Category Archives: Health Care

Wonk Corner:  Briefing on Medicaid Expansion

You have to read the footnotes:  The state estimates that should Virginia approve an expansion of Medicaid to an additional 300,000 low income persons, about 60,000 people now covered by individual ACA plans will revert to Medicaid.

That snippet is buried in a presentation made yesterday to the Senate Finance Committee by its staff, which is a great introduction for the non-experts among us.   Whether and how to expand Medicaid is, of course, the main sticking point which has prevented adoption of a state budget.

And by agreeing to a new hospital tax to provide the state’s share of the cost of expansion, the House of Delegates was able to authorize more spending than the Senate in several other key areas of the budget – all politically popular with somebody, creating a minefield of sticking points.

The hospital tax actually will reduce by 40 percent the financial benefit of Medicaid expansion to many of the hospitals serving that population, and the staff report notes that some hospital leaders are pushing a higher tax in order to increase their fees for Medicaid services to 88 percent of their costs.

The staff’s short list of advantages and disadvantages to the hospital tax fails to even raise the possibility that one way or another ultimate costs to consumers will rise further.  This is a new tax, a tax on a service.  It will be imposed on private hospital revenue from all sources – private pay, Medicare, ACA plans, major insurance carriers or the myriad other choices consumers use.  The tax is not imposed on other providers who will treat these newly-covered patients.

The staff also went through a list of conditions and variations to the traditional Medicaid coverage that Virginia might consider to control costs.   The House of Delegates has opted for a work or job training requirement.  One other option is creating health savings accounts. Right, somebody working in a fast food restaurant has the cash flow to fund an HSA.  Please.

As you will note on slide 15, the Senate has voted to expand Medicaid as well, but with a very limited new caseload.  Majorities in both chambers are on record supporting benefits to people at 138 percent of the federal poverty level, up from 100 percent.

The expectation is that the Senate Finance committee will hash all this out this week and have something to present to the full Senate by May 22.  It is possible unofficial discussions on the final compromise are already going on between some of the leaders in both chambers, but no official conference committee can be named until the Senate actually acts on a full budget.

Hospital Tax (No, Assessment!) Central to Budget Dispute At Special Session

I doubt many not directly involved in the ongoing struggle over Medicaid expansion in Virginia have actually read the budget language that is the heart of the argument.  So I have set it out below in full.  This is language included in the House version but previously rejected by the Senate, creating more than $300 million of the revenue discrepancy between the two plans.  The Senate Finance Committee considers it again Monday.

There is the major policy debate over whether Virginia should do as Congress allowed and expand service to hundreds of thousands of additional people. (I think it should.)  Then there is the argument over whether to try to squeeze the state cost share out of existing state revenue, or to create a new revenue source – which the Governor and the House have done with this language.  Set those aside for a second.

The third debate is procedural, because traditionally a new tax would be created by its own bill and enshrined as a general law, and not buried inside the budget bill. Keeping revenue issues out of the budget is a practice which has been ignored in the past, especially for fees, but on previous occasions any tax changes were formatted within the budget as amendments to Title 58. The big showdown in 2004 ended with two separate bills – the budget and an omnibus tax bill.

Creating an entirely new $226 million per year revenue stream with a budget provision is unprecedented.   As you can read for yourself the level of spending going forward may increase the tax rate in future years, without any Assembly action. The final paragraph vests discretionary authority with a federal agency, something else you seldom see in Acts of the Assembly.

Here is the text as it stands right now:

§ 3-5.20 PROVIDER ASSESSMENT

A. Private acute care hospitals operating in Virginia shall pay an assessment beginning on October 1, 2018. The definition of private acute care hospitals shall exclude public hospitals, freestanding psychiatric and rehabilitation hospitals, children’s hospitals, long stay hospitals, long-term acute care hospitals and critical access hospitals. The assessment shall be used to cover the full costs of the non-federal share of enhanced Medicaid coverage for newly eligible individuals pursuant to 42 U.S.C. § 1396d(y)(1)[2010] of the federal Patient Protection and Affordable Care Act.

B.1. The Department of Medical Assistance Services (DMAS) shall calculate each hospital’s “assessment” annually by multiplying the “assessment percentage” times “net patient service revenue” as defined below.

