Cain Not Able

Herman Cain’s ascendant Presidential campaign brings into focus the limited health policy thinking that has dominated the campaign so far. 

Here are our current major health policy challenges:

• Reversing the trend toward lower investments in the public health and prevention activities that have accounted for half of our increased longevity in the last century;
•  Assuring fair coverage of the chronic conditions, including mental illness, cardiovascular disease, and cancers, that affect 60% of our population;
• Giving even the uninsured 16% of our population access to high quality, comprehensive, integrated primary, specialty, and hospital care; and
• Figuring out how best to pay for all this.

Despite the urgency of these challenges, the current health policy debate can be condensed into a four word sound bite – “Repeal Obamacare Individual Mandate.”

Here are the specifics of what the candidates have been talking about the past couple of weeks.

Mitt Romney and Newt Gingrich are fighting over whether Romney got the idea for the “individual mandate” from Gingrich or the Heritage Foundation.  (Both, it seems, from their exchange in the last debate.)

Ron Paul wants to abolish our health care system in its entirety and replace it in part with free care “as a charitable benefit provided by doctors” for all poor people.

Rick Perry’s first national health policy headline came when he advocated eliminating the Medicaid program that pays for long-term nursing and home care for elders and people with disabilities.  His last came this past weekend when he questioned Hawaii’s vital statistics record-keeping – at least where Barack Obama’s birth certificate is concerned.

And Herman Cain, the self-proclaimed a “problem solver,” solved his business’s financial problems in part by helping to pay for health insurance for only 17% of his employees.

As Cain’s sketchy health care plan shows, his plans for what he would do for the other 83% are few and far between.   

First, he wants to sell insurance across state lines.  The Affordable Care Act already will permit this, but there’s a catch.  The only policies that could be sold across state lines must meet minimum coverage standards. 

He opposes this.  So when he favors selling insurance across state lines, he doesn’t care if it actually covers anything for which you might need insurance, such as cancer, heart disease, mental illness, comprehensive primary care, drugs, or even most hospital stays. 

Second, even though it would violate his 9% flat tax proposal, he wants to allow individuals who buy insurance to be able to deduct it from their income tax.    

Why?  So that businesses could eliminate group health insurance from their employee benefits package – as Cain himself did – and let employees pay for the more expensive individual plans on their own.

Third, he wants to expand the use of health savings accounts, into which individuals and families would have to deposit their own money to cover the thousands of dollars of deductibles in the stripped down insurance policies that would flood the market if his “across state lines” plan passed.

They might get a tax deduction for this – if he violated his 9% flat tax policy again – but that’s just another way of shifting even more of the cost of health care to individuals and the federal government. 

Citizen Cain refers to these proposals as “patient-centered” reforms.  But patient-centeredness involves most everything that is absent from “Cainsian” health economics. 

It is about promoting health and well-being and improving access to affordable, quality care, not making insurance companies more profitable.

At least Cain offers a plan on his web site, unlike family-first candidate Rick Santorum.  And in a nod to Michele Bachmann, Cain did acknowledge in a recent debate – without mentioning her – that he lifted much of his health plan from legislation co-sponsored by Bachmann (HR3400) in 2009.

Herman Cain talks a good game about the “sacred patient-doctor relationship,” but his slapped-together health plan is little more than a slap in the face to people with serious health and wellness needs.  There’s nothing in it about wellness, prevention, or chronic disease management.  There’s nothing about access and quality. 

It’s all about stringing together a few of the worst proposals for individuals, families, and taxpaying citizens, and dressing them up as an alternative to the Affordable Care Act. 

Even raising Cain to new poll heights won’t make him able to sell this.   

If you have questions about this column or would like to receive an email notifying you when new Our Health Policy Matters columns are published, please email gionfriddopaul@gmail.com.

Does The PCIP Enrollment Problem Signal the End of Private Insurance?

There are 4 million or more Americans who can’t get regular insurance because of a pre-existing condition.  You might be one of them.  Now there’s a policy that costs less than $300 per month and covers all of your medical needs, including your pre-existing condition. 

