Kenneth Fredette

Maine House Republican Leader

March 1, 2014

As originally published in the Concord Monitor

When I heard that the Great State of New Hampshire was considering an expansion of its Medicaid program under ObamaCare, the first thought I had was of a quote from Dante’s “Inferno”: “Abandon all hope, ye who enter here.”

I say this as the Republican Leader in the Maine House of Representatives and as someone who has served on my state’s Appropriations Committee, where we spent countless late nights trying to patch the Medicaid-induced leaks in our state budget after past expansions.

Maine and New Hampshire are two very similar states in terms of geography, culture, and population size.  They are two very different states, however, in terms of economic policy.  It wasn’t always this way.  Decades ago, Maine took a decidedly sharp left turn, heading in the direction of more government programs and higher taxation.  New Hampshire avoided the income tax, the welfare state, and other trappings of big government.

Despite starting out in similar situations decades ago with roughly equally-sized private sector economies, New Hampshire has rapidly outpaced Maine according to almost every economic indicator.

New Hampshire’s median household income is about $65,000 to Maine’s $48,000.  Your unemployment rate has been among the lowest in the country since the recession.  Liberals in Maine like to tout welfare programs that are designed to reduce poverty, but our poverty rate is 58 percent higher than yours, despite Maine ranking second in the nation for welfare spending as a percentage of overall state spending.

It’s interesting how liberals in Maine make excuses for New Hampshire’s success while liberals in New Hampshire make excuses for Maine’s failures.

We’ve made a lot of positive changes here in Maine thanks to Gov. Paul LePage and a Republican legislative majority in 2011-2012.  Those reforms began to lower taxes, trim regulations, reform welfare, and bring some fiscal sanity to Augusta, and people are starting to take notice.  But there’s a long way to go.

Mainers are hardworking and independent-minded people, and they’re sick of economic stagnation.  I’m confident we’ll stay on the right track.

In fact, our competitive advantage with your state would be greatly enhanced if we managed to resist ObamaCare’s welfare expansion while you embrace it.

Over the past 10-20 years, Maine has taken the bait of federal matching funds and expanded its Medicaid program considerably while New Hampshire has declined the money and its attached strings.

All of the promises of Medicaid expansion have fallen flat.  Emergency room usage goes up, not down, with Medicaid coverage.  Charity care provided by our hospitals has tripled.  Federal matching rates have been slashed.  Physical health outcomes are no better.  Cost and enrollment levels were not manageable; instead, expansion shattered its original cost estimates.

What this has meant for Maine’s budget, taxpayers, and economy is very tangible.  Maine’s total income tax revenues collected equal the difference in cost between Maine’s and New Hampshire’s public welfare departments.  So if our DHHS was the size of yours, we could eliminate our income tax.

Medicaid’s share of the state budget has doubled since 1998 and now sits at 25 percent of all state spending.  By 2024, medical welfare will consume 36 percent of our budget.  State aid to municipalities is under siege, taxes continue to go up, and politicians have even raided oil spill cleanup funds to plug the perennial budget gap in our Medicaid program.

I understand that the proposal currently being considered in Concord uses federal Medicaid expansion funds to expand subsidized private coverage on the exchange.

That’s a better deal than the one originally offered by the feds under ObamaCare, and you can credit Republican leaders in your state’s senate with that.

But it’s still an expansion of state government and a major strain on taxpayers over the long term, similar to what we’ve experience in Maine, and I would caution you to avoid it.

The most important thing to remember, as citizens of the Granite State, is that the “New Hampshire Advantage” is not by accident; it is by design.  Your elected officials have made good economic decisions over the years and it has paid off.

Maine has gone down the path of Medicaid expansion before.  Take it from me.  You don’t want to follow us.

Michael and James Sununu

March 3, 2014

As originally published in the Nashua Telegraph

Politics and governing aren’t the same thing, but they are inevitably intertwined. As much as we would like otherwise, political considerations often drive policy decisions. Sometimes the repercussions are small. In the pending decision over Medicaid expansion, however, the stakes are huge and it would be a serious mistake for Republicans in the state Senate to make this a political decision. The potential for the largest-ever expansion of state government should be considered only on the merits of “Is this good public policy?” Unfortunately, in the face of significant evidence that this policy will not work, it looks like the strongest driving force on this issue for the Senate GOP is that, politically, “we need to do something.”

