Daschle And State-by-State Healthcare Mistakes


Tom Daschle appears before the Senate this week for confirmation as Secretary of Health and Human Services. While Daschle knows his stuff on health care (see his book, Critical: What We Can Do About the Health-Care Crisis), the discussion is likely to be sidetracked by those who champion a reliance on insurance companies, or on piecemeal reform starting with children. Or, as I’ll discuss here, on a wrong-headed impulse to depend on the states to create new health care models.

Justice Louis Brandeis famously said, “It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”

Brandeis’ elegant language has been distilled to the phrase, “laboratories of democracy,” and used as if that’s a good thing. However, the converse also holds: bad ideas can be legislated at the state level and spread nationwide. One idea that continues to threaten to boil over the boundaries of a single state is “universal health insurance” achieved one state at a time. Oregon, Tennessee, California, and most famously Massachusetts have all experimented with versions, and other states have tried variations, particularly with children.

I’ll get to the more general notion of why I think states can’t go it alone. But for now, I’ll give a quick rundown on how states have tried and failed.

Critical Mass: Despite recent claims of a 97-percent coverage rate, Commonwealth Care, the Massachusetts plan, is struggling. You remember the Massachusetts plan: Mitt Romney was for it as governor before he was against it as a presidential candidate.

The plan is a patchwork of good intentions, political and practical exceptions, and as-yet deferred but heavy-handed enforcement. There’s an appeals system, waivers, and “creditability” (this has to do with the comprehensiveness of the policy and the out-of-network charges).

The crux of the Massachusetts law is a model of administrative clarity. The goal of insuring the uninsured was to be achieved in a couple of ways. One was that if health insurance was “offered by” an employer, the employee had to take it.

The problem is that “offered by” the employer isn’t a clean standard. Employers might have an insurance plan that’s technically available to employees, but it might be too expensive for them, or for their families. To square this circle, Massachusetts subsidized employment-based coverage if it cost more than a certain percent of the person’s income, and raised the eligibility limits for public insurance. Those without employers were required to buy private insurance, and insurers were regulated to make the policies “affordable.”

And then there are the penalties: “To enforce the mandate, [Massachusetts will] establish state income tax penalties for adults who do not purchase affordable health insurance….”

These stipulations raise obvious questions. What is “affordable”? Will residents be penalized for buying a policy too expensive for their family budget? Will insurance companies be punished for selling them such policies (do I hear the words “sub-prime mortgage”?). Will premium arrearages be counted as medical debt in bankruptcy court?

Alan Sager and Deborah Socolar, directors of the Health Reform Program at the Boston University School of Public Health, damned the Massachusetts legislation with faint praise in the Boston Globe last July: “the best law that could be passed.”

Calling it “a blessing to 350,000 newly insured people,” they pointed out that a similar number remained uninsured, and that the law often “can’t work” largely for reasons of cost. The mandates, they said, required huge subsidies, boosted payments to providers without controls, and redistributed funds committed to the most vulnerable.

Not surprisingly, by summer 2008, the lousy economy had begun to take its toll. To shore up the “coverage” rate, Massachusetts has reduced funding to safety-net hospitals, and has even cut millions of dollars from subsidized immunization programs. Patients wait six months for a physical.

With no plan for reducing medical costs, the state is effectively obligated to bankrupt itself.

The Oregon Lucky Number:

Oregon in March – for the first time in more than three years – will begin accepting new beneficiaries in its Oregon Health Plan [...] The state will use a lottery system to enroll 2,000 eligible applicants per month for 11 months. Kaisernetwork.org, Jan. 10, 2008

The Oregon plan had lost two-thirds of its participants since freezing enrollment in 2004 and a lottery was deemed to be the fairest way to apportion openings.

Government lotteries have been used for everything from real estate in tax foreclosure to placement in magnet schools or, showing my age, the chance to serve in Vietnam.

Still, why should anyone have to depend on a lucky number to be treated for diabetes or cancer without going broke? If the plan is funded for 32,000 participants out of a total of 100,000 eligible residents, why didn’t they keep topping up as the numbers diminished? Or was there a theoretical break-even point somewhere?

California Pipe Dream: In early 2007, Governor Arnold Schwarzenegger announced a $14 billion program that supposedly mirrored the Massachusetts plan. The plan would have extended Medi-Cal, the state's Medicaid program, to adults earning up to twice the federal poverty line, and to children, regardless of immigration status, who lived in homes with family incomes up to 300 percent above – about $60,000 a year for a family of four.

One controversial element called for employers without health plans to contribute to a fund to help cover the working uninsured. Doctors were to pay two percent and hospitals four percent of their revenues to help cover higher reimbursements for those who treat patients enrolled in Medi-Cal.

The ambitious program died in committee a year later, with legislators from both parties agreeing that it was unaffordable.

Florida No Frills: A 2008 Florida package would allow insurers to offer "no-frills coverage to the state's 3.8 million uninsured" residents. Residents ages 19 to 64 could purchase limited health coverage for as little as $150 per month; the policies would cover preventive care and office visits, but not care from specialists or long-term hospitalizations.

“No frills” works better in airline travel than in health care. You can do without hot meals and pay extra for a headset or a Bloody Mary, but what Floridians will ultimately get for their $1800 a year and up are office visits and preventive care. It would probably be cheaper served à la carte and paid for in cash.

