John R. Graham
Friday, August 29, 2008Medical Malpractice Update in Wisconsin, W. Virginia, & New YorkSubsidized Funds, Controlled By Politicians, Are No Substitute for Reform By John R. GrahamCategories: Maryland, New York, West Virginia, WisconsinThe Kaiser Daily Health Report gave us an update today on med-mal developments in three states. In West Virginia, the number of med-mal lawsuits increased by 34 percent over a three year period. It looks like a warning sign that something is unravelling since the Mountain State capped non-economic damages and imposed stricter rules of evidence in 2001. Nevertheless, a spokesman for the state medical society was not ready to panic, stating that WV is now "one of the better states in the country" for med-mal insurance. I hope he's not too sanguine: WV ranks 36 of the 50 states in the U.S. Index of Health Ownership, (a.k.a IHOP) 2nd edition, so there is plenty of room for more reform. If the last three years' experience really is a trend, this is no time for the medical society to be complacent. Even more disturbing news comes from New York and Wisconsin. In WI (#39 on medical tort in IHOP), a judge has blocked the transfer of $200 million from the Injured Patients and Families Compensation Fund to plug the state's deficit. In NY (#46 in IHOP), Gov. Paterson has signed a one-year moratorium on med-mal insurance rates, which were likely to go up by one third. Too bad price controls are no substitute for real med-mal reform - and neither are these compensation funds.. Although they shift the pain from doctors (so the state medical societies quiet down), they merely shift the pain to taxpayers, as the Wisconsin situation illustrates. We've seen it before in New York, and Maryland.
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Thursday, August 28, 2008The Promise of TelemedicineOpportunities are far too promising and complex for government to control By John R. GrahamThe St. Louis (that's the city Barack Obama he thought he was in a couple of days ago, before he figured out he was in Kansas City) Post-Dispatch ran a very positive article on the success of telemedicine in increasing quality and lowering health care costs. What impressed me was the scope of innovation and entrepreneurialism encompassed by the term, "telemedicine". "More than 200,000 Americans are using telehealth home-monitoring services..... There are another 200 dedicated telemedicine networks nationwide, involving close to 3,500 medical and health care institutions," according to the article. With that pace of innovation, states need to ensure that telemedicine can operate freely across state lines, without undue regulation. Telemedicine licensing regulations are measurement no. 22 in the U.S. Index of Health Care Ownership, 2nd ed., in case you want to know where your state ranks.
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Wednesday, August 27, 2008Madness of Medi-Cal Dependency; Follies of Fiscal FederalismFederal court soaks California taxpayers for bankrupt program By John R. GrahamCategories: California, MedicaidCalifornia's politicians have run our state into a $17 billion deficit. For months, the governor and legislature have been wrangling over how they'll soak us to fill the hole. Although there's little hope that they'll shrink government spending in the long run, they had to stop the bleeding in the short term or they wouldn't be able to pay the bills. So, the legislature ok'd a temporary 10 percent cut to Medi-Cal (Medicaid) providers starting July 1. Needless to say, the providers are screaming bloody murder. So, they went to a federal judge, who ordered a stop to the rollback. (Today's San Francisco Chronicle features the saga.) By what right does a federal judge command the California Department of Health Care Services to spend state money against the will of the legislature? Well, we haven't repealed the long-standing constitutional mantra of "no taxation without representation," but we've put a dent in it by allowing Congress to tax us and transfer money to the states - strings attached - to operate Medicaid. Many self-styled health care "advocates" call for states to expand Medicaid without limit, arguing that it pulls down about $1.12 of federal money for every dollar the state pulls in. This addiction to federal dollars is the primary reason why states are unable to kick the habit of making more and more of their citizens dependent on government health care, as I've discussed before. Now the Congressional strings are strangling California taxpayers. According to Judge Snyder, federal Medicaid law requires states to keep spending once they've received federal dollars - no matter that the state is bankrupt. I haven't heard any apologies from the advocates of ever-expanding Medicaid for supporting this farcical fiscal federalism, which motivates a "race to the bottom" of the taxpayers' wallets. But I'm pretty disappointed that health care providers haven't diagnosed the disease: their dependence on government, which is as bad as Medi-Cal patients' is. And it's hurting them both.
