Posts

Charlie Arlinghaus

February 6, 2013

As originally published in the New Hampshire Union Leader

As the governor and legislature struggle to put together a balanced budget, regulators are consider two budget dangers: helping the federal government regulate the new federal health law (the health care exchange) and a costly expansion of Medicaid. Lawmakers should move cautiously and know that the federal government is eager to shift costs to New Hampshire taxpayers when it has the chance.

The centerpiece of the federal health care law (ObamaCare or PPACA depending on your mood) is the Exchange. An exchange is the structure used to enforce all the rules of the 2000 page law, regulate insurance carriers, and – perhaps – offer subsidies. In 2012, the state put into law a prohibition against New Hampshire operating the regulatory structure and assuming the financial risks of implementing federal regulations – essentially telling the feds: you’re writing the rules, you raise your own taxes and fund your own bureaucracy.

But the federal government was counting on us. It doesn’t want to implement the law itself. In fact, at this point it appears unable to do so. So they came up with a new scheme – a so-called partnership exchange. They’ll do some of the stuff and ask the state to do most of the public functions. In exchange, they absolutely, positively promise that they will pay for it. You guys do stuff and we’ll pay you for it – blank check, unlimited budget, really, we promise.

The governor and her regulators are going move on this without legislative approval. We need to be careful that whatever they do by executive fiat, the state treasury is not encumbered. The federal employees managed by state regulators should not be mixed into our pathetically funded retirement system as if they’re state workers, should not be promised employment beyond any federal funding, and we need to make sure we’re not stuck floating money that never gets reimbursed.

When the funding goes away, so should the task. Period. All departments used to have sunset clauses. Unfunded ones definitely need them. To be fair to the employees, they need to understand that this is a temp job so they aren’t misled.

A more dangerous situation is the potential and unaffordable expansion of Medicaid. A provision in the federal health care law had originally promised that the feds would pay 100% of the costs of expanding Medicaid for the first few years and then 90% after that.

If the feds kept their promise – and they are already retreating from it – that would cost the state $85 million by 2020 according to supporters of the expansion. Never mind that the state budget doesn’t have an extra $85 million.

One big concern is that the federal government can’t be trusted. After a year of everyone waxing poetic about what a great deal this was, the administration began a retreat. As part of an early budget submission, the Obama administration originally proposed switching to a “blended rate” as a cost savings mechanism.

The left-wing Center for Budget and Policy Priorities criticized the bland rate as an attempt to “shift significant costs to the states.” Well, of course. That’s how the feds work. Some more naïve policymakers actually believed the promise to “cover 100%” of the costs.

Federal budget writers often start off with good intentions. I think someone back in 1975 really, honestly thought they were going to pay 40% of special education costs. The fact that they never did is disheartening to that one idealist. The rest of us, however, have learned lessons.

Obama’s blended rate is not currently on the table. He beat a temporary retreat. But I’m not breaking news when I tell you that there is significant budget pressure in Washington. Shifting a little bit here and there is a federal goal.

They make nice promises on the exchange and on Medicaid Expansion. They even mean some of them. But reluctantly, with great sadness, they decide that they will fund most of but not all of what they promised. They tell themselves it’s still a good deal and that they had the best of intentions. Besides local taxpayers can afford it more than the nearly bankrupt federal government can.

It’s already started happening. The administration did us all a favor by floating a retreat trial balloon. It warned us. The money they’re promising? They can’t deliver even if they want to and they don’t exactly want to.

There are reasonable policy debates to have on both serving a contractor for the feds on an exchange and on expanding Medicaid coverage. But don’t pretend the money’s going to be there. We know it isn’t.

Charlie Arlinghaus

February 22, 2012

As originally publish in the New Hampshire Union Leader

Contrary to some of the misinformation circulating in Concord, a state-run health insurance exchange bureaucracy operating on behalf of the federal government is a bad idea, is not required by any federal regulation, and would be an expensive strain on our state budget.

At the centerpiece of President Obama’s health care legislation is a mechanism known as an exchange — i.e., a new federal or state bureaucracy to be set up to administer the rules and regulations regarding health insurance under the so-called Affordable Care Act (ACA).

The ACA included hundreds of new regulations and federal mandates to govern health insurance once the law takes full effect. In addition, federal agencies are in the process of issuing thousands of new rules to implement the myriad provisions of the law. To administer those rules, there will be a state-level exchange in each of the 50 states.

The federal government had hoped each state would set up its own exchange and manage the regulations for it while assuming the operating costs of the new regulatory agency.

The law can’t require states to set up an exchange. It provides that the federal government will set up and fund a state-level exchange if the state government chooses not to. The majority of states around the country have balked.

Much of the information in this debate is easily misunderstood. One particular piece of information exists only in New Hampshire and is incorrect. Our HHS commissioner mistakenly claimed that not running the exchange ourselves will cause us to lose our federal Medicaid funding, decimating the state budget.

This claim has not been made in any other state. The Obama administration, which has been eager to have every state establish an exchange, has never alleged any such thing.