Hawaii’s Keiki Care In October, 2008, Hawaii dissolved the only state universal child health care program in the nation after only seven months. Dr. Kenny Fink, the administrator at the Department of Human Services, told a reporter, "People who were already able to afford health care began to stop paying for it so they could get it for free. I don't believe that was the intent of the program."

I should say not, but this disconnect between the intent of the program and its result makes perfect sense. Consumer behavior is supposed to be based on rational choices, and those parents who switched seem pretty rational. Hawaii’s solution seems simple and elegant, until you apply some basic laws of economics and behavior. Aloha, Keiki Care.

Why States Can’t Do It Alone

Why haven’t any of these state “universal health care” plans succeeded? Probably for the same reason that states can’t be self-sufficient in fossil fuels, or in banking. Most don’t produce their own fuels, and those that do can’t require their use within the state. They don’t print their own currencies. They have to compete with the rest of the world, public sector and private, for energy and capital.

These are not minor issues with localized consequences. The decision-making alone requires resources that might not be available at the state level. We need national bodies to determine standards, to evaluate technology, and – remembering that Medicaid, Medicare, the VA, and the government employee system amount to around half of health care spending – to decide on the appropriate use of federal dollars.

A final thought: Each additional set of rules, level of supervision, and geographic boundary may make sense initially. But when the lines drawn become indelible, and the bureaucracies created to enforce them calcify, we move further from the goal of providing health care. Jobs, and their budgets, become ends in themselves. We have to return to our original purpose and ask, “How can we get there?” One thing you can be sure of: it won’t be one state at a time. When it comes to health care, we need more unum and less e pluribus.

Georganne Chapin is President and CEO of Hudson Health Plan, a not-for-profit Medicaid managed care organization, and the Hudson Center for Health Equity & Quality, an independent not-for-profit that promotes universal access and quality in health care through streamlining. Both organizations are based in Tarrytown, New York.

Tom Daschle photo by: aaronmentele

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health care insurance and prescription drugs

I graduated from the University of New Hampshire in 1992 with a BA Degree in Political Science and a minor in Economics.

I ran for United States Senate in 2002.

The federal government should use the Bayh-Dole Act to try to lower the prices of drugs based on federal government research dollars by licensing the patents of the drugs to other companies when the prices of the drugs are high. The more companies making the same drugs the lower the prices of the drugs may be.

You may read about the Bayh-Dole Act at http://www.cptech.org/ip/health/bd/

"Why Don't We Enforce Existing Drug Price Controls? The Unrecognized and Unenforced Reasonable Pricing Requirements Imposed upon Patents Derived in Whole or in Part from Federally Funded Research" is located at http://www.cptech.org/ip/health/bd/arnodavis012001.pdf

Individuals should be allowed to buy into Medicare or a health insurance plan similar to what members of Congress have. Monthly premiums could be based on monthly incomes.

Our country SHOULD NOT just have national health insurance. If we have just national health insurance, a lot more people may have experiences similar to what poor children experience going to lousy k-12 public schools in high crime areas. People want competition in restaurants, gas stations, movie theatres, and other things. People should have competition in health insurance and k-12 education. People should be allowed to use public money to send children to private k-12 schools via vouchers. If we have just national health insurance in the future, I expect quality to decline and more delays. What happens when the federal government has to deal with many different national disasters, Wars, and many other things? What happens when the federal government has done a lousy job saving money? What happens when the federal government decides to use premiums for things other than health care? For profit health insurance companies and non profit health insurance companies are necessary because the federal government is often very, very stupid. Congress should have learned from the savings and loans crisis and regulated properly. Congress should have required down payments on homes and fixed rate mortgages. Allowing mortgage backed securities to be sold based on no money down mortgages was nuts.

Individuals and businesses should be allowed to buy for profit health insurance plans and non profit health insurance plans sold in other States. The larger the group participating in a health insurance plan the better the plan may be and the lower the premiums may be.

State governments should be allowed to join with other State governments and have their own individual health insurance plans and group health insurance plans that could be sold to individuals and businesses. Some plans could be regional State government health insurance plans. There could be a plan that people who live in California, Florida, and Massachusetts could participate in. There could be a plan that people who live in South Carolina, Texas, and Oregon could participate in. There could be a plan that people who live in Florida, New Hampshire, and Texas could participate in. The more competition the better the State government health insurance plans may be. State governments could offer multiple State government health insurance plans to their residents. If Congress approves of this, I do not think Article 1, Section 10 of the Constitution applies. An Amendment to the United States Constitution may be necessary.

Article 1, Section 10 of the United States Constitution

"No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make anything but gold and silver Coin a Tender in Payments of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."

People who have original Medicare should be allowed to obtain prescription drugs from original Medicare and not have to deal with Medicare Part D plans if they do not want to.

I recommend people check out Medicare Rights Center at http://www.medicarerights.org

Businesses should not be required to offer health insurance to their employees. Businesses should not be required to pay any part of the health insurance premiums of their employees.

Individuals SHOULD NOT be required to have health insurance if they are at least 18 years old.

My website is http://www.myspace.com/kennethstremsky


Ken Stremsky