From the Cato Institute

By Michael F. Cannon

ObamaCare aims to cover 16 million poor uninsured adults through Medicaid, plus 16 million higher-income uninsured Americans through government-subsidized “private” insurance. Supporters portrayed these “reforms” as a matter of life and death, particularly for the poor. Yet a monumental new study finds that “Medicaid coverage generated no significant improvements in measured physical health outcomes” for poor adults. These findings strengthen the case that states should stop implementing ObamaCare, and Congress should swiftly repeal it.

In 2008, Oregon launched an ObamaCare field test. The state handed out Medicaid slots via lottery to thousands of the very folks to whom ObamaCare opens Medicaid. Economists then studied the differences between the lottery winners and losers. The random assignment of subjects makes Oregon’s the most reliable study—indeed the only reliable study—ever conducted on the effects of Medicaid.

The results stunned and embarrassed ObamaCare supporters. Medicaid increased medical spending from $3,300 to $4,400 per person, but produced no discernible improvement in blood pressure, cholesterol, blood sugar levels, or risk of heart attacks after two years. Medicaid should have had an immediate impact on these measures, especially among the poor. Its failure to do so also casts doubt on any supposed long-term benefits from Medicaid and even ObamaCare’s subsidies for higher-income households. (Government subsidies are even less likely to improve the health of people with higher baseline access to care.) As Nicholas Kristof admits, ObamaCare supporters “oversold benefits of health insurance.”

Some supporters complain Oregon’s sample size was small. That’s another way of saying the disease burden among this group is not as great as you might think. Others stress that Medicaid reduced depression and financial strain. But these protests miss the point. The absence of physical-health improvements indicts the entire enterprise. Supporters have an obligation to show that the $2 trillion entitlements ObamaCare will launch next year would actually improve enrollees’ health. The Oregon study shows they cannot meet their burden of proof. What part of “no discernible improvement” don’t they understand?

The notion that Medicaid should provide only catastrophic coverage likewise misses the point. Congress should have to produce evidence of benefit before it forces taxpayers to fund any such program. Yet there’s no reliable evidence that government-provided catastrophic coverage would improve enrollees’ health, either.

This landmark study’s findings strengthen the case for repealing ObamaCare. Until Congress acts, states can stop both the Medicaid expansion and ObamaCare’s health insurance “exchanges.”

Michael F. Cannon is director of health-policy studies at the Cato Institute and co-editor of Replacing ObamaCare (2012).

by Dennis Jacobe, Chief Economist

Forty-one percent are holding off on hiring because of the Affordable Care Act

PRINCETON, NJ — Forty-eight percent of U.S. small-business owners say the 2010 Affordable Care Act (ACA) is going to be bad for their business, compared with 9% who say it is going to be good, and 39% who expect no impact.

These findings are from a Gallup survey of 603 small-business owners, conducted April 1-5.

Similarly, 52% of owners say the ACA is going to reduce the quality of healthcare they and their employees receive. This contrasts with 13% who feel it will improve the quality of care their employees get, and 30% who see no impact.

In a separate question, 55% of small-business owners expect the money they pay for healthcare to increase. Five percent expect their healthcare costs to decline, while 37% say the health law will have no impact on what they pay for healthcare.

Owners Already Responding to Healthcare Law

When asked if they had taken any of five specific actions in response to the ACA, 41% of small-business owners say they have held off on hiring new employees and 38% have pulled back on plans to grow their business. One in five (19%) have reduced their number of employees and essentially the same number (18%) have cut employee hours in response to the healthcare law. One in four owners (24%) have thought about eliminating healthcare coverage for their employees.

Implications

Small-business owners are worried about the way the Affordable Care Act is going to affect their business, with about half believing the law is going to be bad for business, add to their healthcare costs, and simultaneously reduce the quality of care they and their employees receive. This overall impression of the ACA is consistent with owners’ tendency to be more Republican than Democratic, higher income, more against big government, more conservative, and less optimistic than Americans overall.

However, more important for the U.S. economy in the short term is what small-business owners say they are already doing in anticipation of the new law’s continuing implementation. About four in 10 say they are holding off on hiring and new growth plans. About one in five say they are letting people go or cutting employees’ hours. Even after discounting small-business owners’ political views, these actions suggest the ACA could be a significant drag on the U.S. economy — at least in the short term.

