For some of the merits of this bill, see my previous post on SB 12-032 and about Medicaid block grants in general.

The latest news is that the bill is postponed indefinitely.

As Michael Cannon at Cato summarizes:

The basic theorem is this: market actors have greater incentives to prevent fraud, because it’s their own money on the line.  Politicians are spending other people’s money, so their incentive to prevent fraud is far less.  Therefore, fraud will always be higher in government programs than in similar market endeavors.

And here’s a shocker: Medicare & Medicaid fraud far exceeds insurance company profits.

Here’s the bill summary. (The absence of capital letters is in the original bill.)

SB 12-060 – Improve Medicaid fraud prosecution
Sponsor: Senator Ellen Roberts
Description: The bill requires the department of health care policy and financing (HCPF) to submit a written report annually to the health and environment committee and the judiciary committee of the house of representatives and to the health and human services and judiciary committees of the senate concerning client fraud in the medical assistance program. In addition, the attorney general’s office is required to submit a written report annually concerning provider fraud.

The bill also changes the amount of a county’s share of recoveries of fraudulently obtained medical assistance when the recovery is initiated by a county department, county board, district attorney, or HCPF on behalf of the county. Instead of sharing one-half of the state funds paid with the state, the county may retain the full amount of the recovery after payment of the federal government’s share.
Hearing: Senate Health and Human Services at 1:30 PM in SCR 356
Contact the Senate Health and Human Services Committee by clicking here

Via Colorado Senate News.

Sen. Tim Neville, R-Littleton, said he sponsored Senate Bill 53 because he does not believe in the state or federal government mandating health care purchases or setting minimal requirements that must be in a health insurance plan.

The Citizens Council on Health Freedom recently sent out the following e-mail (which may be published a Health Freedom Watch) that summarizes key points about why repealing Colorado’s Health Benefits Exchange (SB 11-200) is a good idea:

Michael Cannon from the Cato Institute in Washington, D.C. came to Minnesota late last year to discuss Obama’s government-established health insurance “exchange” with Republican legislators. Here’s the video with an intro by CCHF’s president. Here’s part of what Mr. Cannon says (Comments start at 2:45; Q&A begin at 32.17):

 You do not want to create an Obamacare health insurance exchange. You do not want to create any type of health insurance exchange….Obamacare is not just any old law. It is the most sweeping piece of economic regulation that Congress has passed in our lifetimes, in any of our lifetimes….It sweeps 2/3 of of this country, 200 million people, into compulsory health insurance.” Just one regulation in Obamacare is going to throw 155,000 Americans, not just Americans, sick Americans, out of their health plans where they’re protected from insurance spikes….because this regulation is going to force their insurers out of business.

Dumping the “Dogs”

Cannon warns that “the most persuasive reason” for legislators to not create an Obamacare exchange is because those [Obamacare price controls] give insurance companies “a $999,999 incentive to avoid, dump and mistreat sick people…” He says health plans with price controls drop certain coverage “precisely so they could get rid of the “dogs.”" That word came from a internal memorandum, he says. “Dogs” was the term used to describe high cost patients that needed to be dumped.

 Obama “Dying to Have States Create Exchanges”

He says the Obama Administration is

dying to have states create exchanges…They want it to be a state exchange, so they don’t have to administer it, so that someone else will take the bullet for them when Obamacare starts hurting sick people, so that there won’t be this cloud over whether or not they are able to offer the premium assistance that hides much of the cost of Obamacare. [the tax subsidies]

“Let the Federal Government do it”

Cannon discusses whether state-run Obamacare-compliant exchanges do not preserve power for the state. “You’re not mandated to do this.” He says, the administration is giving you the option of running an exchange that you would run yourself with the “federal exchange” as a fallback. But Cannon says, “Don’t do it yourself, let the federal government do it. I understand why that’s counter-intuitive.

Power Has Shifted

“…The biggest argument among opponents of Obamacare as to why they should never none-the-less create an exchange is it will allow you to preserve state control. I want to tell you that that that is false….If you want proof of that, listen to the people who are creating an exchange to preserve state autonomy,

• “Once our exchange is approved…
• We will get authority from the federal government to…
• We will get sign-off from the federal government on….
• The federal government will allow us to…. “

Cannon says:

The power has already shifted from the states to the federal government. If you create a state-run exchange you’re not enhancing your authority. You’re not preserving state authority. All you’re doing is lending power manpower to a federal takeover that has already happened.

