Resonse from Dr. Alieta Eck

Now you got me going. The answer is right under our noses– if we go back about 46 years–before the onset of Medicare and Medicaid.  It is not too late.  Here is the dream you are looking for, Greg.

The answer is for physicians to take on the care for the poor– for absolutely no pay. No billing, no CPT codes, no ICD-9 codes. Nothing.  No physician should earn his living caring for the poor. He should earn his living in his private practice where he can expect payment for services rendered.

And like the way it was before government decided that it could provide health care in an efficient, compassionate, low-cost manner, this free care needs to be done in non-government free clinics (NGFCs)– staffed 95% by volunteer physicians, nurses and support staff and funded by genuine charitable contributions– no government grants, no money extracted from overburdened taxpayers.

Patients self identify themselves as poor, sick and in need of a physician. Then they access the free clinic that is in their neighborhood, staffed by pleasant people who have chosen to be there and are genuinely interested in their well-being and future prosperity.  There will be no government bureaucrats filling out forms to see if they qualify for “benefits.” Each clinic will develop its own criteria to decide who is needy and needs the free care.

These patients need to know that the free clinic is not their medical home, but rather a bump in the road on their way to financial independence. Once they are on their feet, they can go to the same doctors who cared for them in the free clinic, but now in their practices.  Pay cash– but a fair cash price, not one that is trying to make up for the low fees paid by Medicare, Medicaid and HMO’s. A free market price, just like Jiffy-Lube for their cars.

The physicians and taxpayers need protection. If doctors are going to be providing free care in an NGFC, their medical malpractice for work done there will be covered by the federal government via the Federal Tort Claims Act (FTCA). But that is not enough. They need protection from the lawsuit hungry culture that has all but destoyed the medical profession. They need the state to step in and just cover them for malpractice– for their entire private practices. This will cost the taxpayers nothing unless there is a lawsuit– and these will be greatly reduced to episodes where real damage has occurred due to real negligence on the part of the physician. These cases are extraordinarily rare.

If the patients coming from the free clinics need specialty care or hospitalization, they need to access the system of “charity care” that the hospitals already have in place for poor people who have not gotten onto Medicaid.

The free clinics will be inter-connected via a sophisticated computer system. Thus surgeons who are willing to donate two operations per month will be able to sign on and find a patient who needs him, entered by the primary care doc who identified his problem via studies that were done by labs and radiologists who have donated their services. Obstetricians will identify two pregnant ladies per month, do their prenatal care in the NGFC, deliver them in the hospital and take care of them post-op. The absence of medical malpractice payments will free them up to do this good work.

The details will come easily once the structure is in place. All the pieces are actually there– but just need some realignment. Physicians are already covered by the state when they work in the medical school facilities.

Where will these free clinics come from? Where will they be? Who will start them and staff them? The answer again goes back 46 years– when all the hospitals were named after saints and popes and patriarchs. For the natural place where charity begins is in the faith communities. And there will be no shortage of volunteers, as the baby-boomers are retiring at a rate of 10,000 per day.

On Saturday, June 11th, at 10:30 AM, there will be a meeting of pastors held at the new facility of the Zarephath Health Center, 495 Weston Canal Rd, Somerset, NJ 08890. The ZHC will move from a 900 square foot to a 5,000 square foot facility, ready for the many volunteering physicians who will be looking for a place to see the poor.  The purpose of the meeting is to teach pastors how they can start a free clinic associated with their church.

The speakers will include:

• The pastor of the church who has watched his congregation grow from 150-2,000 in the past 7 years– as people, rich and poor, are attracted to a church that cares for the poor.
• The social worker who is also the builder who used many volunteers and thankful former patients to put together a clinic with 5 exam rooms, a dental room and 3 intake rooms where kind volunteers will just sit and hear the stories of the patients that come.
• The physicians who have manned the ZHC for the past 8 years– who have learned much about the poor and what they really need.
• The former FTCA administrator who now works for Echoclinics.org, a philanthropic group whose stated goal is to facilitate the starting of 10,000 free clinics by 2030.
• The community activists who have convinced 6-7 legislators in NJ to write the New Jersey Volunteer Physician Protection Act to make this concept a reality.