2. The “assessment percentage” shall be calculated as (i) 1.08 times the non-federal share of the “full cost of expanded Medicaid coverage” for newly eligible individuals under the Patient Protection and Affordable Care Act (42 U.S.C. § 1396d(y)(1)[2010]) divided by (ii) the total “net patient service revenue” for hospitals subject to the assessment. By June 1, 2018, DMAS shall report the estimated assessment payments by hospital and all assessment percentage calculations for the upcoming fiscal year to the Director, Department of Planning and Budget and Chairmen of the House Appropriations and Senate Finance Committees.

Continue reading

Can Medicaid Expansion Address the Doctor Shortage?

Teresa Gardner Tyson, executive director of Health Wagon. Photo credit: Virginia Business

With Virginia on the cusp of Medicaid expansion, it is heartening to see someone asking the obvious question: What good is Medicaid coverage if you can’t find a doctor? Bob Burke at Virginia Business states the obvious:

Getting a Medicaid card doesn’t necessarily mean you have a doctor at hand. Plenty of places in Virginia — especially rural areas — already are short of health-care providers. Oftentimes, people there depend on nonprofit community health centers or free clinics (both of which are chronically underfunded) scattered around the state, or they just go without. This is the true access challenge.

Virginia has a network of clinics, health wagons and other services that provides basic care to poor Virginians, but the system operates on a shoestring, and thousands of people fall between the cracks. An important question is what happens to the existing medical infrastructure for the poor, as inadequate as it is, when Medicaid comes along?

Teresa Gardner Tyson runs The Health Wagon, a mobile clinic that delivers care to people in Southwest Virginia. Medicaid expansion would be favorable to the people she treats, she says, but it’s not a panacea. Some of Health Wagon’s patients are already Medicaid patients — and they can’t find any other health provider.

About five years ago, Health Wagon hired a consultant to run the numbers on how best to take advantage of Medicaid dollars if they started flowing. “We’d have to go back and look at those numbers again” and see whether becoming a Medicaid provider makes sense, Tyson says. “We’re sustained by donations and grants, and at the end of the day, though, we do give free care, [but] the care that we give is not free.”

Here is my question: What happens to those donations and grants if Medicaid expansion is enacted? Will Health Wagon still have a purpose? Perhaps it will, if nothing is done to address the shortage of health care practitioners in Southwest Virginia and there’s nowhere else to go. But if that shortage isn’t addressed and patients still can’t find doctors, is anyone better off?

The Virginia Community Healthcare Association (VCHA), which has 29 member organizations at 147 sites, serves about 100,000 uninsured people every year. CEO Neal Graham estimates that of that number, about 70,000 would be eligible for Medicaid after expansion. He also estimates that expansion will bring an additional 100,000 patients into the clinics and community centers. But it’s not clear at all from Burke’s article that the clinics will have the resources to staff up to meet the extra demand.

There are two problems in rural Virginia: a lack of health coverage and a shortage of health care practitioners. Medicaid expansion fixes the first problem. But as long as the program pays less than Medicare and private insurance — typically forcing medical providers to operate at a loss — Medicaid expansion will do nothing to recruit new practitioners to under-served areas. If lawmakers want the expansion to work, they must address the shortage of doctors, nurses, and technicians. Otherwise, they’re just perpetrating a cruel hoax on Virginia’s poor.

Map of the Day: Changes in Probability of Death

Map source: Wall Street Journal

It’s not new news anymore that gains in life expectancy have leveled off in the United States, driven by startling and unexpected declines among young and middle-aged whites. The so-called “deaths of despair,” including drug overdoses, are on the rise. So are liver disease (associated with alcoholism) and suicides. Chronic diseases associated with obesity such as diabetes, heart disease, and stroke are up, too.

The map above shows changes in the probability of death among 20- to 50-year-olds in the 50 states between 1990 and 2016. There is a remarkable divergence — health for this age group has improved significantly for some states, including Virginia, and gotten worse for others.

