Medicaid: the beast that’s devouring Oregon’s budget

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An increasing number of Oregonians and their elected representatives appear to believe that affordable medical care is a right.

But fewer Oregonians seem to worry about paying for it.

Take Medicaid.

Like “The Eggplant That Ate Chicago,” Medicaid is gnawing away at Oregon’s budget.

Medicaid was created as a Federal-State funded program by President Lyndon B. Johnson in 1965 as part of his “Great Society” initiative. It was originally intended to be a fairly limited government program to subsidize health care for the poor.

But like so many initially modest government programs, Medicaid has metastasized into what one commentator has called “a budget-gobbling fiscal disaster.” Medicaid is now the third largest domestic program in the federal budget after Medicare and Social Security and, as Pew Charitable Trusts noted in a recent report, Medicaid is now most states’ biggest expense after K-12 education.

Spiraling enrollment is the major reason for the cost jumps.

In the beginning, federal and state Medicaid money allowed states to provide medical care only for single parents and children on welfare. Over time the universe of people eligible for benefits grew to include two-parent families, children with speech and development impediments, people who could be cared for at home rather than in an institution, children up to age 5, 8 and then 18, individuals with mental retardation, pregnant women and so on.

Just since 2000, the number of enrollees nationally has more than doubled, going from 34.5 million to 73.5 million. And because Medicaid is an entitlement program, states have to provide required benefits to eligible enrollees, with the state paying part of the cost. In other words, as more people join the program, it costs more.

Medicaid went into effect on July 1, 1966. Just a few million people enrolled the first year and about $850 million of public money was spent on the program, partly because only 28 states implemented it immediately.

Oregon introduced Medicaid in July 1967. By the end of that year, 37 other states had also implemented their Medicaid programs. In 1982, Arizona became the last state in the nation to implement a Medicaid program.

That same year, the first hints of federal cost concerns surfaced when Congress passed legislation limiting Medicaid eligibility to the “medically needy” whose income was at most 133 1/3 percent of the AFDC income eligibility level in a state. But the program’s explosive growth continued.

By 1973, national enrollment had reached 17 million and total Medicaid spending $9.4 billion. By 2013, Medicaid enrollment was 52.3 million and spending totaled $460 billion. In 2016, Medicaid enrollment reached 72.2 million and Medicaid spending totaled $553.5 billion.

The Centers for Medicare and Medicaid Services’ Office of the Actuary projects national enrollment will reach 77.5 million in 2024.

According to the National Association of State Budget Officers, the run-up in Medicaid costs meant that Medicaid spending accounted for 28.2 percent of total state spending in fiscal 2015, the single largest component of total state expenditures, and 19.7 percent of general fund expenditures. The Association projected that in fiscal 2016, Medicaid spending will come out at 29 percent of total state spending and 20.3 percent of general fund expenditures.

Oregon’s Medicaid spending has also seen explosive budget-busting growth, posing fiscal challenges for the entire government.

The Patient Protection and Affordable Care Act (ACA) called for states to expand Medicaid to low income adults and provides federal funds to cover 100 percent of the costs of the newly eligible people from 2014 through 2016. The federal matching rate was then set to decrease over the next four years to 90 percent in 2020.

When Oregon made the well-intended but ill-conceived commitment to expanding Medicaid under Obamacare, a report commissioned by the state estimated that the Medicaid expansion would cost the state $217 million in the 2017-2019 biennium, the first full two-year budget cycle in which the state would begin shouldering some of the costs. The Oregon Health Authority later revised that to $369 million, about 70 percent more.

In June of this year, the Legislature sent to Gov. Kate Brown a plan to raise $550 million in health care taxes to fund Oregon’s Medicaid program in the 2017-2019 biennium.

The Legislature even went so far as to extend Medicaid to children brought to the United States illegally. Coverage will begin in January 2018, with total enrollment of about 15,000 anticipated.

The Oregon Health Authority has calculated that the fiscal impact of this expansion will be about $36 million during the 2017-19 biennium. Under federal law, illegal immigrants can only receive Medicaid for emergency conditions, including pregnancy-related costs. To get around that, Oregon will pay 100 percent of Medicaid costs for illegal immigrants.

