Not expanding Medicaid will cost SC small businesses

The State
February 21, 2013

By FRANK KNAPP JR. — Guest Columnist

Columbia, SC — The debate is underway over whether to expand the federal-state health insurance program, Medicaid, to more uninsured low-income South Carolinians.

Opponents of expansion, made possible by the Affordable Care Act, or Obamacare, are led by Gov. Nikki Haley’s director of Health and Human Services, Tony Keck, who runs the state’s Medicaid program. Mr. Keck’s public position is that the issue is not about cost but about making more of our citizens healthy. He argues that expanding Medicaid is an inefficient way of achieving that goal.

In December, I attended a forum where Mr. Keck explained that having health insurance was not a good predictor of health outcomes. Therefore the state would do better in promoting health by concentrating on education and jobs while encouraging our citizens to make better personal choices about their behavior.

But in response to a question I posed, Mr. Keck admitted that a low-income person’s health would be better if he had Medicaid than if he did not. “But at what cost?” he quickly added.

Mr. Keck’s almost reflexive response reveals that the tactic of arguing that Medicaid isn’t the best way to improve health is really an effort to misdirect the debate away from the real issue — cost.

If we remove the partisanship over Obamacare and admit that improving the level of education, size of paychecks and behavioral decisions of the state’s low-income citizens is an admirable but daunting goal that will take decades to achieve, the primary objection to expanding Medicaid to improve health today is cost.

Opponents of expansion say that the state can’t afford its eventual 10 percent share of the Medicaid expansion. Mr. Keck’s actuary projects that the cost to the state could be up to $1 billion by 2020.

Proponents of expansion point to a study that projects that economic activity in the state will increase by $3.3 billion and 44,000 jobs will be created from expanding Medicaid. This increase in economic impact would result in the state actually taking in more revenue than it would spend on the expansion through 2020, contradicting Mr. Keck’s analysis. After 2020 the state’s budget would experience a small net loss due to expansion.

Unfortunately, this cost debate has largely overlooked an important factor associated with not expanding Medicaid — the cost to our small businesses.

Many low-income employees work for our state’s small businesses, and expanding Medicaid will result in reduced costs to these employers.

First, there is a significant cost to a small business when workers are not on the job because they are sick or have to care for family members who are ill. Even employees who don’t miss work when they are sick are less effective. Workers with health insurance for themselves and their families miss less work due to illness and are more productive. Clearly expanding Medicaid to cover low-income workers will economically benefit their small-business employers.

Second, small businesses that want to offer health insurance to employees will find it more affordable under a Medicaid expansion. Small employers with Medicaid-eligible workers will have fewer employees to cover on a private group health plan and thus have less in premiums to pay. In addition, with expansion the cost of the employee’s private insurance will drop due to a reduction in the hidden tax on every health insurance policy, which pays for the uncompensated care for the uninsured. Based on projections by Milliman, the actuarial firm used by Mr. Keck for his cost projections, the reduced premiums could be up to $1,000 per year for family coverage.

The third benefit of a Medicaid expansion involves the requirement of the Affordable Care Act that businesses with 50 or more employees either offer health insurance or pay a penalty. Workers on Medicaid are not counted toward the total number of employees, so the Medicaid expansion would mean that even many small businesses with 50 or more employees could avoid paying a penalty for not offering health insurance.

While our state officials continue to debate the cost of expanding Medicaid, that debate must include the cost to small businesses for not doing so.

Mr. Knapp is the president and CEO of the S.C. Small Business Chamber of Commerce; contact him at Sbchamber@scsbc.org.

Read more here: http://www.thestate.com/2013/02/21/2641481/knapp-not-expanding-medicaid-will.html#storylink=cpy

 

The ACA Toolbox for Health Reform: What State Health Leaders Aren’t Telling the General Assembly

February 5, 2013

by The Ruoff Group

The Affordable Care Act (ACA) provides health policymakers with a robust set of tools to accomplish important changes to both bring costs under control and improve our health and health care. The coverage expansion which ensures affordable access to this new, high performance health care system is integral to meeting the those goals, not contrary to them as the state’s health leader is telling the General Assembly.

