David Stokes, Elias Tsapelas, and Avery Frank join Zach Lawhorn to discuss the expiration of enhanced Affordable Care Act subsidies, new federal proposals aimed at lowering healthcare costs through cost sharing, employer coverage reforms, and prescription drug transparency. They also break down the latest installment of David Stokes’ Free Market Guide for Missouri Municipalities on parks and recreation, the role of user fees and outsourcing, national polling on public school open enrollment and why parents strongly support it, what they are watching as the 2026 legislative session approaches, and more.

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Link to the national survey: yeseverykidfoundation.org/new-national…2-education/

Produced by Show-Me Opportunity

The post ACA Subsidies, Parks Policy, and Open Enrollment in Missouri appeared first on Show-Me Institute.

Susan Pendergrass is joined by Elias Tsapelas, director of state budget and fiscal policy at the Show-Me Institute, to explain what was actually at stake in the recent federal government shutdown. They break down the debate over extended Affordable Care Act subsidies, why health insurance costs keep rising, how COVID-era provisions distorted the marketplace, and what Congress may do next.

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Timestamps

00:00 Understanding the Government Shutdown
06:31 The Debate Over ACA Subsidies
09:10 Impact of the Affordable Care Act
13:24 Proposals for Health Care Reform
17:53 The Future of Health Care Costs

Transcript

Susan Pendergrass (00:00)
Well, this is going to be a very timely and interesting conversation with the Show-Me Institute’s own Elias Tsapelas. You are the Director of State Budget and Fiscal Policy, two things that are front and center right now, but I really wanted to just have you on to talk about a little bit of stuff around the recent government shutdown.

And I just want to say upfront, if I understand this correctly, the federal government can’t pay its bills unless it’s got an approved budget to pay the bills, right? And the fiscal year runs October 1st to September 30th. And if you don’t have a new budget for the next year, you can’t pay your bills. So it’s up to the Senate, the House, and the President to agree on a budget. And this past September, as has happened before, they could not agree, and Democrats were holding out, and that caused the government to shut down. What were Democrats saying they were holding out for?

Elias Tsapelas (00:52)
Well, I guess I should start with just a little caveat that some of what the Democrats were saying they were holding out for was not precisely what was on the table. So no matter what happens, health care premiums are going to be going up, that’s just a fact, because health care costs are up. Health care costs are going up everywhere. Hospitals, Medicaid, we see it everywhere.

Susan Pendergrass (00:56)
You know, fix it up for me. Why?

Elias Tsapelas (01:20)
What they were holding out for were these extended or expanded ACA subsidies, Affordable Care Act subsidies. We’re talking about the marketplace here. This is typically for people making between 100 percent and 400 percent of the federal poverty limit. For example, a couple of two: 100 percent of the federal poverty limit is about $21,000 per year, 400 percent is about $85,000 per year. That’s roughly the range you’re looking at.

Now, some small employers do purchase plans through the marketplace, but the big piece here is that the ACA provides subsidies for people. And the way it works, essentially, is that people pay a proportion of their income. If your income is 100 percent of the federal poverty limit, you’re going to pay roughly 2 percent of your income. Now, there are extended subsidies that change that calculation. But the point being, the law set out that if you make this amount of money, you’re only going to pay this much on health insurance, and the government is going to subsidize the rest. You are not sensitive to costs at all, because your costs are tied to your income.

Susan Pendergrass (02:54)
So, for example, if you earn $4,000 a month, theoretically, and I don’t know the numbers, the government would say you won’t pay any more than $300 in insurance premiums?

Elias Tsapelas (03:05)
Yep. And so that is a percentage that you pay scaled off how much income you have from that 100 to 400 percent. That is a core piece of how the Affordable Care Act worked, and everyone paid a portion based on the base subsidies.

Now, what the debate was about, or what Democrats were holding out for, was expanded subsidies, which came about during COVID as part of the American Rescue Plan, ARPA. And it did a couple things, but they were subsidies on top of regular subsidies. So this was not, “If this doesn’t happen, everyone is going to be paying unsubsidized plans.” This was an additional type of subsidy. These additional subsidies were set to expire at the end of the year, at the end of December. ARPA gave four years of subsidies.

Susan Pendergrass (04:04)
Because it was COVID related, temporary, and they said, “We’ll cover more of your premium through December 31, 2025.”

Elias Tsapelas (04:14)
Yes, I think part of the calculation was that people were going to like it so much that it would be hard to get rid of. And it’s certainly the case: if these subsidies go away, people will be paying more.

Susan Pendergrass (04:15)
Ahem.

Elias Tsapelas (04:27)
But that is not to say there would be no subsidies at all. These extended subsidies did a couple things. For people between 100 and 150 percent of the federal poverty limit, quick caveat: in Missouri, if you make under 138 percent, you’re on Medicaid, so you don’t pay anything, but in many states without Medicaid expansion, people go on the marketplace. What these expanded subsidies did is: if you made between 100 and 150 percent of the federal poverty limit, you paid zero percent of your income. You got a plan for free.

You would still have some cost sharing, and the sliding scale up to 400 percent that the normal subsidies used was lowered, so people under regular subsidies who made 400 percent of the federal poverty limit were paying about 10 percent of their income. With the expanded subsidies, you’d only pay 8.5 percent, and the subsidies no longer stopped at 400 percent. They would go all the way up. You would never pay more than 8.5 percent of your income.

Susan Pendergrass (05:30)
Okay.