Some people breathed a sigh of relief at the enactment of the Medicaid package, but the solution is temporary and elected officials know it. Escalating costs are only going to get worse, partly because of the scheduled decrease in the percentage of the bill to be covered by the federal government.

Newly eligible Medicaid beneficiaries were fully financed by the federal government for 2014 through 2016, but the federal share will decline until the federal government funds just 90 percent of the costs and the states pick up 10 percent starting in 2020.

That’s going to have a bad enough impact on the state budget, but what happens after that could be even worse. Oregon’s expansion of Medicaid eligibility was considered a no-brainer by supporters because of the 90 percent commitment, but government can be fickle. From a fiscal perspective, it is unrealistic to expect the federal government to continue to pay 90 percent.

Congress could change the state/federal shares at its discretion, a possibility John Kasich, Ohio’s Republican governor, raised on July 19. “…states cannot expect the federal government to continue paying 90 percent of Medicaid expansion costs given our nation’s historic debt; they must accept a gradual return to traditional cost-sharing levels,” Kasich wrote in a New York Times opinion piece.

The federal government has historically provided states with Medicaid funding on a sliding scale based on their per capita income, with more affluent states getting a 50 percent match and poorer states getting up to 83 percent.

If efforts to constrain burdensome Medicaid costs are made again, you can be sure they will be met with overwrought cries of despair. There will also be new accusations like the claim by Sen. Elizabeth Warren (D-MA) that the House GOP’s plan to repeal and replace parts of the Affordable Care Act “…will devastate Americans’ healthcare. Families will go bankrupt. People will die.”

But not tackling the escalating costs of Medicaid will be medical malpractice.

So hold on to your hats, folks. This isn’t over.

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Almost half of all American births are now paid for by Medicaid

With government playing an ever-larger role in healthcare, there’s almost an even chance that the government paid for your baby.

It’s reminiscent of an ad President Obama’s campaign released in 2012 featuring “The Life of Julia” which promoted a narrative of government taking care of people from cradle to grave.

As the national debate on Obamacare reform takes place, new research by the Kaiser Family Foundation shows that, on average, Medicaid, , paid for just over 47 percent of all births in the United States in 2015, with many of those babies born to unmarried mothers. That same year, half or more of all the babies born in 24 states had their births paid for by Medicaid.

Medicaid provides healthcare coverage to low-income families and individuals. Exactly what it covers during pregnancy, for labor and delivery and after a baby’s birth varies by state. Emergency Medicaid, which covers labor and delivery only, is also available to legal immigrants in the country for less than five years, and undocumented immigrants experiencing a medical crisis.

The share of births covered by Medicaid reached 50 percent in Oregon, up from 34.4 percent in 2001. New Mexico earned the honor of being the state with the largest share of births covered by Medicaid, 72 percent. New Hampshire came in at the lowest level, 27 percent.

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Source: Kaiser Family Foundation

Of the 3,977,745 babies born in the United States in 2015, 1,600,208 of them—or 40.2 percent–were born to unmarried mothers, according to the federal Center for Disease Control and Prevention (CDC).

That made 2015 the eighth straight year that 40 percent or more of the babies born in the United States were born to unmarried mothers, according to CDC data.

Single mothers are more likely to be poor than married couples. The poverty rate for single-mother families in 2015 was 36.5%, nearly five times more than the rate (7.5%) for the families of married-couple families.

According to the  the Committee for a Responsible Federal Budget (CRFB), a non-profit group that monitors federal spending, Social Security, Medicare and Medicaid already swallow 58% of tax revenue, and are predicted to consume 80% by mid-century. Obviously, this trajectory can not continue.

 

 

Free Is (not) A Very Good Price: Oregon Democrats Propose Co-Pay-Free Health Access Bill

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The 79th Oregon Legislature got underway on Wednesday and already Democrats want to give away more free stuff to some Oregonians, even though the state is facing an almost $2 billion deficit.