It will be a time of interaction and real problem solving. Let me know if you want to be there, and I’ll have an extra sandwich for you!

Alieta Eck, MD

co-founder- Zarephath Health Center

NJAAPS.org — watch my discussion of this idea with Judge Andrew Napolitano, and my testimony to a Senate health sub-committee.

Response from Dr. Marcy Zwelling

The Immorality of Irresponsibility

This nation was founded on the principles of “natural law” and many believe fashioned after the writings of Thomas Aquinas.  Thomas Aquinas, theologian and philosopher, realized and wrote about the capacity of human reason to grasp what is right: our morality.  He wrote that truth was understood through reason and human reason was the basis for all law.  He even recognized and wrote about the law of economics, the idea of a fair price.  If the suppliers’ costs are not covered, the business cannot succeed, reasonable and rationale.

Natural law stands as the foundation of our constitution and is the basis of our founders’ passion for every American’s right to self-determination. Man should be able to formulate his /her own destiny within the confines of a reasonable legal system.  The law defines our inherent obligations to each other and the public at large but does not compel us to practice self-sacrifice.

I believe that most Americans believe themselves moral. Most of us want to do the right thing.  We vote that way and define our relationships that way regardless of our politics.

Reason or natural law would have it that “the right thing,” basic human nature does not allow for irresponsibility.  How is it reasonable that any human would not want to take care of his/her own personal needs as best he/she can?  Protect himself and his family? How is it possible that it is immoral for me to not want to accept my neighbor’s personal responsibility?  It is not.

If personal responsibility is the moral paradigm that is the underpinning of American freedom, it cannot be moral that any person be allowed to dispose of that obligation. Morality and reason demand that I work for myself first. My morality demands that I not allow my neighbor’s indifference to his/her own needs mandate my personal contribution.

American morality has no place for personal irresponsibility.  If we are going to turn our economy around and provide the framework for American world leadership we must come to terms with our personal morality. Anything less will bankrupt our pockets and our sense of reason. Personal responsibility is our American duty.

Mediscare and Medicare’s Real Future

By Ross Schriftman, RHU, LUTCF, ACBC, MSAA

Horsham, PA

Tel. 215-682-7075

Rfs270@aol.com

There has been much misinformation about what Congressman Paul Ryan’s plan does to try and save Medicare.  According to the Medicare Trustees Report the program is in deep financial trouble and is not sustainable for the long term.  Ryan has proposed that Americans under 55 today would receive premium support payments into private insurance plans approved by the government starting 10 years from now.  When the first 54 year old reaches Medicare age, those payments would actually be 50% higher than the current cost of Medicare for each beneficiary.  No current Medicare beneficiary and no one age 55 and older today would be affected.

I don’t know if his plan will work to save Medicare or not.  However, it is clear that if nothing is done the program will be in worse shape down the road.  I once heard a speaker use this simple formula for financial planning.  Problem multiplied by time equals a bigger problem.  Time is certainly against us.  It was in 1993 that President Bill Clinton held an “Entitlement Conference” designed to address the financial problems of Medicare, Medicaid and Social Security.  No action was taken after this conference. Now our Federal debt is over $14 trillion and the boomers are just starting to reach Medicare age this year.  The Tsunami is now coming ashore.

So what is the alternative proposal to Ryan’s idea?  I have heard nothing and read nothing from my Democratic leaders about what their proposal to save Medicare is.  If we continue to follow the same path we have been following and we all go over a cliff.  The result is higher Medicare premiums and higher deductibles and co pays with the imminent collapse of the program anyway.  It is disingenuous to criticize Ryan’s plan by saying seniors will have more out of pocket in the future under his proposal.  That is exactly what is occurring with the program now.