Elias Tsapelas (05:42)
But typically, people above 400 percent of the federal poverty limit don’t want to buy ACA plans because 8.5 percent of income is expensive. Still, a decent number of people were impacted. It costs a decent amount of money. The Congressional Budget Office says extending these expanded subsidies costs about $350 billion over 10 years. Very expensive. But there are a lot of issues here, which Republicans are pushing back on as they negotiate whether to extend these by the end of the year.

Susan Pendergrass (06:31)
So now we’re in this argument of whether we extend COVID subsidies or not. And like you said, Republicans seemed willing to say maybe a year, or maybe we’ll vote on it in December. Essentially the Democrats didn’t get any of what they asked for, right?

Elias Tsapelas (06:48)
Yeah. A key piece is that when Democrats passed this in ARPA, no Republicans voted for it. There’s a variety of reasons, but a big one is that it exacerbates problems with the Affordable Care Act. People buying health insurance are seeing higher prices, high deductibles, high copays, so people don’t want to buy it. These additional subsidies got more people into the market, but at a very expensive cost. And because people are not cost sensitive, their share is tied to their income, the subsidies scale regardless of what insurance companies charge. That creates unintended effects. There were allegations of fraud. And a larger discussion: if we’re going to spend $350 billion per 10 years, is there not a better way to get healthier people to buy health insurance? Is there a better way to help people?

And the people most impacted are those around 400 percent of the federal poverty limit, not very low income people. Higher income people. And often near retirement folks who aren’t working anymore but aren’t yet on Medicare. They need health insurance, they have health needs, and insurance gets very expensive. That was something the Affordable Care Act tried to deal with. But doubling down on continuously funding this subsidy system is something Republicans didn’t want to do.

Susan Pendergrass (09:10)
Yeah. So we had Brian Blase of Paragon on the podcast, and he absolutely did not want those COVID related subsidies extended. He claimed that the Affordable Care Act caused health related expenses to go up. Do you know how that works?

Elias Tsapelas (09:45)
There are a couple things going on. One big thing Brian talks about is likely enormous fraud from the expanded subsidies. Bloomberg had a good article about what happened in Florida. As soon as the federal government offered zero premium plans for people between 100 and 150 percent of the federal poverty limit, background: Florida hasn’t expanded Medicaid, so people enroll on the marketplace. What happened is that it became a business for insurance brokers to get people enrolled. Brokers make money off enrollments, and people don’t care if they aren’t paying premiums.

So you had an enormous increase in people supposedly making between 100 and 150 percent of the federal poverty limit. Census data suggests far fewer people actually make that income. Tons were getting health insurance for free, and many weren’t using it. You’d expect higher usage. There are reasons to think there was widespread fraud.

More broadly, ACA plans must cover many things people don’t need, which drives up costs. And the marketplace risk pool is heavily made up of sick people, fewer healthy people, which makes insurance expensive.

So the bigger discussion is: how do you get healthier people into the market? How do you offer plans people want? Republicans are taking a stand that doubling down on the ACA model, with subsidies disconnected from costs, won’t work long term.

Susan Pendergrass (13:24)
Correct me if I’m wrong on this, but didn’t Senator Thune or somebody suggest just sending people $5,000?

Elias Tsapelas (13:30)
I don’t know if it was exactly that amount, but yes, there have been proposals essentially saying: maybe there will need to be a one year extension of subsidies because new plans start soon and it would be hard to roll out big changes in a month. But some ideas, from Senator Cassidy, Senator Thune, and others, propose approving the same amount of money but sending it directly to people instead of insurance companies. For many people, subsidies are worth over $30,000 a year. If people got $30,000, they might not spend it all on an ACA plan costing that much. They might buy a cheaper plan, use out of pocket spending, or seek non ACA compliant plans. There are ideas: HSAs, short term plans, specialized plans. A key piece is giving the money to people, not insurance companies, so someone has an incentive to reduce costs.

Susan Pendergrass (15:47)
Yeah. Well, the shutdown ended. Nothing really changed, right?

Elias Tsapelas (15:52)
Yeah. Congress will have to work a lot in the last month of the year. I’m a little disappointed. There were almost some very interesting budget related court cases that could have come from the shutdown. One argument was whether the government must fund food stamps, or SNAP, during a shutdown, whether they must give out money not appropriated. Some judges said yes. That raises major questions: can courts tell the executive branch to spend money Congress didn’t appropriate?

Susan Pendergrass (16:54)
I think they were told that they don’t, right, in the end?

Elias Tsapelas (16:59)
The Supreme Court basically said courts needed to wrestle with the issue. It got resolved before a final answer. We don’t know for now. Judges were on different sides. Democrats pushed back noting that in previous budgets, they fought to fund things, but the executive branch simply didn’t spend the money. There’s a lot of interesting stuff: can courts force funding, can the executive disregard congressional appropriations? I’m upset that didn’t get resolved. But the ACA issue is big enough that Congress has its hands full.

Susan Pendergrass (17:53)
Some folks said that because of the SNAP benefit question, we were just getting to the point where Americans were paying attention to the shutdown and then it ended. And what’s interesting is the amount of misinformation and hard to follow information. I saw headlines about someone’s insurance premiums going from $300 to $2,600. I don’t know if any of that was right, but it got a lot of play.

Elias Tsapelas (18:28)
I don’t think it was covered especially well in terms of what was being argued, because the government shut down far before these subsidies expired. There was a lot of muddying of the waters. Some people thought if subsidies weren’t extended, no one would have subsidies, even though the people most impacted would just go from paying 8.5 percent of income to 10 percent. Not nothing, but not catastrophic.

Health care costs are going up broadly. Medicare enrollees are getting renewal notices. Everything is going up. ARPA was designed to be temporary. If it were supposed to be permanent, Congress could have made it permanent. Whether Democrats thought it would be continued forever or just help temporarily is unclear. But if Congress comes up with something that makes health insurance better, I’m all for it. There are tough decisions. Congress has struggled with ACA reform for a decade.

