#265: Louisiana’s Lesson

#265: Louisiana’s Lesson
March 29, 2011

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)

In January, we reported in Health Care News that Louisiana Gov. Bobby Jindal’s office claimed he did not intend to implement a health care exchange. But we’ve seen other politicians change their tune over the past few months, and I for one wondered whether Jindal ultimately would cave to pressure on this front to at least take steps toward implementation. My concerns were unfounded: this week, Politico’s Sarah Kliff confirmed the story with a definitive “no.” Louisiana Health and Hospitals Secretary Bruce Greenstein promptly made it a permanent reality, sending back the federal grant given the state to pay toward the exchange’s implementation.

There’s a lesson here for other governors, if they’ll stop to pay attention: Jindal’s decision not to implement a health insurance exchange under the auspices of President Barack Obama’s health care law is not just a wise choice--it is a decision that should serve as an example to all states across the nation.

In rejecting the exchange, Jindal joins Florida Gov. Rick Scott (R) as leading voices among the nation’s governors who’ve staked out a position rejecting the mandate to create an exchange that would be approved by Washington and run according to Washington’s rules. In doing so, they recognize that any exchange set up under Obamacare’s system is guaranteed to become an anti-market force, designed to please the bureaucrats more than the people. And in political terms, they recognize that they don’t wish to be associated with such creations--as Greenstein notes:

He added that insurance premiums are likely to rise under the new law, and he does not want state regulators or Gov. Bobby Jindal to be blamed if that occurred.

“Envision an exchange which, if we were to run it, has the governor’s name on top of the letterhead,” Greenstein said. “We know we would see a number of letters that would go out to businesses and families throughout the state announcing the increase in premiums.”

It’s also no coincidence that Jindal and Scott are the two governors most experienced in health care policy--recall that the former was a state secretary of health before he was 30, while the latter once headed one of the largest private health care providers in the world. They will be joined in this position, as John R. Graham notes, by others, like Georgia Gov. Nathan Deal, who were dragged to their position thanks to the legislature or those pesky Tea Party activists.

The truth about exchanges is that they may well have some use for states. In the aftermath of the repeal and replacement of Obama’s law, exchanges may serve some purpose. But this is a hard-and-fast rule: Any exchange that is created under the auspices of Obama’s law is not going to be an exchange “run by the state” in any real measure, nor will it be one built to serve consumer needs. Instead, it will become a near-permanent delivery mechanism for massive subsidies and a fast lane for unelected Washington bureaucrats to manage the marketplace as they see fit.

One more note, which Graham and others have pointed out on more than one occasion: it’s interesting that the timeframe for states to deliver their exchange plans for review is January 1, 2013. This is, of course, after the presidential election. Assuming we’re in a second term of President Obama, do you really think HHS Secretary Kathleen Sebelius will be interested in playing nice with the token nods toward market-principles in your state’s exchange? Or will she sweep them away like chaff and apply the regulations and requirements as she sees fit?

I don’t think that’s a difficult question to answer. And apparently, neither does Gov. Jindal.

-- Benjamin Domenech


IN THIS ISSUE:


AJMC: HEALTH CARE SPENDING AND PREVENTIVE CARE IN HIGH-DEDUCTIBLE AND CONSUMER-DIRECTED HEALTH PLANS

A study by the Rand Corporation of consumer-directed and high-deductible health plans found these plans “significantly reduced healthcare spending, but they also reduced the use of preventive care in the first year.”

Families enrolling in HDHPs or CDHPs for the first time spent 14% less than similar families enrolled in conventional plans. Families in firms offering an HDHP or a CDHP spent less than those in other firms. Significant savings for enrollees were realized only for plans with deductibles of at least $1000, and savings decreased with generous employer contributions to healthcare accounts. Enrollment in HDHPs or CDHPs was also associated with moderate reductions in the use of preventive care.

Not terribly surprising, but this raises a few other interesting questions about the value of such care:

“While childhood vaccination rates increased among families in traditional health plans, they fell among families in high-deductible health plans. Rates of mammography, cervical cancer screening, colorectal cancer screening and routine blood tests among those with diabetes also fell among those with high-deductible health plans relative to those in other plans.”

