Hospital Lobby's Very Good Deal

The hospital lobby is out in force urging states to expand their Medicaid programs. Their faulty claims are spurring Republicans governors to embrace the giant expansion of the broken, costly Medicaid program. This week, Governor Kasich of Ohio and Read more

Medicaid Provider Taxes: A "Charade"

Medicaid is dominating state budget battles this year. States must decide whether to expand their Medicaid programs to include all individuals making below 138% of the federal poverty level—approximately $30,000 for a family of four. To finance this costly expansion, proponents Read more

Hospital Lobby’s Very Good Deal

The hospital lobby is out in force urging states to expand their Medicaid programs. Their faulty claims are spurring Republicans governors to embrace the giant expansion of the broken, costly Medicaid program. This week, Governor Kasich of Ohio and Governor Snyder of Michigan became the fifth and sixth Republican governors to announce their desires to further embrace consolidated federal health care through the expansion. But why would hospitals who are focused on delivering high-quality health care to their patients embrace such a bad idea? The answer: Protecting their bottom-line.

The controversy revolves around a complicated provision of federal health care law known as disproportionate share (DSH). The federal government requires hospitals to treat all emergent health care conditions regardless of the patient’s ability to pay. Congress realized this mandate imposed costs on hospitals and decided to reimburse hospitals that treat a large share of uncompensated care cases. These hospitals tend to be in very rural or very urban areas of the country where more individuals are uninsured.

These DSH payments are sent to hospitals through the normal Medicaid payment process; the hospitals receive a higher reimbursement than their counterparts. In 2012, Medicaid DSH payments totaled $11.3 billion.

Under the President’s health care law, Medicaid would be expanded to include all individuals under 138% of the federal poverty level, dramatically reducing the incidence of uncompensated care. So, the hospitals didn’t object during the health care law’s debate when Congress included DSH cuts that totaled $14 billion from 2014 to 2020.

After the Supreme Court’s June 2012 ruling, the situation changed because the Court held that states could not be forced to expand Medicaid—the expansion will be voluntary.

Hospitals are scrambling. Without the Medicaid expansion and with cuts to DSH payments, hospitals will have less money to treat the uncompensated care cases—or so they say. In most states, DSH payments represent less than 3% of all Medicaid expenditures.

Now hospital groups are lobbying states hard to convince them to expand Medicaid while ignoring study after study that shows how Medicaid fails to deliver on its promises. Health care outcomes for Medicaid patients lag other types of insurance and more than 30% of doctors refuse to accept new Medicaid patients—ironically, putting even more strain on emergency rooms. Medicaid is also extremely expensive for states and the federal government to run and manage costing taxpayers hundreds of billions every year.

The hospitals are trying to lobby their way out of the bad deal they cut. In Arizona, they lobbied Governor Brewer to abuse the provider tax system to fund the Medicaid expansion. The hospitals agreed to be taxed 6% in exchange for access to billions of state and federal funding—a scheme akin to a veritable gold mine.

Too bad, the rest of us lose. The hospitals and their lobbyists untangled their bad deal by driving up costs for other patients and taxpayers. Sadly, Governor Brewer and the state are complicit in the farce. Brewer echoes the hospitals’ talking points by claiming that this deal will save state taxpayers million every year even though spending will go up dramatically.

Hospital groups in Georgia, Oklahoma and South Carolina are pursuing similar strategies trying to copy the “success” of their Arizonan counterparts.

These backroom deals are exactly why the American public distains the President’s health care law. Instead of giving in to insiders like the President did, governors and legislators should reject the crony calls from hospital groups trying to scheme taxpayers to pad their bottom lines.

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Medicaid Provider Taxes: A “Charade”

Medicaid is dominating state budget battles this year. States must decide whether to expand their Medicaid programs to include all individuals making below 138% of the federal poverty level—approximately $30,000 for a family of four. To finance this costly expansion, proponents are relying on gaming the Medicaid system through a highly technical provision known as “provider taxes.”

 

Medicaid is a joint state-federal program where the federal government pays between 50 percent and 73 percent of all expenses. Provider taxes manipulate this system by maximizing federal contributions while minimizing state contributions.

