Welcome to the Fun House

The Fun House that is the national healthcare debate has more trap doors and surprises than you can imagine. With the 1,018 page (That's not writing legislation; that's typing legislation) House healthcare bill stalled, the Democrats are trying a new tactic to backdoor government-controlled healthcare. 

First "healthcare reform" morphed in the Fun House mirror into "healthcare insurance reform," when the American people dug their heels in. Then the so-called "public option" disappeared through a trap door, and the "insurance cooperatives" suddenly fell from the ceiling. Now the back door of the Fun House has opened and we're staring at the latest Freddy Kreuger tactic from  socialized healthcare proponents. They are starting to push on the state level to get state after state to socialize their health care. From their perspective, it's just a matter of time till Uncle Sam connects the dots and nationalized the healthcare industry.

The latest battleground is Pennsylvania. Democrats are moving a bill through the legislature that would, they say, provide free universal healthcare for all Pennsylvanians. "They say" is the key thing to remember.

Pennsylvania's Senate Bill 400/House Bill 1660 is a piece of work only politicians up for reelection could love. Free healthcare, no deductibles, no co-pays, nobody ineligible, no preexisting conditions. No exclusions Nothing. Free. Free. Free. Ain't life grand? Only problem is that in this world if you're a consumer, nothing's free.

Here's why. The Promise Them Everything Health Care Act is financed by a 3% tax on individuals and a whopping 10% tax on business payrolls. In a recession. When bankruptcies are already at their highest point in years. In a rust-belt state with an economy largely stuck in the 1950s. With one of the highest proportions of elderly citizens of any state. That noise you hear is businesses burning rubber to flee to tax haven Delaware--the Monaco of the East Coast--as fast as they can.

So as these legislative lions try to assure themselves another term by promising a healthcare Garden of Eden, I thought it would be a good thing to take a look a the track record of other states that have bigfooted their way into running healthcare. The record is not good. In fact, it's pretty ugly. Take a look at the results in four states, Tennessee, Maine,  Hawaii and Massachusetts, courtesy of healthcare consultant and analyst Nancy Bucceri of Chaddford Planning Associates:

Tennesee’s TennCare

-         started in 1994 with a $2.6 billion budget.

-         Ran efficiently the first few years

-         By 2004 spending ballooned to $8 billion, one third of the state’s budget

-         By 2005 170,000 beneficiaries had to be cut from the plan

-         45% of people with employer-based coverage left to join TennCare

-         To address costs, benefits were slashed, reimbursement rates were cut

-         Physicians have increasingly declined to accept new patients

 Conclusion:  TennCare has driven the state to near bankruptcy and has not solved the problem of getting affordable healthcare to those who can’t get it elsewhere.

 Maine’s DirigoChoice

-         started in 2003 with $50 million in stimulus money

-         the goal was to cover 128,000 uninsured

-         promised to insure everyone and save patients and businesses money at the same time

-         instead, it is $155 million over budget and rising

-         premiums have risen 74%, pushing most people out of the program

-         only 3,400 are in the program today

 Conclusion:  Maine’s health plan has not met the goal of providing access to healthcare for the uninsured, and yet has increased state spending for healthcare services.

 Massachusetts Commonwealth Care Health Insurance Plan

-         started in 2006, 40% over budget the first year alone

-         30% increase in ER utilization since program inception

-         funding relies heavily on a smoker’s tax (smoking is the leading cause of skyrocketing health costs in the US, but Mass needs people to keep puffing)

-         small businesses have cut jobs, salaries and other benefits to pay for it

-         employers have been reducing benefits, cutting healthcare coverage to the 33.3% minimum

-         over 1,023 employers have opted to pay the fine

 Conclusion:  Massachusetts has successfully increased the number of insured people, but it has not increased access to care and does not have a financially sustainable plan.

Hawaii’s Prepaid Healthcare Act

-         started in 1974.

-         Initially boasted one of  the lowest level of uninsured in the US, but was not lower than many states without universal healthcare

-         Hawaii’s medical cost inflation rate is rising faster than the overall inflation rate in the state (32.6% vs 29.8% between 2000-2008)

-         Uninsured private sector employee rate has risen to 13.25% as employers cut hours to avoid mandate

-         Average cost of premiums to families is $10,000.

 Conclusion:  The program worked for a while but has become financially unsustainable.

Pennsylvania lawmakers want to combine the current state Medicaid plan with coverage for everyone else, essentially running private insurers out of the state. So what's the Commonwealth's track record for managing healthcare insurance? Well, again, pretty ugly. 

The state Medicaid program serves nearly 2 million people already. Like a carnivore, it already consumes over a quarter of the state budget. With annual spending increases of 8%, it's projected to gobble up nearly 90%) pf the entire state budget by 2075. That's if nothing's done. Adding millions more Pennsylvanians to the rolls will only make things worse. 

By the way, about a buck and a half out of every ten tax dollars spent on the Medicaid program in Pennsylvania gets eaten up by fraud. Did I mention that with that kind of insatiable appetite for dollars, Medicaid has a reputation for low quality service? This is the model that politicians want to extend to the non-public assistance population of the state. Just a thought-- why not find ways to extend quality care to the minority of people on Medicaid, rather than the other way around?

The problem with these five states is that state lawmakers are relying on predictive modeling, which has never worked consistently for healthcare. Proof:  Since 1965, the Congressional Budget Office has consistently underestimated the cost of healthcare by as much as a factor of 10.   Government projections of revenue and expenses are unreliable predictors of how healthcare policies are going to play out. 

A better, more reliable way would be to use historic data and case studies in forming healthcare public policy, rather than models that have never proven accurate. But then those facts might get in the way of the optimistic story they're trying to sell to the public. 

Just thought you might like to know.