Category Archives: Health Care

Outline of HB 700 for Committee Testimony

To facilitate orderly testimony Monday morning, I’m posting an outline of the Draft HCS for HB 700. I plan on following this outline (roughly) as I give my presentation to the committee. To the extent possible, it would be extremely helpful to the committee if people planning on testifying on the bill tailored their presentations to speak to specific parts of this outline. 

The outline can be found here: HB 700 OUTLINE

Medicaid Transformation Press Release – Still Relevant


“Market-Based Medicaid” Bill Would Give Missouri Most-Market Based Medicaid System in the Country by Injecting Price Competition in Medicaid for the First Time in History

February 26, 2013

Representative Jay Barnes (R-Jefferson City) filed legislation Tuesday to transform Missouri’s Medicaid system into the most market-oriented public health care system in the entire country. The bill would protect Missouri taxpayers by saving at least $741 million and potentially billions over the first eight years of implementation. It would also reduce dependence by lowering the total number of Missourians eligible for Medicaid.  

Barnes’ Market-Based Medicaid proposal would inject personal responsibility and price competition into a system sorely lacking in effective constraints on runaway spending. Under current law, much of the state’s Medicaid system operates under a fee-for-service model in which there is no incentive for anyone to reduce costs. Market-Based Medicaid would replace the “no-brakes” fee-for-service model with a managed care model designed to encourage the efficient use of taxpayer resources. In addition, it would empower recipients to choose their own health insurance plan, and, for the first time in Missouri history, require bidders providing managed care plans to compete on the basis of price.

Creating the Most Market-Based System in History through Real Price Competition

Market-Based Medicaid would introduce price competition into Missouri for the first time. Managed care bidders would be forced to compete on the basis of price, with the lowest cost conforming bid being guaranteed acceptance into the market. Just as important, at the time of sign-up, recipients will be incentivized to choose more affordable plans by rewarding them for choosing lower-cost plans. For the first time in the nearly five decade history of the federal Medicaid program, recipients would be given the financial incentives to choose the plan most affordable for taxpayers.

“Missourians understand that competition is the most powerful force the world has ever known to reduce costs in any market,” Barnes explained. “Market-Based Medicaid will introduce real price competition to Medicaid for the first time in history, bringing down costs for Missouri taxpayers.”

“We will go from a system with centrally-planned prices set by government employees to one with decentralized decision-making by private market participants who know the health insurance industry better than any central planner ever could,” Barnes continued.

Market-Based Medicaid would empower recipients to choose between either a high-deductible health plan or a pre-paid co-pay plan. The state would fund the deductible or co-pay card depending on the plan chosen. No deductible or co-pay would be applied to preventive or primary care services. However, a steep deductible or co-pay would be assessed upon the use of unnecessary emergency room services. Recipients will be incentivized to use care wisely by rewarding them with a portion of the funds remaining on their deductible or co-pay card at the end of the year. The goal of such measures is to encourage recipients to scrutinize their decisions. A recipient considering whether to present at an emergency room with a sprained ankle will, for the first time in the history of Missouri’s Medicaid program, have a real disincentive to use the ER for such a non-emergency.

“We want to end the wasteful use of the ER for non-emergencies,” Barnes said. “Under the current broken system, Medicaid recipients have no reason not to waste taxpayer dollars at the ER because recipients have nothing at stake. Market-Based Medicaid will dramatically change the incentives. For the first time in the history of Missouri Medicaid, recipients would have real financial disincentives to wasting taxpayer dollars in hospital ERs around our state.”

Market-Based Medicaid would also maximize cost-sharing allowed by the federal government, requiring recipients to pay $4 or $8 for prescription drugs and $4 for specialist doctor visits.

“Participants should be required to pay real money out-of-pocket in addition to the new incentives,” Barnes added. “Market-Based Medicaid would maximize cost-sharing to require recipients to pay as much of their own money into the health care system as reasonably allowed.”