 

Here is how the scenario works: Imagine a state that receives a 50 percent match from the federal government and reimburses a hospital $100 for a procedure. The state would pay $50 and the federal government would pay $50. Now, the state increases the reimbursement to the hospital to $106 and inserts a provider tax on the hospital at 6% (the maximum tax rate allowed). The federal and state government are now paying $53 for the same procedure, but the state gets $6 in tax revenue. The state is in essence paying $47, the hospital receives the same $100 and federal taxpayers lost $3. It’s a scam and federal taxpayers are the ones getting hurt. Now imagine this being played out thousands of times a year in a state.

 

Sadly, abusing the system like this is completely legal. Forty-nine states and the District of Columbia (Alaska is the only exception) use these provider taxes to milk federal taxpayers out of billions of dollars every year.

 

Politicians across the political spectrum in Washington realize just how badly provider taxes manipulate the system. The President’s last two budgets included provisions that would have eliminated these taxes. In November, Senator Dick Durbin (D-IL) called provider taxes a “charade.” Senator Bob Corker (R-TN) previously introduced legislation to phase-out these harmful taxes.

 

As states grapple with whether to expand their Medicaid systems, proponents of expansion are pushing provider taxes as a “simple” way for states to finance the increased expenditures. This is the exact strategy adopted by Governor Jan Brewer in Arizona. Governor Brewer’s plan calls for a 6% tax on all hospitals in the state of Arizona. A similar idea is being pushed by providers in South Carolina to encourage Governor Haley to support expansion.

 

If the last month is any indication, Medicaid will continue to dominate states’ 2013 legislative sessions. Special-interest groups will devise schemes to game this legal, but disingenuous, system to bleed federal taxpayers for unlimited funds. Governors and legislators would be best to ignore these efforts.

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Welcome to ObamaCare Part XIV: Medicaid Admits Lower Payments Equals Less Care

By: Nicole Kaeding

Yesterday, the Center for Medicare and Medicaid Services (CMS) released a new regulation with a long, technical title “Payments for Services Furnished by Certain Primary Care Physicians.” But what is noteworthy about this regulation isn’t the title–it’s the contents. This regulation is an explicit endorsement of what Americans for Prosperityhas been saying for a long time: Lower Medicaid payments to providers means less care for Medicaid payments.

Medicaid is a joint federal-state health insurance program for low income individuals, the disabled and pregnant women. The program covers almost 50 million Americans.

Medicaid is a broken, costly system due to its unusual structure. The federal government splits the cost of Medicaid with each state through a matching formula. The federal government pays on average 57 cents of every dollar spent on Medicaid. In exchange, the federal government puts numerous restrictions on states on who must be covered and how the program must be run.

This complex, ineffective setup means that states have their hands tied in running the program. As a result, states are forced to slash payments to providers, doctors and hospitals, to control for the rapid growth in Medicaid.  Medicaid pays about 55% of what private insurance does; Medicare pays 75%. When payments to doctors are reduced, doctors decide not to accept Medicaid patients. A recent study in the journal Health Affairs estimates that 30% of doctors do not accept new Medicaid patients. In some states, the numbers is much higher—it’s 60% in New Jersey.

When fewer doctors accept Medicaid patients, health outcomes suffer. Individuals are unable to find doctors to treat conditions and maintain adequate care. Unfortunately, Medicaid patients are experiencing this firsthand. Health outcomes for Medicaid patients are worse than those of Medicare and privately-insured patients. In some studies, health outcomes for patients with no insurance are better than those with Medicaid.

And sadly, the President’s health care law will make this situation even worse. Medicaid is the largest vehicle for expanded care under the law. Eleven million more Americans will be covered by Medicaid.

So now, CMS is trying to bribe doctors into complying in this unworkable framework. This new regulation issued yesterday provides primary-care physicians with higher payments for treating Medicaid patients. CMS hopes that by paying doctors more they won’t refuse to cover these 11 million people who are being promised insurance and will flood the market in 2014.

But what happens after 2014? The money runs out. Doctors will face the same reimbursement rates they currently receive, and the system will be strained millions more enrolled. Two years of higher payments won’t solve this problem.

The President and CMS continue down the path. Instead of reforming this broken, costly system, they hope that by spending more money they will solve the problem. Welcome to ObamaCare.

Check out previous posts in the “Welcome to ObamaCare” series by clicking below.