Susan Pendergrass (20:20)
I think we know the answer to that. At the federal level, when they want to do big splashy things, ARPA, the ACA, the Tax Cuts and Jobs Act, they make expenses short term to reduce the fiscal note, assuming someone will renew them later. Same thing with the Tax Cuts and Jobs Act. They assume future lawmakers will extend them. So it’s not unreasonable that ARPA had temporary provisions assuming they’d get extended. I guess not this time.

Elias Tsapelas (21:12)
People’s health care costs going up is a big issue. People won’t be happy regardless. But returning to issues that should have been addressed when the ACA passed is important. The marketplace is dysfunctional and too expensive. Hopefully Congress finds something better. And I don’t want to minimize issues for people close to retirement. That’s a big issue: people between 55 and 65, not on Medicare yet, often have significant health needs. If you tell a 60 year old who isn’t working that coverage is $40,000 a year, that won’t work.

Susan Pendergrass (21:53)
Yeah. That’s right.

Elias Tsapelas (22:23)
More options will be good. That is an important group that needs to be addressed.

Susan Pendergrass (23:07)
Well, thanks for explaining it so clearly and helping our listeners understand what was actually on the table. It’s a complicated topic, but we’ll watch it unfold over the next year, and hopefully you’ll come back and explain what’s happening as it unfolds.

Elias Tsapelas (23:23)
Hopefully something does happen, so there is something to explain. That would be the best case scenario.

Susan Pendergrass (23:25)
That’s right. All right, well, thanks so much, Elias. Really appreciate it.

Elias Tsapelas (23:31)
Thank you.

Produced by Show-Me Opportunity

The post What the Government Shutdown Was Really About with Elias Tsapelas appeared first on Show-Me Institute.

Zoning can be a complicated issue for people who believe in limited government and market-based policies. There is the conflict between the rights of people to organize their community how they want it, the rights of people to develop their own property as they see fit, and the issue of how local governments will prioritize those rights.

Usually, any discussion of reducing or ending zoning immediately leads to nightmare scenarios of a chemical plant opening up right next door to your house. (This actually happens in rural areas with concentrated animal feeding operations, but that is another issue.) But what if the concerns and questions are about much smaller changes to zoning?

The City of Webster Groves is undergoing such a debate right now. Recently, the city council passed changes to the city’s zoning code that will increase housing and development options in parts of the city. In short, the city will allow more small, multi-family homes (i.e., duplexes) in parts of the city previously reserved for single-family zoning. The stated reason for the change was to provide greater housing options that might allow people from different backgrounds to move into Webster Groves. However, a group of residents opposed to the changes has collected enough signatures to put that ordinance change up for a referendum on the ballot on August 3. Those residents, like many suburban residents in our country, prefer single-family zoning for their communities. Needless to say, the upcoming vote has stoked a great deal of interest in Webster Groves. I don’t think the town has been this riled up since the premier of Sixteen in Webster Groves 55 years ago.

The debate over allowing more duplex housing could be academic enough, with good arguments on both sides, but from discussions with residents, letters-to-the-editor, and more, it is pretty clear this debate is closely related to issues of public housing as well. Two years ago, Webster Groves added “source-of-income” to the anti-discrimination rules of its housing ordinances. That means that a landlord in Webster Groves can’t refuse to rent to a person or family who will use a federally funded Section 8 housing voucher to pay the rent. This goes far beyond Obamacare simply requiring everyone to buy health insurance; this law says that a landlord is now compelled to participate in a welfare program whether they want to or not. Bake the cake, landlord! (Keep in mind that Section 8 is a federal program, and there is no federal requirement that landlords accept it). Taken in combination, it is not unreasonable for some people in Webster Groves to think that this rezoning is a first step towards much greater use of multifamily housing and Section 8 vouchers in their city.

Should a community ban the use of the camel because it occasionally sticks its nose under the tent? I guess it depends on what you think about the tent. If your community is based on one-tent per family per lot and you and your neighbors like the community you have built that way, changes in zoning to allow for more tents per lot can be concerning. But if you think tent prices are too high and people need more options, then a simple allowance for two smaller tents on a parcel instead of just one makes sense. (And make sure that camel is not a nonconforming pet under the animal code.)

The rubber will meet the road in debates about equality in housing policy when people—including suburban liberals who claim to passionately support more diversity and inclusion—are forced to consider changes that could affect their own home values and community makeup. I don’t claim to know what the people of Webster Groves should do in the long run. (Though they should definitely use another referendum to get rid of the terrible “source-of-income” rule). However, people have a right to create and abide by zoning laws that maintain the type of community they want to live in, even if not everyone would make that same choice. It is going to be very interesting to see debates play out like this across Missouri’s suburban communities in the coming years.

The post Webster Groves Addresses Hard Issues in Zoning appeared first on Show-Me Institute.

Our conversation also highlights that even within the market movement there remains a great deal of disagreement about the best way to reform our health care system. Mr. Butler was an early supporter of an “individual mandate” that required the purchase of health insurance, a position he now has largely rejected but does distinguish from the mandate as passed in the Affordable Care Act.

But the main reason we invited Mr. Butler on the program was to talk about his “Medicare Advantage for All” proposal, which he recently published in the Journal of the American Medical Association. Mr. Butler explains what he means by “Medicare Advantage for All” in the podcast, but to be plain (and perhaps unsurprisingly), I disagree with the idea. I don’t think American patients are well served by the government “designing” a health care system that relies more and more on third-party, government-financed and government-controlled coverage for the vast majority of our health services. Proponents of free market-reforms should, I think, focus most of their efforts on expanding supply to meet public demand for health services, and we’ve certainly talked about those options at length and for some time.