Look back 10 years and compare the out of pocket in the program to today.  In 2001, the Medicare Part B premium was $50 per month.  Today it is $115.40 per month or a 235% increase in government premiums and much greater than that for higher income beneficiaries starting at $80,000 of modified adjusted gross income.  The Part B annual deductible was flat at $100 until a few years ago.  Now it is $162.  The hospital deductible under Part A of Medicare was $792 in 2001.  Today it is $1,132 for each hospital stay/benefit period.  The Skilled Nursing co pay for days 21 through 100 was $99 in 2001.  Today it is $141.50.

Projecting the Medicare numbers out for 2021 using the last 10 years, seniors will face Part B premiums of $180 or much higher for many more people because there is no adjustment for the higher income surcharge.  In 2021 the Part B deductible would be $180 and each time a beneficiary stays in the hospital they would have to pay $1,472.  The skilled nursing co pay would be $184 for days 21 through 100.  Is this not taking money away from seniors?

Ten years ago, buying a Medicare Supplement was a choice that people made.  Today it is a necessity.  The irony is that you need to buy a private insurance plan to cover all of the out of pocket costs of the government plan which you already paid for your whole working life in income taxes and payroll taxes.  Still the government program is going broke.  Then any politician who tries to address the problem is crucified as demonstrated by the recent disgusting TV advertisement by the Agenda Project showing Paul Ryan pushing a grandmother off a cliff.

So what has the current administration done?  They got Obamacare passed which projects a $500 billion reduction in payments to health care providers within Medicare and diverts those funds to pay for expansion of Medicaid, government subsidies, regulations and enforcement under the so-called Affordable Care Act.  The weight of all of this will continue to stagnate the economy reducing revenue for payroll taxes that go to Medicare Part A which has constituently run deficits the last several years.  It is President Obama and his supporters in Congress that passed a law that drives a stake through the heart of Medicare at the very time the program is running out of gas.

We need to change course.  Paul Ryan and Clinton Advisor and former Congressional Budget Office Director Alice Rivlin came up with one idea to address the Medicare solvency problem.  The backlash against the proposal will diminish the chances of others coming forward with other solutions that may work to save Medicare.  Look out baby boomers; the politicians are interested in their own future, their re-elections, privileges and sanctimonious rantings.  They certainly don’t have our backs.

The Destruction of American Medicine

By Greg Scandlen

The New York Times has published a sobering article by Gardiner Harris  which describes how quickly we have allowed the best health care system in the world to slip through our fingers.

The story keys off Dr. Ronald Sroka, a family practice physician in Crofton, MD. It says,

Handsome, silver-haired and likable, Dr. Sroka is indeed a modern-day Marcus Welby, his idol. He holds ailing patients’ hands, pats their thickening bellies, and has a talent for diagnosing and explaining complex health problems. Many of his patients adore him.

But he is being pushed into extinction by academics like David J. Rothman, president of the Institute on Medicine as a Profession at Columbia University who is quoted:

Those of us who think about medical errors and cost have no nostalgia — in fact, we have outright disdain — for the single practitioner like Marcus Welby.

Mr. Rothman’s disdain and his allies in the insurance industry and government bureaucracies are winning the war. The article explains:

The share of solo practices among members of the American Academy of Family Physicians fell to 18 percent by 2008 from 44 percent in 1986. And census figures show that in 2007, just 28 percent of doctors described themselves as self-employed, compared with 58 percent in 1970.

It’s enough to make you weep, but there is perhaps a sliver of good news. A friend sent the following e-mail to one of my discussion lists:

Last week, Senator Whitehouse came to northern Rhode Island to speak to his home community. He had largely an elderly and retired audience of about 300. His comments were focused on them as he spoke of how he would fight to retain Social Security and Medicare. The audience clapped politely. Whitehouse continued to discuss healthcare. He eventually came to speak about physicians, lighting upon the topic as to how our actual charge per service differs depending upon what insurance each person has. “Go ahead,” he said, “call a doctor and ask what they charge for a certain visit or procedure. They’ll ask what insurance you have.”

