John Stephen

February 12, 2014

As originally published in the New Hampshire Union Leader

The recently announced deal in the New Hampshire Senate of a “framework” to expand Medicaid is a bad deal for our state’s future. The fundamental problem is not just that the plan implements a key component of Obamacare here, but it continues to build on a profoundly flawed Medicaid program desperately in need of reform.

Medicaid, in its current form, is a bulky, inefficient program that hasn’t kept up with the times. It was created in 1964 and, like most government programs, simply hasn’t evolved as proficiently as other market-driven products. Other than Corvettes, pretty much everything we buy today is better and less expensive than the 1964 counterparts, but Medicaid’s basic identity hasn’t changed, and that’s a real problem.

For starters, Medicaid’s incentives are poorly aligned with the reality of the marketplace.

In 1964, the program was put in place to provide some compensation to doctors and hospitals for those who couldn’t pay their bills. However, these same providers quickly viewed this new government program as a new payer. While states assumed that providers would be happy to get something for what had been charity care, the low reimbursement rates meant that many doctors would take Medicaid patients and hospitals would rapidly shuttle out Medicaid patients to make room for higher-paying customers.

That’s why no one should be surprised about the quality of Medicaid care. A study of Medicaid expansion in Oregon shows that Medicaid patients fare no better on health outcomes than the uninsured. Even more damning is a University of Virginia study that shows that Medicaid patients are 13 percent more likely to suffer serious negative outcomes as a result of surgery than the uninsured and 97 percent more likely than those on private insurance.

What keeps many from using the emergency room for routine medical issues is the high copayments that private insurance charges. Under Medicaid, though, states are not allowed to charge more than minuscule copays, which explains why a recent Harvard-MIT study showed that Medicaid patients increase their emergency room use by 40 percent over the uninsured.

The free market knows that incentives matter, and Medicaid shows us glaring examples of that, and why it should not be a model any state should follow.

There is a better way to care for the truly poor of the state than Medicaid expansion.

In 2008, I worked with Rhode Island on what remains the most innovative Medicaid waiver that the federal government has ever granted. The waiver did not expand Medicaid, but allowed the state unprecedented flexibility to manage its program — for example, spending more on community care rather than expensive nursing home care. As a result, Rhode Island has since reduced Medicaid spending by more than $2 billion.

Instead of trying to force the state to implement an outdated, expensive expansion of Medicaid that would force tens of thousands of New Hampshire residents on a program that may lower their quality of care, the state should use this opportunity to begin negotiations on a Medicaid waiver that would transform a broken program to one that could evolve with a changing health care landscape. Not only would this save considerable taxpayer money, but it would deliver higher quality outcomes for those involved.

The start of this effort is to send a clear and unequivocal announcement to the federal government that New Hampshire will not participate in Medicaid expansion under Obamacare. That is the only way that state leaders can gain leverage with a federal government that is focused on implementing President Obama’s signature policy initiative. Taking federal Obamacare funds means that we will need to continue with a broken, ineffective Medicaid program.

Then, the state must make clear that the only way in which New Hampshire will work with the federal government to offer coverage to the able-bodied adults that are covered under Obamacare is if the Obama administration is willing to give us the flexibility to find savings in Medicaid and use those funds to provide coverage for the 22,000 residents who could gain coverage in the process. Without this pressure, there is no way the federal government will back off its plans to bring a Washington solution to the Granite State.

The solution to our health care problems is not in more government, it is in bringing real innovation to a 1960s era program. It’s worked elsewhere, it can work here.

John Stephen of Manchester is the former state commissioner of health and human services and 2010 Republican nominee for governor. He is the managing partner of the Stephen Group, a health care and government solutions firm.

Charlie Arlinghaus

February 19, 2014

As originally published in the New Hampshire Union Leader

The Senate Medicaid Expansion Plan was released this week so we could all see the details and find out that the spin and the reality of the program are not quite the same.