See the full survey on the Gallup website here.

By Representative Walt Rogers

I have the privilege of guiding the legislation pertaining to the Healthy Iowa Plan, the alternative to Medicaid expansion, in the Iowa House. Last week, the House passed the bill and sent it to the Senate. I read The Des Moines Resister’s editorial about the bill (“Branstad Plan Still Pales Next to Medicaid,” May 2) and it left me greatly disappointed that the largest newspaper in our state could write an opinion so biased and incomplete.

I, and every legislator in the House, understand the seriousness of this legislation. It doesn’t take an “expert” to do that. It takes caring, objective and discerning people to assess our situation economically and morally.

Medicaid is a flawed and inadequate system. Inadequate was the word used byproponents of Medicaid at the recent public hearing on the Healthy Iowa Plan.

Medicaid’s reimbursement rates are poor, it is wrought with fraud (100 billion dollars nationwide in some estimates), it only pays for service instead of inspiring healthy habits, and causes insurance and overall costs to skyrocket. It literally fuels an explosion of the federal budget and taxpayer debt.

A recent op-ed in the Wall Street Journal pointed out that the federal government will spend almost a trillion dollars expanding Medicaid. States that do not agree to the expansion could potentially save the country $609 billion.

The Register’s editorial implies that House Republicans “fell in line” and backed the Healthy Iowa Plan, which is far from the reality. What we did is analyze the plan with discernment and seriousness and came to the same conclusion the governor did.

The Healthy Iowa Plan is a better option than Medicaid expansion at keeping low-income Iowans healthy while sustaining a thriving economy. It incentivizes members to take an active role in their own health and health plans, using modern accountability techniques, regional structures, local primary care facilities and personal reward health incentive accounts. Medicaid needs an overhaul and we all know it.

The Register points to an elephant in the room pertaining to the federal government’s apparent unwillingness to approve our plan. In my closing comments on the bill I highlighted a letter to Iowa Senate Democrats from the U.S. Health and Human Services Secretary Kathleen Sebelius’ office that essentially said most of the tenets of the Healthy Iowa Plan are acceptable. While obtaining the waiver is not simple, according to this letter, it is a strong and viable option.

The Iowa House is committed to approving a plan that helps all Iowans become healthier while doing it in a fiscally and morally responsible way. Because of our good financial situation, Iowa can be a leader in the country by putting forth a responsible option to Medicaid expansion.

My challenge to the Register’s editorial board is to take off its blinders and look honestly at the whole landscape of this serious decision.

Representative Rogers is an Assistant Leader for House Republicans and the floor manager of the Healthy Iowa Plan.

Rep. Rogers editorial appeared in the May 8th Des Moines Register

From the Wall Street Journal

By Christina Corieri

By refusing to expand Medicaid, states have a rare chance to cut future federal spending

As the battle over Medicaid expansion rages in the states, supporters of expansion have dusted off an age-old favorite in making the case for taking federal dollars. They say: If our state doesn’t take the money, those dollars will go to some other state instead.

Happily, in this instance that is not true. When a state declines to expand Medicaid coverage to more people, no other state will receive its share of funds and federal spending declines. Based on figures from the Congressional Budget Office and analysis by the Kaiser Family Foundation, Washington was expected to spend roughly $950 billion expanding Medicaid between 2014 and 2022. Each state that declines to expand Medicaid relieves strain on the overall federal budget for this entitlement.

State governments generally don’t have much of an impact on the federal budget. But there was a gift for fiscally conservative state lawmakers tucked into last summer’s U.S. Supreme Court decision on the Affordable Care Act. In National Federation of Independent Business v. Sebelius, the court ruled that Congress cannot coerce states into expanding Medicaid by threatening to withhold federal dollars for a state’s existing program. This ruling effectively gave state policy makers the unique opportunity to veto hundreds of billions of dollars in new federal spending.

Supporters of Medicaid expansion also say that one state opting out won’t make a difference—that the amount of forgone money is a mere drop in the fiscal bucket. But states joining together to say no to Medicaid expansion will make a significant dent in the federal budget, and many already have.