It seems unlikely that there is a condition attached to Medicaid that no one else in the country knows about except one lawyer in Concord.

The Cato Institute has published a more authoritative legal analysis to show why this claim just isn’t true. The misunderstanding stems from a problem with the original draft of the state bill. The debate in New Hampshire centers on Rep. Andrew Manuse’s House bill prohibiting a state-run exchange.The original version included language that could have cost significant Medicaid dollars based on requirements that new information be able to interface with the state exchange whether federally or state-run.

Rep. Manuse quickly changed the language to make the bill simply a prohibition on the state setting up an exchange, whether by itself or through contract. That’s a very sensible compromise.

Another big question mark has been the financing of a state-run exchange. While federal grants would cover the setup, no one is quite sure how much an exchange would cost the state to operate. The final rules haven’t come out. However, we have some hints in that the Massachusetts version costs $29 million to operate.

New Hampshire’s costs are likely to be in the neighborhood of $10 million annually.

Exchange supporters have taken to saying we pay either way. What they mean is that they believe that the federal government would likely tax participants (fees on insurance plans, brokers, insurers and businesses related to their policies) and that states, if forced to fund a program this expensive, would have to look at similar fees.

Although local exchange supporters believe the federal government can impose these taxes already, the federal government itself doesn’t agree with them. In the President’s budget proposal, he asked Congress for $860 million for the express purpose of funding federal exchanges. Mind you, the start-up money for state-established exchanges is elsewhere in the budget so the $860 million is just for the 20-30 states not creating a state bureaucracy.

So the administrative function of the federal health law isn’t funded unless we fund it for them.

They haven’t finished the rules, but they want us to create the administrative agency. They don’t have the money or the authority to raise it, so they want us to assume the financial cost.

I think Rep. Manuse has things about exactly right.

Charles M. Arlinghaus is president of the Josiah Bartlett Center, a free-market think tank in Concord. His email address is [email protected].

This is our dedicated page to information on healthcare exchanges, which are a centerpiece to the Patient Protection and Affordable Care Act, more commonly known as ‘Obamacare’

It will be periodically updated.

JBC President Charlie Arlinghaus on Healthcare Exchanges and why they are bad for NH

Cato’s Director of Healthcare Studies Michael Cannon and John Adler on the all important Obamacare Glitch

Also from Michael Cannon, his article in the National Review on how Obamacare can’t be fixed

The New Hampshire House  Bill: HB1297, which seeks to ban the state from setting up a healthcare exchange

JBC President Charlie Arlinghaus on why HB1297 is a good idea

 

By Grant D. Bosse

Summary: Certificate of Need laws, or CONs, have been set up across the country under the assumption that rationing hospital construction and expansion would limit increases in health care costs. Four decades of experience have shown that CONs do not control costs, but do provide a significant barrier to entry to innovative health care facilities and limit competition in the health care marketplace. Faced with this evidence, CON supporters have created novel arguments to justify them, but these new rationales also fall under close scrutiny. New Hampshire should end its thirty-year experiment and repeal its Certificate of Need Law.

Click here to download a copy of the study

[pdf http://www.jbartlett.org/wp-content/uploads/2012/02/Irrational-Certificate-of-Need-Laws.pdf]

 

Charlie Arlinghaus

February 1, 2012

As originally published in the New Hampshire Union Leader

MOST PROPOSALS on health care are part of a highly charged ideological debate. One exception this year, the health care compact, is not a short-term solution but a longer-term project that will allow New Hampshire to benefit by letting other states craft proposals on the right and the left.

A health care compact is a proposal in the Legislature to have New Hampshire join with other states (four have already passed the compact language) to petition the federal government to grant states the authority to take federal health care spending in their state and craft their own program as a replacement for the federal program.

This is not some wacky theory like nullification, but rather states coming together and asking Congress to vote to give states an option. One option would be to stay in whatever system is created by reforms in Medicare and Medicaid.

Another option would be for an individual state to create its own reform. Very few states will undertake their own reforms, but we could all benefit from giving those few states that option.

We know that change is coming to the biggest federal health care programs. Rep. Paul Ryan, the leading conservative on health care issues, and Sen.

Ron Wyden, one of the leading liberals on health care issues, have put forth a compromise proposal. The merits of the proposal don’t matter for this discussion. When the leading liberal and leading conservative on health care both agree that change is coming — amid a half dozen other proposals floating around Washington — we know change is coming.

A health care compact would let states, if Congress agreed, craft their own experiments instead of accept whatever new federal proposal emerges in the next few years. Some states will do things that I support, others will do things that different people support and then we’ll see how each works.

At a hearing on the compact, Rep. Gary Richardson asked me what I actually wanted to see happen. The implication is that I have an end game in mind and want the federal government to let us make that happen in New Hampshire.

What I really want is for New Hampshire to wait. I want us to petition the federal government to give states authority if they choose and then wait and see what other states do. Even though all 50 states would be granted the choice by Congress, only six or eight would exercise that choice, but each of those states would amount to a pilot program — and very different pilot programs that should teach us something.

