Governor Deal: Major Health Policy Decisions “In a Holding Pattern “
Mike Klein
Governor Nathan Deal expressed displeasure with the U.S. Supreme Court decision on federal health care reform during a Thursday afternoon news conference, describing it as “the largest tax increase in the history of the United States, at least $500 billion and perhaps significantly more.” The Governor also admitted he was surprised by the decision because he thought the Court had given “pretty strong signals” that it had problems with the individual mandate.
The Governor appeared alone when he spoke to reporters and a large crowd that assembled in mid-afternoon inside the State Capitol. Deal said the state will likely hold off making decisions on several questions until after the November national elections. Presumptive Republican Party Presidential nominee Mitt Romney has vowed to dismantle the health care law if he is elected.
Deal said Thursday morning’s Supreme Court’s decision does appear to leave states with some flexibility, in particular, whether they will be forced to expand their Medicaid eligible populations. “There was at least an area of indication that it was not an absolute mandate,” Deal said. “The discretion for a state to participate in the expansion of Medicaid was a door that was left open. The Court has said that would have been an unconstitutional mandate on states.” (Click here to watch Governor Deal’s news conference on YouTube.)
Georgia estimates its Medicaid eligible population would increase by 620,000 in 2014 based on requirements in the Patient Protection and Affordable Care Act. On Thursday, Governor Deal said that increase would cost $76.3 million additional state dollars in 2014, and it would result in 24.2 percent of all Georgians being Medicaid eligible. The current number is 17.6 percent.
Governor Nathan Deal
“As you know, the original legislation (said) that if you did not accept the mandate for expanding the Medicaid coverage up to, in our case 138 percent of the federal poverty level, that you would have lost your federal participation in your existing Medicaid program,” Deal said. “The Court has ruled that leverage and that coercion was not appropriate.”
Because the law was upheld, Georgia faces a mid-November decision about whether it will create some version of a state health insurance exchange or default to a federal exchange. Deal said that decision also will likely not be made before the November election. “We probably are going to be in a holding pattern until we see what the events of November bring us,” he said.
A special committee that considered health insurance exchange models last fall reported to the Governor that while it preferred no exchange, a Georgia created exchange would be preferable to one imposed by the federal government. The Georgia model could be a state-operated exchange or, the committee recommended, a largely private model with some state oversight.
Responding to a question from the Georgia Public Policy Foundation, Governor Deal acknowledged that a regional, multi-state health insurance exchange “is an idea worth exploring.” The Governor noted, however, that the state passed a law that would allow insurance companies licensed by other states to offer policies in Georgia but, “No company has taken us up on that offer.”
Governor Deal said decisions that need to be made this year – in particular, whether to expand Medicaid eligibility and what kind of exchange to create – should not require a Special Session of the Georgia General Assembly. However, he thinks one might be necessary next year.
“We’re probably going to be finished with our 2014 budget before we know the answers to those questions that only Congress and the White House can provide,” the Governor said. The 2013 General Assembly will likely conclude in late March or April, possibly well before Washington has given clear guidelines to states if there is a new administration. Deal said that could require bringing lawmakers back to Atlanta. “I will do everything in my power to avoid that,” he said.
The Governor opposed and fought against President Barack Obama’s federal health care reform law during the last of his nine terms as a congressman from Georgia. “I was surprised by the decision,” Deal admitted. “I honestly felt that the issue of the constitutionality of the individual mandate was one that the Court had given pretty strong signals that they had problems with.
“It is somewhat ironic to me that it is now constitutional not because it is a proper exercise of the power of federal government under the commerce clause but that it is appropriate only because of the federal exercise of taxation authority over the states and over its citizens. That’s why I said, if we really want to know what the largest tax increase is, we have just now been given that opinion by the Supreme Court. It is this piece of legislation that, ironically, is called the Affordability Act.”