I rose and said “$50.” I introduced myself to the audience and said that I charge $50 for an office visit, that I don’t take insurance, and that as a result of the massive cost savings by not having a coding specialist, collections specialist, or billing overhead, and by not having to rent an office big enough to house all those people, I can charge a reasonable fee while each patient retains the confidence of knowing that no third party will have any of their private medical information, of knowing that there are really only two people in the room when we talk, and of trusting that I’m going to provide the treatment that they really need rather than the treatment some third party tells me I should be providing.

I expected that this largely Medicare-covered audience would shake their heads and whisper “dinosaur” under their breath. Instead, I received applause and a few dozen new patients the next day. Each said roughly the same: “I’d rather pay for the care I want than have insurance cover me for care I don’t want.”

If indeed most new physicians choose to look toward the type of practices described in the Times article, that will allow all the physicians who want to run their own lives to do so without worrying about whether they’ll have enough patients. There will always be patients willing to pay a reasonable fee out of pocket for the kind of care that can be delivered by doctors like Dr. Sroka.

While the bulk of American medicine may accept becoming little bureaucrats, doing the bidding of their masters in Washington, a sliver will simply offer their services to patients on a cash or concierge basis. These few may grow until medicine becomes once again the noble profession it once was.

Krugman’s Blinders

By Greg Scandlen

There has been a lot written about Paul Krugman’s recent op-eds  and blog posts about how thinking of people as “consumers” rather than “patients” violates their “sacred” relationship with doctors.  My colleague Ben Domenech had one of the best rebuttals in Consumer Power Report #269.

It is more than a little disconcerting to hear people like Paul Krugman suddenly invoke the sacred doctor/patient relationship when they have been working so hard to have bureaucrats control both physicians and patients. But I want to make a different point, one that has been lacking in most of the commentary.

The whole point of Consumer Driven Health Care is to get people involved in their health care decisions long before they become patients.  For decades the “health policy community” has been fretting over this very thing – how to improve “health literacy,” how to get people to make healthy lifestyle choices, how to get people to ask questions about their treatment alternatives, how to teach people when it is appropriate to rush to the Emergency Department and when it is not, how to teach people the differences between the various medical specialties, etc., etc., etc.

We have health education classes in high school. We have newsletters with “Tips for Healthful Living.”  We have media reports about the latest breakthroughs in prevention and treatment.

None of it worked very well – until the advent of Consumer Driven Health Care. Suddenly people are responsible for making decisions about how to spend their own money for their own health, and they demand more information about their options. They sit together in the kitchen to decide how much money to set aside in a saving account and how big a deductible they can handle.  They have discussions about how often the kids go to the doctor and whether they will need glasses or dental work in the coming year. They look for lower cost generic drugs to replace the name brands they have been using. They use home remedies first, before making an appointment with the doctor. They participate in wellness programs.

They are not yet “patients.” They are active “consumers.”

If the Krugman’s of the world would take off their political blinders, they would see something wonderful is happening in the market.  But that would shatter their illusion of an all-powerful bureaucracy fixing everybody’s problems.

I Get a Kick Out of Uwe

By Greg Scandlen

Princeton professor Uwe Reinhardt is a really funny guy. Really. If you have ever caught one of his talks, he will leave you in stitches. Not the medical kind of stitches, but the other kind usually associated once-smoky nightclubs and a lone comic on the stage.

But he tops all of his previous comedic efforts in a single letter to USAToday. He begins by trying to rebut a recent op-ed:

One of the more mindless clichés trotted out in the health care debate is that “one size doesn’t fit all.” In seeking to rebut USA TODAY’s fine editorial on “RyanCare,” a proposal by Rep. Paul Ryan, Ed Haislmaier trots it out once again. He does this in a country whose entrepreneurs discovered a century ago that there are huge economies of scale in the idea that one size does indeed fit all to meet common human needs.

