Speaker Blasdell and the State House!!! (to which is appended a heads-up from past experience)

Carl Graham and I were in the legislative galleries in Helena last Friday, when the state stepped back from the brink.

Democrats and some Republicans were pushing for the state to yoke itself to the Obamacare Medicaid expansion, enticed by “free federal money.” So they amended a bill designed to keep the state free from the expansion to one chaining the state to the expansion.

The rules of the state House of Representatives generally provide that when the purpose of a bill is changed, it should go back to committee for review. So in a courageous move guaranteed to irritate the state’s “opinion leaders,” Speaker of the House Mark Blasdel decided to just that.

Advocates of the expansion immediately moved to appeal the Speaker’s ruling. All of us in the House chamber held our breaths to see what the roll call vote would be. At the end, the motion to overrule lost—but by the closest margin possible: 50 for, 50 against. Then the bill was physically transmitted to the committee.

At least one, and possibly two, Democrats claimed to have pushed the wrong button while voting, but some Republicans may have made off-setting errors. Anyway, advocates of the extension pushed for a second vote, while hospital lobbyists—eager to pad their employers’ pockets by throwing more people into government dependency—vigorously worked on lawmakers, trying to flip some to their cause. They actually wound up losing people: The second vote to reverse Speaker Blasdell lost 48-52.

Some in the Montana political establishment can be ruthless in finding ways to overrule the state legislature when it makes a fiscally conservative decision. Montana lawmakers have to be careful they are not overruled this time.

For example, in the 1990s, the state House rejected federal funding for a controversial education program. Instead of respecting the legislative will, the governor and superintendent of public instruction decided to thwart it. They arranged for the money to bypass state government and go directly from the feds to local school bureaucrats.

A little later in the decade, Montana lawmakers rejected CHIP, one of those federal health care programs that are (1) promoted as improving access to care but instead (2) always make care more expensive and less accessible. So the Montana state auditor (insurance commissioner) decided to violate a central canon of our constitutional government: He decided, as an executive branch officer, to invade the sole right of the legislature to appropriate money.

First, he threatened insurance companies with prosecution for allegedly breaking regulations. Next, he dropped the cases when the insurance companies handed over large cash payments. Finally, he used the extorted funds to erect the CHIP program himself.

Voila! more dependency, less affordable care, and a new spending constituency.

Montana lawmakers must ensure they are not overridden this time. But if their decision holds, they will have made an important step toward more fiscal sanity and physical health.

Bozeman Daily Chronicle Op Ed: Improve Medicaid Before Expanding It

 

Gov. Bullock waited until nearly 60 of the 2013 legislative session’s 90 days had passed before making a Medicaid expansion proposal that essentially said “do what the feds want.” That’s a wasted opportunity. Since Medicaid rules are made in Washington, D.C., we frittered away a chance to negotiate reforms that could better meet the needs of Montana’s most at-risk population while also being fair to taxpayers.

Continue reading here

Legislature Watching

I’ve been a little out of sorts the past few days with whatever it is that’s making the rounds, but that’s given me a chance to sit and watch the legislature on my fancy computer gadget box in the basement. It’s like magic. The Legislative Services Division has really done a nice job of making information on the 2013 session visible and easily accessible. You can look up bills, find your legislator, watch or listen to hearings and floor sessions, and much more. Kudos to them.

But that’s not what I wanted to talk about. I’m going to be lazy today and just redirect you to some work we’ve already done at MPI on two issues that are currently hot in Helena.

The first is Medicaid expansion. Rob and I have been beating this to death here and here , I know. And you can get all the facts and date you need from our policy note. But you really need to tell your legislators how you feel about creating an entirely new dependency class of young, able, childless adults. The arguments and facts and data are all in the blogs and policy notes we’ve done, but they mean nothing if you don’t show your concern. You can bet the victim industry and hospitals who stand to gain enormously are lobbying the hell out of our reps up in Helena. Somebody’s got to stand up for the taxpayer and for the basic morality of a system that rewards earned success rather than punishes it.

The other hot topic is campaign finance reform. I laid out the argument here that the problem we have isn’t money in politics, it’s politics in money. And so whatever ‘reforms’ we try are for nothing if we don’t reduce the size, scope and power of the government to pick winners and losers. Anything else is putting the cart before the horse. This issue divides those of us on the right and there are legitimate concerns on both sides of the issue. But please take a look at arguments against limiting free speech before letting emotional arguments take the day.

MPI Policy Note 01-13: Medicaid Expansion Can Wait

Proponents of Medicaid expansion argue that it would insure more people, that it takes advantage of “free” federal money and that it will create jobs and pump up local economies. But the fact that barely half the states are taking action to expand Medicaid indicates that this federal giveaway may come with unacceptable risks and costs, including:

  • Expansion will dump more people into a system that provides poorer access to care and poorer health outcomes than private insurance.
  • Federal matching funds are neither free nor guaranteed, potentially leaving the state with an unsustainable funding requirement.
  • Expanding Medicaid without fundamentally reforming it perpetuates its shortcomings and will crowd out other public spending priorities.