(Mike Klein is Editor at the Georgia Public Policy Foundation)
U.S. Chamber: Georgia Higher Ed Comes up Short on Transparency
Mike Klein
A new national higher education report from the U.S. Chamber of Commerce says universities and technical colleges nationwide fail to provide the basic information students need to make entry level decisions, they do not adequately track academic success, too often they are not accountable for failure and very few have any idea what happens to students after they leave the classroom.
The Georgia section is a mixed bag with some positive thoughts about higher education online learning here but significant criticism about university and technical college system consumer information transparency and accountability. The report is the first emphasis on higher education since the U.S. Chamber began this series with K-12 public education reports in 2007 and 2009.
“Right now we have no measure of the quality of a college education,” says Frederick Hess, director of education policy studies at the American Enterprise Institute (AEI). Hess was among several education policy scholars who researched and wrote “Leaders and Laggards” which was released Tuesday by the Institute for a Competitive Workforce at the U.S. Chamber.
Frederick Hess, American Enterprise Institute
“Most of these conversations floating across the landscape today deal with degree completion because we know how to measure degree completion,” Hess said during a panel discussion broadcast on the internet. “We have remarkably little sense of how similar degree completion is from Institution A to Institution B. That’s a conversation we’ve barely started to have.”
Hess and two co-author panelists said four-year university and two-year technical college systems should be able to answer basic questions such as, what happens to students after they leave the classroom; do they get and keep jobs; are they employable in those same fields five years later; did the academic programs they studied have an application in the real world?
“Currently we have this strange phenomenon where there’s a lot of information available (about) the performance of K-12 public schools (but with) almost 6,000 higher education schools there’s almost no information,” said co-author Grover “Russ” Whitehurst, director of the Brown Center on Education Policy Studies at the Brookings Institution.
“We need better measurement in higher education of almost everything,” said American Enterprise Institute research fellow and co-author Andrew Kelly. “We need to be able to aggregate data across the various functions of an institution in ways that we can’t currently do. That’s the key, measurement coupled with transparency, making data available in public.”
The Institute for a Competitive Workforce used publicly available data and information received from four-and-two-year state systems to evaluate performance in six sectors: student access and success; efficiency and cost effectiveness; meeting labor market demand; transparency and accountability; policy environment and innovation. The national report card is a collection of mostly low scores with lots of “D” and “F” grades, not a voice of confidence from the Chamber.
Georgia results are mixed. The state was graded at the top for efficiency and cost effectiveness in the technical college system and also for overall online learning innovation. None of the nine other categories received higher than a “B” grade and Georgia was graded near the bottom for consumer information transparency and accountability in both the two-year technical college (F grade) and four-year university systems (D grade).
The Chamber said, “Georgia receives below average scores for its consumer information and public accountability resources. The state does not track student labor market outcomes.” The state was criticized for a policy that will not allow students to transfer general credits from a two-year school to a four-year school if they change majors. The Chamber also noted Georgia does not have outcomes-based funding. The University System of Georgia did not have a spokesman available on Tuesday. Click here to read more complete data on Georgia.
Discussion about transparency and accountability dominated the panel conversation to almost the exclusion of other topics. Kelly from the American Enterprise Institute noted, “If we had the data to measure how many of your Pell Grant recipients graduate within six years that’s what we would have used here, but we don’t. The fact that we don’t know that is a travesty.”
Grover “Russ” Whitehurst, Brookings Institution
Whitehurst from the Brookings Institution reated the analogy of a student trying to decide which nursing program to select. “We’d like to know whether a particular program actually gets its students to the finish line, whether students who get to the finish line are employed and how much money they make. These seem to be reasonable questions to ask.
“Short of buying a home an investment in higher education is the biggest investment that any family will make,” Whitehurst said. “If states would empower prospective students and their families to shop (for higher education) with at least as much information as they have when they are choosing a restaurant or a used car that would be a wonderful change.”
Hess from the American Enterprise Institute challenged state legislators to “really call the heads of these public systems to account, grilling them, what are you doing to get information out there, what are our investments in transparency, what are we reporting, and how can you demonstrate to us that we are spending dollars wisely. The tiny number of times that anybody in institutions really appears to be challenged or pushed is, I think, problematic.”