Let’s start by dismissing the assertion that this program is somehow a unique New Hampshire approach. That just isn’t so. Iowa passed this same Medicaid expansion plan last May and a few states have had similar ideas in the interim. The New Hampshire version differs in slight ways, none of which make it better.

Notably, Iowa passed a more detailed version of a plan and did not expand Medicaid until the federal government had approved the necessary waivers from federal rules. Making coverage contingent on waiver approval was an incentive for the federal government to act more quickly and to approve at least some changes that had previously been considered unlikely.

In contrast, New Hampshire intends to ask for a waiver – with important details to be filled in at a later date – but in the interim will adopt the same expansion plan the governor proposed as early as last July.

In Iowa’s negotiations with the federal government, the feds needed to approve changes they were not predisposed towards or else no one would be covered. In New Hampshire’s negotiations, we will adopt a plan that some lead sponsors don’t like but the federal government really likes and then ask them to approve changes they like a lot less. You can see why an experienced negotiator might not expect good results from our negotiate-from-weakness strategy.

The bill does say that if the federal overseers of Medicaid don’t approve the changes we want then, after two years of coverage, the program would technically expire and need to be reauthorized or else 50-80,000 would have their Medicaid coverage taken away from them.

No rational person honestly believes this expiration is anything but procedural. No legislature elected in recent memory of whatever partisan flavor could ever bring itself to cancel pre-existing benefits, especially health benefits, for such an enormous population. It will not ever happen and everyone knows that including federal regulators.

Public statements from sponsors describe the plan as having significant personal responsibility measures (like premiums and co-pays). But the plan doesn’t actually. The Iowa prototype included significant changes which required waivers, some of which were not allowed in the end.

In contrast, New Hampshire suggests co-pays be included “to the greatest extent practicable.” Practicable is never defined and we know in advance that state regulators are strongly opposed to just about every co-pay except one or two in nominal, non-incentive providing amounts. That makes them not practicable in their opinion. The bill pays lip service with the practical effect of no changes which helps explain why strong opponents of co-pays and cost-sharing are co-sponsoring the bill.

Some of the bill’s authors have implied that the new entitlement comes with a work requirement – recipients will be required to actively seek employment. Whatever their hope, it isn’t what the bill does. The actual bill merely says recipients “shall be referred to the Department of Employment Security.”  Those who are currently unemployed will be given the phone number of the state’s unemployment office – not exactly a work requirement.

Further, sponsors routinely describe the bill as providing a benefit to 50,000 people. That’s just plain wrong. The bill makes an estimated additional 100,650 people eligible. The analysis of a year ago suggested that 83% of the half of the eligible population without insurance would take the free coverage (I use their higher end estimate because we are now spending millions recruiting people to coverage which seems likely to be more effective than when we spent nothing).

That analysis estimated that only 12,000 of the half of the newly eligible with existing private coverage would cancel their current plan and switch to Medicaid. But the offer now is for them to keep their existing coverage and merely have the state pay all their premiums and co-pays – hardly invasive or inconvenient. A better estimate is that 80% of that population will permit the state to send them free money.

When sponsors say 50,000, replace that number with 80,000 and increase their cost estimates by 60%. I presume cost estimates, not yet available, will emerge sometime before Senators vote.

So the Senate poised to pass a plan to increase the state’s Medicaid population from 135,000 to 215,000 with no cost sharing requirements of note and to abandon any negotiating strength by adopting the federal government and governor’s preferred position as the default program beginning immediately.

Some people are better at compromise than others.

Charlie Arlinghaus

February 12, 2014

As originally published in the New Hampshire Union Leader

This week Republican Senate leadership announced a plan to significantly expand the state’s Medicaid program. While the deal was announced, the details are not yet available. Evaluating whether the deal involves any significant element of compromise or is just a slight variant of a dramatic expansion of the state’s Medicaid system depends on the details but early reports are not promising.

