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STATEMENT: RI & Department of Health Reality Check; Center Renews Call for Inspector General

FOR IMMEDIATE RELEASE: November 30, 2016

State Lawmakers Need to Face the Realities of a Trump Administration

Providence, RI– As it warned four years ago, when it advised against Medicaid expansion and the Unified Health Infrastructure Project (UHIP), the Rhode Island Center for Freedom & Prosperity again warns against the ‘business as usual approach’ on display this past week by state officials. The Center suggests that the Rhode Island Department of Health and Human Services (DHHS) and the state administration need a reality check with regard to the now epic UHIP computer systems disaster and the recent announcement of more funds planned to be sunk into expansion of the state’s Medicaid infrastructure.

“Newsflash: in seven weeks, Barack Obama will no longer be President. There is a shifting healthcare landscape and state officials need to recognize that unlimited federal support to continue these costly boondoggles is going to end,” suggested Mike Stenhouse, CEO for the Center. “At a time when the federal government will be making dramatic new course changes towards making private health insurance more accessible to more American families, our state, stubbornly, is doubling down on its plans to keep plowing ahead with the failed government-centric approach.”

The Center believes it is irresponsible to plan to spend hundreds of millions of dollars to expand our state’s Medicaid capacity at a time when the federal government and many other states will be moving in the opposite direction: towards reducing enrollment in the government’s public health insurance offering and, instead, towards increasing private health insurance enrollment through an aggressive offering of premium subsidies and/or tax credits. An even more poignant question is whether or not the new presidential administration and Congress will even re-authorize these funds?

The Center expresses further concern that the hundreds of millions of dollars of planned federal and state spending will do little to help working families and small businesses, who will be expected to pay for this spending, most of which go to enriching insider institutions that are part of the Medicaid system. “For every dollar we spend on this wayward path, that’s one less dollar we can proactively spend on education reform or tax cuts,” suggested Stenhouse.

As it has also maintained for years, the Center continues to warn that the real costs of UHIP have not yet fully materialized. The one-stop-shopping aspect of UHIP will purposely lead to increased enrollment in various government services – resulting in new costs that our state cannot afford and – because of the changing landscape – that the federal government may cut funding.

Based on these examples of government incompetence and the continued hemorrhaging of taxpayer money, the Center renews its call for government checks-and-balances via legislation that would create an Office of the Inspector General. The Center believes it is vital than an independent, non-partisan entity should keep watch over state spending in order to prevent the squandering of taxpayer money as has been seen with the UHIP and DMV (Department of Motor Vehicles) computer systems. Similarly, major spending projects in other state agencies, such as the multi-billion dollar RhodeWorks program to repair the state’s crumbling bridges and roads, must also be subject to close fiscal oversight of this kind.

NEW: Failing RI Report Card Grades Not Advancing Social Justice

FOR IMMEDIATE RELEASE
November 17, 2015

Non-Competitive Grades Harming Work, Mobility, and Opportunity for Rhode Islanders
Preponderance of Fs and Ds Should Signal Need for Change in Policy Culture

Providence, RI — The opportunity for upward mobility for many Ocean Staters continues to be hampered by a non-competitive business climate and onerous family tax burdens, as evidenced by the poor grades the State of Rhode Island received on the 2015 Report Card on Rhode Island Competitiveness, the fourth annual such report, released today by the Rhode Island Center for Freedom & Prosperity.

Burdened with public policies that discourage work and a productive lifestyle, the state’s poor grades in 10 major categories (two F’s, seven D’s, and one C) reflect a government culture geared to benefit special interest insiders, while at the same time promoting job-crushing and soul-crushing dependency among the general populace.

Raising even further alarm, Rhode Island ranked dead-last, overall, when compared with report cards from other New England states.

“This report card clearly demonstrates the wreckage that decades of liberal policies have wrought upon our state. These unacceptable grades should be a wake-up call to lawmakers that a government-centric approach is not producing the social justice and self-sufficiency that Rhode Islanders crave,” suggested Mike Stenhouse, CEO for the Center. “If we want to provide more mobility and opportunity for our neighbors and entrepreneurs, we must completely reform our public policy approach. We must learn to trust in our people and remove the tax and regulatory boot of government off of their backs by advancing policies that empower the average family with choices, that reward work, and that grow the economy.”