Part II-Obama Taxing Benefits Costs Companies Millions

Part III-CMS Finally Admits ObamaCare “Cost Savings” are Phony

Part IV-Can You Really “Keep Your Plan” If You Like It?

Part V-Businesses Feeling the Impact, Asking for Waivers

Part VI-Proposed Regulations Exchange a Good Idea for a Bad One

Part VII – Acting up in CLASS

Part VIII – Don’t Let a Simple Thing Like Funding Stop You

Part IX-Exchange Flexibility? What Flexibility?

Part X- You Know What We Meant

Part XI- HHS Spends Wildly

Part XII-One of the Largest Tax Increases in History

Part XIII-Essential Health Benefits, Another Costly Mandate

 

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Medicaid: To Expand or Not to Expand

With last Thursday’s ruling on the constitutionality of the President’s health care law, the Court delivered a hidden victory to supporters of limited government and principled federalism. For the first time in modern American history, the Court ruled that there is a limit to Congress’s power in compelling state action. Congress’s attempt to vastly expand Medicaid, and financially punish states for not complying, was ruled a coercive use of congressional authority. Now States must decide whether to implement this failed expansion.

Medicaid is a jointly run state-federal program providing insurance to three main groups: low-income individuals, the disabled and pregnant women. The federal government picks up the bulk of the costs with its share ranging from 50 to 73 cents on the dollar.

Under the President’s health care law, Medicaid eligibility would vastly expand to all individuals below 133% of the federal poverty level—approximately $30,000 for a family of four.  An estimated 17 million people will join Medicaid starting in 2014. In order to encourage states to participate in this expansion, the federal government will pick up 100% of all expenses for the first three years, with the rate falling to 90% in 2020. Before the Court’s decision, if a state refused to comply with the expansion, that state lost all of its Medicaid funding, including for the groups previously covered. The Supreme Court ruled that punishment was so severe that it essentially left the States with no meaningful choice on whether to comply, and was thus coercive.

What should a state do? The answer is quite simple: States should refuse to expand their Medicaid population. 

First, a move to expand the Medicaid population is a move to support the President’s law.  Even though the law is constitutional, that does not make it good policy.  States should join together and force the federal government to reform.  States all ready hate the current Medicaid system due to the numerous regulations and red-tape from Washington, D.C. States function as de-facto administrators of the federal government’s failed health care policies.  Just last year, legislators in Washington State and Texas, two states on opposite ends of the political spectrum, moved to free themselves from Washington, D.C.’s stranglehold. States have a choice and should exercise it.  As Chief Justice Roberts wrote in one portion of the decision: “The States are separate and independent sovereignsSometimes they have to act like it.”

Second, states can’t afford the Medicaid expansion.  Even though the federal government will pick up costs for the first several years, states will be stuck with an ever increasing share of the cost.  From 2014 to 2019, conservative estimates put the states’ cost of expansion at $21 billion.  States like Texas will need to pay more than $2.6 billion as almost 1.8 million individuals are added to its Medicaid rolls. It’s tempting to take the federal money that’s lying in front of you, but it’s simply too good to be true. The President actually hinted earlier this year that the federal government gravy train on Medicaid will be ending shortly. Expanding Medicaid will lead to more government spending and tax increases.

Finally, states must remember that Medicaid is a broken health care system.  Its provider payments are all ready too low causing poor health outcomes.  A recent study found that uninsured individuals have better health outcomes than Medicaid recipients.  In fact, more than 28% of doctors surveyed refuse to accept new Medicaid patients. Why would states want to force individuals into a failed health care system?

Even after only a few days, states thankfully are realizing how bad of a deal this Medicaid expansion is.  Both Governors Rick Scott of Florida and Nikki Haley of South Carolina confirm their states will not participate in this unworkable structure.

The Supreme Court gave States a say for the first time. It is up to them to decide whether or not they want to expand their Medicaid program.  States should unite together and tell the federal government no to a broken and costly system.

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Medicaid Infographic: Broken, Costly and Expanding

 

The Supreme Court ruled that the President’s health care law unconstitutionally tried to force states to expand their Medicaid programs. Each state is now faced with a choice, will they expand a broken health insurance scheme that is crippling states budgets, delivering substandard care and driving doctors away from accepting new patients?