When South Carolina Department of Health and Human Services Director Tony Keck travels the state, his central argument against the ACA and Medicaid expansion is that Congress and the White House asked the wrong question: “How do we insure as many people as possible in the United States?”[1] rather than “How do we get as many people healthy in the United States?”

Keck then points to the “Triple Aim” of health policy first articulated by Dr. Donald M. Berwick, former Administrator of the Centers for Medicare and Medicaid Services of the federal HHS:

 Reduce the per capita cost of health care
 Improve the health of populations
 Improve the patient experience (quality and satisfaction).

We agree with Director Keck’s central premise that we should be paying for health rather than health care, but we disagree that they are mutually exclusive.

Figure 1—with permission of The Commonwealth Fund

In a recent presentation on The Commonwealth Fund’s new report, Confronting Costs: Stabilizing U.S. Health Spending While Moving Toward a High Performance Health Care System (January 2013), Dr. David Blumenthal, M.D., M.P.P., Chair of The Commonwealth Fund, used the chart in Figure 1 to show that the ACA helps move us towards the critically needed changes to the health care system to achieve Keck’s stated goals with a toolbox filled with tools for stabilizing health spending and moving us toward a high performance health care system.

The Keck argument seems to be that we have a choice: provide health insurance coverage or improve our health. Our nation (and state) is facing a health crisis:

1. Massive numbers of uninsured who tax our health systems through inefficient and inappropriate use which often comes too late to be cheap—45 % of non-elderly South Carolina adults with incomes below 138 % of the Federal Poverty Level ($15,856 for a family of one; $32,499 for a family of four) are uninsured[2];

2. Both a very costly and inefficient health system and costs growing faster than the nation’s economy; and

3. Poor health outcomes when compared to other nations.
There are ways to address these. The Commonwealth Fund Commission on a High Performance Health System observes:

As national policy leaders consider approaches to slow and stabilize the growth of federal health spending in ways that also benefit all payers (state and local governments, businesses, and households), it is crucial that these approaches be developed and applied to adhere to and further the goals of a high performance health system. These goals include providing affordable access across the nation to high-quality, well-coordinated and patient-centered care with continuous delivery system innovation. Achieving the goals of a high performance health system, while stabilizing cost growth, requires a focus on the total health system and health care markets, not just federal programs. (Confronting Costs, pp. 18-19; emphasis added.)

Director Keck, a creative health administrator who is using his position to push many of these changes in both public and private sectors in our state, presents a completely false dichotomy. Coverage which ensures affordable access to this new, high performance health care system is integral to meeting the Triple Aim, not contrary to it. When he suggests to the General Assembly and its committees that the ACA only addresses coverage, that is completely untrue.

We can have honest differences over whether South Carolina can afford it’s four percent contribution[3] to a Medicaid Expansion between FY2014 and FY2020. But the state’s chief health policy officer completely mischaracterizing the ACA to the General Assembly can only lead us to bad policy choices on the expansion.
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[1] Unless otherwise noted, all quotes are from Keck’s January 24,2013, presentation to the Senate Medical Affairs Committee’s Affordable Care Act Subcommittee. Video of that presentation is available at: http://www.scstatehouse.gov/video/videofeed.php. Handouts from that meeting are at: https://www.scdhhs.gov/sites/default/files/Medical%20Affairs%20ACA%20Subcommittee%20FINAL%201.24.13.pdf.
[2] US Census Small Area Health Estimates, 2010, at http://www.census.gov/did/www/sahie/data/interactive/.
[3] SCDHHS never shows the marginal costs of the Medicaid Expansion, instead lumping in the unavoidable costs of the ACA, to demonize the ACA and to throw every chunk of cheese and baloney it can onto the scale of Medicaid Expansion costs. If you simply subtract from the costs of their scenario covering a reasonable estimate of costs of the ACA including an expansion their scenario without the expansion, you get $13 billion in total marginal spending, of which the State would be on the hook for $570 million, counting only some of the potential savings from an expansion. These are derived from SCDHHS numbers provided in Milliman Letter to Keck re: AFFORDABLE CARE ACT- FINANCIAL IMPACT SFY 2014 THROUGH SFY 2020 (November 30, 2012).