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Tuesday, August 26, 2008Multilingual Mandate MadnessFinal Countdown to California Health Plans' Translation Mandate By John R. GrahamCategories: California, Insurance RegulationBy July 1, California health plans had to complete a key phase in their compliance with SB-853, which compels them to provide translation services in whatever languages its members demand. California is still in the United States, so I'll go out on a limb and guess that the majority of members prefer their communications in English. Of course, there are some folks who, despite being legal residents of the U.S., would prefer to communicate with health plans in other languages. That's fine, I suppose, but those folks are not willing to pay for the cost of translation themselves, so they got a law passed to mandate it, thereby shifting the costs to those of us who are happy to communicate in English. I've expressed my displeasure at this before. Well, according to a recent update, the health plans have met the July 1 deadline, by which date they had to submit their plans to the regulatory bureaucracy in Sacramento, in preparation for the January launch date. Thinking a little more about it, I've shifted my outrage somewhat. Why are people who don't want to speak English with their health plan forced to join one where the majority are happy to speak English? If I want to participate in church service in Gaelic, I'm free to do so. The answer, of course, is that the tax code makes us join the health plan that our employer chooses for us, not one that we choose for ourselves. If the tax code were reformed so that anyone could use pre-tax dollars to join a health plan of his or her choices, people who wanted to join a Serbo-Croat speaking health plan in California would be free to do so. (Isn't it amazing how any problem in health care can be turned into a case for a universal tax credit and free choice of health plans?)
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Tuesday, August 19, 2008Questions About a Blue's For-Profit Conversion in New JerseyIf the market is so competitive, why is the surplus so big? By John GrahamCategories: Insurance Regulation, New JerseyNew Jersey's biggest health plan, Horizon Blue Cross Blue Shield, has applied to the state to convert to for-profit status. As discussed by the Philadephia Inquirer, the state will likely require Horizon BCBS to disgorge its retained earnings into a charitable foundation that will fund expanded health care - as dictated by the state. Well, that's the bad news: more politically determined health care spending, as if we didn't have enough of that already! On the other hand, Horizon BCBS will have access to capital markets, which will allow it to grow faster. (One thing that I find remarkable is how advocates of government-monopoly health insurance claim that health plans' profits subtract from actual health care paid for and delivered. They conclude that taxpayer-funded health insurance would provide "universal" health care. In fact, the opposite is true: there is really no way that the massive current amount of health spending in the U.S. could be supported solely by taxation. The very high level of spending on actual health care requires the capital markets to finance it. The profits are the return to capital for supporting that spending.) I'm all in favor of the conversion, but I'm a little surprised by the CEO's comment: "You've got to have the right products and those products have to be priced competitively." Well, ok, but that doesn't quite jibe with the fact that Horizon BCBS has a whopping reserve of $2.5 billion, on revenue of $7.5 billion. How come no competitors, either non-profit or for-profit, have entered the market at lower premiums and chipped away at those huge retained earnings? Readers familiar with the U.S. Index of Health Ownership know the answer: New Jersey is not a competitive market for health insurance. Instead it is grossly overburdened with regulations. Instead of scrapping over the loot of Horizon BCBS's conversion, New Jersey's politicians should be looking at making health insurance more competitive.