Will you buy it?  Apparently not.

And that may signal the beginning of the end of private insurance in America.

I first wrote about the diminished role of private insurance in a column last month entitled America’s Health Insurance Myth.  Privately-financed private health insurance today pays only 17% of America’s health care bill.

Two recent developments suggest that this share will become even smaller in the future.

The first was last week’s death of the CLASS Act.  As a result, long term care will continue to be an out-of-pocket and government expense only for nearly everyone.

The second was the report of first-year enrollment numbers for the new Pre-existing Condition Insurance Plan (PCIP).  PCIP was created as part of the Affordable Care Act.  It offers low-cost health insurance for adults who have – or have had – conditions like mental illness, cancer, diabetes, and heart disease.  (Children are now covered on their parents’ policies.)

PCIP is comprehensive.  It covers hospitals, doctors, and drugs. 

There is no means test to qualify.  Provided that you have been uninsured for at least six months, all you need to apply is a note from a physician attesting to your chronic condition.

PCIP is inexpensive.  In Florida, the monthly PCIP premium for a forty-year old is only $211 for the standard option.  There are deductibles and co-pays, but annual out-of-pocket costs are capped at $5,950.  This may seem like a lot, but it is less than 20% of the 2009 average charge of $30,655 for a single hospital stay.

The federal government operates Florida’s plan and those of 22 other states.  Connecticut, on the other hand, is one of 27 states that choose to run their own programs.  In Connecticut, PCIP insurance costs $381 per month, but out-of-pocket costs are capped at $4,250 per year.  So its overall costs are similar to Florida’s.

Of an estimated 4 million people eligible for PCIP and 375,000 expected to sign up in the first year, only 30,395 bought policies.  Just 1,454 people enrolled in Florida, and only 62 enrolled in Connecticut.

Why so few?

The answer is obvious in states like Massachusetts, which has only one PCIP enrollee, and Vermont, which has none.  They have near universal coverage, so they don’t need PCIP.

What about states without universal coverage?  Pennsylvania had the highest first-year enrollment.  It had 3,762 people insured through PCIP.  If every state were like Pennsylvania, then PCIP would have around 100,000 enrollees today, still far below the expected number.

There are three explanations for why people aren’t enrolling in PCIP that speak to how little faith we have in insurance.

The first is that they believe that when there’s a crisis, hospitals and doctors will treat them whether or not they are insured.  Health care providers rarely turn their backs on people in need.

But someone still has to pay the bill.  And it usually gets paid through hidden charges in everyone else’s insurance premiums. 

The second is that people don’t think they can afford even $211 per month for health insurance, or up to $5,950 in medical bills in a year. 

But when the costs of common chronic diseases routinely run into six figures, the alternative can be bankrupting.

The third is that we don’t trust insurance.  Insurance companies take our money, fight with us about covering our bills, and make huge profits. 

But PCIP isn’t like that.  Unlike other insurance, it is designed to pay out far more money than it takes in.  PCIPs paid out four times in benefits what they charged in premiums during the first few months of the program, and Congress set aside $5 billion – of which only a fraction was spent – for this.

Here’s the bottom line.  If $211 a month is too much to pay for insurance we are sure we will use, then health insurance is dying in America.  Many of us say we will rely on our own resources, but also expect a government safety net to be there when our resources fall short.

If we roll the dice and don’t buy PCIP when we can, then we may lose more than we think.  There are political leaders who are already celebrating the demise of the CLASS Act.  Many also would happily repeal both PCIP and the Affordable Care Act, and replace them with… well, nothing.

For more information about federal and state PCIP, visit https://www.pcip.gov/.  If you have questions about this column or wish to receive an email notifying you when new Our Health Policy Matters columns are published, contact gionfriddopaul@gmail.com.

Supreme Court Ruling Against Individual Mandate Could Result in Care Denial to Poor

Opponents of the Affordable Care Act (ACA) are now looking to the Supreme Court to overturn the 2010 law before time runs out on them.