Requiring Gov. Nixon to Demand an Opt-Out of ObamaCare Medicaid

Market-Based Medicaid would require Gov. Nixon to demand an opt-out of ObamaCare Medicaid from the federal government. Other states with conservative governors like Sam Brownback of Kansas and former Gov. Jeb Bush of Florida have received waivers to move to managed care, and at least two states (Florida and New York) have received waivers for innovative incentive systems which reward recipients for making healthy choices. But no state has ever received a waiver for moving to managed care while injecting true price competition into Medicaid through incentives to pick the most affordable managed care plans available. Though it has never been done before, there is no direct prohibition in federal law on incentive payments for choosing affordable coverage.

“Market-Based Medicaid would force President Obama to put his central-planning ideology aside in order to increase access to care for those least able to afford it,” Barnes said. “This innovative new delivery system can serve as a model for other states to save billions in Medicaid spending across the entire country.”

“This proposal is an all-or-nothing proposition,” Barnes continued. “If the waiver is not granted, the bill has no effect.”

Expanding Health Homes for Missourians with Disabilities and Chronic Conditions

Market-Based Medicaid will expand statewide the health care home model introduced to Missouri by former Gov. Matt. Blunt to coordinate care for low-income Missourians with disabilities or chronic conditions. Health care homes assign a provider to coordinate health care – leading to better outcomes for recipients and reduced costs for taxpayers.

“Gov. Matt Blunt’s health care home innovation has proven to improve health and save money,” Barnes said. “Market-Based Medicaid will expand this innovative and successful program statewide to maximize better health outcomes and taxpayer savings.”

Similar Proposals and Plans from Conservatives

The high-deductible plan is modeled partly after legislation enacted in Indiana under Republican Governor Mitch Daniels in which Medicaid eligibility was expanded to 200 percent of the federal poverty level. Another similar proposal was offered by Gov. Matt Blunt in 2008 which would have expanded access to health insurance for working Missourians making up to 225 percent of the federal poverty level.

At the federal level, Congressman Paul Ryan proposed legislation in 2009 which would have provided recipients up to 100 percent of the federal poverty level with a block grant of $5,000 to purchase private health insurance, an amount which could have been matched in any amount by state governments. Under the current Medicaid match-rate, a Missouri recipient would have received a subsidy of $8,064 per year. Rep. Ryan’s Patients’ Choice Act would have also provided similar subsidies for families making up to 200 percent of the federal poverty level – twice the level proposed with Market-Based Medicaid.

“Conservatives have tried for decades to introduce true market-based reforms into entitlement programs,” Barnes explained. “This Market-Based Medicaid proposal would put these ideas into action for the first time in public health care. Missouri would serve as a model for market-based Medicaid reform for the entire nation.”

Streamlined Eligibility

Market-Based Medicaid would also streamline Medicaid eligibility standards. Medicaid categories with eligibility below 100 percent would be increased and those above would be decreased. By setting more consistent standards, Market-Based Medicaid would reduce dependency for Missourians above the poverty level. These reductions in eligibility would be contingent upon the existence of a functioning health care exchange under which robust subsidies would be available. For example, a single mother making $20,123 per year would only be required to pay two percent of her income, or approximately $34 per month, for health insurance.

“Missourians living above the poverty level should be required to take more personal responsibility for their health care decisions,” said Barnes. “Requiring Missourians in these income brackets to choose their own private health insurance plans with low affordable premium payments will improve the quality of the health care they receive and dramatically reduce costs for Missouri taxpayers so that we can get help to those least able to afford access to care.”

The increase to just 100 percent of the federal poverty level would require a waiver from the federal government. In December, Health and Human Services Director Kathleen Sebelius told 11 Republican governors who requested an enhanced federal match rate at only 100 percent that it would not be available.

Barnes stated Sebelius’ response was a political and not a legal decision. “If the Obama administration is serious about increasing access to care for those least able to afford it, it’s going to have to put down its ideological shield and abandon the one-size-fits-all liberal approach that it has taken so far,” Barnes said.