But, then his comic gifts kick in. He just can’t help himself:

KFC, McDonald’s, Burger King, Holiday Inn, Marriott Hotels and many more now global companies all base their business models on the idea that one size fits all. And Wal-Mart might soon teach us that the idea also applies to medical clinics, and someone might show it for hospitals as well.

Wal-Mart as an example of how “one-size fits all?” I know a lot of my liberal brethren would rather be caught dead than be seen inside a Wal-Mart, and there may not be any in the rarified environs of Princeton, New Jersey, but c’mon – are there no photographs in Princeton? Every Wal-Mart I’ve ever seen includes acre upon acre of variety.

And, in case someone doesn’t find anything to his liking in the Wal-Mart, there are thousands of other stores from Dollar General to Saks Fifth Avenue to choose from.

Now, my friend Uwe may prefer the old Soviet-style GUM Department stores for his retail needs, but is that really the model he wants to apply to health care? I can’t wait to hear the reaction once all the Princeton professorate is required to shop only at Wal-Mart.

Fortunately, right below Uwe’s letter is one from a Frank Zoz of Waterloo, Iowa, that is not nearly as funny, but might actually work –

I am absolutely convinced that health care costs will never be brought into control until people are spending their own money, or at least think they are. “RyanCare” changes to Medicare seem to be a step in that direction.

I think the ultimate solution is Health Savings Accounts (HSA) for everyone, with which they pay for insurance premiums and health care. The question is how these accounts are funded.

I am a John Deere retiree and on Medicare. John Deere provides insurance for its retirees. It provides money into an account (similiar to an HSA) from which we can pay for insurance and medical bills. My wife and I happen to have a Medicare Advantage plan and are very happy with it. The HSA covers our premiums and any significant additional costs. We have leftover funds that can be used for emergencies. If the government must be in health care, the best thing it could do is help fund HSAs for everyone.

House of Mirrors

By Greg Scandlen

So, you think the debate over ObamaCare was frustrating? You ain’t seen nothing yet.

Just as Massachusetts provided a preview of that debate, it is also debuting the coming argument over cost control. An article by Amy Goldstein in the Washington Post  tells us exactly how it will play out.  The internal contradictions are mind-boggling.

She begins by explaining that,

Massachusetts Gov. Deval L. Patrick (D) is trying to “shove,” as he put it, the health-care system here into a new era of cost control.

Yes, “shove,” — kind of like Obama shoved us into his version of Wonderland.

She explains,

The governor’s proposal builds on a surprising consensus among leaders from the state’s insurance and hospital industries, medical society, legislature and governor’s staff who served on a special state commission assigned to diagnose the culprit behind the soaring medical spending. Fee-for-service medicine “is a primary contributor to escalating costs and pervasive problems of uneven quality,” the commission unanimously concluded in 2009.

This, even though it is patently untrue.  Fee-for-service does not drive inflation in health care – or in any other sector of the economy. What drives inflation in health care is the one thing that makes it different from any other sector – third-party payment. Of course, all of those “consensus makers” benefit enormously from third-party payment, so they aren’t about to kill this golden-egg laying goose.

The article also disavows any responsibility the state may have for the unique cost increases in Massachusetts.  It says,

The spending per person on health care is 15 percent higher than the national average — even taking into account the comparatively high wages here and outsize role of medical research and training. The move to near-universal coverage, state figures show, accounts for a sliver of recent increases in insurance premiums, which have soared above inflation. The main reason has been a rapid escalation in prices.

The state is saying, “Don’t blame us, it is the ‘rapid escalation in prices’ that is to blame, not the universal health program.” But why is Massachusetts having a “rapid escalation in prices” that no other state is seeing? Golly. It’s a mystery!