A breakdown by county in Virginia would be revealing. I hypothesize that western Virginia, especially the far Southwest, would show patterns similar to neighboring West Virginia and Kentucky. Although a more granular look at the data might reveal a different pattern, it appears that Central Appalachia is ground zero for deaths of despair.

Does Anybody Notice the $300 Million Tax Increase Baked into Medicaid Expansion?

Governor Ralph Northam (left), Richmond School Superintendent Jason Kamras, and Senator Mark Warner met yesterday to discuss Medicaid expansion and school funding. Photo credit: Richmond Times-Dispatch

Governor Raph Northam and U.S. Senator Mark Warner hit the road yesterday with the media in tow, making the case that Medicaid expansion will free up $421 million over two years for other priorities such as K-12 schools.

“When we talk about education, we have to talk about health care,” Warner said during a roundtable discussion at Albert H. Hill Middle School in Richmond, as reported by the Richmond Times-Dispatch. “We’ve got to do this.”

Meanwhile Secretary of Finance Aubrey Layne is making the case that enacting Medicaid expansion is necessary to preserve Virginia’s coveted AAA bond rating, which is teetering on the edge of a downgrade.

That’s quite the rhetorical jiu jitsu move. For years, Republicans have opposed expanding Medicaid under the provisions of the Affordable Care Act on the grounds that it would be fiscally irresponsible, running up state Medicaid expenditures even after accounting for a 90% federal contribution, and competing with other priorities such as K-12 schools, higher education, and pay raises for state employees.

How is it possible for the Commonwealth to simultaneously expand Medicaid at an estimated cost of $300 million over the next two years and free up $421 million for other programs, as the Washington Post quotes Northam as saying? Two things. First the state cost of Medicaid expansion would be offset by means of an “assessment” — in other words, a tax — on the net patient revenue of Virginia’s acute care hospitals. Surprised to hear about that? Yeah, so am I.

Second, Medicaid expansion will allow the state to reduce spending by $380 million on indigent care funding, state spending on mental health, prison inmates and various programs for the poor, according to the House version of the budget. (I can’t figure out where Northam gets his $421 million estimate.)

Voila! That’s $380 million (or $421 million if you use Northam’s figure) that can be spent on other things, such as directing money into the state’s cash reserves and/or K-12 schools. Regarding those reserves, the state has only $281 million set aside in the event of a several revenue downturn, with $154 million scheduled to be injected this year. The budget submitted by former Governor Terry McAuliffe would have added $281 million, but the proposed budget adopted by the House would add only $91 million over the next two-year budget, and the proposed budget adopted by the Senate would add only $180 million.

Bacon’s bottom line: Does the public realize that there is a $300 million tax increase embedded in this plan? I did not understand that to be the case until I read the news accounts with a fine-tooth comb. The Times-Dispatch and Washington Post coverage mentioned the tax only in passing deep in their stories. Of course it’s in the interest of Democrats to downplay the tax increase, but, remarkably, I’ve seen nothing to suggest that Senate Republicans, who oppose expansion, have made an issue of it.

Let’s imagine an alternate universe in which Virginians said, (a) we want Medicaid expansion, and (b) we want to fund it without a tax increase on hospital revenues, which likely would be passed on to patients in the form of higher hospital charges. If the state is generating savings in the realm of $400 million a year from Medicaid expansion, why not just apply those savings to the 10% state share of the program? Why the necessity of adding a roughly $300 million “assessment?”

According to the numbers we’ve been given, paying for Medicaid expansion with savings to state programs would leave about $100 million left over to plunk into the state’s cash reserve. Of course, that approach wouldn’t allow Northam and Warner to tell people that “Medicaid expansion” will help Virginia schools, and it wouldn’t put as much money into the state’s cash reserves as Layne would like.

I find it astonishing that the hospital assessment has not become a hot-button issue. Health care costs are out of control as it is, and a $300 million tax on patient revenues can only make the problem worse (unless you believe that hospitals will settle for lower profits, in which case I’ve got some great swamp land in Florida I’d like to sell you.)

You’ve got to give Northam political credit. He and House Republicans are very close to pulling off the trick of expanding Medicaid and “freeing up” hundreds of millions of dollars for new spending without Virginians even noticing that they’d be indirectly paying for a $300 million tax increase on hospitals. This guy is good.