Saving Missouri Taxpayers Billions of Dollars

The free market reforms and reductions in eligibility more than pay for Barnes’ Market-Based Medicaid proposal. Over the first eight years of the reforms, it would save taxpayers at least $741 million and likely billions of dollars. In 2021, the first year the state would be responsible for 10 percent of the costs of increased eligibility, the reforms would save Missouri taxpayers at least $83.5 million. In addition, the bill contains a contingent sunset so that if the federal government ever breaks its promise, the increased eligibility is automatically eliminated.

“Missouri taxpayers cannot afford a straight Medicaid expansion,” Barnes said. “But by transforming the system and streamlining eligibility, we create a fiscal note so positive that Missouri taxpayers can’t afford not to transform this broken system.” 


A Blueprint for Avoiding ObamaCare

Imagine a world in which states were free from the heavy hand of ObamaCare.  If given the freedom to innovate, how would conservatives transform Medicaid? What would we do control costs, eliminate bureaucracy, and improve results? How would we craft a system that is fiscally sustainable over the long-term, relies on market forces rather than centralized planning, and requires personal responsibility by recipients?  Could we enact reforms that reduce waste, fraud and abuse, and empower recipients to make their own healthcare decisions?

Unfortunately, Missouri’s Democrats and health care industries haven’t been focused on any of these things.  Instead, they have advocated for straight expansion of a broken Medicaid system. They have suggested that Missouri take the so-called “free” money without regard to the long-term consequences.  That’s not leadership and it certainly isn’t “the right thing to do.” 

As Republicans, we have been presented with a problem, not of our own making, but one that requires leadership. The ostrich strategy of sticking our heads in the sand and hoping it will all just go away will not work. We must do everything in our power to avoid the impact of ObamaCare to the best extent we can. The following represents a blueprint for avoiding the heavy handed, big government, one-size-fits-all approach of the Affordable Care Act. 

This blueprint would transform Missouri Medicaid into the most free-market oriented Medicaid system in the entire country – injecting price competition for the first time in the nearly five-decade history of the federal program, empowering recipients to make their own health care choices, reducing dependency by reducing the number of Missourians eligible for Medicaid, and, just as importantly, requiring recipients and Missourians to take more personal responsibility than ever before. 

Obviously this type of system is not the one envisioned by ObamaCare supporters. It replaces the broken Medicaid as we know it with a market-based system which incentivizes recipients to make the same cost-effective health care decisions you and I make. As a result, it would require at least three waivers from the Obama administration. Market-Based Medicaid is an all-or-nothing proposition. If these opt-out requests are denied, this proposal would have no effect. It will fall on Governor Nixon’s shoulders to demand that President Obama put his radical liberal ideology aside and allow Missouri to come up with its own solution.

This plan does not create a health insurance exchange.  It also completely avoids the long term drain on our state budget. By transforming Missouri’s Medicaid system, this plan would save the state at least $741 million over the next eight years, and potentially over a billion dollars. Those savings could be used to cut taxes, reduce the size of government, or invest in education.

Most importantly, it significantly reforms our state’s broken Medicaid system and provides an avenue to avoid some of devastating impacts of ObamaCare.  For decades, conservative and libertarian thinkers have advocated replacing centrally-planned welfare with reforms that bring market forces to bear on poverty programs. These are bold, conservative reforms.  We have tried to stop ObamaCare in the courts, and failed.  We would all like Congress to repeal the law, but the 2012 elections closed that door. A waiver and accompanying state level solution may be the last arrow in our quiver in the fight to stop implementation of ObamaCare.

Draft House Committee Substitute for HB 700

For Monday’s hearing on HB 700, I have prepared (with great help from House research) the following draft House Committee Substitute for HB 700.  I am posting here so that anyone planning on testifying has access to the document from which the Committee will be working. 

Draft HCS for HB 700

Today’s News – Medicaid Transformation Bill to Give Missouri Most Market-Based Medicaid System in the Entire Country

I filed HB 700 this morning to transform Missouri’s Medicaid system into the most market-based public health care welfare system in the entire country. 