What to do, what to do? I know! We will pay doctors more for doing less!! INSPIRATION! Blue Cross has already begun —

The arrangement is a version of the accountable care organizations that the federal government also is trying to encourage in Medicare. They pay teams of doctors or hospitals a lump sum or what is called a “global budget” for the patients assigned to them. If a team can provide care for less, it keeps some of the savings, assuming it also meets enough of 64 measures of quality that Blue Cross has defined. Today, about one-third of the primary care doctors in Blue Cross’s network are taking part. A half-million HMO patients have been put in them — but not told by the insurer.

The article goes on to say the arrangement is “voluntary,” but voluntary for whom? Apparently not the half-million people who have “been put into them” and not told about it. Is this part of the “shoving” the Governor was so proud of?

Another part of the shoving were the arbitrary denials of insurance rate increases the Governor directed the insurance commissioner to make. The article reports the commissioner rejected 235 of 274 proposed rate increases last year.  Not because costs weren’t going up. The article already said they are. But for crass political reasons, dictated by the Governor who was up for re-election.  What a swell way to run a health care system!

But the article also contains the seed of what a real solution could be. Ms. Goldstein writes:

Attorney General Martha Coakley used new subpoena power to produce a report laying out large disparities in hospitals’ prices and concluding that they are unrelated to the quality of their care, the sickness of their patients or whether the institution is a teaching hospital.

Well, golly, again. If there is a wide variety of hospital prices unrelated to the quality of the care provided, is it possible – just possible – that consumers spending their own money might be able to shop around for the best deal and thereby punish those hospitals that overcharge and reward the ones that provide value?

And is it possible – just possible – that what gets in the way of that is not “fee-for-service” but third-party payment?

Can anyone say – YOU BETCHA!?

Increasing Frustration

By Marcy Zwelling Aamot, MD

Americans’ frustrations are increasing. While we were promised that the cost of healthcare would soon stop its upward trajectory, we have yet to see any evidence of anything of the sort.  My individual premium is going up every year while my co-pays also go up.  Every business person with whom I speak complains about their healthcare costs and that includes the deans of our university where their health care costs are consuming so many dollars, they are starting to cut classes and decrease opportunities offered students.

The debate continues in Washington, DC and the promises are coming a mile a minute right along with the threat that we are all going to have to “take it in the shorts” one way or the other.  I wonder if individual Americans wouldn’t be better off managing our own healthcare demands rather than leaving things in the hands of the government or the insurance companies that have not earned our trust or our respect.  The latest budget debate and near closing down of the government assures me that things would be better in the hands of the average American.  We seem to appreciate the value of a dollar and understand value much better than our elected officials.

The solution is really quite simple.

1) We need transparency in health care.  How can we even start to manage our dollars without knowing the cost of care?  Every medical facility and establishment should be require to post their retail cash prices.  This costs nothing and at least starts to bring some honesty to the discussion.  We can start that today by asking our city councils to demand that every medical facility business license require the posting of  retail prices. You may be surprised to find that a mammogram costs less than $100.00 and yearly lab can be purchased for less than $50.00 cash.  Those who use their insurance and pay their deductible know that the cost is goes up when the payment for services is circuitous through insurers or the government.

2) Congress should require every insurer and itself (including Medicare) to sell a catastrophic only health care insurance plan that is actuarially based and open to all patients including those with pre-existing conditions.  The premium for this policy would be affordable and available to all.  Community rating does NOT apply. Patients must be charged the actuarial value of the policy but it should be available to all.  Surely, that person with hypertension will pay some additional cost but smart insurers will find a way to attract those patients by offering them a reduced rate for proof of adequate medical treatment.  This also puts patients in charge of their own healthcare.  As it is, there are many “pay for performance” opportunities for doctors but they have all failed because they have not offered incentives to the right person.  It is always the patient who should reap the benefit of his or her investment in their health.

A free market is the only way to bring competition back into the medical care marketplace and healthy competition drives innovation and excellence.  The current fixed pricing system offered by Medicare and health insurers has taken away opportunities afforded by human nature, our competitive spirit and drive.  The cost drivers are all the middle-men and regulations imposed on what should be a transparent and open marketplace.

