Tag Archives: health care

It’s not news when the train doesn’t wreck

With the central element of the Affordable Care Act (ACA) — the health care exchanges — slated to go online in October, there’s been a lot of concern about how these exchanges will be implemented.  17 states (including Minnesota) have elected to build their own exchanges, 27 states are defaulting to the federal exchange, and seven states are doing a hybrid model based on the federal exchange.

Opponents of the law, naturally are going all gloom-and-doom on the implications (even going so far as to take a quote by Democratic Senator Max Baucus where he worried about a “train wreck” out of context to further their cause).

But what if it doesn’t turn out to be a train wreck after all?  There have been some interesting developments in recent weeks that lead one to believe that strong, proactive management of exchanges by states can lead to positive results.

In Maryland, the largest insurer in that state (Care First) proposed a shocking 25% increase in premiums for 2014, which was widely cited as a troubling statistic for the ACA.  But nearly every other insurer in the state has proposed premium increases below 10%.  Care First either stands to lose a significant amount of market share, or they’re going to have to lower their rates.

In California, meanwhile, proposed premiums on their health care exchange have come in significantly lower than predicted.  2009 Congressional Budget Office projections anticipated that a “silver” plan (one that covers 70% of expected health care costs) would have a yearly premium of $5,200, while an actuarial firm projected an annual premium of $5,400.  When the actual prices were released yesterday, the actual average yearly premium for a “silver” plan is going to be about $3,300, or 35% lower than the CBO projection.

Oregon’s health care exchange is seeing similar patterns to Maryland.  After releasing the costs for all of the plans that will be on its exchange earlier this month, two large insurers have asked to come back and lower their prices after discovering that some competitors were pricing the same coverage for less than half the cost.

Meanwhile, we’ve seen evidence that health care inflation has been slowing substantially.  Provisions of the ACA have contributed to this trend and further policies, such as increased use of competitive bidding for Medicare-paid medical equipment slated to roll out between now and 2016, should only continue it.

These sorts of things should provide us here in Minnesota with hope that our health exchange — named MNSure — will be able to deliver coverage to citizens at a reasonable cost.  Minnesota has always worked hard to give our citizens access to health care and that should only get better under the ACA.

From a political perspective, we too should also remember that what voters tend to value about these sorts of programs is the real-world impacts on their lives.  Opponents of Medicare thought that implementation problems (that did happen) would end up undermining the program and resulting in its repeal.  Opponents of Medicare Part D thought the same thing.  In both cases, what opponents of those programs discovered is that voters ultimately liked the fact that they were guaranteed health care as a senior citizen and that they liked programs that helped them pay less for their prescriptions.  Outright repeal of these programs today is essentially unthinkable.

Ultimately, I think we’ll find the fact that the ACA ensures that you’re always going to have access to our health care system in a reasonably affordable way is going to outweigh any implementation problems at the beginning of the program. In fact, if states that are actively managing their exchanges end up producing better results, it may become a political liability for states that have chosen to actively fight implementation of the law.  After all, if dysfunctional California can build a working exchange with lower-than-expected health insurance premiums, why can’t Texas?

[Image courtesy of the Alexandria Echo Press, is of a 1904 train wreck in Osakis.]

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2013 Legislative To-Do List [UPDATED]

The 2013 legislative session kicks off next week, and there’s a long list of things that the newly-minted Democratic majorities should look at as their top priorities.

#1:  Fix the budget.  It’s long past time for the folks in St. Paul to get on with it and take care of the structural problems in the state budget.  No more stalling, no more half-measures, no more one-time fixes or gimmicks to solve this year’s $1.1 billion projected deficit.  This means:

1a.) Get a plan in place to pay back the school shifts.  My talks with local school district officials indicate that they are more interested in certainty at this point, so we need not necessarily pay back the entire $1.1 billion still remaining (this is on top of the $1.1 billion deficit) in one budget cycle.  A bipartisan commitment, though, to repaying $275 million a year for the next four years should be sufficient.