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Monday, August 18, 2008Is There A "Cost Shift" from Cutting Medicaid?New Analysis Ignores The Real Problem of Government Dependency By John GrahamCategories: CaliforniaOne zombie that just will not die, no matter how many stakes are driven into it, is the argument that the health care "crisis" is driven by hordes of uninsured people who crowd the ERs for "uncompensated" care, shifting a so-called "hidden tax" onto people with health insurance. This is the fallacious argument that launched the out-of-control Massachusetts "reform". It also motivated Gov. Schwarzenegger to waste a year advocating "universal" health care, which in turn caused me to debunk the "hidden tax" in a study last January. Budget realities brought the governor back to earth. Rather than expanding government-run health care, he's got to pare it back, by tightening eligibility and payments for Medi-Cal (Medicaid). Unsurprisingly, those who expound the "hidden tax" are back on the warpath. Now, the fact that some folks will be ineligible for Medi-Cal, and providers will earn less money from them, will be responsible for a new "hidden tax" of $290 annually. According to a new report by the advocates of "universal" health care, this is the amount that hospitals will have to "shift" to privately insured patients to carry the costs of more uninsured. But don't panic: This estimated $290 cost shift will be added to an average total premium of $13,998. That's right: all that analysis for a meager 2 percent cost shift! Well, that's more than zero. However, the folks at Health Access California are trafficking this cost shift only because they want an actual tax hike to restore the break-neck growth of government dependency in health care - not necause they've figured out a way to control costs. It seems to me that they continue to learn the wrong lesson. If Blue Shield, Blue Cross, Health Net, Cigna, or Aetna went bankrupt, as our state basically is, would Health Access California argue that the taxpayer should bail them out? Surely not, so why should we bail out a state health care program that has proven, again and again, that it cannot serve the interests of either patients or providers?
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Friday, August 15, 2008U.S. Index of Health Ownership 2nd Edition Is HereAlabama up, Utah down, New York still in the basement: Where's your state? By John R. GrahamCategories: Alabama, Alaska, Arizona, Arkansas, California, Certificates of Need (CON), Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Hospitals, Idaho, Illinois, Indiana, Insurance Regulation, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Medicaid, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Retail Clinics, Rhode Island, SCHIP, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, WyomingPacific Research Instite has published the 2nd edition of the U.S. Index of Health Ownership, the only ranking of health care in the states that uses criteria of individual choice. Americans lack the basic freedom to make their own health care decisions. The Index measures the degree to which individuals, be they patients, health professionals, entrepreneurs, or taxpayers, "own" the health care in their states. The lack of health ownership is a real problem. Almost half of the country's health care spending is in the hands of the government, instead of patients themselves. The other half is governed by regulations inflicted upon doctors, health plans and patients. The Index uses 24 variables to quantify how state laws and regulations affect the liberty of citizens involved in state government health plans (primarily Medicaid), the private health-insurance market, and the provision of medical services. It also assesses the effect of medical tort on people's freedom to engage health services. Alabama, Montana, Nebraska, North Dakota, and New Hampshire finished in the top five, as the states that allow their citizens the highest degree of health ownership. Alabama leads the pack primarily because of a lightly regulated private insurance market, and good control of state government programs. Also, the state performs well on medical tort indicators. Alabama's regulatory environment for providers favors competition, and government health programs run more effectively than in most states. New York, Massachusetts, Rhode Island, Vermont, and North Carolina rounded out the bottom five, as the states in which the government has taken the most undue control of health care from its citizens. This is the second year that New York was in last place. The state suffers from government health-care programs that are out of control, a grossly overregulated private-insurance market, and almost completely uncompetitive provider markets. A full listing of all 50 states and their rankings is contained in the Index. The Index will give concerned citizens a good basis to demand reforms from their state politicians that will put American families in charge of American health care, instead of government and special interests.