The two categories with F grades are Infrastructure and Health Care; the seven D’s are Business Climate, Tax Burden, Spending & Debt, Employment & Income, Energy, Public Sector labor, and Living & Retirement in Rhode Island; while Education received a C-. Among the 52 sub-categories evaluated, Rhode Island received 19 F’s, 24 D’s, 5 Cs, 3 Bs, and just one lone A.

In a related 1-page brief, the Center also analyzes report card trends over recent years as well as comparisons to grades for other New England states.

The RI Report Card, originally developed for the Center by a national economist, compiles into a single document the state rankings among key economic and social indexes, as published by dozens of credible 3rd party national organizations.

The 2015 report card, with citations, as well as reports from prior years can be downloaded at RIFreedom.org/RIReportCard.

Media Contact:
Mike Stenhouse, CEO
401.429.6115 | info@rifreedom.org

About the Center
The nonpartisan RI Center for Freedom & Prosperity is Rhode Island’s premiere free-enterprise research and advocacy organization. The mission of the 501-C-3 nonprofit organization is to return government to the people by opposing special-interest politics and advancing proven free-market solutions that can transform lives by restoring economic competitiveness, increasing educational opportunities, and protecting individual freedoms.

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Open-Eyed Medicaid Reform: Review of Working Group Proposals

Click here for a printable PDF of this analysis.

Josh Archambault with Buddy on Medicaid

As part of her 2016 budget proposal, Rhode Island Governor Gina Raimondo convened a Working Group to Reinvent Medicaid. Although its theme is reform of the way the public healthcare program operates, the selling point has been budgetary savings — specifically in the next fiscal year, when the group expects its suggestions to save or raise $91.1 million, just shy of 10% of state spending.

While there can be no doubt that Rhode Island’s Medicaid system is in need of reform, analysis of the proposals suggests that policymakers should be reluctant to hinge their budget decisions on the savings’ actually being realized. They should also go into the reforms with eyes wide open. Substantial portions are likely to shift costs to their constituents as healthcare consumers and federal taxpayers.

The group divides its proposals into three categories:

  • Payment and delivery system reform
  • Targeting waste, fraud, and abuse
  • Administrative and operational efficiency

Although waste, fraud, and abuse is often a go-to source when government officials promise to pay for new spending without raising taxes, it makes up a very small portion of the working group’s list, at $4.0 million (4% of the expected savings). About two-thirds of the savings come via payment and delivery system reform, with the remainder in administrative and operational efficiency.

These categories are of limited use in understanding how the state is actually supposed to save money. Working with health policy expert Josh Archambault, of the Foundation for Government Accountability, the RI Center for Freedom & Prosperity sorted the proposals into five new categories that are more descriptive of the likely effects of the policies:

  • Shifting costs to private insurance and employers
  • Shifting costs to federal taxpayers
  • Potentially saving or costing money, depending how the market reacts
  • Cutting payments, with uncertain effects
  • Implementing good (if limited) ideas

workinggroupprojections-newcategories

More than half of the savings (53%) will likely shift costs to the private sector, with another 4% shifting to the federal government. Despite the working group’s projections, 27% of the reforms should be considered speculative and might even cost the state money. Another 8% are simply cuts that may have adverse outcomes or fiscal effects. That leaves just 7% of reforms that we would count as plainly good ideas.

The largest example of cost-shifting to the private sector ($15.7 million) is a 5% reduction in hospital payment rates, which hospitals will seek to transfer to others. The policy would give hospitals an opportunity to receive bonuses, but to the extent that they do so, the “savings” will be consumed. The largest proposal to transfer costs to federal taxpayers, at $1.5 million, would “streamlin[e] the application process” to ensure that beneficiaries are counted in the way that will bring the most federal dollars for their care.

With respect to unknowable outcomes, the largest projected savings ($3.3 million each) come from proposals to change the methods and locations of treatment for people who are seriously mentally ill or have complicated cases. Such proposals may or may not save money, and if the providers losing revenue find ways to bring their customer bases back up, the costs could actually increase. The largest outright cut is $6.1 million in increased risk and other agreements the state would force on providers. Meanwhile, the most significant good, if limited, idea is $2.6 million in projected savings from new methods of tracking waste, fraud, and abuse.