1b.) Real tax reform.  The elements required here are pretty simple, but the devil is in the details.  First, broaden the base of the sales tax by removing distorting exemptions on some categories of goods and services — it should be possible to broaden the base, lower the rate, and still end up revenue-neutral to revenue-positive.  Second, recognize that the sales tax changes are regressive, so cut income taxes on lower- and middle-income taxpayers.  Third, remove unnecessary tax expenditures (credits and deductions) that essentially function as handouts via the tax code.  This should free up additional revenue that can be applied to across-the-board rate reductions in both the individual income and corporate income taxes.  And that’s all before addressing our overly complex property tax system.  It may be too much to ask legislators to fix that in 2013, too, but we can hope.

1c.) Accountability in state spending.  State government needs to do a much better job of measuring effectiveness of state programs, and requiring reforms for programs that don’t measure up.  Additionally, there are programs that just aren’t needed any more.  It’s time to end them, now.  That said, we should be wary of sound-bite proposals like legislative Republicans proposed last session that imposed across-the-board cuts without an analysis of the work required.

#2:  Improve the job-creation environment in the state.  An odd-year bonding bill seems unlikely at this point, but the Legislature can take some concrete steps to improve conditions for job creation in the state.  A commitment to infrastructure is paramount.  For starters, the legislature can begin indexing the gasoline tax to inflation in order to maintain its buying power. (Minnesota’s gasoline tax, even with the increase passed after the 35W bridge collapse, has less purchasing power than it did 20 years ago and our road and bridge construction needs are much more significant.)  Renewing our commitment to our public universities is vital as well.  Even though enrollment is up 23,000 over that time, funding for the University of Minnesota system and MnSCU has declined back to Ventura Administration levels.  This is a significant factor in the doubling of college tuition over the last decade.  In return, those institutions should provide concrete plans on how they can reform their operations and become more efficient.  The U of M, in particular, has some administrative bloat that needs to be addressed.

#3:  Support implementation of the Affordable Care Act.  Minnesota’s health insurance exchange, required as part of the Affordable Care Act, is scheduled to go live in October to enable enrollment in plans starting on January 1, 2014.  It is critical that the Department of Commerce have the necessary resources to finish development and provide ongoing support for the exchange.

#4:  Government accountability, campaign finance and election reform.  There’s a gaping hole in the finance disclosures that our elected officials have to provide.  If they work as an independent contractor or consultant, legislators don’t have to disclose who they work for.  That’s a problem, as demonstrated during the campaign in the case of Senator David Hann.  Unlike some, I don’t have a problem with Hann chairing the committee with critical oversight on health insurance while being licensed to sell it.  But I do have a problem with not knowing who’s paying Hann’s salary outside of the Capitol so I can fairly judge his actions in the legislature.  Same goes for anyone else.  It’s time to require folks in those categories to disclose who they’re getting paid by (over a limit, say $2,500).  From a campaign finance perspective, it’s time to bring some additional sunshine into the process and require additional disclosures.  I would recommend moving to a four times per year model (quarterly in odd years, then Q1, pre-primary, pre-general, and year-end in even years).  Finally, even though the Voter ID constitutional amendment failed, there are things that can be done in the realm of election law to improve perceptions of fraud incidence and improve access to the polls.  Such provisions should include the introduction of early voting (how about the two Saturdays before Election Day), automatic voter registration of holders of drivers licenses and identification cards, and a close look at the electronic poll book concept as an alternative to voter ID requirements.

Certainly, these won’t be the only items that come up — social issues like a push for recognition of same-sex marriage will undoubtedly be discussed (and eventually, I believe it should and will be passed) — but these are what should be at the top of the list.