The federal health reform popularly known as ObamaCare or the ACA rests on three major components: individual and employer mandates to buy insurance, a regulatory and purchasing structure called an exchange (or sometimes confusingly referred to as a “marketplace”), and a roughly trillion dollar expansion of Mediciad.

One of the primary metrics to consider in any potential expansion plan is what the effect be on total Medicaid enrolment. Today Medicaid is not a program for all low income citizens. Instead Medicaid covers people only within certain categories (like children, certain disabled populations, pregnant women or women with breast or cervical cancer). Other low income categories of people, most notably single childless adults, are not covered at all.

The primary goal of Medicaid expansion it to change the program so it covers every low income person regardless of category. One compromise proposed has been to follow the Governor’s example. She proposed covering the lowest income Breast and Cervical Cancer patients through Medicaid and letting those eligible for exchange subsidies be covered instead through that federal program. The state program would be targeted to the lowest income levels while others would be shifted out of this particular program. A compromise might do such a thing but this one doesn’t.

In New Hampshire, prior to any expansion, average state monthly Medicaid enrollment was roughly 135,000 people or about 12% of the state’s population under the age of 65.The newly eligible population being considered for the expansion program amounts to 100,600 people according to the consultants hired by the state.

Oddly, elected officials like to describe the program as covering an additional 50,000 people. That public relations number assumes that only half of those eligible will take up the free health care being offered to them. In contrast, the Urban Institute found nationally that 72% of the currently eligible are actually enrolled in Medicaid. There aren’t New Hampshire specific numbers but certainly among children, the vast majority of our current Medicaid cases, our take-up percentage is four points higher than the national average.

Since early estimates came out, many factors have made Medicaid more attractive to the newly eligible population. All current expansion proposals requires those with access to private insurance to take it and have the state pay for all premiums and co-pays. In those circumstances, why would anyone not keep their existing insurance and just have the state make their payments?

What’s more, the state has started to implement a $5.37 million grant to promote both Medicaid enrollment and the exchange. One insurance executive on the board of the grant administrator described “New Hampshire specific outreach and education about the marketplace, the insurance options and available financial assistance.”Another $580,000 was given to take two large groups who have been lobbying for expansion and hire them as“navigators”to help people interact with the exchange, the majority of whose participants are Medicaid eligible.

Policymakers should ask what the expected total enrolment in Medicaid will be and if anything is being done to apply the notion of sliding eligibility scales to higher income populations.

Further, while language is sometimes used to pretend there is a substantive difference the approach that recently passed the House and the so-called compromise, there is no real difference. For anyone with existing insurance or access to it, the plans are literally identical. For the rest of newly eligible 100,000 population, both ideas would use the same Medicaid dollars to provide the same Medicaid coverage to the same Medicaid population through the same Medicaid providers administered by the same three private companies we are now contracting out regular Medicaid to. You might be forgiven for thinking that’s the same thing.

The only real difference is that the Senate plan would reimburse providers at private insurance rates which are roughly three times as high as Medicaid rates – that hardly seems designed to lower costs.

Compromises typically involve both sides getting something they want. In that respect, this compromise doesn’t look typical. Perhaps when the details come out in the next couple weeks this won’t look simply like a 50% expansion of the state’s Medicaid program that is simply what the governor proposed six months ago but with a different title.


January 2014

Josh Elliott-Traficante

According to the US Department of Health and Human Services, a total of 11,446 New Hampshire residents have selected a health insurance plan through the Federal Exchange. This represents a net increase of 9,877 in the month of December.

Since open enrollment began, the federal exchange has received 19,441 applications from Granite Staters for insurance coverage for 30,204 individuals. Of these thirty some odd thousand, 26,621 were ruled eligible to get policies on the exchange, with just over half (13,516 to be exact) qualifying for subsidies.

For the first time, the Department of Health and Human Services, in addition to enrollment numbers, released the breakdowns of the types of plans being purchased, as well as the percentages receiving subsidies. On the exchange, plans are ranked by metal: Bronze, Silver, Gold, and Platinum, with Bronze being the least expensive.





