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Friday, May 20, 2005

Medicaid reform in the works for next session

[Chris Moon, "Session to end on working note," The Topeka Capital-Journal, 20 May 2005.]


Kansas state legislators wrapped up another session with little progress made on Medicaid, but the mood seems ripe for a return to the issue next year:

[Senate President Steve Morris, R-Hugoton] threw out another idea Thursday -- reforming Medicaid to force the recipients of the state's low-income medical program to cough up a co-pay when they receive medical benefits.

This year alone, Morris said, the cost of Medicaid jumped by $154 million. Next to education, Medicaid is the second-biggest line item in the state budget.

Characterizing his effort as "an aggressive push" for reforms, Morris said he would call for a legislative study this summer to look at the idea, which he said would make Medicaid more like traditional health insurance, where consumers pay small amounts each time they see a doctor or pick up a prescription.

That would save the state money and ensure Medicaid recipients are using the program when they truly need it, Morris said.

"To have that unlimited access out there that's just growing like a weed, uncontrollable, we have to do something," he said, discounting the notion that the state would be solving its budget problems by picking on its most vulnerable citizens.

Senate Minority Leader Anthony Hensley, D-Topeka, said he hadn't formed an opinion on the issue. But he supported studying Medicaid.

"It's politically volatile," he said, "but it's something we need to take a really close look at and proceed cautiously."


Co-payments are just a first step toward needed reforms, but they are at least a step. Let's hope that legislators can keep these thoughts in mind over the next few months.

[Devon M. Herrick, "Give Medicaid recipients more control," The Wichita Eagle, 3 March 2005.
Michael Bond and Matthew Hisrich, "Medicaid Lessons From Former Communists," The Wichita Independent Business Association Newsletter, February 2005.]

Thursday, May 19, 2005

British employ robots to facilitate care

["Medical robots start work at London hospital," Reuters, 18 May 2005.]

It is unclear how this will affect medical error statistics, but it is definitely an interesting development:

Science-fiction moved a step closer to reality Wednesday when robots nicknamed "Sister Mary" and "Doctor Robbie" started work at a London hospital.

The pair allow doctors to visually examine and communicate with patients, whether they are in another part of the hospital or even another part of the world.

"This is a revolutionary concept which opens new avenues in telemedicine research and integrates technology with healthcare," said Professor Sir Ara Darzi in a statement.

Darzi, head of surgery, anesthetics and intensive care at London's prestigious Imperial College is also a practicing surgeon at St Mary's hospital in Paddington, west London.

The 5-foot (1.5 meter) high robots are controlled remotely by a doctor via a joystick.

Doctors can look at patients thanks to a camera mounted on top of the robot while patients can see their doctors via a screen on the robots' "face."

Patients can be asked questions and medical records -- such as X-rays and test results -- can be read.

As part of a pilot study, patients will be assessed as to how they respond to the robots' metallic ministrations.

Wednesday, May 18, 2005

Insurance reimbursements lead to medical errors

[Elizabeth Weise, "Medical errors still claiming many lives," USA TODAY, 18 May 2005.]

Third-party payment for health care leads to a host of perverse incentives and unintended consequences. A new study now links this payment system with medical errors:

As many as 98,000 Americans still die each year because of medical errors despite an unprecedented focus on patient safety over the last five years, according to a study released today.

Significant improvements have been made in some hospitals since the Institute of Medicine released a landmark report in 2000 that revealed many thousands of Americans die each year because of medical mistakes.

But nationwide, the pace of change is painstakingly slow, and the death rate has not changed much, according to the study in The Journal of the American Medical Association.

The researchers blame the complexity of health care systems, a lack of leadership, the reluctance of doctors to admit errors and an insurance reimbursement system that rewards errors — hospitals can bill for additional services needed when patients are injured by mistakes — but often will not pay for practices that reduce those errors.

"We really need to rethink how we pay for health care. What we do now is pay for services, but what we should do is pay for care and outcomes," [says study co-author Lucian Leape of Harvard's School of Public Health.]


The good news is that as consumer-driven plans such as HSAs become more prevalent, payment will begin to shift to being input rather than outcome-oriented.

[Richard B. Warner, MD, "How Would You Like Your Medicine?," The Flint Hills Center for Public Policy, 24 July 1999.]

Tuesday, May 17, 2005

Congressional leaders push for multi-state insurance options

["Free-Market Health Insurance Reform Introduced," Magic City Morning Star, 12 May 2005.]

