Train Wreck, or hopeful prelude? Exchanges, compacts, Medicare, Medicaid -- sidebars, or key to the future?
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Published: 06-Apr-2011

As the Obama administration and Republicans in the U.S. House remain on a collision course for a federal government “shutdown” – some call that a “train wreck,” others consider it a hopeful prelude -- arguments continue to rage over the federal health care popularly deemed “ObamaCare.” 

Several recent comments from Washington, D.C. and the state Capitol in Oklahoma City manifest the central role that the future of Medicare and Medicaid will play in resolution of broad public policy controversies in Washington -- and virtually every state in the Union. 

Blended in to this, consideration of a possible state hospital fee and the continuing debate over an Oklahoma health care exchange might seem like separate questions from Medicare and Medicaid, yet are actually crucial aspects of the larger debates.

Yesterday (Tuesday, April 5), in a statement from Washington sent to CapitolBeatOK, U.S. Rep. James Lankford said, “We have approached a time in the history of our country where we can no longer afford to delay the hard decisions. Our nation’s debt has grown beyond sustainable levels, and we are now at a place where the current generation will live in the comfort of the status quo while condemning the next generation to a future of less promise and opportunity.”

The first-term Republican continued, “It is simply immoral to keep going down the same road because we’re afraid of hard decisions. Unfortunately, that is what President Obama chose to do when he released a budget that was not credible, but rather it was a politically safe plan under the false pretense of fiscal responsibility. We can no longer continue with the current trajectory that the President advocates. Instead, we must stop the denial of this debt crisis that we face and address our fiscal challenges head on by proposing bold, serious solutions. 

“The plan from House Republicans will strengthen quality and effective government programs while cutting away at inefficiencies and duplicative programs. Our budget will repair the broken Medicare and Medicaid systems and protect them for those in and near retirement while preserving them for future generations.” 

Lankford touched on other issues, yet clearly Medicare and Medicaid – and the block grant ideas -- have prime placement in his reflections. His conclusion gives the broader context of health care discussions:

“House Republicans will restore our founding principles rooted in the fundamentals of limited government and a free-market economy. It’s time to remember that government can only do so much; it’s our nation’s entrepreneurs and innovators who hold the key to a dynamic and successful country. By tackling our debt, getting government under control, and incentivizing economic growth, our budget will lay out a path to prosperity.”

Also yesterday, in a statement from her office, Oklahoma Governor Mary Fallin cheered Congressional Republican plans to “to convert the federal share of Medicaid spending into block grants for states.” She supported the GOP “Roadmap to Prosperity” budget proposal in which this different approach to Medicare and Medicaid was central.

Fallin, who served in Congress until early this year, sent these comments to CapitolBeatOK:

“In addition to offering a serious commitment to fiscal responsibility and debt reduction, House Republicans should be applauded for introducing a plan that shifts policy decisions away from the federal government and closer to the people.

 “Specifically, I’m extremely pleased to see the new GOP budget proposes eliminating the one-size-fits-all approach to Medicaid spending and replaces it with a block grant approach. Block grants will allow states more flexibility in meeting the individual needs of their citizens and will reduce the number of onerous federal regulations they are forced to follow. I encourage House Republicans to continue to push this issue with lawmakers in Congress as well as the White House.”

 Also yesterday in Oklahoma City, a group calling itself the “Coalition Against Cost Shifting” was formed, announcing its support for House Bill 1381.

 Fred Morgan of the State Chamber, a founding member of the Coalition, reflected that under current policy, “Medicaid does not always pay its fair share.” He continued, “When hospitals provide care for which they are not adequately compensated, they are forced to pass that cost on to those who pay for health care – including to businesses that provide health insurance for their employees.”

 Roy Williams of the Oklahoma City Chamber of Commerce said, “The ‘hidden tax’ resulting from cost shifting not only hurts consumers here at home, but it also hurts our economic development efforts. If we can lessen the inflationary pressures on health care, it will help us be even more competitive in bringing jobs to our state.  And I can guarantee you, when companies look at growing their workforce or relocating, they thoroughly examine health care costs.”

 H.B. 1381 is designed to create a fee through which Oklahoma can access federal “matching dollars” for money the state spends to serve Medicaid patients. (To be clear, Medicaid is the federal-state partnership in which the federal government provides matching dollars for money spent by the state to serve Medicaid patients. Mike Spradling of the Oklahoma Farm Bureau, a supporter of H.B. 1381, said in a statement sent to CapitolBeatOK:

 “Some of the most at-risk hospitals are in rural Oklahoma, and both access and affordability are important as we grow our state’s rural economy.  We simply need to make the federal government pay more of their share of Medicaid expenses.”