Using figures compiled by Kaiser and our own research at the state level, the Goldwater Institute estimates that the federal tab for Medicaid expansion has been reduced by more than $424 billion in new federal spending over the next eight years thanks to the 18 states that have already opted out. If the 12 still-undecided states also decide to opt out, there will be an additional $185 billion in savings.

The more than $609 billion in total savings from these 30 states would represent over 50% of the expected federal spending on the Medicaid expansion. A drop in the bucket? That’s more than seven times the $85 billion in 2013 sequester cuts and more than half the projected federal deficit for this fiscal year.

In addition to protecting the federal budget, states that decline to expand their Medicaid coverage will protect their own budgets as well. States such as Arizona that voluntarily expanded their Medicaid programs in the past have faced much higher costs than expected. In 2005 alone, the program originally was projected to cost Arizona $315 million, but the actual cost that year was over $1.3 billion.

The year 2005 wasn’t an anomaly. Arizona’s cost projections for the last expansion, from 2001 until the expansion was frozen in 2011, were off by over 400% each year. It is likely that the expansion proposed under the Affordable Care Act will have similar results for states that choose to expand their Medicaid programs, which Arizona may or may not do in the future.

It is highly unlikely that the federal government will keep its promise to pay for 90% of the cost of covering the health care of new enrollees. The Obama administration has already proposed cutting the funding available to states, including in its proposed budgets for 2011 and 2012.

States would be wise to remember that those who rely on assurances of federal dollars are often chasing fool’s gold. A recent example is the Individuals with Disabilities Education Act, where Congress promised federal funding to the tune of 40% of program costs after 1982 but today funds only 17%.

State policy makers fed up with federal spending finally have a chance to do something about it. Although many governors regularly take to the airwaves to call out Washington for its fiscal profligacy, they will be complicit if they go along with the expansion of Medicaid.

Several governors who are usually proponents of fiscal responsibility—including New Jersey’s Chris Christie, Florida’s Rick Scott, Ohio’s John Kasich and Michigan’s Rick Snyder, among others—are ignoring the cliff on the horizon and stepping on the gas when they should be hitting the brake. With the country running a nearly trillion dollar annual deficit, it is time to make the hard decisions required to balance the books.

Ms. Corieri is a health-care policy analyst at the Goldwater Institute in Phoenix.

A version of this article appeared May 1, 2013, on page A15 in the U.S. edition of The Wall Street Journal, with the headline: States Can Save Taxpayers $609 Billion.

Wall Street Journal article here.

From the Heritage Foundation

By Alyene Senger
As Obamacare’s Medicaid expansion is being debated in the states, many myths are being perpetuated by its advocates. Here, Heritage provides the research to debunk such myths:

1. Myth: Expanding Medicaid is “free money” for the states.

Reality: The expansion adds an estimated $638 billion in new government spending from 2013–2023. New spending at the federal or state level is reckless in light of the country’s trillion dollar budget deficits and over $16 trillion in national debt. As Governor Rick Perry (R–TX)stated, “[T]here is no such thing as ‘free’ money. We know there’s only money that’s collected from taxpayers, and money borrowed from other countries like China against the good credit of our children and grandchildren.”

2. Myth: Expanding Medicaid will entail little to no costs to the states.

Reality: Within three years, costs would exceed any projected savings. Heritage research shows 40 of 50 states would see increases in costs due the Medicaid expansion. If all states expand, state spending on Medicaid would increase by an estimated $41 billion by 2022.

3. Myth: Medicaid expansion can bring savings to the states.

Reality: Analysis by Heritage shows that by 2022 any projected state savings are dwarfed by costs. Moreover, these projected savings assume states will further reduce payments to hospitals and clinics for uncompensated care. But, as Heritage’s Ed Haislmaier points out, it is more likely that hospitals will lobby state legislatures for more money rather than less.

4. Myth: States can opt out of the Medicaid expansion if they change their mind later.

Reality: Some proponents of the expansion claim that states could drop out of the expansion if the federal government reneges on its commitments. But as legal experts Robert Alt and Dan Greenberg state, “[I]n fact, there is substantial reason to believe that when a state chooses Medicaid expansion, it is something like a decision to go down a one-way street” and that “legislators are mistaken to ignore the possibility that expansion cannot be abandoned as easily as it was entered.”