In the podcast, we also talk about Medicaid expansion and proposals for changing how Medicaid is administered. As a general matter, I think Mr. Butler is more optimistic about the prospects of the federal government delegating control more definitively to states to control costs and manage the Medicaid program. I’m not so optimistic. In light of the federal government’s Lucyball treatment of state waiver proposals in both Republican and Democratic administrations, I’m not nearly as hopeful as Mr. Butler when it comes to believing states will be allowed to innovate in the program. All of that said, Mr. Butler provides an important perspective that is already part of a larger debate on the future of American health care.

Mr. Butler’s perspective may not be your philosophical cup of tea, but if it isn’t, rest assured that you’ll have plenty of other flavors to digest in the weeks ahead. In the next few days, we’ll be sitting down with Michael Cannon of the Cato Institute and Christopher Pope of the Manhattan Institute to talk about the future of health care in this country, with more guests planned. We hope these podcasts are informative, and we invite your feedback and ideas.

The post Agreeing and Disagreeing on Health Care Reform appeared first on Show-Me Institute.

Well, you could try the hidden ball trick. Indiana’s Trine University softball team played this old ruse to perfection in advancing to the 2019 Women’s College World Series.

In a surprise pick-off move, Trine pitcher Kate Saupe turned and fired a bullet to second base. But the ball got away from the infielder and rolled into the outfield. So it seemed. Actually, the ball never left the pitcher’s glove. When the runner tried to advance, Saupe tagged her for the game-winning out.

In promoting the idea of a cost-free expansion of Missouri’s Medicaid program, the Missouri Budget Project, the Missouri Hospital Association, and others are using a similar (and equally spectacular) misdirection play to gain public support for a policy initiative that would be neither cheap nor free.

At $10.9 billion, Medicaid already accounts for 39.6 percent of Missouri’s 2019 budget. That’s more than education, prisons, public safety, or roads. It’s the most for any service funded in part or total by Missouri taxpayers.

So how can Missouri boost the number of Medicaid participants from 850,000 to more than a million people—and save money? It can’t. If we increase Medicaid enrollment more than quarter, there has to be a similar increase in costs—something on the order of $2 billion a year.

The hidden ball here is to treat the federal contribution in this joint state-federal program as “free money” —a manna-from-the-heavens gift from Uncle Sam to the Show-Me State. But the money is not free. Like the residents of other states, Missourians are on the hook for federal Medicaid obligations, no less than state Medicaid obligations. They pay the final bill either way—through state and federal taxes.

Under the Affordable Care Act, the federal government set out to expand Medicaid to include people earning up to 138 percent of federally defined poverty level.

As originally written, this legislation would have required states to comply with the planned expansion of Medicaid or face the loss of all federal matching funds, split roughly on a $3-to-$2 basis between the federal government and the states. The Supreme Court struck down that part of the law in 2012. The Obama administration then agreed to a $9-to-$1 split in favor of the states if they opted to participate in the expansion. What had been a “gun to the head” (as Chief Justice John Roberts wrote) suddenly became a mouth-watering carrot.

Kansas recently became the 37th state to opt into Medicaid expansion. If Missouri were to follow suit, it would still need to put up 10 percent of the cost. Citing a Washington University study, Medicaid expansionists think they have found a way to make even that cost disappear. But this is just one more example of cost-shifting as opposed to cost reduction.

According to the study, Missouri could re-enroll existing recipients currently classified as permanently and total disabled (PTD) based on income, rather than disability. That would trigger the new $9-to-$1 federal match—meaning more federal funds for the same people.

But there is a problem: This maneuver appears to be against the law. So the federal Office of Inspector General said in a recent audit of New York State when it tried to do same thing.

Over the last two decades, Medicaid has been a rapidly rising cost at both the state and national levels. But it remains a deeply troubled program that is not succeeding in its basic mission of providing ready access to high-quality healthcare for low-income families and individuals.

When it comes to promoting needed change in healthcare, using feel-good, sleight-of-hand accounting to promote a false idea of something-for-nothing benefits is a step backward, not forward.

The post The Myth of “Free” Medicaid Expansion appeared first on Show-Me Institute.

Providing health care for the most vulnerable Americans is a laudable goal, but making countless other Americans financially vulnerable in the process by dramatically increasing their insurance costs is not a result that should be celebrated.

Health insurance should not, at its core, be a maintenance plan. It should be insurance. And it should hardly ever be one size fits all. Unfortunately, limited flexibility in insurance plans was and is a signature feature of ACA plans.

It’s why short-term medical (STM) insurance plans are an important component of a fully functional health insurance marketplace. STM plans provide less coverage, but have much lower premiums than the more comprehensive and maintenance oriented ACA packages.

The importance of STM plans is why I hope that Missouri legislators will continue talking about these plans in 2020 and reforming the law to comport with the STM reforms pushed at the federal level last year, which would mean extending the terms of such plans to a new one year maximum. For several years now, I have supported greater liberalization of Missouri’s health insurance markets, including but not limited to its STM insurance market. Along with Certificate of Need reform, Missouri policymakers have two attainable health reform options that they can pursue immediately and without further federal action.

The post Will Missouri Reform Its Health Insurance Regulations in 2020? appeared first on Show-Me Institute.

Spencer boils down the issues succinctly:

The White House says extending the length of these policies from 90 days to up to three years offers an affordable alternative for Americans who do not qualify for premium subsidies under the Affordable Care Act and cannot afford the premiums that come with the ACA’s mandatory coverages. The Trump rule allows ACA subsidies to be used to promote sales of short-term policies.

