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Returning health insurance to the private market prevents socialized health care – Wyliberty’s advice to Legislators

Wyoming should focus it’s resources on creating affordable health insurance through free-market solutions instead of expanding government-run health programs that do not improve health, increase coverage, make insurance affordable or lower the cost of health care.
Plan to Achieve True Health Care Reform in Wyoming
  1. Limit federal and state government involvement in health care:
    1. Do not pass legislation amending the Medicaid expansion program called “Healthy Frontiers.” Wyoming is not an expansion state. Our Medicaid program remains at a bare minimum covering people at 100% FPL and the Categorically Needy at 133%. HF expands state and federal take-over of the private insurance market for citizens with incomes up to 200% FPL.
    2. Do not pass legislation approving the set-up of an exchange or acceptance of federal grants stipulating to the set-up of an exchange. “Level One and Level Two” grants obligate the state to set up an exchange and expand Medicaid. Because of state bi-annual legislative sessions, fiscal constraints and pending SCOTUS ruling, deadlines for grant applications and exchange establishment milestones will have to be pushed back. This from Michael Leavitt, former HHS Secretary, who owns a private consulting business assisting states in setting up their exchange.
    3. Ratify the Health Care Freedom Amendment passed during the 2010 legislative session to protect individual and state rights to health care freedom.
  2. Return health insurance to the private market and individual.
    1. Pass “Georgia-style” legislation to allow health insurers with a business in Wyoming to sell policies here that they sell in other states. Because states have the power to regulate the business of insurance, any state can pass a law stipulating that meeting the regulatory requirement of any other state will satisfy it’s own regulations without relying upon compacts and federal approval. This also reinforces the Insurance Commissioner as chief regulator and enforcer of existing consumer protections.
    2. Grow the private insurance market in all 50 states. The current problem with high cost health care is due to a lack of affordable health insurance caused by a lack of competition. Opening health insurance to a national risk pool will create consumer driven plans with services we want and need. We already enjoy these benefits with other indemnity products like auto, property, life and supplemental health insurance. By returning health insurance to the private indemnity market, the individual is put back in charge of their health care. We must get away from the “tethered elephant” mindset on how health insurance should work. This mindset has severely limited our options.
  3. Reform Medicaid and Medicare through changes to their program structure and funding mechanism.
    1. States must push for federal changes to both programs that will allow them to roll back the eligibility requirements to 100% FPL. This will allow states to transition current enrollees into affordable health insurance created by nationwide competition leaving the most vulnerable citizens to receive health care through government-run programs. States could elect to provide that help through block grants or tax credits.
  4. Perpetuate the free-market solutions.
    1. Identify regulations that inhibit competition or otherwise suppress free-market innovations and correct them.
    2. Allow research and innovation to occur within medical freedom zones on Indian owned lands.
  5. Secure and protect health care reforms legally.
    1. Identify remaining high cost health care areas not benefiting from current free-market reforms and resolve through tort reforms, safeguards for choice of law provisions and protection of arbitration and alternative dispute resolution provisions in contracts.
Background
Legislation or executive branch action that continues funding for, or the establishment of, “Healthy Frontiers” or a state exchange will implement the Patient Protection and Affordable Care Act (PPACA) in Wyoming.
Patient Protection and Affordable Care Act – PPACA
  • The PPACA is not new or innovative legislation. It reorganized existing Health and Human Services (HHS) programs under one umbrella with a primary purpose: to establish socialized health care by expanding government-run health programs, namely Medicaid.
  • PPACA incorporates existing laws, rules and regulations of the Social Security Act, Title 19 (Medicaid) and Title 21 (Children’s Health Insurance Program-CHIP). All components of the PPACA are subject to the provisions of these programs including final federal approval for authorized operation.
  • PPACA expands Medicaid eligibility and State Maintenance of Effort (MOE) requirements from 100% FPL up to 400% FPL.
  • The U.S. Supreme Court (SCOTUS) is expected to issue a ruling in June of 2012 on the constitutionality of the Individual Mandate to purchase insurance. This mandate is crucial to the functioning of the federal act. Without it, the other components cease to function, the act collapses, and all proposed federal funding disappears. States implementing any component of the act are obligated to continue with funding and administering of those components at state expense according to their FMAP formula.
Wyoming’s “Healthy Frontiers” Medicaid Expansion and the PPACA
  • In 2001, HHS established a new 1115 waiver called Health Insurance Flexibility and Accountability (HIFA) Initiative. The goal is to encourage employer-sponsored insurance. The most common way states have built upon employer-sponsored insurance is by implementing a premium assistance program. Premium assistance allows states to use Medicaid or SCHIP funds to subsidize health coverage purchased through employers or in the individual market. It targeted populations below 200% FPL and made federalizing a state-funded program easier by streamlining the Medicaid state plan amendment process.