In the end we want a healthcare delivery system where the patients can be empowered to be responsible for their own health and life investments.  Doctors need to direct our care to our patient’s specific individual needs and we must be answerable to that person in our exam room, not the government or an insurance company.  History has taught us that with freedom of self-determination, America will always find its way to excellence.  Why can’t we assume the same in the healthcare market place.

Reforming Medicaid

By Greg Scandlen

Fully one-half of the supposed newly insured in ObamaCare will be covered by expanded Medicaid – if all goes according to plan.

Now, I will wager my retirement fund that nowhere near the 32 million estimated will ever be covered. In fact, I would be astonished if even one-third of that number get coverage, and it is as likely that ObamaCare will result in fewer people covered, not more.

But since so much is riding on Medicaid, it might have been a good idea to think through whether Medicaid is such a good vehicle for expanding coverage in the first place. There is evidence aplenty that when it comes to health outcomes, it is better to be uninsured than to be on Medicaid.

Still, with or without Obamacare, Medicaid is a gigantic program – bigger than Medicare in numbers of people covered. And it is helping to drive the states into bankruptcy. So an examination of what to do with it is well overdue.

Recently there has been some fine work done on the topic.  One example is a fine paper published by the Texas Public Policy Foundation and authored by state representative Arlene Wohlgemuth, Brittani Miller, and Spencer Harris, “Medicaid Reform: Constructive Alternatives to a Failed Program.”

The authors propose creation of an entirely new approach, TexHealth. They write:

TexHealth would change the dynamic of Medicaid from a defined benefit program to a defined contribution program, allowing individuals to make their own decisions in regards to their health insurance needs.

They explain:

Under a defined contribution plan, TexHealth will provide better access to health care services and be available to potentially 4 million more individuals than currently served, for less money. Initially, the state would spend $22.26 billion per biennium in subsidies to low-income Texans, $12.4 billion on long-term services and support, and $9.22 billion for implementation and administration, totaling 5 percent less than the state spent on Medicaid in the 2008-2009 biennium. TexHealth strives to offer the maximum amount of choice and freedom in health insurance decisions.

The paper is quite comprehensive and includes summaries of the handful of successful Medicaid reforms that have been implemented to date, including Rhode Island’s Global Medicaid Waiver, Indiana’s Healthy Indiana Plan, and Florida’s Cash & Counseling program.

In North Carolina the John Locke Foundation published a short paper by Nicole Fisher and Joseph Coletti on “Repair and Reform Medicaid.” The paper finds that enrollment n North Carolina’s Medicaid program grew from 639,000 people in 1990 to 1,603,000 in 2006. And the benefits are among the most generous in the Southeast with a per-enrollee cost of $5,668. The future is not bright. The paper says:

ObamaCare will make it nearly impossible for states to make economic reductions to Medicaid due to requirements of maintaining high eligibility while imposing new costly provisions beginning in 2014. Secretary of Health and Human Services Kathleen Sebelius has been all but intractable regarding state requests for flexibility of plan design and payments to providers.

The paper calls for restructuring the long term care component, reducing optional services, and applying for block grant funding similar to what Rhode Island did.

In Wisconsin, the new Secretary of Health Services, Dennis Smith, is doing some similar thinking.

An article by Guy Boulton in the Journal Sentinel reports:

Dennis Smith’s first task as secretary of the Department of Health Services is to eliminate a roughly $500 million shortfall in the state budget for the BadgerCare Plus and Medicaid programs. But his ultimate goal is to make the programs more efficient.

The article explains that Governor Scott Walker’s budget actually increases Medicaid spending by $1.3 billion over the next two years to replace lost stimulus money.

Mr. Smith is taking his time to “get input from the stakeholders,” and, “some advocates are wary.” But, “the Legislature also gave the Walker administration more freedom to remake the Medicaid and BadgerCare Plus programs; that was written into the controversial measure that cut collective-bargaining powers for public-sector unions.”