Click here to read the Institute for a Competitive Workforce report introduction and click here to read recommendations. Click here for a 50-state national map with links to state information.
(Mike Klein is Editor at the Georgia Public Policy Foundation)
Did Longer Time Served Reduce Crime or Just Cost Money?
Mike Klein
During the past five years there has been extensive discussion in Georgia and nationally about the relationship between prison costs and public safety. Texas and Kansas were the earliest states to enact reforms in 2007. Then the recession hit, inmate counts were viewed as budget busters and other states jumped aboard the reform wagon. Georgia passed significant new law this year and is in the earliest stages of implementation that will take years to evaluate.
Most analysis here and nationally focused on the growth in state inmate populations during the past two decades. That is because politically popular 1990s do-the-crime, do-the-time policies were enacted with faith in the idea that longer time served by bad people would reduce crime.
New research this month from the Pew Center on the States Public Safety Performance Project has concluded, “Experts differ on precise figures, but they generally conclude that the increased use of incarceration accounted for one-quarter to one-third of the crime drop in the 1990s.” States individually have to decide their own balance between some improvement and $10.4 billion in extra cost to state corrections systems.
What we know today – and it took almost two decades to figure this out – is a lot of people sent to prison were non-violent personal drug users who posed little threat to anyone else, or they were sick and needed medical help more than prison time. More states now understand they must decide whether drugs are a crime or an illness.
When you look closer at national data, inmate populations have sharply accelerated for longer than 30 years. The country had 320,000 state prisoners in 1980, about 740,000 in 1990 and that more than doubled to 1.543 million over the next 20 years ending in 2010, according to federal Bureau of Justice Statistics data.
You can go back farther and create an intriguing 1925 to 2010 comparison. Back in the middle of the Roaring 20’s the country had fewer than 92,000 state prisoners and a population of 115 million. If state prisoner and national populations had grown at identical percentage rates today we would have 1.945 billion people in the country. We are very good at locking up people.
Pew’s new report “Time Served: The High Cost, Low Return of Longer Prison Terms” studied data from 35 states including Georgia. Pew said time served by inmates released in 2009 was 36% longer than inmates released in 1990. Longer time served had huge financial impacts on state budgets. Pew says the extra cost in Georgia was $536 million. You can see their calculations here.
Adam Gelb, Director, Pew Public Safety Performance Project
“It certainly is understandable that penalties are raised when society or policy makers don’t feel penalties reflect the seriousness of the offense,” said Adam Gelb, director of the Pew Public Safety Performance Project. “But most often that’s not been the driving factor. It was a sense that stiffer penalties would be effective at reducing those crimes.”
Average time served for all crimes increased most in Florida, up 166% compared to the 35-state average of 36%. Georgia was up 75% (sixth highest among 35 states) and North Carolina up 86% (third highest). In time served for violent crimes, Florida was up 137%, North Carolina up 55% (tied for sixth highest) and Georgia up 41% (11th highest) against a 37% average increase.
Drug sentence strategies and time served are an extreme conversation. At one end you have personal users. At the other end you have traffickers and manufacturers. Pew compared time served by the most serious offenders. Florida sentences were up 194%, Georgia was up 85% (fifth highest) and North Carolina up 38% (17th highest). Drug sentences served in Tennessee actually decreased by 9% during the twenty-year cycle.
Florida time served for property crimes grew by 181%, again the largest increase. Georgia was fifth highest at 68%. North Carolina’s increase was 20% and Tennessee sentences were 45% shorter.
Gelb said Pew’s research “reinforces the notion that state policy choices determine or drive the size and cost of state prison populations, not so much crime rates or broad demographic trends. These numbers go up or down based on how policy makers respond to situations rather than forces that are largely out of their control.”
The Department of Corrections says Georgia had 54,373 inmates on June 8 this year; that is up from 52,478 last year. Governor Nathan Deal signed a criminal justice reform law last month that emphasizes alternatives to incarceration for non-violent offenders.