Thus, the state GOP legislators must say NO, NO, NO to the exchange.

The state Department of Health Care Policy and Financing has failed to implement 51 audit recommendations that it agreed to accept during the past two years, auditors told a panel of lawmakers Thursday.

Most serious, auditors said, are failure to properly document proof that Medicaid recipients are eligible for the program and deficiencies in record-keeping that assures health care providers are approved to treat Medicaid patients.

Some lawmakers who attended the joint meeting of the House and Senate health committees expressed outrage that the practices recommended to remedy problems were delayed, in some cases multiple times.

“As a taxpayer, it’s kind of insulting,” said Sen. Joyce Foster, D-Denver. “I am so frustrated with this kind of bureaucracy. I guess that’s what leads to people concerned about big government.”

Read the whole article: Auditors rip state health care department – The Pueblo Chieftain.

Via Ari Armstrong.

The bill requires the department of health care policy and
financing (state department) to seek a federal waiver to allow for increased flexibility and efficiency in the management of the medicaid program and the children’s basic health plan.

The waiver will seek authorization to determine eligibility
categories and income levels and to establish an asset test for eligibility, implement cost-sharing and premiums, encourage the use of private health benefits coverage, and encourage persons to maintain employer-sponsored health insurance. As part of the waiver, the state department may negotiate for capped federal reimbursements with provisions for adjustments in the federal reimbursements for population growth and inflation.

The state department shall report to the general assembly
concerning the waiver request and identify necessary changes to state law to implement the reforms requested in the waiver.

My take:

Cost-sharing and premiums:  I assume this means increasing them. This is a good idea, as I discussed in this article at Health Policy Solutions: Colorado Child Health Plan: Parents should value children’s health more than sweets and booze.

Encouraging this use of (nominally) private health plans: The bill text says: “Encourage the use of the private health benefits coverage market rather than public benefits systems.” This is also a good idea. Medicaid is a dreadful program in terms of access to care, fraud, and cost to taxpayers.  See also “Medicaid’s Unseen Costs” by Michael Cannon.

If the political left approves of food stamps (food vouchers for private grocery stores) rather than government-run grocery stores for the poor, then why not the same for health plans?

Florida has tried this, and according to the Heritage Foundation it has been successful. (I need to read up on this myself.)

Capping federal funding: Matching funds from the Feds is a disaster. It encourages waste and rewards Colorado bureaucrats for spending taxpayers’ money. For more, read my posts about Medicaid Block Grants. Or watch the video above for a summary.

Thanks to Colorado Senate News for informing me about this bill.

Tim Hoover of the Denver Post comments here: Republican senator files bill to force state to seek Medicaid waiver.

Thanks to Obamacare, young adults are now allowed to stay on their parents’ health insurance plans until they turn 26 years old.

This provision “allows” nothing, but it forbids voluntary exchange. Prior to Obamacare, 25 year-olds would be “allowed” to stay on their parents insurance plans — provided that the insurer chose to offer customers a plan with this feature.  For some customers, this feature could make their product more attractive than competitors’ products, especially if it does not increase the premiums too much.

If this mandate is so good, then why not increase the age to 27, or 30? Or extend it to the employee’s siblings? O’care supporters probably would like this, as many Obamacare commands are a means to creating socialized medicine in a nominally “private” insurance market.

Obamacare becomes illegal for people to buy insurance without this feature.  It does not “allow” people to buy a less expensive plan that does not have it. We are forced to pay extra for it, whether we want it or not.  The federal government estimates that the mandate would increase premiums by 1%, while Cigna estimates between 1 and 1.5%. Employees with dependents of any age may pay more than this if their employer is one of the many that plan to increase prices of dependent coverage.

What is the most just penalty for an employer and insurer who voluntarily engage in the buying and selling of a health plan that is illegal because it lacks coverage for dependents younger than 26 years old?  A fine? And if they don’t pay?