Those who want to curb the expansion say it will undermine the nation’s individual insurance market and health care reform by drawing away millions of the healthiest participants from the coverage pool.

It would be good news for consumers if these changes to STM plans last. I have said again and again that one of the main problems in American health care is the absence of price competition that would allow consumers to shop for health insurance products like they shop for other items—by comparing benefits, assessing costs, and making buying decisions that comport with their personal needs. More liberalized short-term medical insurance policies provide at least some of that flexibility in the insurance marketplace by providing less expensive coverage, albeit with fewer features.

Is short-term medical insurance for everyone? Of course not. But that decision should be for consumers to decide, not the U.S. Senate.

The post Short-Term Medical Insurance Makes the News Again appeared first on Show-Me Institute.

The cost of health care is hurting the state’s budget and Missourians’ pocketbooks. This year, Missouri passed the largest budget in the state’s history and Medicaid is a bigger portion of the budget than any other single item. Medicaid today consumes more of the budget than ever before, and shows no sign of slowing down. In fact, Missouri’s Medicaid enrollment today is less than it was in 2005, but the program costs nearly twice as much.

Premiums for private coverage also continue to rise, partly as a result of restrictions imposed by the Affordable Care Act. My colleagues have advocated for the expansion of short-term medical plans to help ease cost inflation. Short-term medical plans allow consumers to personalize their coverage without costly Obamacare restrictions, such as mandated maternity and mental health coverage. Bills that would expand short-term plans have received support in both chambers the past two years. Hopefully a bill expanding the availability of short-term plans will finally pass next year.

The lone bright spot in health care policy was the creation of the “Missouri Health Insurance Innovation Task Force.” When the task force meets later this year, they will “develop innovative ways to transform the health insurance marketplace” and request an innovation waiver from the federal government. I’ll be outlining some market-based reforms the task force should consider in a future blog post.

The work of this task force and the reforms they consider could bring substantial health care savings for Missourians. Sadly, the implementation of any reforms won’t be completed until at least next year.  It’s nice to have a glimmer of hope for the future, but that doesn’t make the present any less disappointing.

The post Another Year without Reform appeared first on Show-Me Institute.

Medicaid is the most expensive program the State of Missouri administers, and the share of the budget that the program occupies only continues to grow. In SFY 2000, Missouri spent 18.4 percent of its budget on the Medicaid program. For this year’s SFY2019 budget, Missouri will spend more than 37 percent. These totals include federal and other funds, but the impact on state General Revenue doesn’t look any better.

The state’s General Revenue is funded mostly by individual income and sales tax collections. Each year, Missouri’s budget is put together based on an agreed-upon assumption of how much the revenue collections will change for the year. When a single state program grows rapidly, it prevents lawmakers from allocating funds to other worthy public policy priorities when the economic outlook is good, and it also limits options for response when there is a downturn.

To understand Medicaid’s effect on the budget, consider this: In the ten years between SFY 2008 and SFY 2018, state General Revenue collections increased by $1,464.7 million (or 18.3 percent). In that same time period, the General Revenue cost of Medicaid increased by $770.3 million. So in effect, over the past decade nearly 53% of all tax revenue growth in Missouri has been consumed by the growth in cost of the Medicaid program.

Sadly, it looks as if this story will continue into SFY 2020. According to the department requests submitted by the MO HealthNet Division of the Department of Social Services, the Medicaid program is expected to need an additional $302 million in General Revenue next year. What does such an increase mean?

First, note that the projected increase for next year ($302 million) is nearly 40 percent as large as the total increase from SFY 2008 to SFY 2018.

Second, even if the only cost increase Missouri had to worry about in its entire budget this year was for Medicaid, state revenue collections would still have to increase by 3.2 percent in order to keep up. And Missouri has only met or exceeded that rate in five of the previous ten years.

As next year’s legislative session approaches for Missouri’s policymakers, the continued growth of the state’s Medicaid program is certain to remain a major concern for our elected budget preparers. Current and future public spending priorities will have to be continually pushed aside until the program can be reformed and the costs controlled. With regard to the future of our state’s budget, Medicaid reform cannot come soon enough.

The post Medicaid Is Stifling Economic Growth in Missouri appeared first on Show-Me Institute.

The excitement surrounding such a reform is not reserved to Missouri. The Trump administration itself has pushed very hard for such expansions, and central to that push is the secretary of the Department of Health and Human Services, Alex Azar. At a conference late last month, he laid out why this reform is important.

“We believe sensible state regulation of [short-term health insurance plans] is important,” Azar said. “But millions of Americans are in need of affordable insurance options, and states can help build this market outside of Obamacare’s broken regulations.”

As more Americans enter the new economic environment, they find themselves unable to purchase quality health insurance, Azar told the audience. The new policy will give states greater flexibility to create more affordable insurance options for all consumers, especially those workers who do not receive health insurance through an employer, Azar says.

“While these plans aren’t for everyone, we believe they can be an important option for many—people who have been priced out of Obamacare plans, who are between other sources of coverage, or who are independent contractors in today’s gig economy,” Azar said.

You can find out more about short-term medical insurance here. It’s my hope that Missouri makes liberalization of short-term medical insurance one of its highest priorities next year.

The post HHS Secretary Talks Up Short-Term Medical Insurance Plans appeared first on Show-Me Institute.