[UPDATE, 1/4]:  Let me clarify a few points regarding Hann’s relationship with Boys & Tyler Financial.  Hann has completed his licensing requirements with the state of Minnesota, but has not been enrolled as an agent by an insurance company.  Until that has been completed, Hann cannot sell insurance in the state.  Hann works on a contract basis with Boys & Tyler, and claims to earn no compensation for that relationship. (Under current law, Hann would not be required to disclose any income earned on a contract basis.)  This seems to be an arrangement designed to fight efforts at disclosure, and leads me to believe that all contract employment/consulting relationships should be disclosed instead of those surpassing the dollar limit originally indicated in the post.

[State Capitol picture courtesy of Minnesota House of Representatives Public Information Services.]

Obama Administration takes step to substantially reduce the number of abortions

It may be surprising to many, but in a few decades we may look back and realize that President Barack Obama took the most concrete step of any President in the Roe v. Wade era towards reducing the occurrence of abortion.

That step, ironically enough, is the target of many right-wing attacks:  the mandate that women’s preventative health services –including contraception — be provided free as of August 1, 2012 as part of the Affordable Care Act.

Last week, researchers at Washington University released the results of a three-year study they did in the St. Louis area where they provided sexually-active adolescents and adults with free contraception.  What they found was striking, and potentially very important.

As the Washington Post notes:

About half of all unintended pregnancies are the result of contraceptive failure, where a condom breaks or birth control pills aren’t taken at the right time. The least expensive methods of contraceptive tend to be the least effective.

Specifically, women in the United States use long-acting reversible contraception (LARC) at a far lower rate than the rest of the developed world — less than 10% of American women choose these forms of contraception.  Forms of LARC include intrauterine devices, such as Mirena or ParaGard and subdermal implants like Nexplanon.  These forms of LARC are up to 20 times more effective than the birth control pill, but their cost often makes it impossible for many women to afford.

Researchers were surprised to find, though, that when these options were made available for free that their utilization increased dramatically.  In fact, fully 75% of the women in the study selected a form of LARC (the researchers anticipated a doubling of utilization into the low-teens).  And, as you would expect based on those numbers, unplanned pregnancies and abortions sharply declined.

Teen pregnancies among the study group occurred 80% less frequently than the national average.  And the abortion rate, when compared to the St. Louis area, declined by at least 50% and as much as 75% in the three years of the study.  And the abortion rate was more than 60% lower than the national average.

Expand those numbers nationally, and there will literally be hundreds of thousands fewer abortions per year even if the rates don’t decline as much as they did in the St. Louis area.  Enabling access to all forms of contraception empowers women and allows them to make the best decisions — from all the available options — for their lives and circumstances.  For that, the Obama Administration deserves credit.

10 Charts of the Year — Health Care Costs

Every day for the rest of the year, we’ll be looking at one important chart that helps to explain current economic problems.

The first, from the Bipartisan Policy Center, shows the projected components of federal spending over the coming decades.

Source: Bipartisan Policy Center

What does this chart mean?

Government spending drives the debt, and the growth of government health care programs drives the spending. Relentlessly rising health care costs (coupled with demographic changes) are driving the growth of these programs, while the open-ended structure of these programs is responsible for much of the increase in health care costs. — Rep. Paul Ryan (R-WI)

 

 

America’s small small-business sector

Everyone likes to talk about small business as the engine of the country’s economy.  Well, it may come as a surprise to find out (via WonkBlog at the Washington Post) that the U.S. has the smallest small-business sector of the 25 largest economies in the OECD.  Only 34.1% of American workers are employed by firms with 50 or less employees.  Most OECD countries have about half of all workers working in small businesses, while Greece leads the pack with about three-quarters of workers employed by small businesses.

Why would the United States lag other countries so noticeably?  There’s many potential explanations — the U.S. has one of the most mature modern corporate cultures in the world (note that other countries near the bottom include similar countries like the U.K., Germany, and France).  Some researchers have pointed the finger in another direction, though — towards the availability of universal health care.

By de-linking employment and health care, people in Western Europeans countries are more free to pursue building their own business because they don’t have the burdens of health care for themselves (and their employees) to consider.  One has to wonder how much the labor markets in our country have been distorted by our inability to break to link between health care and employment.