There is no cost to delaying, but expansion is forever. This decision should wait until we can learn more.

There are alternatives to Medicaid expansion that will actually provide quality care at lower costs, and without creating an entirely new dependent class of young, able Montanan adults. Our policy note gives you all the information you need to see why and how we should take a pass on expansion and concentrate on true reforms.

Medicaid Expansion Policy Note

Let Other States Experiment with Medicaid Expansion – Part II

Medicaid expansion is supposedly a no-brainer. It’ll provide insurance for a lot low income people. It’s free federal money. And it’ll create jobs and pump up local economies. So why are the 50 states almost evenly divided on whether to take this gift horse or send it out to pasture?

It’s because a lot of governors and legislatures have decided that at best the jury’s still out on whether expansion is a good idea; and more likely it’s a bad idea that will hurt many of the people it’s supposed to help and turn into an albatross around taxpayers’ necks.

I’m open to being proven wrong, but I agree with those who say that Medicaid expansion as laid out in Obamacare is both bad welfare policy and bad economic policy. It’s bad welfare policy because it shifts primarily young, able and to a large extent childless adults into a system with demonstrably inferior access to care, and then traps them there. Forty four percent of the newly eligible would be adults under the age of 34, and seventy five percent would be childless.[i] In addition, a fourth of all new enrollees would be dumped into Medicaid from private insurance plans that almost always provide better access to care than Medicaid.[ii] The difference is in having health insurance versus getting health care.

I have a fishing license. That gives me the right to stand in a river waving my fly rod around, but it doesn’t guarantee that I’ll catch any fish. Same goes for health insurance versus health care. Medicaid recipients encounter barriers to primary care at nearly twice the rate of those with private insurance.[iii] Because of this lack of access to primary care, they then show up in emergency rooms at rates nearly twice those of the privately insured, but sicker and much more expensive to treat.[iv] Shoveling well over 70,000 new Montanans into this system[v] while also decreasing provider reimbursements under Obamacare won’t make access to quality care any easier for these folks or for anyone else in the state.

Medicaid expansion is also bad economic policy. In fact, it’s pure crony capitalism. You can’t swing a dead cat in Helena right now without hitting a hospital or pharmaceutical lobbyist trying to get their surgical gloves into taxpayers’ wallets. Yes, there’s good evidence that the “free” money coming from Washington may create around twelve thousand jobs in Montana; but will those jobs create health benefits that are commensurate with their costs? If not, the money is better left in the private economy where it can be spent more productively. A recent New England Journal of Medicine article said that “Treating the health care system like a (wildly inefficient) jobs program conflicts directly with the goal of ensuring that all Americans have access to care at an affordable price.”[vi] And anyway, it’d be much cheaper for Montana taxpayers to just put those who are eligible for federal subsidies into the new exchanges and let Washington pay their entire bill. It’s free money, right?

Except that it’s not. It’s taxpayer money whether you write the check to Helena or to Washington. The net cost to Montana taxpayers of Medicaid expansion through 2021 is over $50 million according to one estimate,[vii] and closer to $100 million according to another.[viii] That’s after the “free” money and jobs and tax revenues, and assumes the federal government will keep its promise to cover 100% of expansion costs in the early years and 90% later on, despite the fact that even the President’s own past two budgets included reductions in those commitments.[ix]

In reality nobody knows what it will cost, but there’s precious little precedent for entitlement spending coming in below or even near initial estimates. In 1965 Medicare was estimated to cost $9 billion annually by 1990. The actual cost in 1990 was $67 billion.[x] There’s no reason to think Medicaid expansion estimates will fare any better, and Montana taxpayers would be on the hook for the difference since it’s politically unlikely that these entitlements would be reversed once they’re put in place.

So why not wait a couple of years? Let’s see how things go in California and Illinois and other bastions of state fiscal responsibility, and then take a look at what’s working and what’s not so we can make an informed decision. Or, we could try true reform and turn Medicaid into a system that really does provide quality access to quality care for more people who need it. We’d do that by reconnecting the patient to the provider and the cost to create responsible consumers rather than filtering both the funding and the care through a self-perpetuating bureaucracy. But that’s a topic for another day.

 


[i] The Urban Institute, “Opting in to the Medicaid Expansion under the ACA: Who Are the Uninsured Adults Who Could gain Health Insurance Coverage,” August 2012,  pp. 8-9.

[ii] University of Montana Bureau of Business and Economic Research, “An Estimate of the Economic Ramifications Attributable to the Potential Medicaid Expansion on the Montana Economy,” January 2013, p. 6.

[iii] 16.3% of Medicaid patients encountered barriers versus 8.9% of those with private insurance. Annals of Emergency Medicine, “National Study of Barriers to Timely Primary Care and Emergency Department Utilization Among Medicaid Beneficiaries,” 2012, p. 4.