Another angle: This mandate is all about special interest politics.  One group appears to win, but they really do not.  In his book, The Machinery of Freedom, economist David Friedman discusses how special interest politics works:

Special interest politics is a simple game. A hundred people sit in a circle, each with his pocket full of pennies. A politician walks around the outside of the circle, taking a penny from each person. No one minds; who cares about a penny? When he has gotten all the way around the circle, the politician throws fifty cents down in front of one person, who is overjoyed at the unexpected windfall. The process is repeated, ending with a different person. After a hundred rounds everyone is a hundred cents poorer, fifty cents richer, and happy.

If you support this mandate, then you cannot legitimately oppose any regulation, subsidy, tariff, etc. that violates free trade by benefiting one group at your expense.

As I’ve written before:

In Colorado, the cost-shift from the uninsured is just $85 per insured person. This is according to research done for Colorado’s 208 Commission. …

Key findings include that “the uninsured pay for about half of their care out-of-pocket” while only “20 percent is uncompensated care from providers.” An Urban Institute study provides further evidence that uninsured cost-shifting is small — at most “only 1.7% of private insurance premiums.”

By outlawing affordable plans, mandatory insurance increases premiums by much more. Consider the federal health control bill, HR 3590. It requires that all plans include at least ten mandated benefits, such as maternity care and substance abuse treatment [HR 3590, sec. 1302], whether you want them or not. A typical mandated benefit increases premiums by about 0.75%, concludes a 2008 MIT study.

Oddly, many proponents of mandatory insurance support Medicaid and Medicare, even though they impose large cost shifts — even when not counting the taxes the insured pay to fund these programs. As I’ve written elsewhere:

A Milliman actuarial study concluded that the cost-shift from Medicaid and Medicare adds $1788 to the annual insurance premium for a family of four. The uninsured pay more of their medical bills than Medicaid does for its participants, reported Reuters in 2008. What’s more, a CDC study found that people “with Medicaid coverage were more likely to have had multiple visits to [emergency departments] … than those with private insurance and the uninsured.”

Also, if the uninsured are free-riding, to my knowledge they can most easily do this in emergency departments because EMTALA forces doctors to treat them. But emergency treatment is a small fraction of total medical spending.  If supporters of mandatory health plans were sincerely concerned about this, they’d support only forcing everyone to buy a plan that covers only emergency room treatment, rather than bloated plans with mandated benefits that appeal to groups that lobby for them.

The National Federation of Independent Business Research Foundation Wednesday released its national study highlighting the private-sector job loss it says will result from the Health Insurance Tax, including 2,500 jobs Colorado by 2021 – 1,300 of them in small businesses.

Read the whole article: HIT tax to cost Colorado 2,500 jobs | Northern Colorado Business Report.

Colorado House Republicans temporarily have blocked the Colorado Health Benefit Exchange board from applying for a $22 million grant that would have been used to set up the technology infrastructure needed to operate an online health insurance marketplace beginning in 2014. …

Rep. Jim Kerr, a Littleton Republican and review committee member, said in a statement that GOP members were very concerned about the requirements to accede to federal law. “This current application would push Colorado into a one-size-fits-all mandate from Washington,” Kerr said. “Colorado needs Colorado-specific solutions to meet our Colorado-specific needs. That’s why we created a health benefit exchange to fit the unique needs of Colorado and to protect Coloradans from an out-of-control Washington, D.C., bureaucracy.”

Read the whole article: House GOP move stalls health reform action.

Kerr is correct. See these posts:

• Colorado’s health insurance exchange: controlled by Feds, limited choice
• Colorado SB 11-200: Feds will control the insurance exchange
• Politically-controlled exchanges & ACOs are about authoritarian control, not competition & accountability
• State-run insurance exchange enables federal control of Coloradans’ insurance

Colorado’s APCD [All Payer Claims Database] is a disaster waiting to happen and makes a mockery of transparency, which is intended for citizens to watch government not the other way around. Among civil libertarians, the Independence Institute was the lone defender of your medical privacy.

Fortunately for Coloradans, the database is behind schedule.  It was supposed to be operational by summer 2011. That has been delayed until December 2011. Enjoy your medical privacy while it lasts. As supporters claim, they cannot “manage” your health care, unless they can “measure” it.

Read her whole post: Spotlight on your private medical records.

To my understanding, there’s a way to opt-out of this database. See my post: Colorado’s health “information exchanges” threaten your medical privacy.