Association health plans have their supporters and detractors, but the ability to purchase a policy in Kansas without all of the mandates state government in Kansas places on policies here has a lot of appeal:

The Health Care Choice Act [is] federal legislation introduced by US Representative John Shadegg (R-Arizona) on Thursday, May 12. Senator Jim DeMint (R-South Carolina) will introduce the Senate companion bill.

If enacted into law, the bill will allow individuals to purchase state regulated health insurance across state lines. Such a policy change will provide consumers with access to a wider range of health insurance options at varying prices and create a national competitive health insurance market.

"A multi-state insurance market will have a transformative effect, providing consumers with more health insurance choices while lowering the cost of policy premiums," said Tarren Bragdon, Director of Health Reform Initiatives for The Maine Heritage Policy Center. "This concept is a win-win situation for consumers."

Monday, May 16, 2005

Doctor-by-phone

[Tyler Chin, "Doctor-founded company a phone-only practice," AMNews, 23 May 2005.]

Consumers are demanding medical care more focused on their schedules and needs, and the market is responding:

TelaDoc Medical Services Inc. has assembled a network of physicians around the country to offer telephone treatment for minor, nonurgent problems of patients the doctors have never seen in person.

The Dallas-based company, which officially launched its 24-hour telephone-based consultation service in April, involves two separate but affiliated for-profit entities incorporated in Texas, said Michael Gorton, TelaDoc's CEO. One is TelaDoc Medical Services, a patient-membership entity co-founded in 2002 by Gorton and two family physicians -- G. Byron Brooks, MD, of Seabrook, Texas, and Bruce Begia, MD, of San Antonio. The other is TelaDoc Physicians Assn., which provides the telephone consultations.

TelaDoc is the only company in the country focused solely on offering telephone medical consultations, its executives said.


The consultations are also very affordable and HSA-qualified:

So far, TelaDoc says it has 20,000 members who pay monthly fees ranging from $4.25 for an individual membership to $7 for a family membership in addition to a one-time registration fee of $18. Members also pay $35 per consultation, of which $20.50 goes to the physician. The remainder covers TelaDoc's expenses, which include providing liability insurance for physicians and also billing and call center expenses.

Insurers do not reimburse for the service, but patients can use health savings accounts and flexible spending accounts to pay for it, Dr. Kramer said.


[Greg Scandlen, "Choice is revolutionizing health care," The Wichita Eagle, 28 September 2004.]

HSAs an option for struggling non-profits

[Carol Tice, "Health-care costs shock nonprofits," Puget Sound Business Journal, 16 May 2005.]

A tight economy combined with rising health care costs is putting mnay non-profits in a vice:

A national study conducted by the Center for Civil Society Studies at the John Hopkins Institute for Policy Studies and released last November charts the rising costs of health care for nonprofits.

Skyrocketing costs are forcing charities to scale back health benefits, cut full-time staff who qualify for health care, or make cuts to other employee perks as they grapple with how to continue insuring employees without cutting programs.

Health-care expenses are hitting nonprofits disproportionally hard for several reasons.

Charities offer more benefits in part because nonprofits often pay relatively low salaries. To compensate, groups have historically offered substantial health benefits, often paying 100 percent of premiums while few businesses still do.

In the Civil Society study of more than 250 charities, 93 percent offered health benefits, compared with 63 percent of a similar group of businesses.


Non-profits looking for answers should explore the options available through consumer-driven health care plans such as health savings accounts. Rather than cutting salaries or dropping coverage entirely, the lower premiums of a catastrophic plan combined with the savings potential of individual accounts could be a win-win situation.

[Devon Herrick, "Health Savings Accounts: The Future Of Health Care For Kansans," The Flint Hills Center, 14 February 2005.]

Friday, May 13, 2005

NCPA: States need flexibility if Medicaid is to survive

["Reforming Medicaid: More Flexibility for the States," Daily Policy Digest, NCPA, 13 May 2005.]


John Goodman and Devon Herrick from NCPA are joining a chorus of Governors from around the country in calling for greater state control of Medicaid in this recent brief analysis:

Medicaid is the largest single expenditure state governments face and is growing at a rate that is on a course to consume the entire budgets of state governments in just a few decades.

The biggest problem with Medicaid is that each 40 cents spent by the states is matched by 60 cents of federal money. Thus states are tempted to go for the matching funds even when they know the spending is wasteful, say Goodman and Herrick.