After ACA became law eighteen months ago, they were optimistic that they could beat back several of its key provisions.  These included the minimum medical loss ratios, the expansion of Medicaid, the health insurance exchanges, and the individual mandate.

A brief review of the current status of each shows why the individual mandate is the last one standing.  But as the arguments for and against it have crystallized in the Courts, they show how the Supreme Court could open a Pandora’s Box best left closed.

 Minimum loss ratios

ACA mandates that all private insurance plans will have to pay at least 80 to 85 cents in benefits for every premium dollar collected, or rebate the difference to policy holders beginning in 2012.  Opponents argued that many existing plans would be forced out of the market because of high administrative costs.

However, the federal government has approved several short-term waivers from the requirement, deflating opposition.  Also the Center for Medicare and Medicaid Services has told Florida that it must meet the 85% minimum loss ratio in its public Medicaid program, too.  Once private insurance rebates start to flow to consumers in 2012, the remaining opposition will likely melt away.

Medicaid Expansion

Beginning in 2014, everyone below 133% of poverty will be eligible for Medicaid.  The 26-state lawsuit against the ACA – the one most likely to be taken up by the Supreme Court this term – argued that the Medicaid expansion imposed an unconstitutional financial burden on the states.

But the Courts have already ruled against the states on this one, and so the Medicaid expansions will go forward in two years unless Congress changes the law.

Health Insurance Exchanges

Beginning in 2014 states will have to have exchanges through which consumers will purchase health insurance.  Only plans offering the minimum benefits mandated by ACA can be offered on the exchanges.  Some state regulators argued that they did not have the authority to enforce the “minimum benefit provisions” mandated by ACA.  Florida decided to establish its own exchange that will not meet the ACA requirements.

However, a dozen other states are already moving forward with their approved exchanges, undercutting “lack of state authority” argument and putting Florida out on a limb.   

The Individual Mandate

Beginning in 2014, a system of subsidies and penalties will go into effect to encourage people to purchase health insurance.  Those making up to 400% of poverty will receive subsidies for health insurance, but all those above 133% of poverty who refuse to purchase insurance will have to pay a federal income tax penalty.

The crux of the legal argument against the individual mandate is that it is unconstitutional for the Federal government to impose a tax penalty on an individual for refusing to purchase a consumer product.  However, opponents have conceded that it would be Constitutional to impose such a mandate at the time of service.

Judge Stanley Marcus, one of the judges who heard the appeal that may now go before the Supreme Court, made this clear in his dissent.

He wrote that “the plaintiffs and, indeed, the majority have conceded, as they must, that Congress has the commerce power to impose precisely the same mandate compelling the same class of uninsured individuals to obtain the same kind of insurance, or otherwise pay a penalty, as a necessary condition to receiving health care services, at the time the uninsured seek these services.”

So what the Supreme Court is being asked to decide is not “if” the individual mandate is constitutional, but “when.”

Some legal experts don’t think that there is much of a distinction in this. 

But if the Supreme Court feels differently, and ultimately decides that it is Constitutional to impose the tax at the time of service, but not in advance, then this may well open up a Pandora’s Box that we would all rather stay tightly closed and locked.

Even a narrow ruling against the “pre-tax” could have a far-reaching unintended consequence for indigent, uninsured people.  These people include many of the over 50 million uninsured people today and the 22 million who will still be uninsured after ACA implementation.  A Supreme Court ruling that holds that people could be forced to pay at the time of service could also be construed as permitting providers to deny care to those who cannot afford it.

Opponents hope that a Supreme Court ruling against “pre-taxing” will result in a political unraveling of the law. It could well happen, but not in the way they intended.

If you have questions about this column or wish to receive an email notifying you when new Our Health Policy Matters columns are published, please email gionfriddopaul@gmail.com.

Florida's Shame is Connecticut's Gain

The next time Florida’s Governor tells you that the only way to create private sector jobs is to cut public sector health spending, don’t believe him. 

