CIVIL WAR! We are in the early stages of an uprising of the states seeking to throw off the heavy demands of the federal government in the health payment arena.
The battle lines are not liberal, conservative, Democrat or Republican. It is economic survival of state governments (most of whom have state constitution requirements to have balanced budgets). It is mostly about PPACA loading about 30% more patients into Medicaid, which is already sinking many state’s budgets. However, the mandated state exchanges, Medicare and other requirements are also points of contention. How big a load? A GOP estimate is $118 Billion in new costs for state tax payers. It may seem like these issues don’t directly impact private employee benefit plans, but the outcome of the battles could drastically change the environment in the next few yeas and future in which we operate. So, this piece is to help you get a general understanding so you comprehend what you will be reading & hearing in the media, and so you will be able to forecast and prepare for your firm and your clients. First, let’s take a step back to pre-PPACA. For many years, interests of states have been a major influential power in various health reform proposals. States want to minimize their costs, and when possible cost-shift onto federal or private plans. They would like to shed many of the costs which have become one of the biggest loads in state budgets. So, a trick for understanding new pieces of health reform legislation was to ask, “What’s in it for the states?” That usually pinpointed the goal or reason for powerful undercover opposition or support by states. State governments are VERY influential in pressuring Congressmen from their state. Many Congressmen were former state officials, owe loyalty for support, and Congressmen know that the state officials are back home to influence the voters day in and day out. So, in the current battle, it is not a case of helpless disunited state governments versus big powerful Uncle Sam. I’d bet on states getting all or most of what they want. So, for example, in January, when 33 state Governors…from the most liberal to the most conservative from both parties…sent a letter to President Obama asking for “flexibility & relief from excessive constraints & federal mandates” it was like the huge mobs you’ve seen on TV demanding their governments reform. What do states want? They want broad waivers for several of the requirements such as exchanges & Medicaid. Plus, they want broad flexibility, block grants (send money, but no instructions or strings how we use it), Medicaid payment reform (more $ for states’ share) etc. In other words, they are saying in various ways on various topics: Send the money, but let me work this out my own way. States also feel bombarded by the constant new efforts to crack down on rampant fraud & abuse in Medicaid (including stopping some schemes states have devised to increase their federal reimbursement or payments to public hospitals). The Federal government has several huge agencies, each larger than most state governments, churning out new time or money-consuming projects that impact states. So, the state position might be summarized as “Enough already!!” Meanwhile, the feds have seen states drastically cut benefits offered and people in the programs. For example, Tenn-Care was hailed as the biggest, best, and most comprehensive state version of Medicaid….but when finances got tight, the state dumped 800,000 people. That kind of situation highlights the different way the two types of government think. The state would say that it was a prudent move to save the state’s finances. However…Uncle Sam sees that situation as almost 1 million people dumped into uninsured status. I tell that story, because most of us would tend to favor home-grown state health reform. However, if that has the effect, in a few years, of leaving millions of Americans uninsured or other sad stories…..then we will have a repeat performance of the political pressure to have health reform (single-payer probably being the next step) proposed. So, we would still have the leftovers of PPACA, but be back where we were a decade ago with demands for new reform & universal coverage. Also, in whatever deals states & feds work out, they will not be thinking of the multi-state requirements of employee benefit plans, so in the rush of political deal-making between states & feds, plans with people from more than one state could find themselves in the pre-1974 (pre-ERISA preemption) situation. We could look like the days when commercial trucks had to get a dozen or more license plates for every state they entered. So, in this battle, be careful who you hope wins, and be pro-active at your state level to be sure policies are not created that are ignorant of the needs of multi-state employee benefit plans. CHAMPIONING PPACA If you want to monitor what the pro-PPACA folks are saying, a new coalition of progressive groups has created a website at Healthcareandyou.org Their stated goal is to provide consumers with “straightforward consumer-focused information”. It is interesting to see who the sponsors are and guess their reasons for support: AARP, American Academy of Family Physicians, American Cancer Society, Cancer Action Network, American College of Physicians, American Medical Assn., American Nurses Assn., Catholic Health Assn. and the National Community Pharmacists Assn. HIPPA PRIVACY $4.3 MILLION FINE The HHS Office of Civil Rights has imposed its first civil monetary penalty for HIPAA privacy, $4.3 million on a medical provider in Maryland relating to 41 patients. The $4.3 million is based on penalty increases authorized by the HITECH Act. I mention this, because it will probably send shock-waves (and over-caution when you need supporting documentation of claims) through the medical provider community…and caution among payers. Wow! Aren’t you glad you’ve been paying attention at the SPBA meetings and reading the SPBA member website & UPDATE how-to articles about HIPAA privacy?!?! Re-check your systems. JUDGE VINSON CLARIFICATION SOON In a previous e-mail, I told that the U.S. Dept. of Justice (DOJ) had asked Judge Vinson in the FL case to “clarify” if his virtual injunction of the whole PPACA law was, indeed an injunction. DOJ’s goal was to get wording which it could then parse to shoot down arguments by states in the lawsuit who say that PPACA (and preparation therefore) no longer apply. DOJ’s final papers were in yesterday, and Judge Vinson says he will respond promptly, so you will probably see a big splash in the media. Some legal observers think it is a dangerous tactic by DOJ, but, in truth, it is still only one decision in one legal circuit, and will be appealed, then on and on and on to the Supreme Court as previously discussed in the sample speech/article yesterday. So, no matter which side “wins” this “clarification” from Judge Vinson, it is like one touchdown, not the Super Bowl clincher. NICE QUOTE I try to end these e-mails with something to give you a smile or chuckle to offset the serious issues. So, let me share this quote from Senator Orin Hatch (R-UT), who has the reputation as a very calm dignified fair bi-partisan statesman. Answering a question at a UT college about allowing states to create their own health reform, he said, “It’s good to allow them (states) to work out their own problems rather than a one-size-fits-all federal dumb-ass program. It really is an awful piece of crap.” Fred