In the body of this email, I try to address two issues.
A. Why I oppose PPACA and federal qualifying health exchanges
B. Offer a real solution to increasing medical costs and how to reduce them
At this time, I cannot support a health exchange that meets federal standards for three main reasons.
1. The federal government, through a federally qualifying health exchange, is forcing Idaho to open Medicaid eligibility that will increase the number of people enrolled in Idaho by 100,000 to 200,000 individuals. These federal programs are changing the culture of our state from one of productivity and independence to one of entitlement and ingratitude altering the character of the people.
2. The federal government is going to fund 90 percent of the cost of these new enrollees. The federal government does not have the resources. Currently, 40 percent of the federal budget is financed through borrowed money with 58 percent of the budget going to entitlements. Medicare and Medicaid are two of the larger entitlement items. It is, in my opinion, irresponsible to embark on a course of action that will cause the deficit to grow. Such a course of action will ultimately destroy the economy through inflation.
3. PPACA or Obama Care will not reduce the total cost of medical care. The cost of medical care in the United States is the highest in the world at 17 percent of the GDP. The next highest nation is France at 11 percent of the GDP and the average of industrialized nations is 8.9 percent. Singapore has a world class medical system that only costs 1/5 of the United States at 3.7 percent of the GDP. We need to go a different direction
The Problem: Medical costs are too high in the United States costing the nation 17 percent of the GDP and costs continue to rise. The main reason for the high cost is our current system has empowered government bureaucracies (Medicaid and Medicare) and insurance company bureaucracies to make spending decisions instead of the person accessing the care. Right now there is little nexus between usage and payment for those on Medicaid, Medicare, and private insurance. The result is over usage and abuse which drives up medical costs for everyone.
PPACA (Obama Care) continues this trend of empowering government and insurance company bureaucracies while disempowering the people to control medical spending. The only way PPACA could eventually work is to institute universal rationing. This would mean delays, denials of care for certain classes of medical care (elderly, premature babies, expensive heart and cancer treatments, and possibly denial of care for other expensive procedures and conditions).
The Problem as it relates to the economy: PPACA and an Idaho qualifying federal health exchange will open up between 100,000 and 200,000 more enrollees in the state of Idaho to Medicaid. The Federal government has pledged to pay 90 percent of the cost of these new enrollees.
The federal government needs to cut $1.6 billion from its budget in order to achieve a balanced budget. The federal government cannot balance its budget while incurring more obligations.
I have done a few calculations. The cost of the federal portion of Medicaid in Idaho for Medicaid is $6,400 per person x 225,000 individuals on Medicaid for a total of $1.4 billion. If a Health Exchange is established that implements PPACA, between 100,000 and 200,000 more Medicaid enrollees will sign up. This will be at a cost of $6,400 per enrollee or between $640 million and $1.28 billion!
The state portion will be 10 percent or between $64 million and $128 million. Where will the state get the funds? Will Idaho be required to raid the public school budget or raise taxes?
Extrapolate across the nation, to see what the fiscal impact may be for the entire nation. There are approximately 300 million Americans of which only 1.5 million live in Idaho or ½ of 1 percent. The population of the USA is 200 times that of Idaho.
The cost to the federal government of the new Medicaid enrollees multiplied by 200 times to calculate the fiscal impact may be to the federal government of increasing Medicaid enrollments.
Idaho cost of between $640 million and $1.28 billion x 200 times = a total cost to the federal government of between $128 billion and $256 billion per year
How can the federal government reduce its budget deficit of $1.6 trillion when it is adding another $128 to $256 billion per year? Also, history tells us that the costs of these entitlement programs grow, not decrease, over time. Cost estimates have been grossly underestimated in the past.
Health Exchanges: Establishing a federally qualifying health exchange is the same as implementing PPACA. PPACA uses health exchanges to establish the PPACA in the state. Without health exchanges, PPACA is not possible.
Health exchanges are the transmission between the federal government and the people within the state. Just like a transmission in a car transfers the power of the motor to the drive shaft and to the tires if a transmission is removed from a car, the car cannot move.
Remove health exchanges from PPACA and Obama Care cannot be implemented. Some will say that the federal government will create a health exchange for us if Idaho does not create one. Let them, it would take years, the federal government does not have the human resources, and an appropriation from Congress would be needed to fund it. No such appropriation has been made and will not be made unless the Democrats win both Houses of Congress and the Presidency. This will probably not happen this next election cycle. The Supreme Court ruling either for or against PPACA will not be the last battle in this legal war.
If Idaho does not establish a health exchange, Idaho and her citizens will be largely exempt from Obama Care for at least 5 more years, in my opinion. (After writing the article, the Secretary of HHS announced that states had another three years to apply; just as I expected. The more the states resist, the more power we have.)
A Real Solution: What should be done? What is the solution? This 5 year window gives us an opportunity to implement real medical reform. Let me lay out for you what it may look like.
Step 1: Pass a bill that was introduced on Monday February 20 in the Idaho House of Representatives that I have been working on for two years. It does several very simple things. The goal is to reduce medical costs within 5 years by at least 30 percent and within 10 years by 50 percent while improving service and access. It starts with state workers.
1. It is voluntary
2. Initially only applies to state workers
3. State workers may choose to create a Health Savings Account and buy a high deductible policy
4. They may choose the high deductible policy offered by the state or find a high deductible policy in the market placed
5. The state will pay the cost of the premium
6. The state will transfer the premium differential between a low deductible policy and a high deductible policy to the employee’s Health Savings Account. The premium differential could be as high as $2,000 dollars per year.
This plan will empower state employees with money that they control so that they can go directly to a doctor or hospital and negotiate smaller payments because they can pay with cash. This plan will empower the patient (state worker). It will start to bring market forces back into the medical system. It will stabilize costs and limit over usage.
Step 2: With a year or two of history using the plan, the plan could be opened up to city, county, and school district staffs and employees.
Step 3: Encourage private employers to offer high deductible plans and also fund their employees’ Health Savings Accounts.
Step 4: Start a pilot program process where certain populations on Medicaid are given the opportunity to have a Health Savings Account that the state funds to encourage wise usage of medical care. The goal is to start weaning the people in the State off of federal entitlement programs that are harmful to their long-term mental and economic health and help them become productive and self-sufficient.
The funding for these pilot programs would come from the economic stimulation and extra tax revenue that a reduction in medical costs will bring. Remember the public and private sectors in Idaho spend about $7.5 billion on medical care. A reduction of 50 percent would free up $3.7 billion dollars.
Step 5: work to wean the State and her citizens from many of the Federal entitlement programs and replace them with social service programs that are sustainable and create economic self-sufficiency.
Encouraging the establishment of Health Savings Accounts is truly a win – win approach. It helps empower the state employ, it helps the taxpayers, and it does not harm the medical industry.
I hope the thoughts expressed offer some vision of a path forward that empowers and trusts the citizens of the state of Idaho and is an alternative to an ever growing federal bureaucracy. If I can be of any further assistance, feel free to contact me at any time.
Sincerely,
Rep. Steven Thayn
http://chumly.com/n/114377d
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