[iv] Ibid

[v] Urban Institute, op. cit., p. 18 and BBER, op. cit., p. 7.

[vi] Katherine Baicker, Ph.D. and Amitabh Chandra, Ph.D, The New England Journal of Medicine, “The Health Care Jobs Fallacy, June 28 2012, p. 2435.

[vii] BBER, op. cit., p. 29.

[viii] The Heritage Foundation, “Obamacare and the Medicaid Expansion: How Does Your State Fare?” March 5th 2013, http://blog.heritage.org/2013/03/05/obamacare-medicaid-expansion-state-by-state-charts/.

[ix] Charles Blahous, Mercatus Center, “The Affordable Care Act’s Optional Medicaid Expansion: Considerations Facing State Governments,” 2013, p. 32.

[x] Conn Carroll, The Foundry, “Health Care Reform Cost Estimates: What is the Track Record?” August 4th 2009, http://blog.heritage.org/2009/08/04/health-care-reform-cost-estimates-what-is-the-track-record/.

Rob Natelson: On the Medicaid Expansion—Yes, Montana Should Say No

When the Supreme Court’s Obamacare case was pending, I noticed that while there was a lot of attention given to the individual insurance mandate, there was little discussion of the Medicaid expansion.

The Medicaid extension was the part of the law that sought to force states into signing up for an expensive new program by threatening to cut off all Medicaid funds if they did not.

Whether the individual mandate was constitutional was an arguable question under the Supreme Court’s modern jurisprudence.  (As you probably know, the court’s modern law on federal regulation and spending is largely disconnected from the Constitution’s actual meaning.)

But the Medicaid mandate was different. However, I looked at it—under modern law or the Constitution’s actual meaning—that mandate seemed flagrantly unconstitutional to me. But almost no one was addressing it.

As a result, I authored one of the very few Supreme Court briefs to address the issue in detail. The brief was edited and filed by Dave Kopel at the Independence Institute, where I am also a senior fellow.

Against all popular expectations, we won: By a 7-2 margin, the Supreme Court struck down the coercive portion off the Medicaid expansion. This left the states free to make their own decisions.

A recent MPI post explains why Montana should not sign up for the budget-busting, dependency-creating Medicaid expansion. As if any additional reasons were necessary, health care expert Linda Gorman adds this compelling argument. It’s written for Colorado, but applies to Montana as well.

More On Medicaid Expansion

Had a good time on KMMS this morning talking about Medicaid expansion so I thought I’d jot down a few notes from the show.

If you’re on MPI’s website you’re already active and aware on policy issues so I won’t belabor the point with a lot of background, but in a nutshell the Governor is about to roll out his plan to expand Medicaid as our masters in Washington have directed to include people earning up to 138% of the federal poverty level. That’s a bad idea for several reasons, as I argued in an Op Ed back in January. We’ll have a lot more on this soon, but here’s a quick outline:

  1. It’s bad welfare policy: According to an Urban Institute study that pretty much everyone is using, 43% of those added to Medicaid in MT would be under 35 years old and 75% would be childless. Unless they’re disabled, putting young, unfettered individuals on public assistance without some kind of work or payment in kind system is unfair to taxpayers, creates all the wrong incentives, and traps them in an entitlement web that’s tough to get out of.
  2. Will cost taxpayers more than just the expansion: Hospitals claim it will save taxpayers and those who are privately insured money because putting more people on Medicaid will reduce their unreimbursed or charity care costs. Don’t believe it. In states like Maine where they’ve already been down this road, those costs increased as people moved from private insurance to Medicaid and uninsured numbers remained virtually unchanged. Just think about it: how will adding 50,000 people from an at-risk population (lower incomes equate to poorer health) to a program with low and sinking reimbursement rates save money?
  3. Job numbers are probably overstated: We need to do a little more homework on this – and will – but claims of more jobs from “free” federal money have been wildly overstated in the past and probably are now as well. And besides, as argued in a New England Journal of Medicine paper called “The Health Care Jobs Fallacy,” if the same health care outcomes can be achieved with fewer resources that leaves more for schools, transportation, safety, and other public priorities.
  4. And finally, it ain’t free money: Over 30% of the “free” money will be borrowed by the federal government, and the remaining will either paid for by you on April 15th or come out of other spending priorities. Direct costs to Montana taxpayers of expansion range from $50 million to around $150 million depending on whom you believe, and there are few examples of entitlement program cost estimates being understated. President Obama’s last two budget submissions included increasing the states’ share of Medicaid reimbursements, so talk of 100% federal cost share is doubtful in the future, and so-called circuit breakers that would cancel expansion if the feds renege are meaningless. Nobody is going to take away this benefit once it’s been granted, so let’s wait a couple of years, see how they like it in other states, and then make an informed decision.