According to news reports, the Governor’s Office is already warning state health agencies to expect more budget cuts in 2012.  He wants the dollars to implement his 7-7-7 plan to create 700,000 jobs in 7 years.

source: US DOL data, 2011

How’s the plan working out for Florida so far? Dismally, by two different measures.  The first is the 2011 state unemployment claims data.  The second is the story of why Florida just lost another 7,500 jobs in health research.

The 2011 unemployment data show that Florida’s Governor has been more effective at killing jobs than creating them.  The week before Governor Scott took office, 14,139 Floridians lost their jobs and filed new unemployment claims.  In 36 of the 37 weeks since then, the number has been higher than that.  Another 15,713 Floridians filed new unemployment claims during the most recent September week for which data are available. 

To add insult to injury, there was a press conference a thousand miles away in Connecticut last week that explained why Florida’s job creation performance has been so dismal this year. 

 Jackson Laboratory, a Maine-based company, announced that it will build a new, $1.1 billion research lab on University of Connecticut Health Center property in Farmington, Connecticut.  The lab will produce over 661 new research jobs, support 842 construction jobs,  and create an estimated 6,200 spinoff and indirect jobs.

Jackson carries out cutting edge research in the genetics of Alzheimer’s disease, cancer, and diabetes prevention.  Landing the company was a huge victory for Connecticut.  A source close to Connecticut’s Governor reportedly proclaimed that it “will make Connecticut a world leader in the science of genomics.” 

This was all supposed to happen in Florida, as a part of that highly-touted 7-7-7 plan.   But in June, Jackson announced that it had “withdrawn” its request for $100 million from Florida to locate in Sarasota.  In its June release, its Executive Vice President was gracious, but clear, about why it went elsewhere.   “We respect that the state had to make difficult priority decisions in order to balance the budget this year,” he said.  But the lack of dollars “and the uncertainty of future funding made such a venture too speculative to undertake responsibly.”

In a story last week, the Hartford Courant, Connecticut’s newspaper of record, offered up a slightly different, and blunter, quotation from a company official.  It reported that a “Jackson source said ‘politicians in Florida took a dramatic, hard turn to the right, and funding dried up.’"  

One local Florida health leader recently said that “we used to just show ‘em a palm tree” to get people to relocate to Florida from the north.  Apparently, Florida can no longer sell itself to actual job creators on good looks alone.

As a result, the University of Connecticut – instead of the University of South Florida – will reap the benefits of a billion dollars of private investment in one of the most rapidly growing areas of health care.  In return for a $192 million loan and $99 million in support of research, Connecticut, instead of Florida, will get over 7,500 new jobs.

CT News Junkie, an online publication, rubbed it in with a headline article on September 30^thentitled “Florida’s Loss is Connecticut’s Gain.”  In the accompanying photo, Jackson Laboratory CEO Edison Liu is shown holding up a UCONN tee shirt as UConn’s President speaks, flanked by the Speaker of the Connecticut House and the Chairman of her Board of Trustees.

This was supposed to be Florida’s photo op.  But opportunity knocked, and no one answered. 

Florida has only its “hard turn to the right” to blame for the clouds over its horizon.  That’s why over 7,500 jobs will begin to fly north this winter.

Florida should be a leader in health research and treatment, especially research and treatment in diseases affecting an aging population.  But Florida can’t lead when its elected officials are running backwards. 

Florida’s Governor and Legislature have been slashing from health and mental health programs – including public health, Medicaid, and – as it turns out – even economic development spending.  And now the Governor, who should be ashamed by what happened with Jackson, wants to slash some more.   

The next time you visit Farmington, Connecticut, take a good look at where over 7,500 would-be Floridians will be buying their homes, paying their taxes, and spending their money for years to come.  You won’t see a single palm tree.

If you have questions about this column or would like to receive an email notifying you when new Our Health Policy Matters columns are published, email gionfriddopaul@gmail.com.