In short, the working group’s proposals are a mixed bag. In some cases, it may in fact be more appropriate for costs to be borne by insurance customers and the federal government, and some reforms might be worthwhile despite uncertain outcomes. Hopes for short-term savings, however, should not become an excuse for jumping into reforms, and costs shifted off of the state’s books should not be an excuse for increasing or maintaining other government spending.

To GOVERNOR’S MEDICAID WORKING GROUP: A Proven Policy Idea to Save Money

A proven and bi-partisan cost saving measure that has produced significant savings in other states has been recommended to state officials by the RI Center for Freedom & Prosperity and its national partner, the Foundation for Government Accountability (FGA).

It is well-known that fraud, abuse, and lack of enforcement plague many state and federal welfare programs, often resulting in wasteful spending and a potential lack of funds for the truly needy.

FGA’s recent “Stop the Scam” report discusses how many states are not conducting detailed enough Medicaid eligibility and verification procedures for new and existing enrollees.

From issuing Medicaid and welfare payments to dead people, to lottery winners, to enrollees who did not provide proper documentation, and to people under-reporting their incomes, a process that provides for more detailed screening and periodic check-ups can result in significant cost savings for states.

According to FGA, “Illinois and Pennsylvania instituted proactive audit reforms with bipartisan support, and together they have saved hundreds of millions of dollars. Pennsylvania discovered thousands of ineligible individuals receiving benefits, removing 160,000 individuals in just the first 10 months of the audit, saving $300 million. Illinois quickly followed suit and removed 300,000 individuals in the first year, 400,000 more in the second, with expected taxpayer saving of $350 million per year in Medicaid alone.”

As with many states, Rhode Island has its own screening and verification process. However, according to FGA, rarely do they have the capacity to conduct the deep-diving to search the federal and state databases necessary to root out more subtle cases of ineligibility. 

The Center recommends legislative action or an executive order requiring Rhode Island to utilize third-party vendors that specialize in determining if enrollees have retained eligibility in Medicaid.

A thorough examination of FGA’s recommended “best practices to stop welfare fraud” should be conducted by Rhode Island  health officials to determine if the vendors suggested by FGA may be able to help the state identify additional cases of ineligibility.

Center Issues Statement on Governor’s Proposed Healthcare Tax

Summary: Explanations by the Raimondo administration about the Governor’s proposed surcharge on health insurance premiums appear to be misleading. The truth about the new tax expose four major concerns about how it is NOT comparable to the would-be federal exchange tax.
 
FOR IMMEDIATE RELEASE
March 17, 2015
Truth about the proposed HealthSource RI Tax
Is Not Commensurate in Scope to Federal Exchange Tax:
Tax Base, Tax Levy, Tax Certainty, and Next Steps are Considerably Different

Providence, RI — Explanations by the Raimondo administration about the Governor’s proposed surcharge on health insurance premiums appear to be misleading. Designed to raise money to partially fund continued state operation of the controversial HealthSource RI exchange, the tax is being positioned by administration officials as comparable to the fees that would be charged if the exchange were to be returned to the federal government.

However, as broached in a recent post in The Ocean State Current, there are a number of major differences between the federal tax and Governor Raimondo’s proposed tax:
First, who gets taxed? Under a federally run exchange, only those who purchase a policy through the exchange, or who purchase an identical policy outside of the exchange, would be taxed. But, as the Center has been projecting for years, because of Rhode Island’s small size and low enrollment numbers, not enough revenue can be raised without charging exorbitant per policy fees.
Under Raimondo’s plan to pay for HealthSource RI’s high projected costs, there would be an assessment on ALL individual and small business policies in the state, whether purchased inside or outside of the exchange.
Also of note, vocal special interest groups, such large corporations and union shops, would appear to be exempt from the tax; yet another special interest handout?
Second, how much tax? Under the federal plan, it was estimated that the 3.5% federal rate assessment based on the 30,000 or so who are currently purchasing insurance through the exchange, would result in about $5-6 million in fees. The Governor’s tax is projected to raise an ‘initial’ $6.2 million in half a year, or about $12 million in annual revenues, making it at least twice as expensive for Ocean State policyholders as the federal option.
Additionally, the proposed 3.8% and 1% tax on individuals and small employers, respectively, is significantly higher than similar 1.35% and 2.5%-3% taxes in Connecticut and Massachusetts, which can afford the lower rates, as they can be spread across a significantly higher number of policy holders.
Third, a fixed tax rate? Use of the term ‘initial premium assessment’ indicates a potential slippery slope. In fact, if HealthSource RI’s expenses rise, or when federal funds disappear, the health and human services secretary is empowered to raise rates for this tax in future years, while the federal plan is statutorily fixed.
Fourth, a stepping stone to state control? Maintaining the exchange under state operation also maintains the threat of further state control over Rhode Island’s healthcare industry, with separate legislation in 2014 (H7819) and 2015 (H5387) already seeking to give government unprecedented new powers. A single-payer system, such as that advocated for by the new HealthSource RI Director, has long been a goal of progressive lawmakers. Under a federal exchange, this threat is virtually eliminated