Read the extended press release here if you want the main points.

SOURCE: American Journal of Managed Care


NEJM: THE ACO MODEL--A THREE-YEAR FINANCIAL LOSS?

Trent T. Haywood and Keith C. Kosel have a must-read study in the New England Journal of Medicine regarding Accountable Care Organizations and their pitfalls. An excerpt:

The accountable care organization (ACO) model is rather controversial among health care experts. Its proponents tout the potential savings and coordinated care that could be achieved through this model. Others, however, point out that the model is not without risks, such as the potential for anticompetitive effects as providers leverage it to concentrate market power. While experts are trying to clarify such matters, many health care executives and physician practices are deciding whether to move forward with becoming ACOs. Yet they may be unaware that the limited data suggest that most organizations will lose money in the first 3 years under the ACO model.

Because of the need to stem the spiraling costs of the Medicare program and the need to shift the health care system from volume-based to value-based rewards, the ACO has been put forward as a possible model for restructuring traditional Medicare coverage. In particular, Section 3022 of the Patient Protection and Affordable Care Act requires the Secretary of Health and Human Services (HHS) to establish the Medicare Shared Savings Program by January 1, 2012. With this rapid movement toward ACOs, one would expect that the previous government demonstration of the model would have produced promising results that warranted its rapid expansion. Our analysis of the results from the demonstration suggests otherwise.

If you need background before diving in, John Goodman broke down ACOs for HCN last year in a piece that provides a nice primer on what they are.

SOURCE: New England Journal of Medicine


STATES ARE COLLABORATING ON HEALTH IT NEEDS FOR EXCHANGES

For states pushing forward to implement health care exchanges, the health IT needs can be daunting. In a time of budget crunches and cutbacks, that makes collaboration an attractive prospect:

HHS recently presented $241 million in “early innovator” grants to help states develop IT systems, operations, and governance. The grant recipients include Kansas, Maryland, New York, Oklahoma, Oregon, Wisconsin, and a multi-state consortium led by the University of Massachusetts Medical School. (The New England collaborative includes Connecticut, Maine, Massachusetts, Rhode Island and Vermont.)

The central idea of the early innovator program is that some states will create applications that can be transferred to other states. For instance, Kansas is developing tools and functionality for an online portal and an end-to-end solution for its information exchange. The state is in discussions with Missouri to partner with its neighbor on the project.

Meanwhile, Maryland will develop a tool that will connect its exchange with the federal systems so that it can automatically confirm an applicant’s income and citizenship. Arizona, Indiana, California, West Virginia, and Oregon will collaborate with Maryland on the effort.

Of course, keep in mind that all of these interlaced activities, funded with federal taxpayer dollars, will have to be paid for by our children and grandchildren--regardless whether the exchanges even end up existing.

SOURCE: Fierce Health IT


AAPS IN OMAHA: THRIVE NOT JUST SURVIVE

Two promotional items: First, the fine folks at the Association of American Physicians and Surgeons are holding a gathering on May 20 in Omaha, Nebraska. Guests will include Yuri Maltsev, a Ph.D. economist who worked on Mikhail Gorbachev’s economic reform team before defecting to the U.S., and Ralph Weber, who’ll speak to the dangers of rationing from a Canadian perspective. You can sign up to attend at their Web site, which has more information.

SOURCE: Association of American Physicians and Surgeons


WHY OBAMACARE IS WRONG FOR AMERICA

And second, you’ve probably already heard about Why Obamacare Is Wrong for America, the new book by Grace-Marie Turner, Jim Capretta, Tom Miller, and Bob Moffit, with an introduction by Rep. Paul Ryan. I encourage you to watch the webcast of the book launch at their site, and refer interested friends to the book as a substitute for having to wade through a sea of PDFs and background. It distills in an excellent way the chief arguments against this law, and provides a strong overall view on the nature of America’s health care crisis. Check it out!

SOURCE: Why ObamaCare Is Wrong for America

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)