5. Myth: States can circumvent Medicaid requirements for the expansion population.

Reality: In its recent Frequently Asked Questions, the Centers for Medicare and Medicaid Services (CMS) clearly states that beneficiaries under any premium support arrangement would still be Medicaid beneficiaries, “entitled to all benefits and cost-sharing protections,” and that states must provide “wrap around” to fill in any gaps. As Ed Haislmaier has pointed out, “[A]ny state that agrees to the Medicaid expansion will get exactly what the term expansion implies: simply a bigger version of the same expensive and dysfunctional program.”

6. Myth: States must act quickly before Obamacare cuts hospital payments.

Reality: Hospitals are pushing states to expand Medicaid coverage because Obamacare is going to reduce their payments for uncompensated care by $56 billion over 10 years. However, the President’s latest budget proposes delaying the Medicaid disproportionate share hospital (DSH) payment reductions until 2015, which raises questions over the future of the cuts. But regardless, as Heritage’s Nina Owcharenko points out, “[m]aybe it is time for the states to tell the hospitals to shift their attention to the real problem: Obamacare.”

7. Myth: Hospitals will go out of business if states do not expand Medicaid coverage.

Reality: Hospitals have been lobbying hard on the idea that without expansion, the Obamacare uncompensated care payment cuts will be unsustainable for their business. But according to Ohio Media Trackers, about 80 percent of Ohio hospitals would still net millions in profits if their charity care was cut.

8. Myth: States can trust the federal government to keep its funding promises.

Reality: “Although Obamacare stipulates the federal government will pay at least 90 percent of the benefit costs of the Medicaid expansion,” Heritage explains, “state lawmakers have no guarantee future Congresses will keep that promise.” In fact, the Obama Administration has already proposed changing the deal in its fiscal year 2013 budget proposal.

9. Myth: Medicaid expansion will help low-income workers out of poverty.

Reality: Medicaid expansion actually locks low-income workers in poverty because of its backward incentives that discourage work. As Dan Greenberg explains for Advance Arkansas, “[E]mployees who earn too much money—or who work too many hours—face a set of unpleasant choices. They can quit. They can work fewer hours. They can decline raises. Realistically, a large number of employees who face such choices will opt to preserve Medicaid coverage by reducing the hours they legally work.”

10. Myth: Medicaid is quality health coverage.

Reality: Research has consistently shown that Medicaid produces worse access and health outcomes than private insurance. As Heritage’s Kevin Dayaratna writes, “By further expanding this broken program, Obamacare only exacerbates the situation by adding millions of low-income Americans to a failing program.”

Watch Medicaid Expansion in Iowa on PBS. See more from KDIN.

The Healthy Iowa Plan however, is a modern plan that helps Iowans get healthier through accountability and wellness measures.  This will result in lower costs to the state, making the Healthy Iowa Plan fiscally responsible and sustainable.

Below is the full Gallup article

Preventable Chronic Conditions Plague Medicaid Population

More than twice as likely to be depressed and have asthma

by Elizabeth Mendes

WASHINGTON, D.C. — U.S. adults whose primary health insurance source is Medicaid are in significantly worse health than are adults who get their coverage from an employer or union. More than three in 10 adults on Medicaid are obese, and more than two in 10 say they are being treated for depression (22%) and high blood pressure (24%). Medicaid recipients also struggle disproportionately with asthma and diabetes.

In addition to Medicaid recipients, those who primarily rely on Medicare for health insurance also have poor health in many respects, which is due to the generally older age of Medicare recipients. Specifically, those on Medicare are by far the most likely to have high blood pressure, high cholesterol, diabetes, and to have had a heart attack.

These data are based on more than 28,000 interviews conducted as part of the Gallup-Healthways Well-Being Index with adults aged 18 and older from Jan. 3-March 1, 2013.

Approximately 60 million low-income Americans get their health coverage from Medicaid or the Children’s Health Insurance Program (CHIP). Individual states determine the eligibility standards for Medicaid, but enrollees must meet the minimum poverty threshold standards that the federal government sets. The majority of Medicaid recipients in Gallup’s data report annual household incomes of less than $36,000. The young — those aged 18 to 34 — and females are much more likely to be on Medicaid.