The matching scheme is also a bad deal for federal taxpayers:

* The average cost per Medicaid beneficiary nationwide is about $7,500, but because New York offers almost all optional benefits to all optional enrollees, it spends almost double the national average.
* Mississippi, which has less generous benefit package and confines coverage mostly to the “mandatory” poor, spends just about half the national average.
* The result is that New York receives about twice as much federal money per enrollee as Mississippi, where the need is much greater.

We need to end the practice of matching grants coupled with wasteful regulations. Instead states should request a block grant covering all Medicaid, State Children's Health Insurance Program and disproportionate share hospital funds. States should have complete discretion, provided they spend these funds on indigent care, say Goodman and Herrick.

Giving states both more flexibility and responsibility will go a long way in slowing the growth of Medicaid. Block granting Medicaid funds would let states deliver care in efficient ways, such as moving enrollees to private-sector managed care plans, premium subsidies for individual policies and employer-based plans, and Health Savings Accounts for self-management of chronic diseases, say Goodman and Herrick.


[Matthew Hisrich, "Staying the Course: Medicaid Reform in Kansas," The Flint Hills Center for Public Policy, January 2004.]

Thursday, May 12, 2005

Wichita Independent Business Association to offer HSAs

[Deb Gruver, "WIBA to offer health-savings plan," The Wichita Eagle, 12 May 2005.]

WIBA has been a great co-sponsor of Flint Hills Center HSA events, and now they have joined forces with Intrust Bank - another co-sponsor - to offer their members HSAs:

The Wichita Independent Business Association is offering a new health savings account insurance plan to its members.

WIBA joined with Intrust Bank and Preferred Health Systems to offer the plan, which couples a pre-tax savings account with high-deductible health insurance.

The plan will be available to members across the state beginning June 1.

WIBA says the option could result in significant savings in monthly premiums for some members. More than 900 of the group's 1,300 member companies participate in a WIBA-sponsored health insurance program, according to a news release issued Wednesday.

HSA deposits now close to half a billion dollars

["HSA Deposits Top $460 Million, ICDC Finds; 50,000+ Accounts Are Opened Each Month," AIS Consumer-Directed Care, 5 May 2005.]

HSA growth continues to astound...

Health savings account administrators say they have opened more than 425,000 accounts since Jan. 1, 2004, and are adding at least 50,000 new ones each month, according to interviews conducted by ICDC with 21 HSA administrators (see table, below). Collectively, these firms have amassed about $460 million in HSA deposits and are bracing for what they expect will be an explosive 2006. Some of the largest administrators — such as HSA Bank and Exante Bank — say they already are opening more than 8,000 new accounts each month.

Monday, May 09, 2005


NCSL President: "Medicaid was never intended to be a middle-class entitlement program for nursing home care"


[Robert Pear, "States Propose Sweeping Changes to Trim Medicaid by Billions," The New York Times, 9 May 2005.]


Governors and state legislators from around the country are working together to develop a significant reform package in an effort to save the broken Medicaid program - and their budgets:

The proposals, drafted by separate working groups of governors and state legislators, provide guidance to Congress, which 10 days ago endorsed a budget blueprint that would cut projected Medicaid spending by $10 billion over the next five years.

John Adams Hurson, a member of the Maryland House of Delegates who is president of the National Conference of State Legislatures, said: "I am a Democrat, a liberal Democrat, but we can't sustain the current Medicaid program. It's fiscal madness. It doesn't guarantee good care, and it's a budget buster. We need to instill a greater sense of personal responsibility so people understand that this care is not free."

State officials say their goal is not just to save money, but also to avoid wholesale cuts in coverage like those in Tennessee, which is dropping more than 300,000 people from its Medicaid rolls, and in Missouri, which is dropping 90,000.

Medicaid, the nation's largest health insurance program, covers more than 50 million low-income people. Though originally intended for the poor, it now covers people with incomes well above the poverty level in some states.

Mr. Hurson, the president of the conference of state legislatures, who is also chairman of the health committee in the Maryland House, said, "Medicaid was never intended to be a middle-class entitlement program for nursing home care."


[Matthew Hisrich, "A Backgrounder on Kansas Medicaid," The Flint Hills Center, 19 July 2004.]