  • “Healthy Frontiers” (HF) is not a new or innovative program. Its design copies the Indiana Medicaid expansion program called “Healthy Indiana Plan” (HIP). HIP was established in 2007 as an 1115 waiver program extending eligibility up to 200% FPL. Indiana has submitted HIP to HHS as part of their Medicaid State Plan Amendment. HHS did not grant initial approval because of the cost sharing requirements. Indiana had to modify HIP to fit current PPACA, hence Medicaid, program provisions. The waiver renewal application seeks funding until 2015 and includes the authorized modifications to HIP, as well as a request for HIP to serve as the coverage vehicle for newly-eligible individuals under the PPACA Medicaid expansion. Healthy Frontiers will face this same problem. It will need redesigned to fit into our current Medicaid state plan to receive federal FMAP funding. HF will officially be recognized as another Medicaid program.
  • Since 2003, the state of Wyoming has spent $3.4 million to develop HF. Using executive authority, the governor’s office secured contracts between one contractor, Dr. Hank Gardner of Human Capital Management Services (HCMS), the governor’s office and the Department of Work Force Services (WFS). Then, Workforce Services established the Health Assist and Job Assist programs through their rulemaking authority. Finally legislation was introduced in 2008, 2009 and 2010 forcing the legislature to approve and eventually fund an existing program. The model used to establish government-run health care in Wyoming without Executive Orders and ahead of legislative involvement has been defined.
  • Healthy Frontiers currently serves 49 Wyoming citizens. Continuation contracts between HCMS, WFS and the governor’s office have been renewed.
A State Created Exchange and the PPACA
  • Exchanges, whether they are federal, state, individual, small group (SHOP) or regional, do one thing: income eligibility determinations for Medicaid expansion and premium subsidy (tax credit) authorization. This function is crucial to the PPACA.
  • Exchanges are the vehicle in which to expand the current federal health care program, Title 19 of the Social Security Act, as incorporated into the PPACA.
  • HHS uses federal grants through the Office of Consumer Information and Insurance Oversight to coerce states into implementing an exchange. States who apply for and receive “Level One Establishment” or “Level Two Establishment” grants must sign a Cooperative Agreement accepting all conditions related to establishing an exchange or repay the money and void future eligibility for 1311 funds. 1311 funding will be available after June 2012 as many states refuse to apply for funding pending the SCOTUS ruling. This agreement requires letters of commitment or support from the Governor, State Medicaid Director and Insurance Commissioner. Wyoming accepted a “Planning and Research Grant” which has not compromised our ability to say no to the establishment of an exchange should SCOTUS rule the individual mandate unconstitutional. Acceptance of “Level One” or “Level Two” funding will.
  • All exchanges must follow the federal rules and regulations determining their exact design and function, in addition to complying with current Medicaid program provisions, namely the Maintenance of Effort (MOE) requirements. States are not allowed to create their own exchange by selecting features, functions, income eligibility limits, etc. Also, six states, called “Early Innovator” states received funding to design the IT framework that all states will use in the exchanges. As in Medicaid, the federal government retains final approval for operational status and compliance with all federal mandates.
  • The mantra “the federal government will establish an exchange if we don’t”, is no longer credible. There is no language allowing HHS to authorize the subsidizing of individuals within a federally run exchange. The PPACA expressly states “tax credits are for insurance purchased through an exchange established by the state.” Furthermore, PPACA states that health insurers operating in the exchanges, whether state or federal, must be licensed to do business in the state where the exchange functions. A state facing the threat of a federally imposed exchange can simply pass a law revoking the license of any health insurer participating in that exchange.
  • PPACA, not superseding other laws, must recognize existing state reserved powers regarding the “Business of Insurance.” Only states have the power to license, tax, impose fees upon or otherwise regulate the business of insurance. This, ironically, has created our current problem of a lack of affordable health insurance and small risk pools confined to state borders.
  • Results of the Massachusetts and Utah exchanges prove that exchanges cannot lower the cost of health insurance, lower the cost of health care or even increase insurance coverage. Massachusetts has seen their total health care costs rise by more than $8 billion since 2006. Insurance premiums have steadily risen by $4.3 billion. The cost of insurance plans in Utah’s exchange remains at $416 to $1,600 per month, the same as Wyoming’s private plans. According to www.americashealthrankings.org, the national uninsured rate in 1990 was 13.4%, Massachusetts 8.5%, Utah 12% and Wyoming 14%. In 2010, the national uninsured rate was 16%, Massachusetts 5%, Utah 14% and Wyoming 14.7%. Studies report that due to gaming of the system where people purchase insurance than drop it after filing proof of insurance, means that Massachusetts rate of 5% is over reported by 45%. Their rate is closer to 7.5%. Is a 1% to 3% change in insurance coverage worth $8 billion?