 

Leidiger’s E-Mail Torpedo of Not Really the Truth

Rep. Ernie Leidiger released his weekly e-mail update today.  Although a freshman in the House, Leidiger has already learned the tricks of the trade when it come to hiding the real impacts of the policies he supports.  Let’s look at a few of his claims:

The House transportation bill preserves current systems and boosts local road funding while halting light rail expansion the state cannot afford to build or operate.  The bill also gives Greater Minnesota transit funding a $1 million increase. 

Leidiger is correct — the GOP-passed budget bills do increase local road funding by $125 million over the next two years.  What he fails to point out is that is the exact same increase advocated by Governor Mark Dayton.  Leidiger and the GOP did nothing out of the ordinary with these bills. 

Leidiger is also correct that the House GOP transportation bill hikes Greater Minnesota transit by $1 million over the next two years, but fails to mention that amount trails both Gov. Dayton’s recommendation and that of Senate Republicans, who increase that funding by $8 million.

Leidiger’s pride over ending funding for additional light-rail projects is misplaced.  The Twin Cities, with a population of over 3 million people, can’t be expected to thrive on roads alone.  The Central Corridor and Southwest Corridor projects need to move forward. 

The state government bill reduces agency spending by over 30 percent and contains perhaps the most reforms out of any piece of legislation in recent memory, including:

  • 15 x 15 Initiative (15% reduction of state workforce by 2015)
  • State employee pay freeze for two years
  • Sunset Commission to review and retire unnecessary state activities and spending, identify opportunities for innovation and drive continued reform

Leidiger shows his pride in a bill that dictates a 15% reduction in the state workforce, but hasn’t yet identified  any unnecessary state activities.  Once again, Rep. Leidiger and his GOP associates show that they’re better at talking the talk than walking the walk when it comes to making government function like a business.  Without that review of state activities up front, there is no way to know whether or not the 15% target is achievable.  It’s just a number plucked from the air. 

Does Rep. Leidiger run his own business that way, based on numbers that have no basis in analysis or reality?  If you’re a state employee, get ready for a great future — cuts of 30% of your budget, 15% of your colleagues will be going away, and you won’t get a pay increase to cover your increased work.  I bet that will do wonders for keeping talented folks in the state’s employ.

Finally, our HHS bill.  This legislation does what no bill has ever done before, cutting almost $2 billion in state spending.  While protecting priorities like seniors in nursing homes and the disabled, the bill reduces projected spending increases by 15 percent and sets our state on a sustainable path.

Let’s review the sorts of cuts that are in the HHS bill, shall we:

  • Meals on Wheels ($2.7 million; 50% cut)
  • developmental disability family supports ($4.1 million; 50% cut)
  • child care service developmental grants ($500,000; 100% cut)
  • child care resource and referral grants ($1.5 million; 100% cut)
  • subsidized adoption grants ($5.3 million cut)
  • American Indian Child Welfare Program ($9.5 million; 100% cut)
  • aging prescription drug assistance grants ($1.8 million; 100% cut)
  • adult mental health crisis grants ($1.5 million; 100% cut)
  • caregiver support grants ($952,000; 100% cut)
  • relative custody assistance grants ($1.5 million cut)
  • child welfare reform/prevention & early intervention ($1.6 million; 100% cut)
  • Temporary Assistance to Needy Families (100% cut) funds  
  • Statewide Health Improvement Program grants (100% cut)
  • state loan forgiveness programs for medical training that maintain the state’s ability to recruit and retain health practitioners in geographically underserved urban and rural settings (100% cut)
  • repeals the Early Expansion of Medicaid 
  • families and children on Medicaid with incomes above 75 percent of the poverty rate ($13,898 for a family of three) would be dropped from Medicaid
  • the same would apply to all those on MinnesotaCare with incomes above 133 percent of the poverty rate
  • eliminates optional services like eyeglasses, contact lenses and prosthetics for Medical Assistance and MinnesotaCare recipients

These are the sorts of priorities that Ernie Leidiger is standing up for, the sort of “sustainable path” he endorses.  Leidiger voted to give businesses a tax cut and against fully funding Meals on Wheels or paying for eyeglasses for poor people.