Friday, May 06, 2005


One-size fits all approach will not help the diverse uninsured population


[Merrill Matthews and Grace-Marie Turner, "No Single Solution Will Protect Health of the Uninsured," The Galen Institute, 5 May 2005.]


Talk of "the uninsured" makes it easy to lump together a group of people with very different backgrounds and needs. Any public policy effort to address the problem must take into account this diversity. Merrill Matthews and Grace Marie Turner offer up some key considerations in this recent column:

- The percentage of uninsured has remained relatively constant over the years: 15 percent.

- People are uninsured for relatively short periods of time.

- Most of the uninsured are workers.

- The uninsured tend to be young and healthy.

- Some of the uninsured have high incomes.

- The uninsured and the uninsurable are not the same.

- The number of uninsured varies significantly from state to state.

- Being uninsured does not mean no access to health care.

Yes, we do need a solution for the 45 million uninsured Americans - or better yet "solutions." But they must be targeted to address the varying problems listed above. What won't work is a single solution. The uninsured are different, and the solutions must be also.


[Matthew Hisrich, "Using tax credits to cover the uninsured," The Flint Hills Center, 4 May 2005.]

Liz Pulliam Weston on Medicaid planning

[Liz Pulliam Weston, "Are the well-off ripping off Medicaid?," MSN Money, May 2005.]

MSN Money financial columnist Liz Pulliam Weston tackles a tough subject and urges readers considering taking the Medicaid planning plunge to ask themselves three important questions:

Now, we really are faced with a situation where needy people are being turned away, while those who had the means to pay for at least some of their care -- but who engaged in Medicaid planning -- will still have their nursing home bills paid by the government.

I would suggest if you're considering Medicaid planning for yourself or a parent that you ask yourself the following questions:

- Whose assets are they, anyway?

One of the reasons we accumulate a nest egg is to pay for our retirement years -- and that includes medical care as well as cruises. If your primary purpose in Medicaid planning is to pass more money to the kids, you might ask yourself if public funds should be used to fund an inheritance-preservation program.

- What about quality of care?

Federal law requires that nursing homes give Medicaid patients the same treatment as their private-pay counterparts. But many of the best nursing homes don't accept Medicaid patients, and those that do are allowed to assign them to less-desirable rooms. The difference between the quality of life in a private or semi-private room compared to an Alzheimer's ward can be considerable, so think about that if you're contemplating Medicaid planning for yourself or a parent.

- Are you walking your talk?

If you rail about high taxes and welfare cheats, it's a tad inconsistent to change the rules when you're the one who's asking for the government's help.

HSAs working to address the uninsured

[Ellen Beck, "Health Biz: HSAs make early headway," United Press International, The Washington Times, 5 May 2005.]


As Cover the Uninsured Week winds down, news that health savings accounts are emerging as a viable option for this population could lead to an important shift in how policymakers approach the problem:

It was a surprise for many this week, then, when America's Health Insurance Plans rolled out its latest statistics showing in the 14 months since their inception, HSAs have been opened by 1.03 million Americans -- and virtually all health plans belonging to AHIP now offer HSA options to individuals, as well as to small and large group employers.

"It's astonishing," remarked Greg Scandlen of the Galen Institute, a non-profit public policy group, in response to the AHIP numbers. "It's happening now, in the real world ... and Washington needs to pay attention to it."

AHIP's survey found 37 percent of the individual policies -- some 204,374 -- were sold to people who were previously uninsured; and 27 percent of the small group market plans, representing 37,868 covered lives, were bought by companies that had not previously offered a health insurance benefit to workers. So roughly 242,000 people went off the uninsured list because of HSAs.


[Matthew Hisrich, "HSAs are increasing Americans' health coverage," The Topeka Capital-Journal, 26 September 2004.]

Thursday, May 05, 2005

KC Star urges ban on smoking

[Yael T. Abouhalkah, "To clear air, start at grass roots," The Kansas City Star, 5 May 2005.]

The range of possibilities for you to act as you see fit is shrinking - now it is smoking, will drinking and eating junk food be next?

A regional ban on smoking would protect the health of people who eat, drink and work at hundreds of area bars and restaurants.

Alas, smoke-free ordinances remain a pipe dream as long as elected officials are cowed by a limited number of business owners in the Kansas City region.

Promoters of anti-smoking campaigns need to be more aggressive in taking matters into their own hands. Grassroots efforts on a city-by-city approach — such as through the use of initiative petitions — could accomplish what weak-kneed politicians have not.