Republicans champion individual freedom and limited government that intervenes only when necessary. Our policy decisions should reflect this. We fight expansion of the welfare state because it makes people more dependent on government and creates perverse incentives against work, independence and income mobility. But Senate Republicans appear to be on the abyss of enabling a new and significant round of dependency, one that will still not solve the problem at hand.

Supporters of expansion say we have to reduce the uninsured population. They argue the cost of the uninsured is too high and by insuring them through the government (albeit through taxpayer support for private insurance premiums) we will lower the overall cost of health care. Except available evidence shows us it doesn’t work. Maine expanded Medicaid coverage in 2002 for the same reason, but it was a huge failure. Before expansion, 12 percent of their population was uninsured. After Medicaid expansion? Still, 12 percent uninsured. Markets adjust when government gets more involved, so while Medicaid rolls expanded, private insurance rolls fell, costing taxpayers and businesses more money.

Another argument for Medicaid Expansion is to reduce emergency room visits, increase preventative care all while lowering the overall cost of health care. Again, the evidence doesn’t support this claim. A recent study published in the journal Science reached the opposite conclusion. Economists at MIT and Harvard studied Oregon’s Medicaid experiment. They compared similar populations, part of which “won” the lottery to enroll in Medicaid and part that remained uninsured. They found that expanding Medicaid “generated no significant improvement in measured health outcomes”.

More importantly, the study also found that emergency room use increased among those added to Medicaid, exactly the opposite of the desired outcome.

Proponents of expansion in New Hampshire will argue their plan is different because they support the use of private insurance. But once the market adjusts, we could end up with undesirable outcomes and no real net benefit, at the cost of tens or hundreds of millions of dollars.

It is puzzling that hospitals and many in the business community are supportive of this expansion. Hospitals are mired in their own battles over uncompensated care, the Medicaid Enhancement Tax, and low reimbursement rates. Yet somehow shifting tens of thousands of patients from private insurance to a system with lower reimbursements is going to help matters? And the business community should certainly know better than to support any large-scale expansion of government. When the program costs more than projected, or the federal government fails to meet its obligations, where do businesses think the state will turn for more revenue?

The notion that “we need to do something” seems to have been hatched and nurtured inside Concord’s version of the Beltway. The first attempt at Medicaid Expansion died last year, and there was hardly an outcry from the general public. Yet Senate Republicans still feel they have to pass a “compromise” that is in reality a bad deal. What’s worse is that in the future, if the program doesn’t live up to expectations it will be almost impossible to pull the plug. A sunset provision is nice, but only if you have the nerve to let it sunset – and political “Profiles in Courage” are pretty scarce in Concord these days.

For the sake of argument, though, let’s add some political context. In 2012, the Republican nominee for President was in the difficult position of having supported a large government intervention into health care in his state and could not aggressively attack Obamacare. But the unfolding Obamacare disaster will be front and center in the 2014 elections. New Hampshire Republicans should be pointing out the folly of large-scale interventions in health care, not strapping themselves to the mast of a sinking ship because they are afraid Ray Buckley will accuse them of class warfare. Bulletin: Ray Buckley will accuse Republicans of that no matter what.

New Hampshire’s corner office has lacked leadership and direction for far too long. Senate Republicans have often been the only bulwark against bad public policy, and deserve credit for such victories as a responsible budget and limiting regulatory overreach. They should continue this approach with Medicaid expansion and say “not this policy, not right now.”

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

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.

Charlie Arlinghaus

May 22, 2013

As originally published in the New Hampshire Union Leader

Like most states in the country, New Hampshire is having a difficult time answering the question about whether or not to expand Medicaid coverage. For the last decade politicians of both parties have not made any attempt to expand Medicaid coverage in New Hampshire. With the federal government dangling some initial money for the program, some are tempted but unsure. Today, with so many unanswered questions and reasons to be skeptical policymakers should avoid a rush to judgment and just say maybe.

The federal government, as part of its new healthcare law, has offered to borrow about a trillion dollars to help states expand Medicaid coverage. Supporters in New Hampshire say it’s too good a bargain to pass up: the feds say they’ll pay 100% of the new costs in the first few years, then 90% and then 50%.