I will post more in the near future. For now, here are the key points:

  • Market-Based Medicaid would force Gov. Nixon to request an opt-out of the failed ObamaCare Medicaid system and replace it with the most market-based public health care system in the entire country. 
  • Market-Based Medicaid would empower participants to choose their own health insurance plan and would inject true price competition into Medicaid for the first time in the 47 year history of the federal program.
  • Market-Based Medicaid would flip-the-script on one-size-fits-all ObamaCare. Missouri would end Medicaid as the world has known it and would serve as a model for reform that could save billions of dollars every year if expanded to other states. 
  • Market-Based Medicaid will reduce dependency by lowering the total number of Missourians eligible for Medicaid. 
  • Market-Based Medicaid would require participants to put “skin in the game” for the first time – forcing participants to consider costs just as ordinary Missourians with private health insurance are. Participants will have financial disincentives to waste taxpayer dollars with unnecessary emergency room visits. 
  • Market-Based Medicaid turns participants into active consumers of health insurance plans rather than passive recipients of no-strings-attached welfare benefits.
  • Market-Based Medicaid replaces bureaucratic central planning with decentralized competitors who know the health care industry and local markets better than any bureaucrat in Jefferson City ever could.
  • Concepts similar to Market-Based Medicaid have been proposed or implemented by Congressman Paul Ryan, former Indiana Gov. Mitch Daniels, Kansas Gov. Sam Brownback, former Missouri Gov. Matt Blunt, and Florida Gov. Rick Scott. None of these proposals, however, has been as innovative as Market-Based Medicaid. 
  • Market-Based Medicaid would help save rural Missouri hospitals scheduled to suffer under ObamaCare.
  • Market-Based Medicaid would increase access to care to working Missourians who are least able to afford it. 

Yesterday’s News – House Committee Rejects Democrat Medicaid Expansion

So, I realize this is yesterday’s news, but I thought it worth posting, even though events have moved forward (more on that later). The House Committee on Government Oversight and Accountability rejected Minority Leader Jake Hummel’s bill to expand our broken Medicaid system. David Lieb of the Associated Press reports:

Rep. Jay Barnes derided the Democrats’ plan as the “Brink’s truck theory of economic development, where we ask the federal government to send as many Brink’s trucks full of borrowed cash from China as they can possibly gather and dump it into Missouri’s economy.”

P-D on Medicaid Reform

Elizabeth Crisp reports in the Post-Dispatch on Medicaid. My quotes:

“What we won’t be doing is expanding Medicaid in the fashion contemplated by Obamacare,” said Rep. Jay Barnes, a Republican from Jefferson City who is one of the three lawmakers looking into the state’s options. “If there are reforms within the Medicaid system that can be made to save taxpayer money and at the same time expand access to people who need care — then that’s a topic worth discussing.”

The Honey Boo-Boo Protection Act?

I filed House Bill 72 yesterday which would prohibit children under the age of six from using a tanning device. Why six? Because last year I filed a bill which set the age at 15 and there was significant opposition. I want to see someone make the case that there’s social value in allowing Honey Boo-Boo to fake-bake. (The Honey Boo-Boo Protection Act name was the brain-storm of Simon & Renee from the Morning Meeting on KFRU in Columbia.)

In all seriousness, skin cancer is an exploding public health problem. It’s incidence is increasing, it’s deadly, and it’s avoidable in many cases. This bill will eventually include a medical exemption for exposure to UV rays under certain conditions, but in the absence of a doctor’s prescription, there absolutely no reason a 5 year old needs a tan. 

Holtz-Eakin Makes the Conservative Case for State-Based Exchanges

Douglas Holtz-Eakin is working hard to prevent conservatives from unwittingly enabling single-payer health care. In Yes to State Exchanges, published on National Review Online, he writes on what it means to continue the current course of refusing to create state-based exchanges:

This would truly be a Washington takeover of health care. And if conservatives allow it to happen, they will be consenting to an unprecedented and potentially irreversible intrusion into states’ economies and health-care systems. It would give single-payer advocates a foothold across many states.