Due to the nature of what allows an individual to receive Medicaid — they must be low income or disabled — it is not particularly surprising that this group is in such relatively poor health. Gallup research has long-shown thelink between poverty and poor health.

Whatever the cause, the extent of the health problems this group of Medicaid recipients reports suggests that improvement in lifestyle choices and care of these individuals could be particularly effective, not only in improving their personal health, but in lowering government expenditures for the Medicaid program. In particular, obesity and chronic health problems like high blood pressure and depression are preventable — and a focus on preventing people from developing these illnesses could positively impact their lives and reduce the amount of time and money spent to treat these conditions every year.

During the Jan. 3-March 1, 2013, timeframe, Gallup estimates that 4.5% of Americans aged 18 and older have Medicaid as their primary source of health insurance, while 18.0% mainly rely on Medicare, 3.6% on a military or veteran plan, and 44.5% on an employer plan. Another 11.0% say they have some other source of health insurance, and 17.0% have no insurance at all. Gallup’s estimates of the percentage of the adult population on Medicaid are lower than what government surveys find, in part due to question wording. Gallup’s estimates may also differ because it only asks respondents for their primary type of health insurance.

With the Medicaid population set to grow due to the expansion of the program under the Affordable Care Act, keeping this group of people as healthy as possible is more important than ever. Federal Medicaid spending was $251 billion in 2012 and is projected to be $265 billion in 2013.

Smoking Worst Health Habit of Those on Medicaid

Thirty-six percent of adults whose primary health insurance source is Medicaid say they smoke — making them 21 percentage points more likely to report the habit than those with employer-based insurance, and 17 points more likely than the overall adult average. Smoking appears to be the main health habit that this group struggles with disproportionately — they are about as likely as others to exercise frequently and eat healthily.

Access to Basic Health Necessities an Issue for Medicaid Recipients

Since Medicaid is a program for low-income Americans, it makes sense that this group trails others in terms of certain health necessities. Even though Medicaid provides coverage for and access to healthcare, it doesn’t assist with everything. For example, 26% of Medicaid recipients report that there were times in the last year when they didn’t have enough money to pay for the healthcare or medicine they needed. Medicaid recipients are also more likely to say they can’t easily find a place to get the medicine they need or a safe spot to exercise.

Bottom Line

Adults on Medicaid — by definition, those with lower incomes — are in relatively much poorer health than are those who get their healthcare from other sources, reflecting the overall-population finding that poor health is inversely correlated with income.

Still, Medicaid recipients’ disproportionately higher levels of chronic disease and of obesity are putting a strain on the system set up to support these individuals. An analysis by the Kaiser Family Foundation of 2009 Medical Expenditure Panel Survey data shows that “health spending for nonelderly adult Medicaid enrollees with chronic illness ranged from $8,099 per capita among those with respiratory disease to $13,490 per capita among those with diabetes.” In fact, the vast majority of Medicaid resources are spent on people who have chronic conditions.

As many Americans who are now uninsured — and also may be in relatively poorer health — become eligible for Medicaid due to the expansion of the program, it is likely that chronic conditions will become an even greater cost burden for this program. Some chronic health problems, though, like obesity and high blood pressure are preventable. Stopping them before they form — especially among the vulnerable low-income population — would help to significantly bring down Medicaid costs.

Additionally, as this population struggles to afford healthcare and medicine even with Medicaid health insurance, helping the group prevent costly health problems that can last a lifetime will position them better financially.

About the Gallup-Healthways Well-Being Index

The Gallup-Healthways Well-Being Index tracks wellbeing in the U.S. and provides best-in-class solutions for a healthier world. To learn more, please visit well-beingindex.com.

Click here to go to the Gallup article.

From the Heartland Institute

By Merrill Matthews, Ph.D

Democrats are desperately hoping the states will accept the Medicaid expansion being foisted on them by President Obama’s health care law, but they may be disappointed.

The primary reason for their concern is blatantly self-serving: ObamaCare’s success, like its RomneyCare prequel in Massachusetts, will be judged solely by how many uninsured people get coverage. The pretense of increasing quality and lowering costs was abandoned months ago; now it’s all about reducing the uninsured.

