Wednesday, April 2, 2008

Corruption & Waste in New Jersey's State Health Plans 

"Classic bureaucratic snafu": The good news is that the state even allowed an audit

By John R. Graham

Categories:  Medicaid, New Jersey, SCHIP

Back in September, President Bush held the line on Congressional Democrats' (and many Republicans') irresponsible plan to make more American kids dependent on government health care.  Congress proposed to expand SCHIP (state government health insurance program) grants into the middle class, which drew a rare response of relative fiscal responsibility from the White House.  I noted that the states which were most upset by the President's shoving them away from the trough were those that the most out of control Medicaid and other state government health care programs: New York and New Jersey (which rank at the bottom of the U.S. Index of Health Ownership).

I've scribbled about how necessary it is to restore some fiscal discipline to New York's state health programs, and now a new state audit shows how critical it is to do the same for its neighbor.  NJ FamilyCare, meant for the poor, has enrolled three beneficiaries earning over $700,000 annually!  Three people may be trivial, but get this: the state was also unable to recover $4.6 million from people who received benefits after they were no longer eligible, and the auditors discovered that $43.1 million was spent on beneficiaries whom the state did not know were eligible or not. That's over 8% of program spending!

The situation is so out of control that the NJ Division of Criminal Justice has subpoenaed records from a state Medicaid program that paid a contractor to refurbish and sanitize used medical equipment - but that contractor only inventoried new equipment!

I suppose the good news is that the state had even ordered an audit, and then allowed the auditor to publish the results.  Maybe the fact that the President pushed the New Jersey away from the federal spending trough forced the state's politicians to find money elsewhere?

I'm sure this won't shame them from their continuous bleating for more federal tax dollars, but as long as the President keeps a lid on the spending, I'm sure Garden State politicans and bureaucrats will keep finding health care dollars in places they'd never think to look - if they didn't have to.

• posted by John R. Graham
• 5:41 pm
• 0 comment

Wednesday, March 19, 2008

Massachusetts Plan in New Jersey? 

Proponents say it won't cost the state any new money

By Marc Kilmer

Categories:  Individual Mandates, Massachusetts, New Jersey

It seems that New Jersey legislators are considering following in the footsteps of Massachusetts and requring all residents to have health insurance. Of course, the plan's authors think they can design such a plan that won't cost the government any new money:

But at a time when New Jersey is reeling from financial problems, and the country appears headed toward a recession, the plan would avoid adding to the budget and would instead try to redistribute federal and state dollars in a more efficient way.

The article says that the plan's authors want to enroll more people in the state's Medicaid program, somehow cut the costs of that program, and then set up a "self-financed" program to provide low-cost insurance for people in the state. How realistic is that?

In going down this road it is clear that these legislators have not been paying attention to the failure of the Massachusetts plan as Michael Cannon and Michael Tanner of the Cato Institute continue to point out.

• posted by Marc Kilmer
• 12:39 pm
• 0 comment

Monday, November 26, 2007

Trouble Getting Health Insurance in New Jersey? A Paper Gets It Wrong 

Be Careful When Reading Out-of-State Stories

By John R. Graham

Categories:  California, Insurance Regulation, New Jersey

Imagine my surprise when I read, in the North Jersey Record's and Daily News's website that a 6'2," 190 lb man in good health had trouble finding affordable individual health insurance.  Apparently, this is because health insurers can "cherry-pick" (the media's term for underwriting, which they use to give negative spin to this fundamental insurance principle).

North Jersey is in New Jersey, so the newspaper obviously has it wrong.  NJ is one of the few states that outlaws underwriting, which results in outrageously expensive health insurance for everyone in the Garden State (as described in Conrad Meier's Destroying Insurance Markets: How Guaranteed Issue and Community Rating Destroyed the Individual Health Insurance Market in Eight States, published by The Heartland Institute in 2005).

How did the papers get it wrong?  Well, the story actually comes from the San Francisco Chronicle's Victoria Colliver.  It's a California story; and California does allow underwriting in the individual market.

Lesson learned: reporters and editors are generally hopelessly uninformed about state regulation of health insurance, but will not fact-check when they run an article about such regulation from another state.  In this case, the North Jersey Media Group has done a disservice to its readers, who will make important voting decisions based on a misunderstanding.  One of the main reasons New Jersey does so poorly in the U.S. Index of Health Ownership is its over-regulation of private health insurance.

OK, but what about this man in California?  6'2" and 190 lbs describes my girlish figure, and I figure I'd be insurable in my home-state's individual health insurance market.  What is the difference between me and Mr. Odell, the subject of the San Francisco story? Age: Mr. Odell is 56, and he suspects (undoubtedly correctly) that the first underwriting "cut" is age.

The problem is that he is no longer employed, but too young for Medicare, so he has fallen through a gap, a foot wide and a mile deep, that many baby-boomers are stepping into.  When employed, they were paying premiums for group health insurance that were too expensive, because when they were young they subsidised the premiums of older workers.  (Of course, most of them did not realize this, they thought their employers were paying the premiums, out of some treasure chest in the basement.)

In the 1990s, politicians tried to get in front of this issue with tweaks named COBRA, HIPAA, and similar state reforms that were supposed to allow people to move between insurance markets without this friction.

To put it mildly, these laws & regulations did not work.  Is there another way? Yes, in papers published by Health Affairs and the National Bureau of Economic Research, Professor Mark Pauly and colleagues describe a market for individual health insurance that is guaranteed renewable annually at an average rate (for the "block" in insurance lingo.)  We cannnot insure against aging, but we can insure against the variance of incidence of disease within any group at a given age.

What has to happen to make this a reality? First, tax reform that frees Americans' from our workplaces and encourages us to buy our own, individual, health insurance when we are young and healthy, which we keep for our whole lives.  (Internet search: "Giuliani health proposal".) This should not be difficult to understand: it's how we insure every other risk in our lives.

• posted by John R. Graham
• 11:56 am
• 0 comment

Wednesday, June 6, 2007

Index of Health Care Ownership is Out! Every State Ranked! 

Utah Top of the List, New York Bottom of the Barrel on 24 Measures

By John R. Graham

Categories:  Alabama, Delaware, Maine, Nebraska, New Jersey, New York, North Carolina, North Dakota, Utah, Vermont

PRI has released the Index of Health Ownership, which uses 24 variables to rank all the states according to their residents' freedom from undue government interference in health care.

Top 5: Utah, Nebraska, Delaware, North Dakota, Alabama

Bottom 5: New York, Vermont, New Jersey, North Carolina, Maine

I know SPN wants to collaborate in promoting this effort and I'll be in touch with John LaPlante on that.  Any SPN members who want more color or would like me to speak in their state please contact me.  This is something we intend to repeat periodically, hopefully annually.

Go forth and own your health care!

• posted by John R. Graham
• 12:22 pm
• 0 comment