Bluegrass Beacon: Make health care affordable again

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Editor’s note: The Bluegrass Beacon column is a weekly syndicated statewide newspaper column posted on the Bluegrass Institute website after being released to and published by newspapers statewide.

Whether the American Health Care Act (AHCA), which narrowly passed the U.S. House of Representatives last month, offers an effective repeal and replacement of the Affordable Care Act (ACA) – affectionately known as Obamacare – is the subject of much debate as the Senate takes up another attempt to deal with the failed health care fiasco.

It’s indisputable, however, that any replacement plan failing to deal with cost – the primary malady affecting health-care policy – is an effort in futility.

A growing body of evidence suggests that not only has Obamacare done little to address the cost of health-care products and services, it’s exacerbated the problem.

Recent analysis by the U.S. Department of Health and Human Services indicates average premiums are 105 percent higher for Americans in the 39 states purchasing policies through the federal exchange in 2017 than for individuals’ plans in 2013 – before the exchange was created.

The analysis further unpacked reports that the average individual market premiums rose from $2,784 before Obamacare had kicked up to $5,712 in 2017.

“Affordable” Care Act, anyone?

All of this, it seems, would produce a wonderful opportunity for Republicans, who control Congress, the presidency and most state legislatures to use the leverage given them by voters to tattoo history with:  “Here’s how you do health-care reform,” and do it right.

Don’t get your hopes up.

Insurance-company lobbyists and welfare recipients have joined forces to weaken the resolve of many legislators who campaigned for changing a policy that never should have been implemented in the first place.

We would’ve been much better off seven years ago, instead of passing Obamacare, to adhere to the wise adage of President Calvin Coolidge: it’s “much more important to kill bad bills than to pass good ones.”

Still, killing not only Obamacare but its foundational ideas and approaches remains a priority.

More than reasonable doubt exists concerning whether the AHCA comes anywhere close to doing this – with its Obamacare-like approaches to taxes, subsidies and even mandates.

Northern Kentucky congressman Thomas Massie, one of 20 Republicans to oppose the AHCA, sassily compared the legislation to a kidney stone, charging “the House doesn’t care what happens to it, as long as they can pass it.”

Yet even when it comes to something as politically charged as whether we’re going to replace a health-care policy bearing the name of a Democratic president with a Republican-created substitute, progress can be made regarding critical policies in a bipartisan way.

There is, for example, strong support for making the cost of care transparent.

Costs have largely been hidden in our days of low co-pays, employer-provided plans dominated by third-party administrators and government programs.

“I don’t think I’ve ever had a Medicaid patient ask me how much something costs,” Dr. Cameron Schaeffer, a Lexington-based pediatric urologist and proponent of free-market policies, said on KET’s recent Kentucky Tonight program.

Neither Obamacare nor the AHCA effectively connects patients with cost, which is critical to making America’s great health care affordable again.

One viewer’s email read by Kentucky Tonight host Renee Shaw noted, “a free market only works when there is competition.”

Both Schaeffer and fellow KET panelist Dr. Barbara Casper, an internist, professor of medicine at the University of Louisville and Obamacare supporter, agreed providers should post their prices in a clear and understandable way.

Doing so would “help patients know what they’re getting into” and “would also allow for … more competition,” Casper said.

“I think we need to do everything we can to lower costs,” she added.

Whatever your political belief system, you will bear the burden or at least the consequences of higher health-care costs.

Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

Bluegrass Beacon: Read the side of Obamacare’s box

BluegrassBeaconLogoLike food makers claiming “fat free” on the front of the box only to have a close reading of the ingredients on the side of that same box reveal a product packed with unhealthy, unpronounceable names of chemical toxins, Obamacare’s cheerleaders gush forth superficial claims about the reform policy’s success.

For instance, supporters in Kentucky and nationwide slapped a label in big letters on the front of Obamacare claiming “dramatic drop in the number of uninsured” while on the side of the box you discover a product packed with unsavory ingredients like “misleading claims.”

Just days before a recent government report forecasting a 25-percent increase in premiums in the 39 states that use HealthCare.gov, the federal Obamacare exchange which Kentucky joins on Nov. 1, President Obama proudly claimed to college students in Florida that “another 20 million Americans would know the financial security of health insurance” because of his reforms.

We’ve heard similar claims in Kentucky, where proponents allege the commonwealth’s Obamacare-induced programs reduced by a half-million the ranks of the uninsured.

Yet 80 percent of Obamacare’s enrollees in Kentucky were dumped into Medicaid, which is, as a recent Wall Street Journal editorial noted, “a failing program that provides substandard care.”

Nationally, 97 percent, or nearly 9 million of the 9.25 million newly insured who enrolled for coverage using the federal platform or one of the state Obamacare exchanges, wound up in the government-run Medicaid program.