 

Check out the infographic below for the startling numbers:

 

 

Medicaid Infographic

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Conservatives in Congress Unite Against Exchanges

In the wake the Supreme Court’s decision to uphold most of the President’s takeover of nation’s health care system, a group of 73 senators and representatives have signed onto a letter urging governors not to implement the law’s health insurance exchanges. 

These exchanges are the central way that the federal government will exact control over the state health insurance markets.  And although federal HHS is trying desperately to have the exchanges viewed as providing flexibility, state legislators and governors across the country are rebelling at the prospects of being nothing more than an administrative arm of the federal government.  AFP has been an active and vocal opponent of the exchanges.

Senators on the letter include:

DeMint, Lee, Johnson (WI), Coburn, Graham, Vitter, Paul, Cornyn, Sessions, Rubio, Toomey and Shelby

While representatives include:

Bachmann, Jordan, Paul, Roe, Wilson, Duncan, Akin, Hensarling, Garrett, Mulvaney, Walsh, Walberg, Stearns, Ross, Gowdy, Emerson, Franks, Buchson, Rokita, Broun, Boustany, Huelskamp, Scalise, Amash, Olson, Canseco, Price, Blackburn,  King (IA), Adams, DesJarlais, Landry, Gingrey, Lankford, Miller (FL), Guthrie, Manzullo, Bono Mack, Ellmers, Pitts, Benishek, Calvert, McClintock, Jenkins, Gohmert, Flores, Bilbray, Ryan, Sensenbrenner, Buerkle, Denham, Lungren, Harris, West, Long, Westmoreland, Fleischmann, Aderholt, Poe, Labrador, Neugebauer

Here’s the text of the letter:

National Governors Association
Hall of States
444 N. Capitol St., Ste. 267
Washington D.C. 20001-1512

Dear Governors:

The Supreme Court has ruled significant parts of the Medicaid expansion of the President’s health care law unconstitutional as well as ruling that the individual mandate violated the Commerce Clause and will therefore be implemented as a punitive tax on the middle class. This presents us with a critical choice: Do we allow this reprehensible law to move forward or do we fully repeal it and start over with commonsense solutions? The American people have made it clear that they want us to throw this law out in its entirety.

As members of the U.S. Congress, we are dedicated to the full repeal of this government takeover of healthcare and we ask you to join us to oppose its implementation.

Most importantly, we encourage you to oppose any creation of a state health care exchange mandated under the President’s discredited health care law.

These expensive, complex, and intrusive exchanges impose a threat to the financial stability of our already-fragile state economies with no certainty of a limit to total enrollment numbers. Resisting the implementation of exchanges is good for hiring and investment. The law’s employer mandate assesses penalties – up to $3,000 per employee – only to businesses who don’t satisfy federally-approved health insurance standards and whose employees receive “premium assistance” through the exchanges. The clear language of the statute only permits federal premium assistance to citizens of states who create a state-based exchange. However, the IRS recently finalized a regulation that contradicts the law by allowing the federal government to provide premium assistance to citizens in those states that have not created exchanges. The IRS had no authority to finalize such a regulation. By refusing to create an exchange, you will assist us in Congress to repeal this violation which will help lower the costs of doing business in your state, relative to other states that keep these financially draining exchanges in place.

State-run exchanges are subject to all of the same coverage mandates and rules as the federally-run exchange. Clearing the hurdles of crafting an exchange that complies with the 600 plus pages of federal exchange regulations will only result in wasted state resources and higher premiums for your constituents.

Implementation of this law is not inevitable and considering more than half of the American people oppose the law, it is improbable. Join us in resisting a centralized government approach to health care reform and instead focus on solutions that make health care more affordable and accessible for every American. Let’s work to create a health care system of, for, and by the people, not government or special interests.

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Welcome to ObamaCare Part XI: HHS Spends Wildly

By: Nicole Kaeding

The Supreme Court is expected to rule on Thursday morning on the constitutionality of the President’s health care law. While advocates of health care freedom are focused on the Court, the Department of Health and Human Services (HHS) is busy rushing federal grants out the door while no one is watching. Instead of waiting on the Supreme Court, HHS is wasting your federal tax dollars—hoping to buy off opponents and quell the public’s hostility to this unpopular health care takeover.