Eventually, smoking in public places could be a thing of the past across this region.


It is interesting that Abouhalkah labels politicians who refuse to restrict individual rights as "weak-kneed." I'd hate to see what he thinks is a "strong" politician. He and others looking out for "the public interest" would do well to take a refresher course in basic liberties.

New NCPA study on consumer-driven health care released

[Devon M. Herrick, Ph.D., Consumer Driven Health Care: The Changing Role of the Patient, NCPA Policy Report No. 276, The National Center for Policy Analysis, May 2005.]


Devon Herrick takes a detailed look at the consumer driven health care movement in this new NCPA study:

The latest trend in health care? Patients are managing their own care. New technologies make it possible. Legislative changes facilitate it. And financial pressures all but require it.

Consumers now have numerous avenues to become smart shoppers of medical services. Research has shown that employees are more satisfied when they have a greater choice of plans and consumer-driven health care offers them the ultimate choice. With these new plans comes the opportunity to manage our own care.

An important byproduct is the quality of health care and service improves when patients are the ones who control the checkbook, rather than third-party insurers. Another important result is that costs will rise more slowly. Over 250 million consumers holding a tight rein on health care spending will do more to control costs than a few third-party bureaucrats working for HMOs.


[Devon Herrick, "Health Savings Accounts: The Future Of Health Care For Kansans," The Flint Hills Center, 14 February 2005.]

Wednesday, May 04, 2005

Are socialized countries getting a better deal on health care?

[Richard Schwartz, "Higher cost, not better care," New York Daily News, The Lawrence Journal-World, 4 May 2005.]

The myth that government agencies can perform better because they don't have to make a profit seems to pervade the discussion of health care in certain circles:

America doesn't have the world's best health care system, just the most expensive. For those of you who worry about your health and wealth (i.e., everyone), that's mind-bogglingly bad news.

The numbers are grotesque. The United States spends 15.5 percent of its gross domestic product on health care, about $1.7 trillion a year. No other country comes close. Yet for all that money -- equal to the entire economic output of France -- 45 million Americans go without health insurance.

By the way, in France, which on a per-capita basis spends about half what we do on health care, everyone is insured. In fact, under France's universal health system, patients can visit doctors, even specialists, virtually any time they wish

National health would save us nearly $250 billion a year on administration alone.

In nations with just one payer -- the government -- the focus is on service and efficiency. Not only is that cheaper, but it's more equitable, since everyone gets covered. In a modern, industrialized nation, that's how things should be.


Can such claims be backed up? Not really. Arnold Kling explains in this Tech Central Station column:

Most of the increase in the share of health care spending in GDP in the United States from 1980 to 2003 was for real goods and services, as opposed to price increases. To see this, start by noting that in this data the share of health care spending in GDP in the U.S. was 7.7 percent in 1980 (our domestic measure differs somewhat from the OECD measure). Suppose that we extrapolated U.S. health care spending in 2003 based on 1980's level, plus population growth and health care inflation. In that case, spending would have been 8.1 percent of GDP in 2003. Instead, our accounts show a figure of 13.1 percent. The difference between 13.1 and 8.1 is the amount of the rise in the health care spending share that represents a real per capita increase in utilization. (In other words, from 1980 to 1993 GDP grew enough to absorb the increase in population and most of the increase in the relative prices of health care services. It was the doubling in the utilization of services that caused the surge in health care's share of GDP.)

All I can say at this point is if the United States were to undergo regime change and adopt socialized medicine based solely on the evidence as it exists today, that would represent a massive intelligence failure.


[See Charles W. Van Way, III, M.D., "The Strength of a Really Bad Idea," The Flint Hills Center.]

Medicaid estate planning to face increased scrutiny

[Kevin Freking, "GOP Wants to Curb Medicaid Estate Planning," Associated Press, The Guardian Unlimited, 28 April 2005.]

What sense does it make buy long term care insurance when - with the help of a lawyer - you can save your money and finagle your way into private care beds at government expense? That's a very good question:

GOP members of the House Energy and Commerce Committee asked state Medicaid directors on Wednesday what they have done to curb "Medicaid estate planning," in which assets are transferred so people look poor on paper and thus qualify for Medicaid.

Medicaid is expected to grow at a rate of 7.4 percent annually over the coming decade.

The Bush administration has estimated that changing the policy on the transfer of assets could save taxpayers $4.5 billion over that time.