Obama says states shouldn’t worry about future costs of such dramatic increases in Medicaid enrollment, because, after all, “the federal government is paying for it.”

Yet states will be required to start picking up a significant portion of the bill delivered by their expanded Medicaid populations next year.

How does Obama expect Kentucky with its worst-in-the-nation pension crisis to pay for an additional 400,000 Medicaid enrollees?

Does the federal government have a special printing press somewhere designed to spit out special Benjamins just to pay for this failed experiment in government-run health insurance?

Besides, have you checked your pay stub?

If you see “SWT” and “FIT,” it means that not only have you been paying for your state’s Medicaid program and its expansion — which, in Kentucky’s case, was $1.8 billion higher than expected during its first 18 months in 2014 and 2015 — but guess who antes up when “the federal government is going to pay for most of it?”

Yep. That would be you, too.

Another reason for Obamacare’s implosion is its attempt to impose a one-size-fits-all regulatory and pricing scheme on both insurers and their customers.

Forcing men to pay for maternity coverage and denying healthy young people the opportunity to purchase a higher-risk, lower-cost plan isn’t exactly motiving millennials to sign up.

While these young adults may have flocked to former presidential contender Bernie Sanders while he was holding court during this year’s primary campaign to extol the virtues of forced sharing and the vices of liberty and profit, they’re not biting when it comes to surrendering their money and personal liberty to Obamacare and its mandates forcing insurers to charge younger, healthier people higher rates to pay for older, sicker patients.

While it would be difficult to find a more Sanders-like program than Obamacare, 18-to-34-year-olds are reading the side of the box where they find “likely failure” among the ingredients and are choosing instead to forego the higher rates and pay the fines instead.

In fact, this demographic group purchases only about a quarter of the Obamacare plans when actuaries say 40 percent is required to offset the costs incurred by older, sicker workers.

Insurers, unable to keep carrying such significant losses, are fleeing the Obamacare exchanges faster than Aroldis Chapman’s fastball, leaving customers with fewer choices and even-higher costs.

Jim Waters is president of the Bluegrass Institute; Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

Bluegrass Beacon – Transparency: the best medicine for 340B drug-pricing program

BluegrassBeaconLogoIf ever a well-intentioned government program was trusted too much and verified too little, it’s the 340B Drug Pricing plan created by Congress in 1992 to help indigent and uninsured patients acquire costly prescription medicines.

The policy forces manufacturers to sell those drugs to participating hospitals at reduced rates; some price at more than 50 percent below retail.

However, a lack of proper oversight combined with passage of the Affordable Care Act has resulted in a collusion between big hospitals, big pharmacies and big government, causing an explosion in the size of 340B.

More than 14,000 facilities have signed up despite the fact that 340B was initially meant to serve only about 90 safety-net hospitals and clinics. Spending on 340B ballooned from $1.1 billion in 1997 to more than $7 billion in 2013 and is projected to reach $16 billion by 2020.

The 340B cabal seems to force one industry – drug manufacturers – to subsidize huge profits of hospitals and big-chain pharmacies that likely don’t provide direct benefits to vulnerable and uninsured patients, at least not in proportion to the savings the facilities squeeze from makers.

Participating hospitals simply aren’t required to reveal enough relevant data needed to determine whether they use the 340B program as Congress intended or merely to enhance their bottom line.

A congressional hearing was finally held in March after a growing chorus of voices – including mine in a column last year – criticized Congress for failing to hold a single oversight hearing in the 22 years since 304B’s creation even though the Health Resources Services Administration (HRSA), the program’s oversight agency, admitted more accountability is needed.

But an effective prescription will involve more than tepid talk.

Answers are needed for fundamental questions, including the most-obvious one: Should hospitals offering extremely low percentages of charity care even be allowed to participate in the 340B program?

It doesn’t take a brain surgeon to suspect hidden, costly maladies and seek a second opinion on the condition of the program at places like Duke University’s rich hospital, which, according to a four-page letter to the HRSA from Sen. Charles Grassley, R-Iowa, reported 340B profits of $463 million between 2009 and 2012 while treating no more than 5 percent charity cases in any of those years.

While some Kentucky hospitals and clinics seem to correctly use the program by caring for large percentages of 340B patients, it’s certainly questionable whether others are passing on to vulnerable and needy patients the savings they receive – much less whether they even qualify for participation, considering how small a percentage of their overall revenues are devoted to charity cases.

For instance, there’s a stark difference in Louisville between University Hospital, where, according to the Centers for Medicare and Medicaid Services, charity cases comprised nearly 10 percent of their patient load in 2014, and Norton Healthcare, which, despite $1.5 billion in revenues and 53 contracted pharmacies, reported less than 1 percent of vulnerable patients.