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Wednesday, August 13, 2008The Real Cost of Mandated Infertility Treatment Is IncreasingAll women's employment prospects will suffer because of court ruling By John R. GrahamCategories: California, Insurance RegulationOne of the most expensive benefits mandated by some states is infertility treatment. I was pleased to be interviewed by Sue Shellenbarger of the Wall Street Journal for her article on the issue. Ms. Shellenbarger quotes me as noting that 13 states mandate treatment for in vitro fertilization. Not reported is the rest of my comment: that this is a very expensive mandate, because women can fail to become pregnant and repeat the treatment as often as they want. I discussed this in my recent analysis of state benefit mandates, From Heart Transplants to Hairpieces. Unfortunately, a federal judge has just upped the cost of these mandates, as reported by Ms. Shellenbarger. Finding that infertility treatment is protected by the Pregnancy Discrimination Act, the judge found that a plaintiff's boss laid her off because of her extended absences due to infertility treatments. So, even though she was not pregnant at the time (obviously), she's covered by the Pregnancy Discrimination Act! As I discussed in From Heart Transplants to Hairpieces, the costs of these supposedly "pro-woman" anti-discrimination laws are borne fully by women, as lower wages, whether they undergo in vitro fertilization or not. Look for women's wages to fall versus men's, for them to have more difficulty finding professional employment, and enter jobs with no health benefits at all, as a result of this judgment. Ms. Shellenbarger called the court a "friend" to women for this decision. With friends like that, who needs enemies?
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Tuesday, August 12, 2008Neo-Prohibitionism, Alcohol Taxes, and Central Planning in CaliforniaDo they really think a higher excise tax will stop a rapist? By John R. GrahamCategories: California, Nanny StateThe last time I had a critical look at the neo-prohibitionists, it was via a pamphlet opposing a tobacco tax hike in California. Now, the Marin Institute has completed a "landmark" study suggesting that we need to hike alcohol taxes in the Golden State. And landmark it certainly is: the Marin Institute adds up every traffic accident, every fall & tumble, every angry word, and every rape, that can be attributed to booze, throws in "pain and suffering" to boot (the trial lawyers will love this study), and concludes that current alcohol taxes just do not cover the social cost of alcohol. Jack them up! Well, I believe that no punishment is too great for the drunk driver who injures or kills someone. But does the Marin Institute really think that raising the excise tax by a quarter will stop a rapist? Apparently so. The Institute seems a little overconfident about how much a "reasonable" excise tax would effect drinking, claiming that another 25 cents per drink will cut consumption by 9 percent! Sounds a little optimistic to me. Absent from the study are the costs of more government intervention, through taxation or otherwise. For example: what about kids in Lake Tahoe driving over to Nevada to buy cheaper booze? What about bootleggers? (Maybe not for a quarter a beer, but this is surely only a start.) And most of all, if they're right that direct government costs (policing and such) are $8.3 billion a year in California , what taxes would they cut to give back to non-drinkers the higher taxes they're planning to take from drinkers: the sky-high state personal income tax? Other sales taxes? Property taxes? On tax cuts, which would make Californians more prosperous (and healthy), the Marin Institute is silent. On tax hikes and running your life, they've got the plan.
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Monday, August 11, 2008Unbalanced Billing in California Hospitals: the Sacramento Bee Weighs InEditorial not sure who's the Bad Guy - but understands The Problem By John R. GrahamCategories: California, Hospitals, Insurance RegulationThe Sacramento Bee, our fair capital's daily newspaper, has editorialized on the issue of "balance billing," whereby ER doctors and hospitals which are not in a patient's health plan's network, send high-priced (and unexpected) bills to patients. Interestingly, although the editorial leans against the health plans, it approves of the state's new regulation forbidding doctors and hospitals from balance billing. The Bee notes that there are already laws in place that require health plans to pay "usual and customary" charges when a provider is out of network. However, this is a patch, not a solution. If there is disagreement, how can the state decide what "usual and customary" charges are? No wonder hospital prices are in cloud-cuckoo land! Lest we forget, the new regulation specifically chooses sides in favor of the health plans, and against the providers. As I've written before, there is no perfect solution to this question. Nevertheless, I have proposed binding arbitration as a better way than the state picking sides.
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