The Ruoff Group conducts research and policy analysis on issues affecting South Carolinians.  http://TheRuoffGroup.com

The Medicaid expansion debate heats up

The advocates of expanding Medicaid in South Carolina were out in force last night at the USC School of Law auditorium.  Hundreds of people turned out to hear presentations by three supporters of the expansion and one opponent, Tony Keck the Director of the SC Department of Health and Human Services.

In his remarks, Mr. Keck chastised the first speaker for barely mentioning health while focusing on the economic reasons for providing Medicaid to South Carolinians up to 138% of the federal poverty level.  His position and that of his boss, Governor Nikki Haley, is that spending money to expand Medicaid to hundreds of thousands of uninsured low income citizens is not the best way to improve their health. 

One of the two slides Mr. Keck showed was the underpinning of this argument.  The slide of a map showed federal data on health outcomes for Medicaid recipients in the state.  Those with Medicaid in the I-95 corridor of shame had far more health problems than Medicaid recipients outside of that area.  This demonstrated, according to Mr. Keck, that government health insurance was not a good determinant of health outcomes.  Better education, jobs and personal decisions along with genetics were more important to better health than simply having health insurance.

When I was recognized to speak, I pointed out that the map he was of present Medicaid recipients but that these were not the people we were actually talking about.  I wanted to see a map of the uninsured South Carolinians who would be eligible for Medicaid under the expansion and how their health outcomes compared with today’s Medicaid recipients.  I predicted that we’d see a big difference between the two groups with those with Medicaid having better health.

Mr. Keck responded with more of the same concerns that expanding Medicaid was not going to be successful in improving health.  But I was able to get in one last question.  Did he think that there would be a different health outcome for a person at 50 percent of the federal poverty level with a child who has Medicaid under our law compared to a person at 60% of the federal poverty level who does not have Medicaid today. 

Mr. Keck responded that of course the person would be better off with Medicaid than without it.  “But at what cost?" he added.

Cost?  Wasn’t this debate supposed to be about health?  When the proponents cite the economic benefits, they get criticized.  But when the opponents of expansion agree that having Medicaid will yield to better health outcomes than not having it, then they evoke “COST”. 

This is going to be an interesting legislative session.

The sad case of Medicaid expansion

At the recent Republican National Convention South Carolina Governor Nikki Haley took the stage.  “Sadly, the hardest part of my job continues to be this federal government, this administration and this president,” she said.

But a story in today’s Charleston Post & Courier clearly shows that the hardest part of the Governor’s job is convincing state legislators not to do what is in the best interest of South Carolina. 

According to the story Haley and Tony Keck, who heads the state’s Department of Health and Human Services (SCDHHS), have been meeting and talking with legislators to convince them to vote against expanding Medicaid in the state to cover up to 600,000 uninsured South Carolinians. 

Under Obamacare the feds would pick up all the cost for the expansion for the first three years and 90% after that so the uninsured at or below 138% of the federal poverty level could get the healthcare they desperately need.  Small businesses employing these working poor would benefit from healthier workers that would no longer need covering under employer healthcare plans.   Premiums for everyone would be helped by eliminating the hidden premium tax we all pay for the uninsured.  Healthcare providers would benefit from the increased revenue.  And the economic boost to the whole state’s economy would be enormous. 

But Haley wants the state to reject the $13 billion in federal money over the next six years because, she says, it would hurt the state in the long run. 

Haley complains that the state can’t afford the expansion.  She cites a highly criticized study paid for by Keck’s agency.  In analyzing this report John Ruoff of The Ruoff Group concludes, “As the General Assembly explores a Medicaid expansion, it should do so with realistic numbers based on empirical research and taking into account all costs and savings directly attributable to an expansion and not just SCDHHS costs and savings. To date, SCDHHS has failed to provide estimates of those other savings.”