New Hampshire





Of the 11,446 newly covered, 72% are receiving subsidized coverage, while the remaining 28% are not. Given the distribution of the completed applications, it appears that the percentage of those getting subsidies will decrease, while those not, will increase. However, it remains to be seen if all of those completed applications will result in the selection of a plan.

For the first time, the Department of Health and Human Services has released demographic data about the people who have selected plans on the exchange. New Hampshire has largely mirrored the nation as a whole in terms of gender and age breakdowns.


















Death Spiral?

Garnering the most attention in the recent enrollment report was the percentage of enrollees between the ages of 18 and 34. Nationally, 24% of enrollees were in this age bracket (vs 22% in NH). 40%, however, has generally been regarded as the critical number for Obamacare to work as planned. With 40% belonging to the 18-34 age group, there are enough young and healthy people in the pool to keep down prices and cross subsidize older enrollees. The ‘Death Spiral’ occurs when too few of this group enroll, forcing prices to increase, leading health people to drop insurance due to the cost, forcing rates even higher, continuing the cycle.

The non-partisan Kaiser Family Foundation has done some work on the issue of young adult enrollment and used 25% as a worst case scenario. Under that scenario, the cost of plans would be roughly 2.4% higher than the charged premiums.  That of course would necessitate a hike of in premiums the following year to make up the short fall, on top of any healthcare inflation. Kaiser researchers do not see this as being enough to trigger a death spiral, although the critical enrollment level to spark the Death Spiral is disputed.

Josh Elliott-Traficante

January 9, 2014

A few years ago, Oregon chose to expand Medicaid coverage to the population now under consideration for coverage here in New Hampshire. In Oregon’s case, state funds would cover the total cost of the program. The problem for Oregon policy makers was that there was only enough money available to cover some, not all, of those eligible. To remain fair, coverage in the expanded Medicaid program was chosen by lottery.

This lottery presented a unique opportunity for researchers. Given the nature of the process, it created a randomized sample that received Medicaid coverage, while those that did not became a de facto control group. Budgetary limits had created the perfect case study to analyze the effects of Medicaid Expansion.

So far the results have been mixed, but the recent data on emergency room (ER) usage is troubling. After 18 months, the study has found that ER usage among the newly covered Medicaid population was 40% higher than the control group. Not only is this a sharp increase in real terms, but keep in mind who the control group is: people with no insurance coverage at all, who often uses emergency rooms as their primary source of healthcare.

That being said, just stating that ER utilization has gone up does not explain the nature of the usage. Thankfully, the study also breaks out usage by the type of visit based on an algorithm designed by New York University and used universally by the Medicaid program. The algorithm sorts out visits into three main categories: Emergent[1], non-Emergent[2], and a catch all of ‘other’,[3] as well as a number of sub-categories diagrammed below. It found Medicaid coverage increased visits that were classified as ‘non-emergent’, ‘primary care treatable’ and ‘emergent, preventable’, while finding no statistically significant change in the use of visits classified as ‘emergent, non-preventable.’

Source: NYU Center for Health and Public Service Research

Taking a look at the three categories that saw increased usage, showing up to the ER with a bad cold would be classified as ‘Non-Emergent’. Essentially, any illness that does not require medical care beyond bed rest and over the counter medication would be classified as non-emergent.  ‘Primary care treatable’ is any condition requiring the attention of a doctor, but it could have been easily and safely taken care of by a primary doctor. Any ER visits that fall into these two categories are generally a waste of emergency resources.

‘Emergent, Preventable’ are conditions that do require a trip to the emergency room, but could have been taken care of by a primary physician, had they sought care sooner. Typical examples include complications arising from chronic conditions, such as asthma or diabetes.

There were only two categories that saw no increase over the control group. Based on the data there was no statically significant increase in the number of ‘emergent, non-preventable’ ER visits. These are health issues that require immediate medical attention but are not foreseeable, such as heart attacks, appendicitis, and strokes. In addition, there was no increase in the number ER visits that resulted in admission to the hospital.