Still, both are considered “Disproportionate Share Hospitals,” allowing them to purchase highly discounted 340B medicines.

We also see such disparities in other parts of Kentucky.

Charity cases in 2014 comprised more than 9 percent at St. Joseph Hospital in Mt. Sterling but less than 0.5 percent at T.J. Samson Community Hospital of Glasgow and The Medical Center of Bowling Green, which reported $125 million and $285 million in revenues, respectively, during that same year.

Yet all three hospitals claim to serve a “disproportionate” share of indigent patients and are eligible to participate in 340B.

What’s needed are disproportionately large doses of transparency to help determine whether 340B hospitals are, in fact, passing manufacturers’ savings on to enough needy patients.

Some unquestionably are; others undoubtedly profit in big ways from failing to do so and should be rendered ineligible for further participation in the 340B program.

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

States should flatly reject ObamaCare exchanges

Cato’s Michael F. Cannon provides the reasons why:

Video produced by Caleb O. Brown and Austin Bragg. Tweet it if you like it!

What’s holding back Kentucky’s economic recovery?

According to economists, one big factor is ObamaCare:

Aaron Yelowitz, an economics professor in the business college, told attendees that another concern for Kentucky is the effect of the Affordable Care Act in 2014. The federal law will require businesses with 50 or more employees to provide “affordable” insurance to full-time workers or pay a tax penalty of $2,000 for each employee.

Using a detailed econometric model, Yelowitz estimated that 283,549 of 2.4 million Kentucky workers could be affected. Analyzing by industry, Yelowitz estimated that workers in the administrative, waste management, manufacturing, mining and transportation sectors might be most affected.

The region most likely to be affected is in southeastern Kentucky, although all areas of the state would have a number of businesses that will need to respond to the health care mandate.

Kentucky, of course, doesn’t have to create an ObamaCare health insurance exchange. Lawmakers have an opportunity to display their opposition to the law and avoid some of the law’s impact by refusing to allow the exchange to come into existence.

The Peril of Compromise

My friend (and occasional former boss at LEO) Rep. John Yarmuth has a letter in today’s Courier-Journal stressing his desire for more compromise in Congress. In it, he praises his colleague, House Speaker John Boehner, but implores him to give some ground on some of his views rooted in ideology, particularly those ideological commitments that would lead him and other members of the GOP-run House to oppose just about any tax increases:

… because, in a government this polarized, the issues where common ground already exists are simply too few, and the challenges that divide us far too important for inaction. In fact, in the current political environment, insisting on common ground without compromise may be the best way to guarantee 90 percent of the nation’s problems remain unsolved—not coincidentally, that is the same percentage of Americans who disapprove of this Congress and its refusal to compromise.

I think my friend may be mistaken.

First, the history. James Madison didn’t craft the Constitution to grease the wheels of government or make it more efficient. Why? Because Madison and the other founders viewed “inaction” as the appropriate default position for the federal government. Government, in their view, could rarely be trusted with large sums of money or unchecked power.

Second, the debt and deficit problems faced by the United States today have not been caused by a government with insufficient resources or power. Gigantic increases in federal expenditures and the vast new regulatory structures that have yet to fully unfurl (the Affordable Care Act, Dodd-Frank, etc.) have done little to make the life of the average American more safe, secure, happy or wealthy.

(As an aside, isn’t it possible that people have a low opinion of Congress because, well, Americans give Congress trillions of dollars every year and somehow things aren’t awesome yet?)

More Yarmuth:

Our country and our system of government were formed through compromise and have been strengthened by it for more than two centuries. Until Republicans find leadership that values results over ideology — and economic progress over anti-tax pledges — this Congress will continue to fail America.

Let’s talk about results. An AEI study last year found that of 37 fiscal adjustments made by national governments to deal with excessive debts, the ones that were most successful at actually reducing debt over the long term relied primarily on spending cuts, specifically reduced transfer payments within a country. And if you want history specific to the United States, it’s clear that when Presidents Ronald Reagan and George H.W. Bush were faced with fiscal imbalances and chose to compromise with Congress on taxes and spending, those compromises (which were supposed to yield both spending reductions and tax increases) only yielded tax increases.

I like John Yarmuth a whole lot. He is an engaging conversation partner and I always look forward to hearing what he thinks about issues of the day. From the chats we’ve had in the LEO office or on the radio or in his office in Washington, D.C., he’s been nothing but respectful and pleasant, and always intellectually stimulating. Unfortunately, it taxes credulity to consider “economic progress” synonymous with Congresspeople abandoning their worldviews in the name of “compromise.” One never necessarily implies the other.