The Haley administration also contends that the Medicaid program doesn’t provide the most healthcare for the lowest cost.  But instead of crafting a new approach and asking the feds for waivers to implement a more “cost effective” Medicaid program as it claims it wants, Haley and Keck would rather do the political work of convincing the legislature and public that an expansion is not good for the state. 

Sadly for South Carolinians, the hardest part of our job is seeing the health of our citizens and economy suffer at the hands of partisans looking to make national names for themselves.

 

Catholic's going after Medicaid expansion

First, I’m not a Catholic.

Second, let’s hear it for the Catholic Church!

Back in April the U.S. Conference of Catholic Bishops sent a letter to Congress opposing cuts in program funding for the poor such as Medicaid.  In August, Father Stephen Umhoefer, Paul Ryan’s family pastor for a number of years, revealed his worry over VP candidate’s budget proposal that would cut funding for Medicaid-something Father Umhoefer believes is would be “inconsistent with Catholic teachings.”

Yesterday the President of the Leadership Conference of Women Religious, Sister Pat Farrell signed onto a letter encouraging governors to expand Medicaid in their states as allowed under Obamacare.  Most American nuns are members of the Conference.

The Catholic Church believes in the shared responsibility we all have for making sure that there is an adequate safety net for the less fortunate.  Medicaid that provides access to healthcare is part of that safety net that the Bishops, Father Umhoefer and the nuns do not want to see cut by Ryan’s budget and instead expanded in the states under Obamacare.

Enter South Carolina’s director of Health and Human Services Tony Keck who, like his boss South Carolina Governor Nikki Haley, opposes expanding Medicaid even if the Federal government pays for it for several years.

In a blog posted on September 6^th in the well-respected online journal “Health Affairs, Mr. Keck partially justifies Governor Haley’s opposition to expanding Medicaid saying, “she does so because she believes that its version of expansion will ultimately hurt the poor....”

I don’t know if Mr. Keck is a religious man and we read that Governor Haley, Sikh turned Methodist, attends church.  But while these two rightfully should be concerned about government policy, their combined credentials for having hands-on experience with the poor pales in comparison with those in the Catholic Church. 

So let’s not hear some “we know better” (or “holier than thou”) comments about how providing low income uninsured with access to healthcare is somehow bad for the poor.  If South Carolina officials don’t like the way it is delivered under Medicaid, take the Federal money and ask for permission to make systemic changes in how the healthcare will be delivered.  They’ll probably get a positive response from the Feds and definitely a thumbs up from the Catholic Church (and maybe even from someone at a higher level).

Obesity, regulations and donuts

Last month the new director of the South Carolina Department of Health and Environmental Control (DHEC) stirred up the debate on healthcare in the Palmetto State.  Catherine Templeton said that she had a “hallelujah moment” in talking with health experts when she realized that obesity was an important contributor to numerous health problems like heart disease, high blood pressure and diabetes.

If we could prevent obesity, she reasoned, we could make South Carolinians healthier and reduce the state’s spending on Medicaid. 

No one disputes her conclusion and the healthcare professionals, who have worked on the obesity problem for decades, appreciate the attention Ms. Templeton has given the issue.  The business community also appreciates efforts to make our workforce healthier and more productive.

There aren’t too many states (actually only 3—“thank God for” Mississippi, West Virginia and Alabama) that have a higher adult obesity rate than South Carolina’s 31.5 percent. 

But Ms. Templeton’s characterization of how she thinks the state should attack obesity caused some concern.  “If we could paratrooper in—sort of the obesity SWAT team—just focus on those areas with a surgical approach…And if you knock out the most critical areas, you’ve made a difference for the whole state.” 

The “SWAT team” analogy gives the impression that the obesity problem can be quickly corrected with a concentrated effort in a specific geographic area in a relatively short period of time.  No one in the healthcare community believes that.  Obesity is a systemic problem with numerous determinants not likely to be corrected with some one-time surgery.