So what does this tell us? The upshot is that ER usage is not increasing because the newly covered are now taking advantage of that coverage. If it were, there would be an increase in the ‘emergent, non-preventable’ category, as well as in hospital admissions from the ER. Instead, usage is increasing because the newly covered are using the ER improperly. Ironically, one of the selling points of expansion was to reduce this practice. Despite now having access to primary care doctors to take care of minor health issues, or catching them before they required emergency attention, this population is now using ERs more than people whose only source of healthcare might be an emergency room.

[1] Emergent: Emergency Care is required

[2] Non-Emergent: Emergency Care is not required

[3] Other: Injuries, Mental Health, Alcohol/Substance abuse/overdose

Josh Elliott-Traficante

December 2013

The latest data released by the Department of Health and Human Services showed that a total of 1,300 New Hampshire residents have selected a health insurance plan through the federal exchange during the month of November. Since open enrollment began on October 1, a total of 1,529 have signed up.

A total of 8,763 applications have been received by the federal exchange to cover a total of 17,234 individuals.

It is interesting to note that of the 12,768 that have been determined to be eligible to enroll in exchange provided insurance plans, only 4,927 qualify for subsidies, roughly 38.5% of the total.

The balance, 7,841 individuals, (61.5%), do not qualify for any assistance. There are two categories of people this might fall into: either people who have had their insurance policies canceled due to the law itself, or people who did not have insurance and though had the resources to buy it, did not.

The end result is that though Obamacare was designed to improve access to affordable healthcare, the majority of New Hampshire residents buying health insurance through the exchanges likely doing so either because their existing plan was canceled, or because they did not want to have insurance and are now required to have it.

All of these numbers stand in contrast to the nearly 22,000 who will lose coverage because their existing plans were not compatible with the new law. Though they were granted a temporary reprieve, the policies are still due to be canceled.

Link to full report from DHHS:

Charlie Arlinghaus

November 13, 2013

As originally published in the New Hampshire Union Leader

On Medicaid expansion, there is no relevant difference between the Republican and Democratic proposals being considered by the special session. An important flaw in the Senate Republican plan makes it roughly the same as the proposal pushed by the governor and the House Democrats.

Today, Medicaid covers people in specific eligibility categories rather than basing eligibility on income. To be eligible, one has to be poor (or middle income depending on the category) and also in a specific population (disabled or pregnant or diagnosed with breast cancer for example).

The expansion envisioned by the federal government would change the program to make everyone under 138% of the federal poverty level Medicaid eligible.

The largest newly eligible population under this scenario would consist of childless adults who are not covered at any income level today. About 135,000 people are currently covered by Medicaid. The proposed expansion would increase that total by as much as 50%.

In New Hampshire, a little less than half of the newly eligible population already has insurance or access to insurance through their employers. Both Republicans and Democrats would require those individuals to access that insurance and then use the Medicaid expansion budget to provide wrap around coverage for co-payments, deductibles, and additional premiums.

The governor’s plan would simply make everyone else in the expansion population eligible for one of the Medicaid plans offered by the three Medicaid managed care companies we are contracting with.

In the first year of their plan, Senate Republicans would do the same thing. They call it a bridge program but it is specified in the law as the same Medicaid coverage offered by the same Medicaid managed care companies and paid for with the same Medicaid dollars. There is no difference.

There is no need to consider the Republican plan any further because everything beyond that is moot. Their other ideas could only begin IF the federal government approved a waiver to their Medicaid rules. Except they wont.

They will deny the waiver and the program “will end.” Except it won’t. The future path is quite predictable.

Medicaid rules are set in Washington. To design our own program or make any significant change, we need to ask the federal government for permission or a “waiver” of the specific regulations. Waivers are often granted for little things but are rarely granted for large scale approaches that differ from what the administration then in power wishes.