How do STLDI plans save their members money? For starters, short-term plans are not ACA-compliant. They do not offer all ACA required benefits, cover preexisting conditions, prohibit dollar limits on benefits, or insure dependents to the age of 26—some of the very provisions that drive up the cost of insurance. But because coverage is less comprehensive, individual monthly premiums for STLDI plans cost substantially less than unsubsidized ACA plans (see chart below). For many Missourians, these affordable plans are a welcomed option.

The rise of these STLDI plans will likely affect the ACA insurance markets. The departure of low-cost, younger and healthier customers could increase the volatility of ACA risk pools and stoke spiraling premiums further. And for those who choose an STLDI plan? Those customers may have made a bad bet if they get really sick, given STLDI’s comparatively skinnier benefits relative to the more expensive ACA plans. But considering that almost half of Missouri’s population is under the age of 34 and that many are being crushed by exorbitant premiums, a number of Missourians could benefit from an STLDI expansion.

Missouri currently limits its STLDI plans to six months, requires plans to cover some state-mandated benefits, and necessitates that customers have a 63-day gap in coverage before purchasing short-term plans. These regulations impede customers’ access to these plans, creating significant barriers to affordable insurance.

In the 2018 legislative session, Missouri considered House Bill 1685, which would have extended the six-month limit on plans to a full year. Though the measure did not pass before the session ended, it received support in both chambers, and a similar bill could appear in 2019. In light of the change in federal rules, isn’t it time for policymakers to consider expanding short-term plans for the sake of Missourians’ health—both physical and financial?

The post Not Bronze, or Silver, or Gold, or Platinum-Just Affordable appeared first on Show-Me Institute.

Imagine if cars had to be sold this way. Say that I just need a cheap car to get to work every day, but the law prevented dealerships from selling me a car without gold rims, tinted windows, and free oil changes for life—in other words, all the bells and whistles. My budget may be $5000 for the car, but the dealership may only be able to sell cars that start at $30,000 because of all the mandates. The result isn’t that I end up getting the more expensive car with the mandated features—but that I might have to go without a car entirely.

That’s the problem in American health care in a nutshell. Some people may find themselves overpaying for a product they don’t want, and others may end up going without a product that they really need because it’s so expensive.

There’s a wrinkle in that health care paradigm, though. While longer-term insurance plans typically fall under the auspices of federal regulation and often have state coverage mandates tacked on, “short-term medical insurance” (or STM) can often sidestep the mandate layers and offer a product that is insurance first and a maintenance plan second, if at all.

That may sound a bit jarring if you’re used to health insurance as maintenance, but imagine how much homeowner’s insurance would cost if government required insurers to include a grass-mowing benefit, or if a car owner’s insurance had to include an oil change benefit. STM generally avoids those additional costs by focusing  on the financial backstop that insurance is actually supposed to be.

Having greater latitude in finding a plan that fits your medical needs (and your budget) is an important step in fixing the health care cost problems we see in America today, and that’s what one proposal from the House appears to offer. The legislation would expand the duration that an STM plan can last from six months to a year in Missouri, and it would also make clear that the STM plan a consumer might purchase is different from the insurance plans they might be used to. Specifically, the plans would have to state plainly in their documents that,

This policy may not cover preexisting conditions, including conditions you may currently have and are unaware of but are not diagnosed until the policy’s term. This policy may not cover certain essential health benefits, including prescription drugs, preventative care, and emergency services. Before you realize benefits under this policy, you may be responsible for a deductible and/or coinsurance. Be sure to discuss these items with your insurance broker before purchasing a short-term medical policy.

In other words, a consumer may not have every medical condition covered—the maintenance plan would be limited—but if they were hit by a bus, they’d have a financial backstop because they’d at least have the STM’s insurance protecting them.

And as the name suggests, STM is generally used for shorter periods of time than more fully-featured health maintenance plans. Some people may need it to fill a temporary gap in employer-sponsored coverage, and others may prefer it as an alternative to vastly more expensive Obamacare plans, even though STM plans are “skinnier” in terms of benefits and were generally non-compliant for purposes of the mandate penalty. 

Expanding the scope of STM coverage would help to resolve both of the problems I articulated at the beginning of this blog post—the limited incentive to shop around for coverage, and the multi-layered onion of mandates—that drive up the cost of the average health “insurance” plan.

This STM expansion idea is an excellent one that helps to meet the needs of people who really want coverage but don’t want or can’t afford what the government is trying to impose on them. I hope the idea receives increasing attention as the session continues.

The post Short-Term Medical Insurance Proposal Offers Opportunity to Get People Coverage appeared first on Show-Me Institute.

“Despite the fact that Missouri’s economy is growing and we’re in a stronger position than we were last year, what continues to be the greatest challenge in the budget is the explosion in federally mandated and other health care spending,” Greitens said Monday at a news conference in Jefferson City to outline his budget plan.

From there, the paper embarks on a roughly 1500-word odyssey to impress on readers that four- or six-percent rates of growth in the Medicaid program do not a cost “explosion” make. This pronouncement, delivered without providing any context, fails on several fronts, including the fact that both figures are double and triple the rate of inflation, respectively.

But I wouldn’t constrain the question of whether Medicaid costs have exploded to a single year, anyway. Consider the program’s growing impact on Missouri’s budget. According to the National Association of State Budget Officers (NASBO,) Missouri spent 18.4 percent of its FY2000 budget on the Medicaid program. By FY2016, that figure had more than doubled to over 37 percent of the state’s budget. As we’ve argued for years, Medicaid’s cost problems aren’t some artifact of Obamacare alone. The program has long been broken and, like the rest of the health care system, outpaced inflation—eating into public spending priorities just as private health care has grown in our own budgets. Over the last 17 years, Missouri even lowered eligibility thresholds for certain populations, and yet overall costs have continued to rise.