Many of us are also concerned that fighting obesity will take the place of improving the health of all low income South Carolinians.  In his opposition to our state expanding Medicaid under Obamacare, the director of our Department of Health and Human Services Tony Keck has said that South Carolina could better spend the relatively small state match for a Medicaid expansion on focusing on “hot spots” where “there are profound health problems.”

With Ms. Templeton’s newly found interest in obesity within hot spots around the state, I can see Governor Nikki Haley’s administration coalescing around obesity SWAT teams as a more effective and less costly approach to improving health than expanding Medicaid to make healthcare available to 500,000 working poor throughout our state.

However, there is no disagreement that obesity is a driving force in rising healthcare costs.  And one component of the remedy is to encourage personal responsibility.  To the degree that it is possibly, people who need or want to lose weight should make better choices in their diet.  Both Governor Haley and Mr. Keck have pointed out the need for personal responsibility in one’s health.   DHEC board member Kenyon Wells is quoted as saying in regard to obesity, “It is hard to get people to change.  We can throw as much as we can at it, but it stills gets down to personal values and personal responsibilities.” 

But for people to take more responsibility for their weight, the public needs more information about the food from which they are making eating decisions.  If you can’t compare the nutritional values, especially calories, of your choices, how can you make better decisions? 

One of the provisions of Obamacare addresses this issue.

Section 4205 of the Affordable Care Act amends Section 403 of the Food Drug and Cosmetic Act of 1938. This amendment requires restaurants and similar retail food establishments with 20 or more locations nationwide to provide calorie information for menu items, food on display and self-service food and additional written nutritional information for menu items. Additionally vending machine operators that own 20 or more machines are to disclose calories for foods.

Governor Haley, Ms. Templeton and Mr. Keck should welcome this new nutritional transparency to encourage more personal responsibility in fighting obesity.  But they apparently will need to work on at least one member of our Congressional delegation.

In May Representative Tim Scott formed a bipartisan Congressional Regulatory Review Caucus along with Representative Loretta Sanchez of California.  Yesterday was the first briefing for this caucus and the topic was the nutritional labeling requirements in Obamacare. 

Naturally since this calorie transparency was associated with the President, Mr. Scott was against it.  Freedom to eat what you want without concern for nutrition appeared to be Mr. Scott’s philosophy. 

“I don’t want to know how many calories are on my pizza,” Scott is reported to have said.  Addressing the Dunkin’ Donuts representative at the briefing Scott said, “I had five of your powdered donuts the other day, and I did not look at the calorie count.”

But Mr. Scott is doing himself (and his body) a disservice by not checking out the calories.  Instead of the five powdered donuts at 1700 calories, he could have had 5 glazed donuts at only 1300 calories or 6 ½ glazed for the same 1700 calories.  And we all know that glazed taste better than powdered.

But my suggestion is that Mr. Scott should have gone with my favorite, chocolate kreme filled.  Yum!  Four of these (if a person can actually eat four at one sitting) would be only 1480 calories. 

If Mr. Scott would look at nutritional information as the way to make better tasty calorie choices instead of a tool to fight obesity, maybe we can win his stomach if not his brain.

Expanding healthcare to more childen....finally!

Congratulation to South Carolina Governor Nikki Haley and state Health and Human Services Director Tony Keck.  Their proposal to add an additional $29 million in the Medicaid budget for children’s healthcare appears to be a done deal both in the House and Senate.  This is a dramatic turnaround from the Mark Sanford administration.

Back in 2007 the South Carolina Small Business Chamber, S.C. Appleseed Legal Justice Center, S.C. Fair Share and AARP-SC were fighting to increase the cigarette tax in an effort to generate funding for a program to help make health insurance more affordable for small businesses and to expand the number of children eligible for Medicaid from those in families of  up to 150% of poverty to up to 200% of poverty.  The latter proposal survived and the General Assembly put about $29 million in the budget to provide healthcare services for an additional 70,000 to 100,000 children.