    Returning health insurance to the private market prevents socialized health care – Wyliberty’s advice to Legislators

    Wyoming should focus it’s resources on creating affordable health insurance through free-market solutions instead of expanding government-run health programs that do not improve health, increase coverage, make insurance affordable or lower the cost of health care.
    Plan to Achieve True Health Care Reform in Wyoming
    1. Limit federal and state government involvement in health care:
      1. Do not pass legislation amending the Medicaid expansion program called “Healthy Frontiers.” Wyoming is not an expansion state. Our Medicaid program remains at a bare minimum covering people at 100% FPL and the Categorically Needy at 133%. HF expands state and federal take-over of the private insurance market for citizens with incomes up to 200% FPL.
      2. Do not pass legislation approving the set-up of an exchange or acceptance of federal grants stipulating to the set-up of an exchange. “Level One and Level Two” grants obligate the state to set up an exchange and expand Medicaid. Because of state bi-annual legislative sessions, fiscal constraints and pending SCOTUS ruling, deadlines for grant applications and exchange establishment milestones will have to be pushed back. This from Michael Leavitt, former HHS Secretary, who owns a private consulting business assisting states in setting up their exchange.
      3. Ratify the Health Care Freedom Amendment passed during the 2010 legislative session to protect individual and state rights to health care freedom.
    2. Return health insurance to the private market and individual.
      1. Pass “Georgia-style” legislation to allow health insurers with a business in Wyoming to sell policies here that they sell in other states. Because states have the power to regulate the business of insurance, any state can pass a law stipulating that meeting the regulatory requirement of any other state will satisfy it’s own regulations without relying upon compacts and federal approval. This also reinforces the Insurance Commissioner as chief regulator and enforcer of existing consumer protections.
      2. Grow the private insurance market in all 50 states. The current problem with high cost health care is due to a lack of affordable health insurance caused by a lack of competition. Opening health insurance to a national risk pool will create consumer driven plans with services we want and need. We already enjoy these benefits with other indemnity products like auto, property, life and supplemental health insurance. By returning health insurance to the private indemnity market, the individual is put back in charge of their health care. We must get away from the “tethered elephant” mindset on how health insurance should work. This mindset has severely limited our options.
    3. Reform Medicaid and Medicare through changes to their program structure and funding mechanism.
      1. States must push for federal changes to both programs that will allow them to roll back the eligibility requirements to 100% FPL. This will allow states to transition current enrollees into affordable health insurance created by nationwide competition leaving the most vulnerable citizens to receive health care through government-run programs. States could elect to provide that help through block grants or tax credits.
    4. Perpetuate the free-market solutions.
      1. Identify regulations that inhibit competition or otherwise suppress free-market innovations and correct them.
      2. Allow research and innovation to occur within medical freedom zones on Indian owned lands.
    5. Secure and protect health care reforms legally.
      1. Identify remaining high cost health care areas not benefiting from current free-market reforms and resolve through tort reforms, safeguards for choice of law provisions and protection of arbitration and alternative dispute resolution provisions in contracts.
    Background
    Legislation or executive branch action that continues funding for, or the establishment of, “Healthy Frontiers” or a state exchange will implement the Patient Protection and Affordable Care Act (PPACA) in Wyoming.
    Patient Protection and Affordable Care Act – PPACA
    • The PPACA is not new or innovative legislation. It reorganized existing Health and Human Services (HHS) programs under one umbrella with a primary purpose: to establish socialized health care by expanding government-run health programs, namely Medicaid.
    • PPACA incorporates existing laws, rules and regulations of the Social Security Act, Title 19 (Medicaid) and Title 21 (Children’s Health Insurance Program-CHIP). All components of the PPACA are subject to the provisions of these programs including final federal approval for authorized operation.
    • PPACA expands Medicaid eligibility and State Maintenance of Effort (MOE) requirements from 100% FPL up to 400% FPL.
    • The U.S. Supreme Court (SCOTUS) is expected to issue a ruling in June of 2012 on the constitutionality of the Individual Mandate to purchase insurance. This mandate is crucial to the functioning of the federal act. Without it, the other components cease to function, the act collapses, and all proposed federal funding disappears. States implementing any component of the act are obligated to continue with funding and administering of those components at state expense according to their FMAP formula.
    Wyoming’s “Healthy Frontiers” Medicaid Expansion and the PPACA
    • In 2001, HHS established a new 1115 waiver called Health Insurance Flexibility and Accountability (HIFA) Initiative. The goal is to encourage employer-sponsored insurance. The most common way states have built upon employer-sponsored insurance is by implementing a premium assistance program. Premium assistance allows states to use Medicaid or SCHIP funds to subsidize health coverage purchased through employers or in the individual market. It targeted populations below 200% FPL and made federalizing a state-funded program easier by streamlining the Medicaid state plan amendment process.