Many experts say there are no solid estimates of how many people use estate planners to make themselves Medicaid eligible. "Do we really think that today's nursing homes are filled with scheming seniors who are free-riding on the taxpayers' dime?" said Rep. Sherrod Brown, D-Ohio. "There will always be people who work the system, but most Medicaid beneficiaries do not want to be Medicaid beneficiaries. They have no choice."

"Just go on Google and put in quotes 'Medicaid planning,' or 'Medicaid estate planning,' and see how many hits you get," said Stephen Moses of the Center for Long-Term Care Financing, a think tank based in Seattle. "That'll show how extensive it is."

The answer to his challenge for the phrase "Medicaid estate planning" was about 602,000 hits.

Under current law, the government reviews for three years whether a Medicaid applicant has transferred assets.

One proposal would lengthen that review to five years. A second would extend the amount of time the government can withhold Medicaid eligibility when asset transfers occur.

Some lawmakers said they want to make it more attractive for people to buy long-term care insurance or to use reverse mortgages, in which homeowners take out a loan that is repaid only after the last surviving borrower dies or sells the property. Such mortgages allow people to tap the equity built up.


[Stephen A. Moses, "Project Proposal: Controlling Medicaid Long-Term Care Costs," The Flint Hills Center, January 2004.]

Nicholas Kristof: "boomers may earn a place in history as the worst generation"

[Nicholas D. Kristof, "The Greediest Generation," The New York Times, 1 May 2005.] (registration required)

Columnist Nicholas Kristof takes his generation to task for using the political system to extract future wealth:

As a baby boomer myself, I can be blunt: We boomers won't be remembered as the "Greatest Generation." Rather, we'll be scorned as the "Greediest Generation."

Our slogan has gone from "free love" to "free blood pressure medicine."

But I fear that we'll be remembered mostly for grabbing resources for ourselves, in such a way that the big losers will be America's children.

With boomers about to retire, I'm afraid that national priorities will be focused even more powerfully on the elderly rather than the young - because it's the elderly who wield political clout.

We boomers are also preying on children in a more insidious way: We're running up their debts, both by creating new entitlement programs and by running budget deficits today. Laurence Kotlikoff, an economist and fiscal expert who with Scott Burns wrote the excellent and scary book "The Coming Generational Storm," calls this "fiscal child abuse."

[W]e boomers need to resist the narcissistic impulse to ladle out more resources for ourselves. Our top domestic priorities should be to ensure that all children get health care and to get our fiscal house in order.

Otherwise, we boomers may earn a place in history as the worst generation.


[Matthew Hisrich, "First Things First: Kansas Medicaid Program Must Get its House in Order Before Expanding Home-based Care," The Flint Hills Center, 20 August 2004.]

Tuesday, May 03, 2005

Long-term care issue must be addressed

[Editorial, "Band-Aid not enough," The Atlanta Journal-Constitution, 2 May 2005.]
(free registration required)

This editorial points out the urgent need for states to address the problem long-term care provision through Medicaid presents to budgets:

One of the most contentious issues between the states and Washington involves the huge impact Medicaid spending is having on state budgets.

With the annual cost of the health care program for the poor and disabled skyrocketing, Medicaid has begun to challenge elementary and secondary education as the most costly wedge of the state spending pie. At the same time the Bush administration has told Congress it wants to reduce federal spending on Medicaid by as much as $40 billion over the next decade. (Medicaid is jointly funded by the states and the federal government.)

Those budgetary trend lines are not a good omen, and states have already begun scrambling to enact cost-saving measures.

But largely left out of the debate has been the most ominous Medicaid trend line of them all — the issue of long-term care.

Elderly, blind and disabled people represent roughly a quarter of the nation's 50 million Medicaid patients, yet they account for 71 percent of the program's costs. The National Governors Association reports that people with disabilities are the fastest-growing Medicaid eligibility group. Over the next 30 years, the number of Americans aged 65 and older — and the proportion of those individuals 85 and older — is expected to double.

Medicaid, not Medicare, will pick up most of the long-term care services of many of these patients. In order to keep Medicaid sustainable for the basic services it provides for pregnant women and children and other poor and uninsured Americans, the nation will need to come to grips with what role government and private individuals should play in ensuring long-term care.

Among other things, some of the nation's governors want Medicaid to take aim at the common practice of allowing elderly nursing home patients to give away their assets so that Medicaid will pick up their bills. That's why Congress needs to seriously consider incentives for making the purchase of long-term care insurance more affordable.