Georgia prisons cost $1 billion a year; probation and parole services add another $400 million. Alternative court programs for mental health and some but not all drug offenders and other changes are predicted to save the state $264 million over the next four years. The belief is these changes can be made without compromising public safety.
Georgia criminal justice reform will extend beyond implementation of this year’s new law. The state Special Council on Criminal Justice Reform will reconvene this summer. Governor Deal has said the council will be asked for juvenile justice and code recommendations that could result in the state’s first comprehensive rewrite of those laws in several decades.
Pew analyzed National Corrections Reporting Program data voluntarily submitted by the states and verified by the U.S. Census Bureau and the Bureau of Justice Statistics. Click here to read the Pew summary. Click here to read state fact sheets.
(Mike Klein is Editor at the Georgia Public Policy Foundation)
Next Year’s State Medicaid Budget Shortfall Already $308 Million
Mike Klein
Georgia will delay payment until next month on some $90 million in already incurred Medicaid expenses because it has run out of state funds to pay the bills. That will change when the new fiscal year starts in July. State health officials also predict a $308 million or larger shortfall in next year’s Medicaid budgets and they will ask the Legislature for more money in January.
“Certainly the budget numbers we have are pretty daunting,” Department of Community Health commissioner David Cook said at Thursday morning’s board meeting. Every Medicaid expense category increased this year compared to last year, and some increased more than expected.
This was almost certainly the last Community Health board meeting before the long anticipated U.S. Supreme Court decision on federal health care reform. The Court’s decision is expected this month. If the law is held to be constitutional, the Patient Protection and Affordable Care Act … often described as ObamaCare … will increase Georgia Medicaid costs by billions of dollars.
The state is also near the conclusion of an exhaustive Medicaid redesign that will be announced sometime this summer, no date certain. The challenges are complex. For example, 25% of the state Medicaid enrollment is aged, blind or disabled clients but they are 54% of expenditures. Traditional fee-for-service and managed care are almost equal in total number of claims paid.
“One of the things that has struck me in terms of the redesign process is I think there’s pretty broad agreement that when you coordinate care you not only get better care, but you can save some money,” Cook said. “The question is how can you do that in a way that is doing the best thing for the patients, is attractive to providers and in a way that saves money?”
With an eye on saving where possible, Thursday the DCH board unanimously voted to reduce payments for services provided to patients who are eligible for both Medicare and Medicaid. The department estimates the change will save $48.5 million annually. Payments to physicians, hospitals and ancillary care providers such as therapists and many others will be affected.
The biggest piece of Thursday’s meeting was devoted to a Medicaid financial update including current dollars and forecasts. Chief Financial Officer Vince Harris began by describing the $90 million shortfall. Most of that – some $82 million – is owed to managed care organizations.
“By law we cannot overspend the budget but we will incur those expenses in this fiscal year and we will have to pay them in the next fiscal year,” Harris said. “We are going to be doing that in every one of our larger programs. Not a good thing but something you need to know.”
Total state-funded Medicaid costs that were budgeted at $2,486 billion this year will finish closer to $2.576 billion. The actual costs exceeded budgets in all three major categories: programs to serve aged, blind and disabled (ABD); programs for low income Medicaid recipients (LIM); and, the state PeachCare children’s health insurance program.
Community Health is forecasting shortfalls next fiscal year of $186 million in LIM, $108 million in ABD and $13 million in PeachCare. “This is just preliminary,” said Harris. The supplemental amount that DCH needs from the Legislature next year could be more than those totals.
There is also a rolling number inside DCH financial accounts known as IBNR – Incurred But Not Reported. These are charges for services already provided but the state has not received bills. The FY 2012 projected IBNR is $245 million with $195 million for ABD costs. DCH will not ask the Legislature for supplemental funding to eliminate this shortfall.
DCH also presented a 25-year analysis of real and projected Medicaid costs, covering 1996 when total expenditures were about $3 billion through 2019 when they could reach $14.5 billion if the Supreme Court upholds the federal health care reform law. DCH predicts the additional cost to Georgia taxpayers would be $4.57 billion between 2014 and 2023.