Stenhouse OpEd & Testimony Video re. Bill to Socialize Healthcare in RI (H7819)

 

See related OpEd in the Providence Journal, July 3, 2014 

 

Mike Stenhouse appears on the State of the State cable TV show.

State of the State

Center’s CEO discusses the recently passed FY-2015 budget, BIG QUESTIONS for gubernatorial candidates, and the state of the state on “State of the State” cable TV.

[button url=”http://vimeo.com/channels/365354/99366876″ target=”_blank” size=”medium” style=”royalblue” ] Cable TV Interview [/button]

THEY KNEW! 2009 Brief Advised Against Healthcare Exchange for RI

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They Knew!

Ignoring the advice of her own specially convened study process, Lt. Gov. Elizabeth Roberts became one of the leading figures in promoting a complex, costly health insurance exchange for Rhode Island. Further,

HealthSourceRI officials and supporters continue to tout a cost containment goal that the process advised is not achievable according to a little known 2009 Issue Brief provide to Ms. Roberts and other state officials! Our Center’s analysis of this Brief can be downloaded by clicking the button below:

Analysis: They Knew in 2009!

TheyKnew

MEDIA RELEASE, June 3, 2014: Specifically advised “Do not pursue” in 2009 by her own specially convened study group, regarding formation of a state-based health insurance exchange, as it would not be fiscally viable and would not meet its primary objective of cost containment, Lieutenant Governor Elizabeth Roberts of Rhode Island nevertheless pressed for the formation of a state-run ACA exchange and has remained one of its most outspoken advocates. This according to the Rhode Island Center for Freedom and Prosperity, a nonpartisan think tank, which today published an analysis of a little known Issues Brief funded by the Robert Wood Johnson Foundation and presented to state officials years ago. 
 
“There has never been a rigorous public debate about the pros and cons of a state-funded exchange for the Ocean State. With tens of millions of dollars now at stake, we need a renewed discussion today,” commented Mike Stenhouse, CEO for the Center, referring to the abbreviated process that saw related legislation fail in the General Assembly in the spring of 2011, only to have the exchange authorized without advance public scrutiny later that fall by Executive Order of the Governor. “Revelation of this Brief raises many questions. Why was this information not brought to light in 2011? Why do State and HealthSourceRI officials continue to tout claims that their own study advised are not feasible? We must have answers to these questions before we spend $15 million in next year’s budget.” 
 
The findings in the Brief validate many of the specific concerns raised by the Center in recent reports. In additional to clearly indicating that the study group’s number one preferred objective – to drive down healthcare costs – was not achievable via a state exchange, the 2009 document also advised that Rhode Island’s economy was not strong enough, that there was not a large enough insured population, nor was their a complex enough insurance provider/product market that required coordination, to justify the “establishment of a new administrative structure” to operate an exchange. Further, the Brief advised that because of these characteristics a “health insurance exchange may not generate sufficient volume to be cost-effective.”
 
“As a state, we are now facing the precise sustainability problems that our Center projected two years ago, that this Brief advised against five years ago, and that has been empirically supported by results from Massachusetts for the past six years,” added Stenhouse. “The small business sector in our state has been deceived into supporting a massive bureaucracy that, sadly, will not reduce their health insurance costs.”
 
Links to other related information about this issue, including two reports by the Center and a Forbes.com analysis, can be found on the Center’s home page for the health exchange issue at RIFreedom.org/Exchange
TheyKnew

THEY KNEW! Lt. Gov. Roberts advised in 2009 that state exchange not viable!

Ignoring the advice of her own specially convened study group, Lt. Gov. Elizabeth Roberts and HealthSourceRI officials continue to tout a cost containment goal that the group advised is not achievable! The Center provides an analysis of this buried 2009 report.

Analysis: They Knew!