Governor Sanford then vetoed that part of the budget but we were successful in having that veto overridden.  The story should have ended there…but it didn’t.

The Sanford administration and his HHS director actively worked against adding these children to the Medicaid program by refusing obvious measure to let parents know about the program and throwing every roadblock they could in front of parents and organizations who tried to have the newly eligible children enrolled in the program.  Who knows where the millions set aside for the program went but it certainly wasn’t used as intended by the Legislature.

For 5 years these children went without the Medicaid for which by state law they were legally eligible. For 5 years the uncompensated healthcare these children did receive helped push insurance premiums up on individuals and small businesses.  For 5 years the working parents of these children were less productive on the job because of sick children whose illnesses could have been preventive with proper healthcare.  All of this because Governor Sanford and his Director of HHS knew better that the General Assembly and caring more about shrinking government instead of the health of our needy children and health insurance costs for the rest of us.

But while Governor Haley, Tony Keck and the Legislature appear to be all on board with funding and implementing this Medicaid expansion, they should drop their rhetoric that they are doing it because of the new federal health care law, the Affordable Care Act. 

There was no “ObamaCare” back in 2007.  This Medicaid expansion program for children was passed by a Republican House and Senate.  It is the law.  State officials need to stop blaming President Obama for a worthwhile healthcare program that we worked for and our South Carolina Legislature passed 5 years ago. 

Black will not be fall guy

These must have been the worst two weeks in David Black’s life.  What started in February as a new career adventure for the former president and CEO of the Liberty Life Insurance Company in Greenville, dissolved into a nightmare for the Director of the S.C. Department of Insurance who resigned yesterday. 

Weighing heavily on Mr. Black’s decision, one he made last week according to an email he sent to staff, surely was the political troubles of his boss, Governor Nikki Haley. 

Renee Dudley of the Charleston Post and Courier broke what has now become a national story of South Carolina accepting a $1 million planning grant from the feds to determine if the state would establish and operate a health insurance exchange in 2014 or let the federal government do it.  The exchange, a market place for obtaining health insurance, is an integral part of the Affordable Care Act, Obamacare to many.

But emails of March 31 of this year—obtained by Ms. Dudley through the Freedom of Information Act—clearly show that Governor Haley had no intention of South Carolina creating an exchange.  The problem is that in an Executive Order on March 10^th she established a Health Exchange Planning Committee, as called for by the grant, to “develop and submit a report to the Governor by October 28, 2011 which sets forth the Committee’s recommendation regarding whether or not the State should establish a health insurance exchange.”

The planning committee, including Mr. Black, was totally in the dark about the Governor’s earlier decision—except for one member, Tony Keck who is the Director of the South Carolina Department of Health and Human Services.  Mr. Keck, a former member of Governor Bobby Jindal’s administration, participated in the March 31 email discussion with the Governor and her staff. 

The political firestorm that has continued to burn following Ms. Dudley’s story has now consumed its first victim. 

It was Mr. Black’s insurance department that received the federal planning grant money and hired a key staffer (who also had no knowledge of the Governor’s ruse) to be in charge of the planning grant and committee.  Mr. Black and his insurance department will now have to respond to a possible federal investigation of misusing taxpayer dollars as called for on December 22 by U.S. Senator Tom Harkin.  On December 23 the Chairman-Elect of the S.C. Legislative Black Caucus sent Mr. Black a letter requesting a full briefing on this issue.

Mr. Black didn’t sign up for all this.  He certainly was not a knowing party to this charade.   And he never really fit into the highly partisan Governor’s operation as dis Mr. Keck.  My experience with Mr. Black has been very positive.  A very affable person, he demonstrated a professional responsiveness to his duties and those who interacted with his department.  There was never even a hint of partisanship in his actions.

So now Mr. Black has done the honorable thing.  Instead of trying to mold himself into the continuous campaign mode of Governor Haley’s administration and trying to defend her duplicity in this matter, he resigned.   

But the buck doesn’t stop with Mr. Black.  Who will the fire burn next?