Supporters are excited that Medicaid coverage might reduce the percentage of people without insurance and reduce the amount of charity care (to the uninsured and to Medicaid patients) currently provided by hospitals.

But there are many reasons to be skeptical. There is some reason to believe the federal government may not live up to its promises and the experience in other states suggests the outcomes may not be as promised.

It’s important to remember that no one in New Hampshire would think this was a good idea if we paid for it ourselves at the regular Medicaid match rate. Remember that during the four years of a Democratic governor and Democratic legislature none of them proposed any significant expansion of Medicaid. The same is true of Republican control and divided control. There has been no local thought of expanding Medicaid in decades.

The feds currently claim they will pay 100% of the initial costs but they’ve already hinted at backing away. President Obama is perhaps the biggest supporter of this among any federal politician – it was his idea after all. Yet his 2012 proposal retreated from 100% funding and switched to a blended reimbursed rate attacked by left wing think tanks. If the biggest cheerleader for expansion has signaled a willingness to cut back before the program has begun, we ought not expect the promised federal funds to materialize.

While we are told that expanding Medicaid will reduce the level of uninsured, experienced across the country proves exactly the opposite. In the last decade, two states significantly expanded Medicaid: Maine and Arizona. In Arizona, the percentage of the population uninsured went from 19% to 19% over the decade – no change at all.

Lest you think it has something to do with deserts or warm air, our neighbors in Maine had precisely the same experience. Their uninsured went from 12% to 12%. In both states, the percentage with private insurance declined by the same amount as the increase in Medicaid coverage.

The other supposed policy benefit of expanding Medicaid coverage is a decrease in the amount of charity care provided by hospitals. Hospitals have a small number of patients with no insurance for whom they write off all their costs and a larger number of Medicaid patients for whom they receive payment for less than 50% of costs.

One of the big drivers of Arizona’s expansion was the expectation that it would dramatically reduce charity care and hence cost-shifting to private insurance. Instead, post-expansion, charity care costs rose an average of 9% per year (remember that that the percentage of uninsured didn’t change).

In Maine, a state almost exactly the same size as our own, they too saw increases in charity care. In the first eight years of expansion, charity care has climbed from $61 million to $215 million (in Maine too there was no reduction in the uninsured).

At this point, there are too many questions to say yes to Medicaid expansion. We know the results won’t be as advertised. There is every reason to be concerned about costs and the ability or willingness of a destitute federal government to meet its promises.

Proponents suggest we can adopt the program and just opt out at any time later but practically that isn’t true. The federal could adopt a maintenance of effort requirement like they adopted with the stimulus package that precludes any changes. And rolling back any program is always problematic.

This year, in this budget, there are too many questions, too many reasons to be skeptical to say yes to expansion.

Josh Elliott-Traficante

A recent study published in the New England Journal of Medicine suggests that the expansion of Medicaid, which is currently being debated in many states, including here in New Hampshire, does little to improve the health of the newly covered.

Several years ago, researchers were recently given the rare opportunity to study the effectiveness of Medicaid Expansion in Oregon. The state opted to expand its Medicaid program to include some low income, uninsured adults. However, funds were only available to enroll only a portion of those eligible, so roughly 10,000 individuals were chosen by random lottery to receive coverage. While unintended as such, these conditions laid the groundwork to conduct a scientific study of the efficacy of the program by creating a randomly selected sample (those chosen) with an established control group (those not chosen).

What makes this study so relevant in today’s discourse is that the population covered by Oregon’s expansion is the same population that will be covered under the expansion of Medicaid as part of Affordable Care Act in the other states. The study of nearly 12,000 individuals’ health outcomes grants rare insight into what the benefits and shortfalls of expanded Medicaid would be.

When comparing the newly covered and non-covered groups in Oregon two years out, the study found that there was little difference in health outcomes. The study concluded:

This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years…

The study did find that expansion increased the use of health services, diabetes detection and management as well as reducing financial strain, all of which would be expected. Surprisingly it did lower rates of depression by about 30%, which could be related to the reduced financial strain.

Some have argued that all that the study shows is that insurance is working because people are getting some chronic conditions taken care of, or that just by virtue of having insurance coverage does not make one healthier.

To some extent both are true, however, the gains seen in the Oregon study can be achieved by means other than the expansion of a very expensive program like Medicaid.