We have no bargaining power to get a waiver when the administration strongly prefers the status quo to the change we are asking for.  Currently we are in an unusual situation. The powers that be would very much like us to expand Medicaid, preferably in the manner they’ve fashioned. Because they want a change to the status quo, we are in the unusual position of having bargaining power.

To adopt the Obamacare style expansion even for a year is to abandon all bargaining power for a position of weakness. The administration no longer needs us to change, they’ll just want us to continue the newly adopted program. And they know it won’t really expire no matter what the law says.

The future looks something like this: After the federal government denies our requested waiver, the governor will immediately call another special session in September, 2014 to “deal with the crisis.” The House will pass a continuation of the Senate Republicans’ “bridge program” which is the same as what they want anyway. “We tried but the federal government said no. Let’s join together to continue this program. It won’t cost any state dollars and that way we don’t throw 40-60,000 people out of their Medicaid bridge insurance.” In September or October of an election year, the current Senate is very likely to acquiesce.

If the later years of the Republican program were a good idea (and there are kernels of good ideas), it only makes sense to ask for permission now when you still have some bargaining power. To abandon that bargaining position turns your theoretical future plans into meaningless window dressing.

There are many reforms that people drafting the law would agree to if they didn’t worry about the federal permissions. But if any changes are worth having they are only possible if you do them first. Changes you save until after you expand and hope the feds approve anyway will never ever happen.

Charlie Arlinghaus

As originally published in New Hampshire Business Review

In a special legislative session scheduled to begin November 7, the state will consider not just expanding the Medicaid program in New Hampshire but also a dramatic change in what sort of program Medicaid is. The dramatic nature of those changes and very uncertain finances make finding the common ground needed a difficult task at best.

Today, Medicaid covers people in specific eligibility categories rather than basing eligibility on income. To be eligible, one has to be poor (or middle income depending on the category) and also in a specific population (disabled or pregnant or diagnosed with breast cancer for example). The expansion envisioned by the federal government would change the program to make everyone under 138% of the federal poverty level eligible.

The largest newly eligible population under this scenario would consist of childless adults. Today, a monthly average of about 135,000 people are covered by Medicaid. The proposed expansion would increase that total by as much as 50%.

It’s important to remember that Medicaid does not pay for health coverage. It pays a small fraction of health coverage, nowhere near the cost, and expects the provider to make up the difference on those of us with private insurance. Medicaid rates are roughly one-third of what most of us or our insurance companies pay.

If a single provider has too great a share of Medicaid patients, he goes out of business because there simply aren’t enough paying patients to shift the cost to. So, to as great an extent as possible, private insurance is to be preferred and preserved with Medicaid as a last resort.

In New Hampshire, about half of the newly eligible population already has insurance. An additional percentage is eligible for heavily subsidized through the health exchanges. People at 100-138% of federal poverty will receive insurance with premiums capped at 2% of their income.

It would be wasteful and counter-productive to move any of that population to Medicaid. The plan favored by the recently concluded state commission would preserve private coverage for only a small subset of those with insurance or access to it.

The governor and supporters of hers have suggested a principle that should be more widely applied. For one category, those with breast and cervical cancer, they would keep the lowest income people in Medicaid but cover those at higher income levels through the exchange and private insurance. If we expanded that principle to the entire Medicaid population, we would move as many people into private but means-tested coverage as we added with expansion.

If the program is changed to make everyone below certain income levels eligible, it would be natural to try and ensure that Medicaid and its fractional reimbursement rates don’t consume an ever increasing share of the market forcing our costs higher.

Just as important, the financial costs of the program are unpredictable. The experience of the very few states that have expanded to childless adults in the past

is that the eventual costs were much higher than estimated – five times higher in one case. The only thing the researchers seem to agree on is that the expected cost is unpredictable.

It would be sensible for the state to impose a structural limit on its costs. Both total enrollment and, more important, total expenditures could be capped consistent with the projected budget upon which expansion decision making will be based. This is a reasonable restraint which would allow the program to exist but with a degree of financial certainty.