    • “Healthy Frontiers” (HF) is not a new or innovative program. Its design copies the Indiana Medicaid expansion program called “Healthy Indiana Plan” (HIP). HIP was established in 2007 as an 1115 waiver program extending eligibility up to 200% FPL. Indiana has submitted HIP to HHS as part of their Medicaid State Plan Amendment. HHS did not grant initial approval because of the cost sharing requirements. Indiana had to modify HIP to fit current PPACA, hence Medicaid, program provisions. The waiver renewal application seeks funding until 2015 and includes the authorized modifications to HIP, as well as a request for HIP to serve as the coverage vehicle for newly-eligible individuals under the PPACA Medicaid expansion. Healthy Frontiers will face this same problem. It will need redesigned to fit into our current Medicaid state plan to receive federal FMAP funding. HF will officially be recognized as another Medicaid program.
    • Since 2003, the state of Wyoming has spent $3.4 million to develop HF. Using executive authority, the governor’s office secured contracts between one contractor, Dr. Hank Gardner of Human Capital Management Services (HCMS), the governor’s office and the Department of Work Force Services (WFS). Then, Workforce Services established the Health Assist and Job Assist programs through their rulemaking authority. Finally legislation was introduced in 2008, 2009 and 2010 forcing the legislature to approve and eventually fund an existing program. The model used to establish government-run health care in Wyoming without Executive Orders and ahead of legislative involvement has been defined.
    • Healthy Frontiers currently serves 49 Wyoming citizens. Continuation contracts between HCMS, WFS and the governor’s office have been renewed.
    A State Created Exchange and the PPACA
    • Exchanges, whether they are federal, state, individual, small group (SHOP) or regional, do one thing: income eligibility determinations for Medicaid expansion and premium subsidy (tax credit) authorization. This function is crucial to the PPACA.
    • Exchanges are the vehicle in which to expand the current federal health care program, Title 19 of the Social Security Act, as incorporated into the PPACA.
    • HHS uses federal grants through the Office of Consumer Information and Insurance Oversight to coerce states into implementing an exchange. States who apply for and receive “Level One Establishment” or “Level Two Establishment” grants must sign a Cooperative Agreement accepting all conditions related to establishing an exchange or repay the money and void future eligibility for 1311 funds. 1311 funding will be available after June 2012 as many states refuse to apply for funding pending the SCOTUS ruling. This agreement requires letters of commitment or support from the Governor, State Medicaid Director and Insurance Commissioner. Wyoming accepted a “Planning and Research Grant” which has not compromised our ability to say no to the establishment of an exchange should SCOTUS rule the individual mandate unconstitutional. Acceptance of “Level One” or “Level Two” funding will.
    • All exchanges must follow the federal rules and regulations determining their exact design and function, in addition to complying with current Medicaid program provisions, namely the Maintenance of Effort (MOE) requirements. States are not allowed to create their own exchange by selecting features, functions, income eligibility limits, etc. Also, six states, called “Early Innovator” states received funding to design the IT framework that all states will use in the exchanges. As in Medicaid, the federal government retains final approval for operational status and compliance with all federal mandates.
    • The mantra “the federal government will establish an exchange if we don’t”, is no longer credible. There is no language allowing HHS to authorize the subsidizing of individuals within a federally run exchange. The PPACA expressly states “tax credits are for insurance purchased through an exchange established by the state.” Furthermore, PPACA states that health insurers operating in the exchanges, whether state or federal, must be licensed to do business in the state where the exchange functions. A state facing the threat of a federally imposed exchange can simply pass a law revoking the license of any health insurer participating in that exchange.
    • PPACA, not superseding other laws, must recognize existing state reserved powers regarding the “Business of Insurance.” Only states have the power to license, tax, impose fees upon or otherwise regulate the business of insurance. This, ironically, has created our current problem of a lack of affordable health insurance and small risk pools confined to state borders.
    • Results of the Massachusetts and Utah exchanges prove that exchanges cannot lower the cost of health insurance, lower the cost of health care or even increase insurance coverage. Massachusetts has seen their total health care costs rise by more than $8 billion since 2006. Insurance premiums have steadily risen by $4.3 billion. The cost of insurance plans in Utah’s exchange remains at $416 to $1,600 per month, the same as Wyoming’s private plans. According to www.americashealthrankings.org, the national uninsured rate in 1990 was 13.4%, Massachusetts 8.5%, Utah 12% and Wyoming 14%. In 2010, the national uninsured rate was 16%, Massachusetts 5%, Utah 14% and Wyoming 14.7%. Studies report that due to gaming of the system where people purchase insurance than drop it after filing proof of insurance, means that Massachusetts rate of 5% is over reported by 45%. Their rate is closer to 7.5%. Is a 1% to 3% change in insurance coverage worth $8 billion?
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