 Dubbed the Supplemental Hospital Offset Payment Program, H.B. 1381 would, in the words of a statement from the new coalition, “assess a fee on Oklahoma’s hospitals that would then be used to achieve a two-to-one federal match to be used for Medicaid reimbursement.  Supported by the hospitals affected by the fee, this fee could not be passed on to consumers.”

 Mike Neal of the Tulsa Metro Chamber commented, “At this time, 34 states have a provider assessment in place, enabling these states to bring in more federal dollars for Medicaid programs.  Oklahoma is at a competitive disadvantage for recruitment of jobs and people because we do not have this program in place.  Passage of H.B. 1381 is another step in improving the overall business climate and quality of life. A ‘yes’ vote on H.B. 1381 is a vote for jobs.”

 A different set of reflections on Medicaid issues and health care governance policies came today (Wednesday, April 6) in a statement form state Rep. Mike Ritze of Broken Arrow, one of two physicians serving in the state House. Ritze said:
 
“While some physicians are legitimately frustrated by the increasing difficulty in getting paid by private insurance companies and so called ‘health maintenance organizations,’ things will only get worse as ObamaCare turns Medicaid into the nation’s single-provider of health coverage. Unless ObamaCare is defeated in the Supreme Court, or defunded/repealed by Congress, we may soon be in that position.”

 Ritze pointed out that the federal legislation dubbed “ObamaCare” massively expands Medicaid. He highlighted news reports that nearly one in six Americans was on Medicaid at the end of 2009 (49 million people, according to CNNMoney).

 The Kaiser Foundation, Dr. Ritze pointed out, reports in one study that states as a whole have boosted Medicaid spending 8.8 percent in Fiscal Year 2010 – the highest growth rate in nearly a decade.

 Ritze said, “The growth of Medicaid is already straining state budgets, and things will only get worse as ObamaCare dumps millions more into the system.”

 He predicted the new federal law will lead to dysfunction in the health care system, as all private health insurance rates become comparable to those in Medicare and Medicaid. 

 In his analysis sent to CapitolBeatOK, Ritze continued, “Dictating who and what must be covered, at what price, and how much must be spent on care vs. administration/profit, will very likely lead to major cuts in provider reimbursement, and more intense micromanagement of care.

 Pointing to the origins of Medicaid in the 1960s, Ritze continued: 

 “Medicaid was set up as a third-tier system, one that would relegate its beneficiaries to hospital emergency rooms and clinics, rather than to private medical offices. Medicaid payments to physicians to this date in most states are well below the cost of care and there is minimal participation of private physicians in the program. How can a program that virtually excludes private physicians now be expanded and hope to succeed? Obviously, it cannot.”

 The mandate in “ObamaCare” to treat Medicare and Medicaid reimbursements similarly are, Ritze said, temporary and would leave rates below cost. Ritze asked, “Why would doctors take on Medicaid patients under this scenario? Many will not participate.”

 In his view, dramatic reforms, including repeal of the federal law, are the only way forward.

 Ritze concluded,“Medicaid is a fiscal and humanitarian disaster, providing fragmented, lousy, and expensive care. It is a welfare system and enslaves participants in permanent poverty. Rather than expanding, it should be cut. The federal government should rescind all rules regarding Medicaid and return to the states their share of funds as block grants. States should be free to develop their own approaches to health care for the needy.”

 Late last month in Austin, Texas, Oklahoma Commissioner of Insurance John Doak spoke on health care exchanges and larger issues of the health care system at a meeting of the National Association of Insurance Commissioners. 

 His comments conclude this sketchy review of the “sidebar” issues of health care that are still at the center of the discussion over “What’s next” in American health care. 

 In a summary of his views provided to CapitolBeatOK, Commissioner Doak said:

 “I told the committee members that I have been and remain opposed to ObamaCare, but I am a businessman. I know you have to have a backup plan. I support Attorney General Scott Pruitt and the other states’ attorneys general who are [attempting] to have this federal law overturned in the courts and our congressional delegation that would like to see it repealed. 

“If those efforts are unsuccessful, Oklahoma must be prepared to fight on another front and an insurance exchange that takes a market-based approach and promotes robust and fair competition is the best way to do that. If we do nothing, we will lose the fight because the federal government will create and impose an exchange on Oklahoma that likely will ignore our needs and most certainly our conservative ideals.”