The article continues:

Smith is open to setting up some version of health savings accounts for people in BadgerCare Plus and other programs. And he talks about providing defined benefits and services for specific groups within the programs. “We don’t need more money,” he said. “We need to use the dollars more wisely.” Much of those dollars are spent on a relatively small number of people, nearly all of them elderly or disabled and many covered by both Medicare and Medicaid. Smith noted that 5% of the people covered by Medicaid account for 58% of the cost, a bit more than the national average of 54%. Long-term care is among areas likely to be a focus. He admires what Oregon and Washington have done to provide community-based  are, enabling people to remain in their homes instead of nursing homes while also saving money.

These state efforts are getting a boost from Congress. The Wall Street Journal reports:

House Republicans are preparing to propose a major shake-up of the Medicaid health-care program for the poor, a first step in their drive to overhaul federal entitlements, according to a member of the House Budget Committee.

Entitlement reform will be part of the 2012 budget proposal that Paul Ryan will be unveiling in April, but there is some talk about beginning with the remaining FY 2011 budget.  Block grants to the states are a popular idea. That would enable the states maximum flexibility to design a wholly new approach to covering the poor. Of course, they had that flexibility with the SCHIP program and didn’t do much with it.

At a minimum, the states should separate out the three programs that constitute Medicaid – long term care for the elderly, health coverage for the disabled, and health coverage for low-income families. These three components have little in common and having them merged makes it difficult to even talk about how much Medicaid costs. Total program costs are meaningless when looking at reform.

But the states need to do much more, including voucherizing Medicaid for most eligible families. A recent study in Health Affairs found that such families are constantly moving in and out of Medicaid eligibility, even at a 133% of poverty cut off point. This is disruptive and confusing for such families. It would be far better if they could apply Medicaid funds to the cost of private coverage they could keep as circumstances change.

At the same time, some significant portion of the population is incapable of managing any form of insurance program. They may be illiterate, drug addicted, mentally ill, or otherwise too dysfunctional to make appointments, fill prescriptions, and follow treatment plans. These people need the direct delivery of services.

Getting Medicaid right is not easy, but the stakes are enormous. We need to get serious about it.

HSA Roundup

By Greg Scandlen

Fidelity Investments reports substantial growth in its HSA business. In 2010 it added 14 new corporate and 22,000 individual clients, representing a one-year growth rate of 52%. As of February 28, 2011, it held $229 million in HSA assets.

The company found that 17% of its account holders contributed more than $5,000 to their accounts in 2010, and 46% contributed between $2,500 and $5,000. Ninety-five percent carried over a balance from year to year.

Fidelity Press Release

State employees in Wisconsin will likely be put into HSAs as a result of the new budget-repair law.  Currently, 95% of state workers have no deductible whatsoever with the remaining 5% having a deductible of $100.  The average private sector deductible in Wisconsin is $947 for singles and $1,893 for families.  The new law requires the state to do a study by June, 2012, that will likely result in changes in 2013.

Wisconsin Journal Sentinel

Towers Watson conducted an employer survey on behalf of the National Business Group on Health that found, according to an article in HRMorning:

Account-based health plans (ABHPs) — health savings accounts (HSAs) and health reimbursement arrangements (HRAs) are booming, the report said. In 2002, just 2% of all employers offered ABHPs, but by 2011, that number has exploded to 53%. By 2012, another 13% of all respondents plan to add an ABHP.

HR Morning

The Employee Benefit Research Institute (EBRI) put out a new study of HSA and HRA accounts, which, as usual with EBRI, underestimates the market penetration of HSAs. I write this up on the NCPA Blog. EBRI draws its conclusions on total deposits and account growth from an internet survey, while Bill Boyles of the Consumer Driven Market Report (CDMR), and Eric Remjeske of Devenir Investments each tallied similar data by talking to HSA administrators who actually know how much money is in their vaults.

The contrast should be embarrassing to EBRI – if it were capable of being embarrassed.

NCPA’s Health Policy Blog