And it gets worse.  The bill doesn’t even deliver on the $2 billion in savings that Leidiger promisesUp to $1.2 billion in savings claimed by Republicans is “not substantiated by completed fiscal notes”, according to the fiscal analysts in the Management and Budget office.

For too long, government has made promises it cannot keep with money it does not have.  In the last decade alone, health and human services spending has increased 109%.

What Leidiger fails to mention here is that the national cost of private health care insurance over that time has increased by 131%.  So, in fact, Minnesota’s state government has been doing a better job than private insurers of controlling health care costs, and that’s despite the fact that government health plans are typically responsible for the poorest and sickest among us.

In sum, the House Republican budget is a fiscal responsible approach that puts a lid state spending, promotes reform and helps improve Minnesota’s business climate by letting families and businesses keep more of your hard earned money.

As we’ve shown, the Republican bills do nothing of the sort.  Leidiger and his GOP colleagues, though, show a Charlie Sheen-like devotion to the alternative reality they’ve created.  Sheen thinks his “tiger blood” and out-of-control lifestyle make him some sort of counter-culture hero.  Leidiger and the GOP think that protecting the rich and punishing the poor is the path to prosperity.  They may think they’re “winning” now, but we all will lose in the end if these policies become law.

Building a better business climate in Minnesota

The new legislative session has started, and even though we’ve got a $6.2 billion deficit to address, there are already calls for tax cuts for business.  It’s seemingly taken as a matter of widespread agreement that Minnesota has an “unfriendly” environment for business.  But is that really the case?  Crunching the numbers indicates that the conventional wisdom on this issue may not in fact be correct.

A recent study by the Council on State Taxation (a collection of 600 large corporations) and the accounting firm Ernst & Young compared states by calculating the ratio of actual tax dollars paid by businesses to states, counties, and cities versus the GSP (Gross State Product) of private sector companies.

This is a different measure used than in most analyses, which merely rank states based on their corporate income tax rate.  Minnesota has a fairly high base corporate income tax rate, and as such doesn’t fare well in these rankings.  As we all know from our personal income taxes, though, the actual tax that we end up paying doesn’t match what bracket we are in because of the various exemptions, deductions, and credits that are in our tax law.  Well, the same things apply to business taxes as well.

When you look at the actual amount of business taxes paid as a ratio the economic activity in the state, Minnesota fares significantly better.  In fact, Minnesota’s ratio of 4.3%, is tied for 16th in the nation, ahead of such purported tax havens as Arizona (4.8%, tied for 26th) or Florida (5.3%, 37th).  Minnesota even fares better than Nevada, South Dakota, and Texas (all at 4.9%, tied for 28th).

Yes, you heard that right.  Minnesota businesses pay less in taxes as a percentage of total economic activity than businesses in Nevada, South Dakota, and Texas.  What’s the Sioux Falls radio guy going to say now?

So the answer to getting Minnesota’s economy back on track isn’t cutting business taxes.  We know that.  All we have to do is look at the experience of the last decade.  Since 2000, we have had five rounds of federal tax cuts and created about 2 million private sector jobs nationwide over that time.  In the 1990s, we increased taxes and created 20 million private sector jobs.  The answer to encouraging economic growth is much larger and diverse than merely cutting taxes.

So what are those answers?  Well, we know what they are.  They are time-tested and proven.  Even with our deficit, we need to protect and promote the societal infrastructure that has given Minnesota such strong economic performance over the last three decades and which has begun to decay over that time.

It’s physical infrastructure (roads and bridges, the electrical grid), it’s education (from early childhood through our colleges and universities) and it’s health care (protecting children and the poor).  As Jeff Rosenberg at mnpublius.com points out, for the cost of the corporate tax cuts, we could make investments that would almost certainly do more to add jobs and create long-term prosperity.


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