“Laboratories of democracy” has become one of the most hackneyed phrases in American politics, but Louis Brandeis’ original thought is at the heart of a health care compact.

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

I don’t think New Hampshire is currently up to the task of coming up with useful reform but other states are. Texas would probably try something more market-oriented, Vermont would almost certainly create a single-payer plan and become a teeny version of Canada.

I think Vermont or Oregon or whoever tried single payer would prove it a failure, but it is possible that I’m wrong (unlikely, to be sure, but within the realm of possibility). On the other hand, the New Hampshire way is to watch carefully what other states do and then import the best pieces into our system. Allowing other states to pilot innovative programs, only if they choose to do so, will help us all.

Some will object that nothing in a compact prevents states from doing something stupid.

But that’s just the point. We want to allow states to craft their own pilot programs with as much latitude as possible. They should use their judgment to replace Washington’s. And New Hampshire should watch the results to reap the benefits.

Make no mistake, this is a long-term, cautious project. It won’t go before Congress until many states have joined together to ask. Even then, it will require debate and congressional approval. Even at that point, New Hampshire should let other states lead the way and watch cautiously. But their pilot programs will teach us lessons and teach the federal government lessons. This is a health care proposal that doesn’t presuppose a program or an ideology. It will be a tool for liberals and conservatives alike. The longterm future of health care will demand more than just yes or no answers to the question of the month. We should put other states to work for us.

Charlie Arlinghaus

January 25, 2012

As originally published in the New Hampshire Union Leader

 

At the center of the debate over the federal law known as ObamaCare is a debate over whether or not states should administer the federal rules and regulations in a supposedly state-run Exchange. New Hampshire would make a mistake with significant financial consequences if it allowed itself to be seduced into this foolish idea.

When the federal government adopted health care reform known as ObamaCare or the Affordable Care Act (ACA), the rules and regulations included a plan that each state should set up an Exchange, a new bureaucracy to administer the significant rules already adopted and the forthcoming regulations envisioned by the bill. States are encouraged to set up their own federally regulated bureaucracy – the state as federal extension agents – or else the federal government will administer an exchange itself.

As details have become apparent over the last year or so, it is clear that whether the federal government runs the exchange or the state administers its rules for it amounts to the same thing, that the costs of running an exchange will impose a significant burden on the state, and that not setting up a state-based exchange is likely to force the law to be re-opened and hence renegotiated.

In early days, some opponents of Obamacare nevertheless thought perhaps states themselves could blunt its impact by setting up their own exchanges. The Heritage Foundation, opponents of the federal law, had helped Massachusetts establish its pre-ObamaCare exchange called the connector and initially thought maybe other states should follow suit. After a few months looking into the rules and regulations, they concluded “a state would now have no more real control over an exchange it set up than one HHS established.”

The conclusion is obvious and at the heart of the exchange debate. Whether run directly by the federal government or mandated by the federal government and carried out by local agents is immaterial. The regulations and decisions come from Washington with perhaps a few window dressing exceptions. As such, we are not deciding between regulation and autonomy, we are deciding whether or not we want a puppet government.

If it’s all the same, why not run our own exchange even for those few admittedly insignificant rules we can control? The difference is money. The Massachusetts connector, although the prototype, administers a less complex system than the new federal law and its annual budget is $29 million. No one knows what a New Hampshire exchange would cost but it would be somewhere between $10 and $20 million.

Federally collected tax dollars would pay for the start up costs but after start up the state would pay for the exchange itself. With state government on the hook, the federal regulations would pay less heed to their costs so there would be more of them. With a federally run exchange, the federal government – which hasn’t the budget authority for them yet – would have to weigh financial costs.

I have written often of the folly of a federal bailout of state governments. I don’t think any of us wants to see a state bailout of the federal government.

By the way, the obvious decision to hold our fire on establishing an exchange is not irreversible. The state may at any point if it so chooses reverse course and implement one.

The last reason to avoid a state run exchange is what’s known as The Glitch. Michael Cannon and Jonathan Adler writing in the Wall Street Journal discovered that the health law provides for premium assistance programs in state run exchanges but not federal ones. This was an error drafting a bill which requires the bill to be reopened to correct. If only 20 or 25 states adopt exchanges, as looks likely, the law would have to be opened up if it isn’t repealed next year.

By not adopting an exchange, we increase the pressure to open the law to fix the glitch. We also increase the financial pressure on a law that counted on passing the cost of running the exchanges to the states.

But regardless of the pressure we may wish to exert, setting up a state exchange is a bad idea. A state exchange is a fig leaf layer of bureaucracy between us and the people who really make the rules. Setting up a puppet government to put a happy face on federal regulation does no one any favors, and it would cost us tens of millions of dollars each year that we don’t have.

 

UPDATE: Attached below is a letter from HHS Commissioner Toumpas to House Commerce Chairman Hunt, which lays out his objections to HB1297.

HB1297 would ban the State of New Hampshire from setting up a healthcare exchange.

Toumpas Letter to House Committee on Exchanges