According to an article published in Politico on Saturday, HHS has issued more than $2.7 billion in grants since oral arguments concluded at the Court in March. This is almost three times greater than the amount spent in the three months prior to arguments. The grants help fund a variety of programs imbedded in the health care law, including state and federal health care exchanges, health care co-ops and health care innovation programs.

These programs are a waste of taxpayer dollars. For instance, in a recent piece appearing in the Wall Street Journal, Dr. Steven Greer profiled his time evaluating the effectiveness of health care “innovation” grants for HHS. One example that he cites: George Washington University received a $1.9 million grant to implement changes that would reduce costs for its patients by $1.7 million—an investment that returned a net negative. HHS has given out over $772 million in similar “innovation” grants since March.

HHS has also distributed more than $306 million in grants to health care co-ops since March.  These health care co-ops are government funded and guaranteed nonprofit insurance companies, which HHS hopes will be more consumer-focused and provide better health outcomes. But this ignores that most insurance companies are already nonprofit and can only make enough revenues to cover expenses when they provide quality service to their customers.  In Montana, for instance, HHS funded a new co-op that would compete alongside three large insurers, two of which are already nonprofits. Here HHS is simply propping up companies it likes best, distorting market competition.

Americans for Prosperity profiled HHS’ out-of-control spending in February as well. HHS Secretary Kathleen Sebelius acknowledged that HHS was over budget on a federal health care exchange and would work around Congressional opposition to obtain more funds.

Instead of waiting for the Supreme Court to rule on ObamaCare and being good stewards of Americans’ hard-earned tax dollars, HHS is shoveling money out the door in hopes of entrenching a massive federal health care bureaucracy before the Court—or public opposition—can tear it down.

Welcome to ObamaCare.

Check out previous posts in the “Welcome to ObamaCare” series by clicking below:

 

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States Should Flatly Refuse to Create ObamaCare Exchanges

Michael Cannon from Cato nails it again on why states should not implement exchanges from the President’s new health care law.

 

Posted from Cato website.

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Join Americans for Prosperity for a Health Care Freedom Event

Join AFP for a great event as we work to stop ObamaCare exchanges in Missouri.

When:

  • Saturday, June 2nd 2012
  • 12:30 PM

 
Where:

  • Springfield, MO University Plaza Hotel
  • 333 S John Q. Hammons Parkway, Springfield, Missouri 65806


View Larger Map

 
Special Guests:

  • Lt Governor Peter Kinder
  • Representative Eric Burlison
  • National Health Care Expert Michael Cannon – Cato Institute
  • David Limbaugh – Conservative Columnist and Author
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It is time for the Missouri House to Block Exchanges

With only thirty-days left on the Missouri Legislature’s calendar for 2012, Missourians need to keep up the pressure on legislators to prevent Missouri from implementing the President’s health care exchanges.  In February, the Senate passed SB 464 which would require lawmakers or voters to approve any attempts by Missouri to create a health care exchange.  Now, it is time to focus on the House to pass this important taxpayer protection. 

Please help AFP-MO protect taxpayers and prevent Missouri from implementing the President’s health care exchanges.

Under some circumstances, conservatives could support health care exchanges, but as Americans for Prosperity-Missouri has outlined numerous places like here and here the President’s exchanges have disastrous results.  These exchanges heap thousands of pages of rules, regulations and mandates on Missouri’s insurance market hurting competition and increasing insurance premiums for Missouri families.  Even Jonathan Gruber, the chief architect of ObamaCare, acknowledged this fact.  In a study for the state of Wisconsin, Gruber found premiums will increase by 30% once these so-called reforms are in effect.

Additionally, this exchange is nothing more than a hidden tax increase on Missouri residents and businesses.  Starting in 2015, the exchange must be self-funding though no one knows the cost to operate the exchange. The cost is expected to be financed through user fees and taxes on insurance premiums further hurting families in Missouri. More importantly, if Missouri decides to create a state-based exchange, a glitch in the original law will subject Missouri businesses to a new tax of up to $3,000 per employee enrolled through the exchange.  

The next thirty days are critical to this fight.

Please help AFP-MO protect taxpayers and prevent Missouri from implementing the President’s health care exchanges.

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