Years of cost increases—even if only of the four- or six-percent variety—add up to an ongoing cost explosion. That is precisely why former President Barack Obama said this back when he was selling Obamacare. (Emphasis mine)

And, finally, the explosion in health care costs has put our federal budget on a disastrous path. This is largely due to what we’re spending on Medicare and Medicaid—entitlement programs whose costs are expected to continue climbing in the years ahead as baby boomers grow older and come to rely more and more on our health care system. That’s why I’ve said repeatedly that getting health care costs under control is essential to reducing budget deficits, restoring fiscal discipline, and putting our economy on a path towards sustainable growth and shared prosperity.

So yes, Medicaid’s costs are exploding. And the sooner we can get to reforming the program, the better.

The post Yes, the Cost of Medicaid Has Exploded appeared first on Show-Me Institute.

Congress approved a sweeping $1.5 trillion tax bill on Wednesday that slashes rates for corporations, provides new breaks for private businesses and reorganizes the individual tax code.

The Senate passed the GOP bill early Wednesday morning and the House then voted on it for a second time to fix technical problems with the legislation, the final step before it’s sent to President Donald Trump for his signature.

According to the Tax Policy Center, 8 out of 10 Americans will see their taxes reduced under the finalized bill, including the vast majority of middle income earners. It also sounds like entitlement reform could be coming soon to pair any long-term revenue reductions from this tax relief with long-term spending reductions, as well. Entitlement reform should have happened with or without tax reform, obviously, but that the two issues are being talked about in the same breath now is a positive development for supporters of good, sustainable governance.

But let’s not forget one other big development in the tax reform bill: starting in 2019, the end of Obamacare’s mandate penalty/tax.

The individual mandate was included in ObamaCare in part to draw young and healthy people to sign up for insurance in the marketplaces as a way to offset the costs of older and sicker enrollees.

Still, not everyone agrees that the measure has worked as intended, with some saying the mandate hasn’t been as effective as originally thought to entice people to buy health insurance.

“Today, we’re turning Obamacare from a mandatory program into a voluntary program and providing additional tax relief for the millions and millions of Americans who have chosen and will choose not to buy a government-mandated product that for them provides not the value that they want,” Sen. John Barrasso (Wyo.), the No. 4 Senate Republican, told reporters on Tuesday.

To me as a Millennial, the functioning of Obamacare’s mandate was a particularly objectionable piece of that bill that used younger, generally poorer Americans to subsidize everyone else in the individual market. It’s why so many young people instead risked not getting the insurance at all, especially as the premiums on the plans available to them exploded year after year. 

In the end, while I’d like to have seen more from the bill—and frankly, more from this year, including a full repeal of Obamacare—the passage of the TCJA is a welcome win in what could otherwise have been a dicey year for supporters of free market reform. 

The post Tax Cuts And Jobs Act Passes appeared first on Show-Me Institute.

That’s why news broken by Samantha Liss at the St. Louis Post-Dispatch should be very welcome to patients in Missouri and elsewhere, as it appears the market for at least some pharmacy services is about to grow:

Throughout the past year, and without much fanfare, Amazon.com Inc. has gained approval to become a wholesale distributor from a number of state pharmaceutical boards, according to a review of public records….

According to a review of records by the St. Louis Post-Dispatch, Amazon has received approval for wholesale pharmacy licenses in at least 12 states, including Nevada, Arizona, North Dakota, Louisiana, Alabama, New Jersey, Michigan, Connecticut, Idaho, New Hampshire, Oregon and Tennessee.

An application is currently pending in the state of Maine.

An Amazon spokesperson told the Post-Dispatch via email that the company does not comment on “rumors and speculation.”

It’s a little complicated, but one of the big questions surrounding the Post-Dispatch report is the ultimate aim of the Amazon filings—that is, whether Amazon wants to open up a pharmacy benefits management business only, or whether a soup to nuts model is also in the tech giant’s future. Does Amazon want to be Express Scripts? Does it want to be Walgreens? Or does it want to be both? I would welcome all of the above, actually, and I suspect millions of Amazon customers would feel likewise.

And despite the failure of our Federal representatives to actually do what they said and repeal Obamacare, there is still reason to be optimistic about the trajectory of care in this country. Along with the reform initiatives above, tech innovations like 3D printing of prosthetics, and much more, the potential entry of Amazon into the pharmaceutical space reiterates that the future of health care as some government product remains anything but assured. After all, people are markets, and markets are powerful things.

The post Is Amazon Getting into the Pharmacy Business? Let’s Hope So appeared first on Show-Me Institute.

Rate proposals released Friday by the Missouri Department of Insurance are on average 36 percent to 42 percent higher than rates for similar 2017 plans….

Both Cigna and Anthem Blue Cross Blue Shield, the two companies returning to sell on the marketplace, listed the uncertainty about cost-sharing payments that help consumers cover the cost of insurance as justifications for their proposed rates.

Cigna has reportedly asked for up to a 73% price hike on at least some of its plans. Meanwhile Anthem will be dropping out of at least 17 counties in the state where the company marketed plans just this year. KCUR has a good national map of the number of insurers in each county in 2018. Particularly in Missouri, the map tells a story of an individual insurance market that for hundreds of thousands is less a market and more a monopoly, duopoly, or oligopoly. 

American health care reforms should be based on good policy that empowers people, not government. And these rate hikes are just the latest example of what happens when the center of a health care system is government and its cronies rather than patients themselves. We need change, and we need it sooner rather than later.

The post Ouch–Missouri Individual Health Insurance Premiums To Rise by Double Digits in 2018 appeared first on Show-Me Institute.