Many changes will require the state to play mother may I with the federal government but that should not be an obstacle. Any compromise that is acceptable will necessarily involve things that are not off the federal shelf.

Grant D. Bosse

October 28, 2013

As Originally Published in the Concord Monitor

There’s a very easy way to tell if you’ve been the victim of one of the many scam websites that popped up this month to take advantage of people trying to sign up for Obamacare. It worked. If you’ve tried to buy insurance through, you almost certainly couldn’t log on, couldn’t enter your personal information or couldn’t get accurate pricing for your limited insurance options.

President Obama says “the product is great” and that “it’s more than just a website.” But he’s scapegoating the online disaster for problems with the law that we’ve known were coming for three years.

New Hampshire Sen. Jeanne Shaheen led the charge this week to extend the open enrollment period, citing the failed website and insisting that she was not changing her opposition to delaying the individual mandate to purchase insurance.

But that’s exactly what she wants to do, and it has nothing to do with the internet. Obamacare’s individual mandate requires all of us to have a certain level of health insurance in 2014 or face a fine of $95 or 1 percent of our income, whichever is greater. The IRS is in charge of collecting this fine, which allowed Chief Justice John Roberts to declare it a tax and slip most of the law through the eye of his constitutional needle.

The penalties were designed to kick in if you went without insurance for three months, and that’s why Health and Human Services Secretary Kathleen Sebelius set the open enrollment period to run through March 31, 2014.

But the law actually taxes you if you are without insurance for a single day in any three months, moving the actual deadline to get coverage up to March 1. Since you need to complete your application two weeks before coverage takes effect, the real deadline to avoid Obamacare penalties in Feb. 15.

President Obama is going to waive enforcement of the penalties for six weeks, moving the enrollment deadline back to March 31.

Obama and Shaheen still oppose efforts to delay the individual mandate through legislation but are perfectly willing to ignore the existing law through executive fiat.

Perhaps we should blame former Massachusetts senator Scott Brown for the law’s sloppy drafting. His special election to the Senate in 2010 gave Republicans enough votes to filibuster the controversial bill.

Democrats feared that any attempt to fix the mistakes baked into the law would erode the fragile party unity needed to get the bill to the president’s desk, so they just voted for it, warts and all. These errors would inevitably sabotage the law’s implementation.

Undermining the plan

But there are structural problems that Democrats built into the law on purpose. Two of the most popular provisions are guaranteed coverage for pre-existing conditions and a mandate that adult children be allowed to stay covered under their parents’ policies through age 26.

We needn’t debate the merits of these two policy choices to see how they are undermining the entire scheme. In order for the insurance companies offering plans through the exchanges to be profitable, they need to get many young, healthy people to buy more insurance than they currently do. Keeping people in their mid-20s on their parents’ plan keeps potential customers out of the exchanges. Many more will wait to buy insurance until they need it.

The Obama administration is trying to convince these “Young Invincibles” to purchase coverage. But the reason young people don’t buy as much health insurance as the rest of us is because it’s a bad deal. It’s much cheaper for health people with lower incomes to pay a 1 percent Obamacare penalty and sign up for insurance after they get sick. Imagine if you could go without car insurance, and call State Farm after your accident to cover the repairs. Economists call this a moral hazard, and it’s ObamaCare’s biggest flaw. But not it’s only one.

Health insurance policies have to strike a balance between coverage, access and price. Obamacare pushed that balance toward comprehensive coverage, forcing people to insure against risks that they’re unlikely to face. That choice forces premiums much higher, and many insurers, including Anthem in New Hampshire, have compensated by limiting their coverage network.

Court complication

The Supreme Court’s decision leaving Medicaid expansion up the states has also blown a hole into the law. Congress planned on shifting everyone below a certain income level into Medicaid and made them ineligible for subsidies under the exchanges. This creates a perverse situation where you might earn too little money to qualify for federal aid.

Congress also failed to anticipate states declining to set up their own exchanges, so it only authorized federal subsidies in state-based exchanges.