In fact, federal “fallback” exchanges are the single-payer Trojan horse hidden in Obamacare. Conservatives must not allow themselves to be outfoxed and overrun.

Health Insurance Monopsonists and the Road to Single Payer

Last week, I posted about the importance of the administrative decision-maker in regards to ObamaCare – and examined the actual rules being promulgated by HHS which would allow Kathleen Sebelius and Barack Obama to determine which health insurance companies would be permitted to offer coverage to Missourians in an exchange:

Whichever bureaucrat is in charge of determining the “fact” of whether “making a health plan available is in the interest of qualified individuals and qualified employers” will get to determine the health plans available in any given state. An exchange run by the Obama administration could use the second provision to severely limit competition in a federally-facilitated exchange. If Missouri creates its own exchange, the state would fight for maximum competition and choice. The ambiguity of the phrase “in the interest of qualified individuals and qualified employers” is either a blessing or a curse. If Missouri runs its own exchange, it’s an unmitigated blessing because it’s so open to interpretation and allows us to have maximum competition. If the Obama administration runs the exchange, watch out, anything goes.

Today, a post on the New York Times’ Economix blog explains the theory under which the Obama Administration could limit competition in an exchange in the name of “the interest of qualified individuals and qualified employers.” As explained by Dana Goldman, an economist from USC:

In imperfect health care markets, competition can be counterproductive. The larger an insurer’s share of the market, the more aggressively it can negotiate prices with providers, hospitals and drug manufacturers. Smaller hospitals and provider groups, known as “price takers” by economists, either accept the big insurer’s reimbursement rates or forgo the opportunity to offer competing services. The monopsony power of a single or a few large insurers can thus lead to lower prices. For example, Glenn Melnick and Vivian Wu have shown that hospital prices in markets with the most powerful insurers are 12 percent lower than in more competitive insurance markets…….

Greater competition in the insurance industry — either through health insurance exchanges or other measures — may not lower insurance premiums. Weakening insurers’ bargaining power could instead translate into higher costs for all of us in the form of higher premiums.

Goldman admits that “the evidence is mixed” on whether monopsony occurs in these situations of market dominance by one or just a few health insurers. He also points to another study which found that mergers of health insurance companies are correlated with increases in premiums. (And then there’s the entire history of anti-trust laws – the purpose of which was to prevent the accumulation and consolidation of power giving an entity monopoly power and allowing it to set exorbitant prices. Now we’re going to see liberals argue for government-imposed consolidations in the name of lower costs. It’s the world-turned-upside-down. I do not know whether Goldman considers himself a liberal or not. This isn’t about him. It’s about how the Obama administration could limit competition in the name of making health insurance more affordable and, in the process, discarding over a century of liberal thought on the danger of the coercive power of monopolies.)

Which side is right on the short-term economics of it, however, is beside the point for conservatives. Government should not be the entity choosing which companies and entrepreneurs are allowed to sell their products and which aren’t. Even if the economists are right that monopsony would lower costs, it would be morally wrong for government to impose a monopsony by administrative fiat. Moreover, as Hayek would point out, government planners cannot possibly have the knowledge necessary to determine which products will work best for individual consumers or even society as a whole. Those decisions are better left to individuals who know their own situation better than a central planner ever could.

Further, even if the monopsonists are right, that limiting competition would be in the “interest of qualified individuals and qualified employers” because it would allow those few companies to squeeze docs and hospitals, it doesn’t address what comes next. And what comes next is crucial because it’s the potential path to single-payer. As those designated insurers run into problems (and they will run into problems at some point because every business eventually does), the blame for problems will be placed on the lack of choices in health insurance – that just a few players dominate the market. And the solution proposed will be a public option or single payer.

Nevertheless, Goldman’s blog post illustrates the exact theory under which Kathleen Sebelius and Barack Obama could severely limit competition in the health insurance industry in the state of Missouri. If we take control of our own exchange, we could avoid this result.