Jennifer Williamson, D-Portland, Majority Leader in the Oregon House, posted on item on Facebook on Tuesday (Jan. 30) highlighting a bill before the Oregon Legislature. The bill would require coverage of specified health care services, drugs, devices, products and procedures related to reproductive health.

The bill, H.B. 2232, was introduced by Rep. Jeff Barker, D-Aloha, and Sen. Laurie Monnes Anderson, D-Gresham. It now sits in the  House Committee On Health Care. It would require insurers in Oregon to cover contraceptive drugs and devices approved by the Food and Drug Administration with no co-payment, co-insurance or deductible.

The same requirement would apply to a range of reproductive health services, including prenatal care, well-woman visits, screening for sexually transmitted infections, voluntary sterilization and abortion.

A complete list of items and services covered by the bill is provided below.

A story in the New York Times said 30 million women across the country gained co-pay-free access to preventive services like contraception under the Affordable Care Act. “By codifying the protections of the Affordable Care Act, the bill would protect Oregonians’ access to birth control and other preventive health care in the event of a repeal,” the Times reported.

The bill says health care providers will be reimbursed for providing all the required products and services without any deduction for coinsurance, copayments or any other cost-sharing amounts.

Of course, nothing is really free. Mandated free stuff is an illusion foisted on the public by pandering politicians. If the state requires insurance companies to provide products and services for free, and the state promises to reimburse them, the state will have to come up with the money to do that. At this point, nobody knows how much that would be.

But, hey, why worry. H.B. 2232 would give Democrats a chance to cater to a key constituency and the state is only facing a budget deficit of almost $2 billion.

 

Items and services covered by H.B. 2232

A health benefit plan offered in this state must provide coverage for all of the following services, drugs, devices, products and procedures:
(a) Well-woman care, including screenings, assessments and counseling.
(b) Pregnancy-related services, including pregnancy tests, preconception care, abortion and prenatal care.
(c) Counseling for sexually transmitted infections, including but not limited to human immunodeficiency virus and acquired immune deficiency syndrome. (d) Screening for:
(A) Chlamydia;
(B) Gonorrhea;

(C) Hepatitis B;
(D) Hepatitis C;
(E) Human immunodeficiency virus and acquired immune deficiency syndrome; (F) Human papillomavirus;

(G) Syphilis;

(H) Anemia;
(I) Urinary tract infection;
(J) Rh incompatibility;
(K) Gestational diabetes;
(L) Osteoporosis; and
(M) Cervical cancer.
(e) Screening and appropriate counseling or interventions for:
(A) Tobacco use; and
(B) Domestic and interpersonal violence.
(f) Folic acid supplements.
(g) Breastfeeding comprehensive support, counseling and supplies.
(h)(A) Screening to determine whether genetic counseling related to the BRCA1 or BRCA2 genetic mutations is indicated;
(B) Genetic counseling; and
(C) If indicated, BRCA testing.
(i) Breast cancer mammography.
(j) Breast cancer chemoprevention counseling.
(k) Any contraceptive drug, device or product approved by the United States Food and Drug Administration, subject to all of the following:
(A) If there is a therapeutic equivalent of a contraceptive drug, device or product approved by the United States Food and Drug Administration, a health benefit plan may pro- vide coverage for either the requested contraceptive drug, device or product or for one or more therapeutic equivalents of the requested drug, device or product.

(B) If a contraceptive drug, device or product covered by the health benefit plan is deemed medically inadvisable by the enrollee’s provider, the health benefit plan must cover an alternative contraceptive drug, device or product prescribed by the provider.

(C) A health benefit plan must provide coverage without a prescription for all contraceptive drugs available for over-the-counter sale that are approved by the United States Food and Drug Administration.

(D) A health benefit plan may not infringe upon an enrollee’s choice of contraception and may not require prior authorization, step therapy or other utilization control techniques for covered contraceptive drugs, devices or other products approved by the United States Food and Drug Administration.