The Washington, D.C., District Court last week refused to dismiss a lawsuit challenging subsidies under the federal exchange.

The Obama administration delayed the employer insurance, and companies all over the country have responded by dumping their employees into the exchange. Others have already dropped coverage for spouses, or cut back hours to avoid the mandate next year.

The White House will almost certainly try to further delay the pain of Obamacare past November 2014. If Republicans really want to get rid of this law, they should get out of its way and let it destroy itself.

Charlie Arlinghaus

October 16, 2013

As originally published in the New Hampshire Union Leader

The Medicaid commission that ended this week was a well meaning distraction that won’t produce a compromise but may lead to some constructive conversations. Policymakers, notably the governor and the senate president, can use the commission as an example in both good ways and bad. In that respect, perhaps the commission was a useful first step toward a productive discussion.

In the budget process in June, a divided state government could not agree on any one approach to the federal enticement toward a large scale expansion of the state Medicaid program. The governor and the House insisted expansion be part of the budget, the Senate took it out. As a compromise, the budget created a commission to study Medicaid expansion with the majority of members appointed by those supportive of the expansion envisioned by the president and the governor.

I had the mixed blessing of being appointed to that commission which ended its existence on October 15th. Ultimately, some of the work of the commission will be used by lawmakers trying to negotiate some sort of compromise between those who want additional coverage and those worried about the financial risks and unintended consequences inherent in expanding Medicaid caseloads by about 50%.

For those policymakers seeking some common ground, the commission is an example of exactly what not to do but also an example of a path out of a messy mix of mistrust and politics.

The commission ended up beset by predictable pitfalls. From the beginning there was tremendous mistrust between minority and majority factions – more from outside the commission itself than within. It’s natural that a majority, convinced of the wisdom of their cause, might regard skeptics as politically motivated and more as saboteurs than conscientious objectors.

Unfortunately, that led to an overly scripted and less-then-open initial commission. Questioning was attacked, technically anonymously but only technically, as “building the case for an ideological crusade.” Data requests, apparently, are quite dangerous.

The tension led to frustration and a willingness to dismiss the commission as a meaningless sham. One observer noted “show trials are usually better choreographed” (that may have been me). Gradually, politicians who would ultimately be involved in any decision regarded the commission as something of a meaningless sideshow.

The mistrust, the willingness to assume sinister motives, and the eagerness to at least try to choreograph behind the scenes is an example to be avoided by politicians.

On the other, after three months of neutering itself, the commission created examples of what might work for people ultimately involved in the real decision. Meaninglessness created opportunity. When the outcome became very low stakes indeed, people were able to be more open.

The final three weeks of the commission became a model of discussion, dialogue, and exchange. Much of the responsibility for that change falls to Rep. Tom Sherman of Rye. Dr. Sherman is likely as liberal as I am conservative but inaugurated a discussion phase by putting a tentative plan together and being willing and eager to engage in wide ranging discussion with anyone regardless of whether or not they were likely to agree with the final product.

The only real downside to those few weeks is that time constraints pressured us and limited some discussion areas. Had those three weeks of open conversation began the discussion rather than ended it the commission might have been a very different animal.

Going forward, any negotiation has to be a real negotiation not an attempt to get one side or the other to lose and harm their electoral chances next year. A year ago, people might have argued that the federal government is asking us a yes or no question – either we expand in precisely the way they suggest or we don’t. That thought needs to be abandoned.

The populations the state might expand to are not one bloc. Almost half of them currently have health insurance, the other half do not. A fraction of those who don’t currently have insurance have access to subsidized insurance through the exchange. None of those groups should be treated precisely the same.

Too much time is spent wondering if the federal government will permit something instead of wondering if it’s a good idea. “I don’t think they’ll let us do that” is not an acceptable argument. Any compromise that is acceptable will necessarily involve things that are not off the federal shelf. And playing “mother may I?” with the federal government is never a recipe for making good decisions.