In his prepared remarks to fellow commissioners of insurance, Doak said,

“I remain adamantly opposed to the Patient Protection and Affordable Care Act. I believe it to be unconstitutional in the individual mandate to buy insurance it imposes upon taxpayers, continued analysis by the Congressional Budget Office shows its estimated costs skyrocketing even before the majority of [the federal law]’s obligations have been implemented, and I consider the federal law a power-grab by Washington in a field where the states’ sovereignty has always been recognized – the regulation of the insurance market within our individual borders. I applaud Oklahoma Gov. Mary Fallin for her stand against these flawed federal regulations, and join our state’s Attorney General Scott Pruitt, who has filed a lawsuit against PPACA, in pledging to fight its implementation.

“Nevertheless, as the duly elected insurance commissioner of the state of Oklahoma, my first obligation always is to the best interests of my constituents. Therefore it is my duty as Oklahoma Insurance Commissioner to do everything within my power to fully prepare my state for health insurance exchange that are mandated by PPACA, should that legislation withstand a Supreme Court challenge. Any state that fails to establish its own health insurance exchange by 2013 risks a federal takeover of the process should PPACA still stand at that time.

“Fortunately, insurance exchanges can serve the public and the industry well regardless of PPACA’s survival, provided the system improves consumer choice and drives down consumer costs through healthy competition that incorporates, rather than undermines, our licensed agents and domiciled insurance producers. Conservatives have long touted the benefits of a market-driven insurance exchange, and in 2009, the Oklahoma Legislature authorized creation of such an exchange based on model legislation introduced by the Heritage Foundation, a conservative think-tank.

“To be successful in Oklahoma, an insurance exchange must take a market-based approach that promotes robust and fair competition within the system, because a less competitive market reduces choices and raises costs for consumers. It must include our state’s knowledgeable, professional agents and licensed producers, because they are best prepared and positioned to assist Oklahomans in making sound insurance choices.

“An effective exchange should preserve and enhance the options employers have at their disposal for insuring workers, should limit disruptions to the current insurance market, and should do no harm to existing state-based initiatives that are working, such as high-risk pools, associational health plans, and our state’s Insure Oklahoma program for small businesses. It shall not use government funds to provide abortion services, and shall not mandate that insurers offer coverage for, nor dictate that health care professionals provide, abortion services as requirements of participating in the system. And, the exchange must be developed in a transparent process that allows consumers, government and professional stakeholders alike to participate in shaping the best possible system for Oklahoma.

“My six keys to unlocking the right health insurance exchange system:

“1. Consumer-Driven Goals: The public deserves greater access to insurance and better health care services at a lower cost. The right health insurance exchange for the people of Oklahoma must achieve all three of these objectives.

“2. Consumer Protection: Licensed brokers and agents play a key role in protecting insurance consumers. They have earned the trust of their policyholders and are vital to educating consumers on their coverage options. These agents and brokers are the experts in the field who help Oklahoma families and businesses meet their health insurance needs.

“3. Transparency: As these exchanges are designed, the public must have full and open access to the process. The people will not and should not trust a system that was negotiated and devised behind closed doors.

“4. Accountability: The federal government’s mismanagement of Medicare and Medicaid, which are frequently disparaged for their underpayment for services and are rife with fraud, is evidence enough that the job can be done much better. Government must stop making promises it can’t keep and writing checks that future generations of taxpayers can’t cash. This state-based system of health insurance exchanges must be smart, successful and solvent.

“5. Competition: An open, online exchange market in which every licensed health insurance carrier that wishes to participate has a fair opportunity to make its bid for each customer’s business is the most beneficial system both for insurers and the insured. Good firms have the opportunity to grow their business by providing proven value to policyholders, while consumers benefit from access to information, far greater choice of insurance products, and competitive pricing.

“6. Achievement-Oriented: Administrators of the exchange must be quick to recognize and remediate or remove poor performers within the system. This protects consumers while also providing greater opportunity for high-performing insurers.

“Following these guidelines, exchanges can be a viable, valuable tool for providing health insurance coverage to the thousands of Oklahomans and perhaps the millions of Americans who are presently uninsured due to cost, and in the future I would like to invite my fellow insurance commissioners to gather in Oklahoma to discuss the possibilities. While no single health insurance exchange will fit all states, we all might have ideas or strategies that could be tailored to suit another state’s population.

“I am proud to work alongside Gov. Mary Fallin in representing Oklahoma’s conservative values throughout the process of creating a market-based health insurance exchange for our state. It should be up to the states, not the U.S. Congress, to determine whether and how exchanges are implemented, and as insurance commissioners, each of us is sworn to make the right choice for the people of our respective states.”

 

Attracting less attention, but also less controversy,  are proposals for voluntary health compacts that could become a home port for block grants – and potentially unifying mechanisms to address Medicaid and other funding. 

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