(l) Voluntary sterilization.
(m) Patient education and counseling on contraception.
(n) Services related to the administration and monitoring of drugs, devices, products and services required under this section, including but not limited to:

(A) Management of side effects;
(B) Counseling for continued adherence to a prescribed regimen

(C) Device insertion and removal;

(D) Provision of alternative contraceptive drugs, devices or products deemed medically appropriate in the judgment of the enrollee’s provider; and

(E) Diagnosis and treatment services provided pursuant to or as a follow-up to a service required under this section.

(o) Any additional preventive services for women that must be covered without cost sharing under the 42 U.S.C. 300gg-13, as identified after the effective date of this 2017 Act by the United States Preventive Services Task Force or the Health Resources and Services Administration of the United States Department of Health and Human Services.

 

Tweedledee. Tweedledum: The two parties spend with abandon.

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Tweedledee. Tweedledum. This is what we get when the two parties work together, a massive spending spree.

A $1.1 trillion federal spending bill and a $650 billion tax package unveiled today show that neither party gives a damn about holding down spending. It’s not that all the items to be funded are wasteful or unneeded, but the package will push spending above previously agreed limits by $66 billion in 2016 and permanently extend a vast array of tax benefits that will add at least a half-trillion dollars to the federal deficit, once a matter of great concern.

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  • Bowing to pressure on Republicans and Democrats from medical device manufacturers across the county, including in Oregon, anti-Obamacare zealots, and ticked-off unions with expensive healthcare plans, the legislation will postpone for two years (which probably means forever) a 2.3 percent excise tax on medical devices manufacturers, that was expected to raise $29 billion of net revenues over 10 years and a so-called “Cadillac Tax” tax on expensive employer-sponsored healthcare plans, that was projected to raise about $30 billion over 10 years to cover new spending under Obamacare. Then, to add insult to injury, the legislation makes the Cadillac tax refundable when it restarts. The lost taxes will blow a hole in planned funding to cover the cost of Obamacare.
  • The Defense Department will get $1111 billion for new military equipment, including F-35 Joint-Strike Fighters, Black Hawk helicopters, attack submarines and guided missile destroyers.
  • A 40-year-old oil export ban will be rescinded and, in trade, Democrats will get expensive extensions of wind and solar power tax incentives.
  • A research and development tax credit will be expanded and extended permanently.
  • The $1,000 Child Tax Credit will be extended permanently.
  • The Earned Income Tax Credit will be permanently extended.
  • A federal health program for first responders and construction workers who worked at the World Trade Center site after 9/11 and a separate victims compensation fund will be extended at a cost of $8 billion.
  • A National Oceans and Coastal Security Fund will be created to “support work that helps Americans understand and adapt to forces like sea level rise, severe storms, and ocean acidification” associated with climate change.
  • The American Opportunity Tax Credit, an annual credit for tuition and other qualified expenses, will be permanently extended.
  • A $250 annual deduction on qualified expenses of teachers will be indexed for inflation and permanently extended.
  • Five tax credits tied to charitable donations by individuals and businesses will be permanently extended.
  • Funding for the IRS will be frozen, punishing the IRS for targeting conservative groups, but also further limiting its ability to go after tax scofflaws and, this, reducing tax receipts.
  • A $255 per month pre-tax benefit for parking and public transportation expenses will be permanently extended.

But aside from all the spending, Congress did accomplish a few good things.

There will be a pay freeze for Vice President Biden, for example.

Also, earlier this year the dour, stick-in-the-mud Capitol Police said sledding by gleeful children and adults on the snow of Capitol Hill would no longer be allowed. The package asks that the Capitol Police rescind that prohibition so the jollity can resume.

Capitol-Sledding

The Democratic debate: Soak the rich. Yeah! that’s the ticket!

Remember how Jon Lovitz, as Tommy Flanagan, the pathological liar on Saturday Night Live, would build a narrative that was a series of lies and say, “Yeah! That’s the ticket!”?

The Democratic debate was like that.

Want something for nothing? When I’m president, you’ll get it: Tuition-free public colleges and universities; free mandatory parental leave, without burdening small businesses; $15 minimum wage with no increase in productivity; enhanced Social Security benefits; Tax cuts for middle-class families; Refinancing of federal college debt at a low interest rate; Government subsidies of Obamacare for people in the United States illegally; move America to 100% renewable energy with federal subsidies.