Georgia Medicaid costs paid by state and federal dollars are growing at 5%-to-6% annually, which is greater than the annual growth of the state economy. “The question becomes, over what period of time can you sustain a program that is growing faster than the growth rate of our budget?” said DCH commissioner Cook. “Figuring out where we go with the population, particularly in the aged, blind and disabled population, is, I guess, where the focus will be.”
(Mike Klein is Editor at the Georgia Public Policy Foundation)
At a Crossroads, Kaiser Permanente in Georgia Changed Course
Mike Klein
Kaiser Permanente in Georgia found itself at a crossroads four years ago. The popular health services and insurance provider was being phased out as a state government employees option, affecting tens of thousands. Kaiser also admitted internally that it had too few primary care staff physicians, too few specialists of any kind, too few locations and limited service hours.
Further, Kaiser had begun to confuse the health care community by signing service agreements with doctors in downstate locations where it had no offices. One of Kaiser’s senior executives today puts it this way, “It was impossible to know who we were. You couldn’t describe it.”
Kaiser did have a loyal following and considerable strengths. First, it provides insurance and care and no other Georgia provider does both. Second, as a non-profit it focuses on how to decrease costs. “The goal is to keep out patients out of the hospital,” said Dr. Alison Wiebe, senior director at Kaiser’s new advanced care center in Kennesaw. Third, it pushes technology; Kaiser members have access to their medical records on the internet and through mobile apps.
Fast forward since 2008 and Kaiser Permanente in Georgia says it has completed two-thirds of the journey to establish a stronger medical care and insurance footprint in metropolitan Atlanta with an eye to once again become competitive for the state contract that it lost four years ago.
State of Georgia provider contracts that expire next year cover almost 700,000 employees, dependents and retirees. Georgia reduced the number of vendors during the current five-year contract; it also dropped Blue Cross Blue Shield of Georgia. The state estimates it saved $47 million in administrative costs. United Healthcare has 89% of the state business and Cigna has the rest.
Losing the state contract was not the only reason Kaiser recognized it must reinvent, but it was a sizable cannon shot across the bow. Kaiser has long been very good at practicing Minivan Mom Medicine – the simple diagnose-and-treat procedures that young families typically need.
But often it came up short for patients with advanced medical requirements, for instance, adults who needed cardiology or neurology care. “Our patients would complain that they would come in for a primary care visit but when they needed a specialty they had to go right back to the community,” said Daniel Styf, Kaiser’s vice president for regional and marketing strategy in Georgia.
Kaiser Permanente’s current Georgia strategy is threefold: Expand its primary care physician group, expand in-house advanced medicine specialists and offer 24 x 7 x 365 service at some locations. “We’re about two-thirds of the way to becoming a complete integrated delivery system,” said Styf. “We need two more years to complete the journey.” The company has also recommitted to its Atlanta-area strategy; there is no more discussion about downstate service.
Four years ago 80% of primary care physicians who saw Kaiser Permanente in Georgia patients were staff doctors; today that is 99% with 200 new doctors hired. Advanced care specialists such as cardiologists, neurologists and oncologists were 20% Kaiser and 80% non-Kaiser. Sixty percent are Kaiser physicians now and that will increase to 80% within two years.
Notably, there are more Kaiser locations – 29 total. Twelve opened since 2009, including a new Athens location. Why Athens? Kaiser has a contract with the University System but until this year it could serve only Atlanta-area university employees. “They are very aggressive with their pricing,” said University system vice chancellor Tom Scheer. “Kaiser seems to work for us.”
Access to service was another hurdle that Kaiser needed to address. Its clinics had limited evening and weekend hours. That is not a full service medical model and it often forced Kaiser members to rely on hospital emergency rooms or urgent care clinics.
Last month Kaiser debuted all day, all night, every day services in the new $47 million, 80,000 square foot advanced care center in Kennesaw. Kaiser expected 500 after-hours patients in May; there were 1,200 visits. “Anytime you open a service like that and within the first week you’ve seen 300 patients you know that the need has been there,” said Dr. Twiggy Harris, lead internal medicine physician at Kaiser in Kennesaw.