If states refuse the Medicaid expansion, which the U.S. Supreme Court has ruled they can do, the whole idea of universal coverage goes out the window. And ObamaCare will be judged a failure.

Currently, nine states have rejected the Medicaid expansion and six are leaning against it; 13 have said yes and four are leaning toward it. For states that are still undecided, here are several reasons they should reject the expansion.

1. Medicaid Is Bad Coverage

Medicaid is the worst health insurance coverage in the country, and yet ObamaCare did nothing to fix its many problems. Take access to physicians. The Texas Medical Association published a survey showing the number of Texas doctors willing to accept new Medicaid patients declined from 42 percent in 2010 to 31 percent in 2012, in large part because Medicaid pays doctors so little. For various reasons, Medicaid beneficiaries often go to the emergency room instead of a family doctor. In addition, Medicaid drug formularies limit the poor’s access to many beneficial drugs.

The problem highlights a serious misunderstanding among Democrats pushing the legislation: Access to health insurance is not the same as access to health care. ObamaCare goes to great strides, and even greater expense, to ensure people have coverage. That does not mean they will be able to get care.

Although Medicaid is better than having no insurance, expansion only exacerbates Medicaid’s many problems. Coverage for the poor should not be synonymous with poor coverage.

2. The Exploding Medicaid Population

Medicaid currently covers more than 70 million Americans, and ObamaCare increases that number by an estimated 17 million almost immediately. In addition, those designated as disabled are eligible for Medicaid, and that population has grown at unprecedented levels since Obama became president, from 7.5 million to 8.8 million.

3. The Woodwork and Crowd-Out Effects

Those Medicaid growth projections are likely low, as eligible people “come out of the woodwork” to join the program. For example, an estimated 25 percent of the uninsured are eligible for Medicaid but not enrolled.

More importantly, employers with a large number of low-income workers who offered some type of basic coverage may drop it or shift some employees to part-time, making them eligible under Medicaid’s new eligibility standards. That’s known as the “crowd-out effect.”

4. The Cost to State Budgets

Medicaid spending has been growing by about 8 percent a year, compared to economic growth of 1 percent to 2 percent. ObamaCare puts Medicaid on growth hormones: Total Medicaid spending (state and federal) is projected to grow from about $400 billion to about $900 billion by 2020.

At 23.5 percent, Medicaid has become most states’ biggest budget item, surpassing K-12 education. We are already at the point where other state priorities are suffering because of money being sucked up by Medicaid, and that problem will only get worse.

Expansion advocates claim the federal government will absorb most of the cost of the newly eligible Medicaid enrollees—100 percent for a few years, dropping to 90 percent by 2020. That’s much larger than the average 57 percent share the federal government now pays. What a deal!

Expanding Medicaid will still cost states billions of dollars, even at the reduced state share. And taxpayers are still paying for the coverage, of course; the taxes—actually, borrowed money—are just coming from the feds rather than the state.

5. Federal Controls

Although a bipartisan coalition of governors has asked Washington for more flexibility over their Medicaid program, ObamaCare doubles down on federal control. If states thought federal mandates and restrictions were suffocating under traditional Medicaid, they will be gasping for air under the expansion.

6. Rampant Fraud

Medicaid fraud is rampant and will only get bigger under expansion. No one knows for sure how big the Medicaid fraud problem is, but estimates put it in the range of $60 billion a year. For example, Texas spent $1.4 billion on Medicaid pediatric orthodontics—more than every other state combined!

States have been rapidly shifting their Medicaid populations to private sector managed care companies, which helps reduce costs and fraud. But the government has yet to figure out how to cut the waste, fraud, and abuse.

7. Loss of State Sovereignty

Medicaid is supposed to be a federal-state program. But the Medicaid expansion is one more effort by the federal government to micromanage the states and what they do. That effort is fundamentally breaking down our federalist system, a system in which the federal government has its sphere of authority, as do the sates—and individuals, for that matter.

Democrats claim Republicans should work with them to implement the Medicaid expansion. But the time for “working together” was when the legislation was crafted, and Democrats rejected that option. Considering all the problems that will come with Medicaid expansion, states would be wise to reject it now.