The Democrats offered up a grab bag of free stuff. How would they pay for it all? Hillary summed up the Democratic Party’s answer. “ I know we can afford it, because we’re going to make the wealthy pay for it,” she proclaimed.

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Yeah! That’s the ticket!

Reminds me of Margaret Thatcher’s observation, “The problem with socialism is that you eventually run out of other people’s money.”

The national debt stands at $18.2 trillion, up from $10.6 trillion when President Obama took office, and it is continuing to increase an average of
 $1.88 billion a day. The debt goes up when the government doesn’t get enough revenue in a given fiscal year to pay its bills. Annual federal deficits have been shrinking lately, but that pattern isn’t expected to last as the budget takes hits in the coming years.

And then, of course, the country already faces problems with covering the huge costs of entitlements such as Social Security and Medicare.

Unless we want to embrace ever-higher deficits, money would need to be found to pay for the cornucopia of benefits the Democrats promise.

Hillary Clinton said not to worry, we’ll get it from higher taxes on the wealthy. “Right now, the wealthy pay too little and the middle class pays too much,” she said in the debate.

Echoing Clinton, Lincoln Chafee chimed in that the rich are doing fine, “so there’s still a lot more money to be had from this top echelon.”

The problem is that the top-earning 1 percent of Americans (earning about $400,000 +), a pretty fluid club of individuals on a year-to-year basis, already pay almost 50 percent of federal income taxes and the top 25 percent pay about 87 percent, making the United States extraordinarily dependent on small slices of the population.

The Congressional Budget Office has calculated that high-income earners receive only pennies in federal benefits for every dollar they pay in federal taxes. In contrast, those in the middle 20 percent of earners received $2.23 in benefits for each dollar they paid and the lowest 20 percent receive close to $20 in federal benefits for every dollar they pay in federal taxes. In other words, the high-income earners are already subsidizing middle-income and low-income Americans.

“Despite the data, accusations that the rich are not paying their fair share continue,” The Manhattan Institute has reported. “This rhetoric is based more on perception than reality, or on a mistaken belief that the government needs more funds to become further entrenched in Americans’ lives. While this rhetoric may work as a populist rallying cry, the data show that a central tenet of the political left’s platform is simply incorrect.”

Disillusionment and despair: the Trump turmoil

Donald Trump isn’t a candidate.

Donald-Trump-Caricature

He’s a stand-in for the alienation and disillusionment so many Americans feel as both the Republican and Democratic parties have failed us.

How could it be otherwise when so much seems so wrong and fakery, misdirection, and outright lies by both parties have been so pervasive?

Consider:

  • The past several decades have seen the most sustained rise in inequality in the United States since the 19th century after more than 40 years of narrowing inequality following the Great Depression. By some estimates, income and wealth inequality are near their highest levels in the past hundred years.
  • The 2009 $830 billion stimulus package, with a claimed focus on shovel-ready projects, was supposed to fix things after the Great Recession. The legacy instead – a slow growth economy. The first 23 quarters of the recovery, which officially began in June of 2009, had an annual rate of growth of just 2.1 percent.
  • The distribution of wealth in the United States is even more unequal than that of income. The wealthiest 5 percent of American households held 54 percent of all wealth reported in 1989, rose to 61 percent in 2010 and reached 63 percent in 2013.
  • 71 percent of Americans say life has gotten worse for middle-class Americans over the past 10 years.
  • Today’s fifty-somethings may be part of the first generation in American history to experience a lifetime of downward mobility, in which at every stage of adult life, they have had less income and less net wealth than did people who were their age ten years before.
  • There is now less economic mobility in the United States than in Canada or much of Europe. A child born in the bottom one-fifth of incomes in the United States has only a 4 percent chance of rising to the top one-fifth.
  • Young Americans (ages 18-34) are earning less (adjusted for inflation) than their peers in 1980 ; the college graduating class this year left with an average student debt of $35,051.
  • In 1986, President Reagan signed legislation that was supposed to fix the illegal immigration issue once and for all. Three million applied for legal status and about 2.7 million received it. Today, about 11.7 million immigrants are living in the United States illegally. So much for the fix.
  • Despite all the “mission accomplished” and “victory is at hand” assurances, America has been at war in the Middle East for the past 15 years, with little to show for it, billions of dollars down a rathole, thousands of American soldiers dead and wounded, and continuing chaos in Afghanistan, Iraq, Libya and Yemen.
  • Despite the billions the government has spent on poverty-related programs, half of children age three and younger live in poverty.
  • The White House wants to “press the reset button” on one of Washington’s biggest challenges: its increasingly troublesome relationship with Russia,” Vice President Biden, 2/7/2009; “We’re going to hit the reset button and start fresh (with Russia),” Secretary of State Hillary Clinton, 3/6/2009
  • “If you like the plan you have, you can keep it.  If you like the doctor you have, you can keep your doctor, too.” President Obama, 6/6/2009.
  • “I ended the war in Iraq, as I promised. We are transitioning out of Afghanistan. We have gone after the terrorists who actually attacked us 9/11 and decimated al Qaeda.” President Obama, 9/14/2012
  • Despite assurances from some politicians that all’s well, the Medicare program has $28.1 trillion in unfunded liabilities over the next 75 years. Together with Social Security’s $13.3 trillion shortfall, the government has accumulated entitlement spending commitments that far exceed our capacity to pay for them.
  • In the 2012 election cycle, a tiny elite of the U.S. population, just 0.40 %, made a political contribution of more than $200, providing 63.5% of all individual contributions to federal candidates, PACs and Parties, according to the Center for Responsive Politics.
  • Fewer than four hundred families are responsible for almost half the money raised in the 2016 presidential campaign to date, a concentration of political donors that is unprecedented in the modern era.

As H.L. Mencken said, “Under democracy one party always devotes its chief energies to trying to prove that the other party is unfit to rule — and both commonly succeed, and are right.”

 

Cover Oregon: big management paydays/ small results

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When Clyde Hamstreet took over as Interim Executive Director of Cover Oregon earlier this month, he said one of his priorities would be clamping down on spending. He might want to start by looking at the compensation of his senior staff.

That’s because the fiasco that is Cover Oregon has still found a way to pay some pretty hefty salaries and generous benefits.

While the focus of most Cover Oregon media coverage has been on the utter failure of its enrollment website and the millions paid to contractors, little has been said about the employees behind the scenes.

Cover Oregon’s 2013-2015 budget for personnel is $18 million. That covers 175 employees.

The top ten highest paid of those employees are all getting more than their boss, Governor John Kitzhaber, whose annual salary is $98,600. With benefits, Kitzhaber’s total annual compensation is $125,163.

In contrast, the total compensation of each of the ten highest paid Cover Oregon staff exceeds $150,000.

Before Interim Executive Director Bruce Goldberg resigned in March, his annual compensation totaled $229,761.

The salaries, benefits and total compensation of the rest of the top 10, which includes state payment of 95 percent of their health insurance premiums, are as follows:

 

Chief Communications Officer $132,516 $35,700 $168,216
Sr. Mktg Mngr $132,516  $35,700

 

 

$168,216

 

 

Chief Policy Officer $132,516

 

 

$35,700

 

 

$168,216

 

 

 

Position title Current salary Benefits* Total Compensation
Operations Mngr. $122,000 $32,867 $154,867
Operations Liaison $125,002 $33,676 $158,678
Functional Lead $150,000 $40,410 $190,410
Chief Operating Officer $162,516 $43,782 $206,298
Chief Information Officer $162,516 $43,782 $206,298
Executive Director $181,000 $48,761 $229,761

*Derived from a benefits factor equal to 26.94 percent of salary, based on 2013 overall year-end totals. Source: Cover Oregon

But even with all this high-paid firepower, Cover Oregon couldn’t get the job done.

Maybe part of the reason is because Cover Oregon employees have so much time off. According to Cover Oregon’s recruitment information, benefits for all employees include 30 days of paid time off and 11 paid holidays annually. That adds up to 41 days, or more than 8 weeks, off each year. Not a bad deal … for them.