ACA and the Collapse of Capitalism

Here is a question I’d love to see candidates answer before the election.

Source: NY Times

Does the continuing activity around the implementation of the Affordable Care Act signal the collapse of American capitalism – at least as it pertains to health and health care?

The myth of American capitalism is so powerful that I imagine they won’t touch this one with a ten foot pole – or even a ten-foot long poll!  In the politics of our $2.6 trillion healthcare economy, however, capitalism takes a back seat.

The recent activities of the Connecticut health exchange board explain why capitalism in health care is about as relevant as a Democratic voter in Utah. 

Connecticut is one of the dozen or so states embracing ACA, and is making an impressive effort to implement its health insurance exchange on time in 2014.  By contrast, more than half the states have yet to even declare their intentions, even though the deadline for doing so is mid-November.

According to a recent, well-written article in CT News Junkie, its health exchange board, tasked with the job of approving the “essential benefits package” for the state, did so last week.  The essential benefits package will become the standard in each state for what must be offered by insurers after the law takes effect.

The board voted to base Connecticut’s essential benefits package on one of its most popular health insurance plans.  The plan is offered by ConnectiCare, an HMO.  ConnectiCare has offered good health insurance packages for many years – I was insured by ConnectiCare for many years when I was a resident of Connecticut.

So far, so good.

But here’s the ironic twist that makes you wonder if capitalism can survive health care, and if health care can survive capitalism. 

The one member of the board voting against the package was the former CEO of ConnectiCare.  His reason was that the plan will provide to be too rich for many small businesses and individuals to afford.

He was quoted as saying that small businesses would have to drop insurance.  According to the report, here is how he put it:  The essential benefits were supposed to set a floor for insurers “but it’s like we’ve taken an elevator to the 12^th floor.”

Think about it.

If an insurance plan that provides fair coverage for emergency services, mental health services, prescription drugs, pediatric services, pregnancy services, and rehabilitation has become too rich for all the people who need those services the most to afford – even with thousands of dollars in tax credit subsidies – then what kind of an insurance market is that?

And if Connecticut’s comprehensive, but essential, benefits cost too much, then what’s your alternative?

As a Florida Congressman once got in political trouble for asking, “dying quickly?”

If the ACA essential benefits approach doesn’t work then there are really only two options left to consider.

The first is to regulate the price of healthcare as aggressively as you can. 

The second is to create a Medicare-for-all system with the leverage and muscle to decide how much it will pay for healthcare services no matter what a provider wants to charge.

Both require significant governmental intervention.  And neither is an endorsement of the kind of market-driven capitalism favored by some candidates this year.

So why can’t all this still be part of our national campaign dialogue about health care?  Is the myth of capitalism and “free” enterprise so strong that politicians can’t even talk about how important the role of the government is in subsidizing our care and regulating and managing the marketplace?

I’m just asking.

The Medicaid Elephant in the Supreme Court Room

States’ Medicaid elephants are being dragged into the courts this year.  States had better be careful, or they just might get trampled under the weight of people they’ve failed to enroll.

Last week, CT News Junkie reported the story of a class action lawsuit filed on behalf of almost 7,000 potential Medicaid recipients in Connecticut as of November 2011 whose applications were not processed within the 45 days mandated by federal law.  

And Health News Florida, among others, reported that Florida’s Attorney General Pam Bondi filed a brief with the Supreme Court on behalf of twenty-six states (Connecticut is not one of them) alleging that Congress exceeds its authority when it “coerces states into accepting onerous conditions” of participation in the Medicaid program –even when it pays 90-100% of the costs of those provisions. 

The two battles raise similar questions about how states avoid Medicaid costs today.

The Supreme Court brief is supposed to be an argument against the Affordable Care Act-mandated Medicaid expansion to cover everyone up to 133% of poverty beginning in 2014.

Bondi builds her argument around a simple point.  States depend so heavily on Medicaid money from the federal government that they can’t afford to drop out of the program.

And the ACA-mandated expansion, she argues, will cost Florida almost $1 billion.

But then there’s a stunning revelation in her brief.

Most of the costs she cites have nothing to do with ACA.  They represent the cost of enrolling currently eligible people in the Medicaid program, not those who will become eligible as a result of the Affordable Care Act. 

On page 17 of the brief, she writes that “Florida anticipates spending approximately $351 million on its share of the cost for newly eligible program participants who are presently uninsured and $574 million on the currently eligible but unenrolled.”

In other words, 62% of the costs she’s claiming will result from ACA are actually costs the state should be paying today, but avoids by failing to enroll Medicaid-eligible residents.

The Connecticut class action suit attacks essentially the same issue – failure to enroll currently eligible people.

In paragraph 25 of the complaint, the plaintiffs allege that Connecticut “has set up a system to circumvent the federal timeliness requirements by making it appear that the applicant has failed to provide required documentation.” 

Throughout the nation, these practices result in the avoidance of billions of dollars of costs at the expense of elders, low income children, and people with chronic diseases and conditions – and the health and mental health providers who serve them.

Bondi’s brief suggests that new Medicaid enrollments could cost Indiana about $2 billion over ten years, Arizona and Louisiana over $7 billion, and Texas close to $25 billion.  But these numbers all appear to include the currently eligible populations.

States understandably and justifiably want to contain their Medicaid costs.  But they cross the line when they do it by turning away literally millions of people who already belong on the program.

Bondi works hard to make the currently eligible group relevant to the Affordable Care Act by stretching a silken thread of the individual mandate around them. 

She writes that “the considerable cost for the [currently eligible group] reflects the fact that, unlike for the newly eligible, Congress has not increased federal funding for those newly enrolled (but previously eligible) by virtue of the ACA’s individual mandate.  As a result, the States will continue to pay for up to half of the costs generated by the latter group’s now mandatory enrollment.”

But she stretches the thread to the breaking point.  The individual mandate doesn’t apply to the group of people currently eligible for Medicaid.  Their Medicaid enrollment is “mandatory” by virtue of existing state and federal laws that pre-date ACA.

So what happens when the Supreme Court makes its ruling this spring?

If the Court finds the Medicaid expansion constitutional, then the states will have to implement it in 2014 – and also enroll those currently eligible without further delay. 

But even if it doesn’t, the currently eligible group isn’t going away – and we now know what they will cost.  Florida will still owe at least $574 million and Connecticut will still have to enroll up to 7,000 more eligible people.

That’s the best case scenario.  The worst is that such a ruling could induce the federal government to reduce its role in the Medicaid program to avoid the “coercion” argument in the future.  Then states might have to provide coverage and care to the poor and elderly all by themselves.  

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.