Similarly, the private sector should step up promotion of innovative long-term care plans, such as those that allow life insurance benefits to be converted for nursing home care. Then Medicaid might have a chance to survive.


While the column correctly identifies the problem, it goes slightly astray in suggesting that the solution to elderly nursing home patients giving away their assets is to bribe them with incentives. Before any incentives are considered, and indeed before a healthy private sector market can develop, policymakers must eliminate the incentives already in place to hide assets and avoid purchasing insurance. Otherwise, it essentially devolves into a game of legislators trying to outbid themselves.

Government-sponsored health initiatives raise questions

[Randy Scholfield, "Get fit," The Wichita Eagle, 3 May 2005.]

It's one thing when city boosters try to spend taxpayer money on ridiculous public works projects like stadiums, but it is a whole other ballgame when they try to spend taxpayer dollars to influence your behavior:

Most Wichitans already know what it takes to lead a healthier lifestyle, including getting more exercise and eating more fruits and vegetables, according to the report.

But they need more community outlets and encouragement -- and that will require a broad-based, coordinated effort by families, schools, businesses and policymakers.


Perhaps the best line came toward the middle of this editorial:

Among the good ideas that came out of the meeting:

- Promote farmers' markets and other healthy, affordable sources of fruits and vegetables. Wichitans often came up blank when asked about local resources for healthy food.


Wichitans often came up blank when asked about local resources for healthy food?!? Is there a shortage of grocery stores in the city? Have they all made a collective decision to stop selling fruits and vegetables? Or are the fruits and vegetables from the supermarket not healthy or affordable?

This recommendation is equally problematic, if not quite so absurd:

- Align public policy with community fitness goals. Planning that doesn't include greenways and parks, sidewalks and bike paths is stacking the deck against citizens' health.


Despite what they might tell you, city planners are not responsible for your health. Greenways, parks, sidewalks and bike paths are all lovely amenities. But they will by no means guarantee public health and their absence by no means dooms it, either. Decisions such as these should take place in the context of the economic trade-offs they entail and not as part of a misguided attempt to realize "community fitness goals."

City and county leaders should resist the temptation to abuse their positions by engaging is social engineering through public policy.

Monday, May 02, 2005

George Will: "GM is a welfare state"

[George Will, "Pension, medical costs cripple GM," The Lawrence Journal-World, 1 May 2005.]

Following the breakdown in negotiations between Boeing and SPEEA, it is interesting timing for George Will to release a column discussing the unsustainability of current health care benefits in major companies:

Who knew? Speculation about which welfare state will be the first to buckle under the strain of the pension and medical costs of aging populations usually focuses on European nations with declining birth rates and aging populations. Who knew the first to buckle would be General Motors, with Ford not far behind?

n 2003, GM's pension fund needed an infusion from the largest corporate debt offering in history. And the cost of providing health coverage for 1.1 million GM workers, retirees and dependents is estimated to be $5.6 billion this year. Their coverage is enviable -- at most, small co-payments for visits to doctors and for pharmaceuticals, but no deductibles or monthly premiums.

GM says health expenditures -- $1,525 per car produced; there is more health care than steel in a GM vehicle's price tag -- are one of the main reasons it lost $1.1 billion in the first quarter of 2005.

GM says its health care burdens, negotiated with the United Auto Workers, put it at a $5 billion disadvantage against Toyota in the United States because Japan's government, not Japanese employers, provides almost all health care in Japan. This reasoning could produce a push by much of corporate America for the federal government to assume more health care costs. This would be done in the name of "leveling the playing field" to produce competitive "fairness."

Health care for retirees and their families -- there are 2.6 of them for every active worker -- is 69 percent of GM's health costs. GM says it has $19.8 billion in cash and normal mortality rates will reduce the ratio of retirees to active workers. Meanwhile, Rick Wagoner, GM's CEO, can only muse, "It's strange. When I joined GM 28 years ago, I did it because I love cars and trucks. I had no idea I'd wind up working as a health-care administrator."


Companies that continue to offer over-the-top benefits at little to no cost can expect similar fates. Others, such as Wendy's and Dell, are moving to HSA policies and forever changing the trend lines of their health care spending.

[Devon Herrick, "Health Savings Accounts: The Future Of Health Care For Kansans," The Flint Hills Center, 14 February 2005.]

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