The Kennesaw location is similar to the model Kaiser operates in eight other states. “Our national accounts saw what Kaiser was like in California. Everything was integrated, everything was housed like this,” Dr. Harris said as we toured last week. “When they came to Georgia everything was fragmented. (We) didn’t have any service after six o’clock. Where do you go if you need to see a specialist? Now we are able to present that we are a Kaiser delivery model. That is how we are different.”
Kaiser Permanente has invested $150 million to open and upgrade Georgia facilities since 2008. Around-the-clock services like those in Kennesaw will be available next year in Duluth, then later in Sandy Springs and Jonesboro.
The Kennesaw facility will keep patients for up to 23 hours before it decides whether they can be discharged or require hospitalization. Kaiser has agreements with Northside and Piedmont hospitals and Children’s Healthcare of Atlanta. In emergencies, any doctor can obtain a Kaiser patient’s history by calling a toll free number that is staffed 24 x 7.
With 237,000 members, Kaiser is still a relatively small but aggressive Georgia health insurance player. It has five percent of the university system employees; Blue Cross Blue Shield has the rest. Kaiser also has contracts with Cobb, Gwinnett, DeKalb and Clayton counties, and Kaiser is an option for Atlanta-area federal employees.
“The key difference between what the federal government does and what the state government has done is the federal government does not require us to be in every county of the state,” said Styf, “nor do they require us to be in every state of the country.” Kaiser’s private sector Georgia employee clients include AT&T and Walmart.
Most of Kaiser’s continued Georgia expansion over the next two years will be personnel. The 29 metro Atlanta locations could expand by a small number but the emphasis will be staff. Styf said Kaiser is immediately able to handle at least 50,000 new members and up to one-half million total within two years, or twice the number it serves today.
Kaiser lost 45,000 state employees and their families four years ago. “Everything we hear from the leadership in the House, the committee chairs and the leaders, they are supportive of adding more choices to the state health benefit plan,” Styf said, adding that Kaiser talks with the state “any chance we get.”
More about Kaiser Permanente
Kaiser Permanente traces its history to 1933 and a tiny hospital in Desert Center, California opened by Dr. Sidney Garfield to care for sick and injured workers who were building the Los Angeles aqueduct. Later, Garfield established similar care for Grand Coulee Dam construction workers. World War II brought Garfield’s prepayment medical model to the attention of industrialist Henry Kaiser and President Franklin D. Roosevelt.
Kaiser was seeking a solution to provide medical care for 30,000 workers at his shipyard in San Francisco. Intrigued with Garfield’s earlier successes, Kaiser asked that President Roosevelt waive the doctor’s military obligation so Garfield could remain stateside and serve the country by creating medical care for Kaiser’s defense industry workers. Roosevelt agreed.
After World War II, Kaiser and Garfield were convinced the prepayment model could have a civilian application. The Permanente Health plan was launched in northern California. The company was renamed Kaiser Permanente in 1952. It consists of two main divisions – the not-for-profit Kaiser Foundation Health Plan and the Permanente Medical Group.
Kaiser Permanente has about 8.9 million national members. That is small by health insurance standards; Blue Cross Blue Shield has 100 million national members and several other insurers have between 10 and 20 million. But as a non-profit and a care provider, Kaiser is unique.
Kaiser has also become an important research player. The federal Centers for Disease Control financed a Kaiser Vaccine Study Center research into the impact of the MMRV vaccine given to 150,000 children. MMRV is a two-step vaccine given to prevent measles, mumps, rubella and chicken pox. Kaiser also participated in a vaccine safety analysis of 200,000 adults who received shingles vaccines shots.
Kaiser Permanente in Georgia membership is diverse:
Private Sector 135,035 55%
Public Sector 37,456 15%
Federal Government 28,298 11%
Medicare & Medicaid 27,122 11%
Individuals & Families 19,123 8%
(Mike Klein is Editor at the Georgia Public Policy Foundation)
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