Unfortunately, bad policy can also recur like an eclipse—and sadly, not nearly as infrequently as Kansas City’s two-hundred year solar eclipse cycle.

Seven years ago, Congress passed the Patient Protection and Affordable Care Act (or “Obamacare”) on a party-line vote and into law. Not only has that law disrupted the health care of millions of Americans—particularly rural Americans—but it has doubled down on a broken status quo that puts “insurance” at the center of our health care system rather than care. Forcing people to purchase value-questionable comprehensive insurance plans as a stand-in for actual care has not worked so far, and it will not work in the future.

But what’s especially frustrating is that some of the same folks who made Obamacare the law of the land now want to commit even further to a government-centric approach to health care policy, labeling it “bipartisanship.” I submit that bipartisanship that views government as the white knight of health care is not an appropriate compromise position, nor is it the solution to our country’s health care problems. The market is.

Market solutions to health care require reliable pricing signals established by the transacting parties, not the continued reliance on a third-party negotiator for services that has affected care quality, cost, and access over the last half-century. That means disintermediating insurance in our health care system. It means massively overhauling Medicaid to ensure our most vulnerable receive the care they need and that the program doesn’t bankrupt us in the process. It means clearing the way for people to freely help one another through licensing and regulatory reform. It means, in other words, often doing precisely the opposite of what Obamacare supporters want government to do—rather than get government more involved in our health care, it means getting it less involved.

I hope that good policy won’t be eclipsed by a broken Obamacare health care system that continues to hurt millions of Americans. But I especially hope the bad policies driven by Obamacare aren’t exacerbated yet again by another cycle of bad government-centric policy, now seven years on from its last appearance. We’ve seen these mistakes before, and we don’t really need to see them again.

The post Obamacare’s Total Eclipse of Bad Policy appeared first on Show-Me Institute.

As we have noted before, rural areas of Missouri were already severely underserved by the Obamacare exchanges, and the departure of Blue Cross Kansas City will leave dozens of counties with no Obamacare providers next year if nothing else changes. To give our readers a sense for what part of the state the insurer covered, BCBSKC’s 2017 service map in the exchanges is below:

This may only be the first major insurer departure from Missouri that could happen this year. More on this story as it evolves.

The post Breaking: Blue Cross KC to Leave Obamacare Exchanges appeared first on Show-Me Institute.

But as has been said, a journey of a thousand miles begins with a single step. The House’s action today is an important step of a longer journey, not only at the federal level but among the states as well. From licensure reciprocity to direct primary care promotion to Medicaid reform, the list of projects to be undertaken by free marketeers at the state level is a lengthy one that would never be accomplished in a single law, federal or otherwise. Indeed, ours is a policy journey that will span years and even decades to reach anything resembling completion.

That said and with the initial passage of the AHCA, I am hopeful that the federal government is commited to taking that long and important policy trip with us.

The post House Vote The First of Many Important Health Care Milestones appeared first on Show-Me Institute.

I was reminded of our unhatched eggs after reading a commentary last month by Columbia Daily Tribune editor Henry J. Waters III. While I agree with Mr. Waters from time to time, I can’t help but disagree with his assessment that “what’s next” after the American Health Care Act is “single-payer.” Although it remains a persistent threat to good public policy, single-payer is a counted chicken from an unhatched egg—and an egg that may, in fact, never produce a bird.

I say this for several reasons.

First, the laws of economics are as true in health care policy as anyplace else. Top-down cost controls in single-payer systems have significant tradeoffs that become obvious when looking at the Medicaid program alone. Rather than introduce market mechanisms to control costs, Medicaid programs across the country more often pay doctors less to provide the same services, or simply cut services directly. That means fewer doctors and worse access for patients. Many taxpayers recognize this and believe this sorry dynamic shouldn’t be applied to the public writ large. We need markets; single-payer systems don’t deliver them.

Second, it isn’t obvious to me that the window for Obamacare reform has closed. President Donald Trump and Speaker Paul Ryan have publicly declared their intent to move on to other legislative priorities like tax reform, but in the weeks since the AHCA’s withdrawal, it’s not clear that the AHCA itself is dead, or that reform will not come through another legislative vehicle. Keep in mind that Obamacare passed over a year after negotiations on the bill began in 2009; there is plenty of reason to believe that despite the posturing of legislative leadership, another attempt at reform is forthcoming.

Third, and perhaps most importantly, measures continue to flow into the present health care policy landscape, even as federal efforts remain in limbo. State-based legislative changes that would: do away with hospitals’ certificate of need monopolies; empower patient–doctor relationships through direct primary care arrangements; open new avenues to care through licensing reforms; and introduce market mechanisms into existing state programs remain active issues in the states, and issues that Missouri legislators have often been on the forefront of implementing. And that’s just the short list of currently debated reforms.

Surely federal health care efforts are an important part of the reform puzzle, but it presumes too much to think that federal officials are the only ones calling the shots in health care policy. For many years now, states have had a primary role in these decisions, from demurring on Obamacare exchanges to rejecting the law’s unsustainable Medicaid expansion.

This isn’t to say that the single-payer health care system Mr. Waters envisions is a political impossibility; market reformers need to take such efforts seriously. But the odds of it becoming law anytime soon are sufficiently unknowable that Mr. Waters is better served by not counting that chicken, at least not yet.

The mistakes of heavy government intervention in our health care over the last few decades are now coming home to roost. Rather than continue those mistakes, we should be reducing the government presence in our health care decisions, not increasing it. Hatching an even bigger government intervention in American health care seems more likely to produce a rotten egg than a productive hen.

The post Don’t Count Health Care Chickens Before They’ve Hatched appeared first on Show-Me Institute.