How to Control Health Care Costs: Prune Useless Tests, Speed Recovery from Surgery

Daniel Carey. Photo credit: The News and Advance.

It comes as no surprise that Virginia’s new Secretary of Health and Human Resources, Dr. Daniel Carey, supports Governor Ralph Northam’s push to expand the Medicaid entitlement. But he’s also got some ideas on how to squeeze costs out of Medicaid — and Virginia’s health care system generally.

One strategy is to decrease the use of procedures and tests that provide little value. Writes Amy Trent with the News and Advance:

He points to routine echocardiogram and routine stress testing before noncardiac surgeries as well as routine vitamin D testing, all of which can offer little value, he said. It’s more cost effective to treat most people with a vitamin D supplement rather than routinely testing vitamin D levels except in very specific circumstances, according to Carey. Physicians need to stop giving tests that are unlikely to change the care patients receive, he said.

“We need to eliminate that because it’s not cost-effective care,” Carey said.

Carey advocates implementation of the Choosing Wisely principles, launched by the American Board of Internal Medicine, which consults 100 medical specialty groups to maintain a library of overused tests and treatments.

While the state cannot mandate these measures, Carey said in a statement, “What we can do is work with the state plans, [The Department of Medical Assistance Services], and the Virginia Center for Health Innovation to not cover low-value care.”

Meanwhile, Carey wants to expand a Virginia Commonwealth University initiative that speeds recovery from surgery.

In the online publication OncLive, Dr. Traci Hedrick, co-director of the Enhanced Recovery Program at the University of Virginia Health System, writes that since her system’s implementation of enhanced recovery protocols in patients undergoing major colorectal surgery in 2013, the hospital has seen an average reduction of two days for hospital stays, an 80 percent decrease in opioid use and a 50 percent reduction in complications. In addition, “there was a $6,567 per patient reduction in total hospital costs,” Hedrick wrote.

Enhanced recovery after surgery makes sure patients are as healthy as possible prior to surgery, thereby reducing the effects of surgery on the body.

Both initiatives sound promising. The trick is implementing them in an industry notoriously resistant to change. It’s one thing to identify ways to spend health care dollars more efficiently, and it’s quite another to persuade hospitals and physicians to adopt measures which, if successful, will cut into revenues and profits.

One thing we know: Hospitals and doctors won’t implement the changes out of competitive pressure. There is no competitive pressure. Virginia health care is increasingly dominated by a handful of monopolistic health systems and giant physician practices. Moreover, there is no price transparency, so it’s not as if a hospital could gain market share by touting its lower-cost services. Virginia does have some control over the way it designs its Medicaid programs, so perhaps there is some hope in that sub-market. Otherwise, Carey will have to rely mainly on moral suasion. However, I can’t remember the last time moral suasion ever convinced anyone to act against their self interest.

Why Are Asians and Hispanics So Healthy?

City/county ranking of Virginia health outcomes based on potential years of life lost before age 75. Source: Robert Wood Johnson Foundation

The Robert Wood Johnson Foundation has issued its annual Healthy Community report for the United States. As usual, the information is packaged in such a way as to highlight the health disparities between racial/ethnic groups. But the findings for Virginia, which the state-level report largely overlooks, do not fit the dominant institutional-racism narrative. It turns out that Asians are the healthiest racial/ethnic group by far. It also turns out that, despite lower incomes and education levels, Hispanics are healthier than whites. The only finding that conforms to the narrative is the blacks are the least healthy of any group.

The info-graphic to the right shows differences in health outcomes (potential years of life lost before age 75) by place and by race/ethnicity. The “place” metric compares the differences in health outcomes by city or county. There is a wide disparity (as also seen in the map above) between localities with high incomes and high levels of education and localities with low incomes and education. The worst pockets of unhealth are in far Southwest Virginia, Southside, the Eastern Shore, and older cities. No surprises there.

Far more interesting is the disparity between racial/ethnic groups, which many researchers and commentators persist in defining as a gap between whites on the one hand and blacks and Hispanics on the other — a gap matching the socio-economic divide and consistent with the paradigm of America as a nation afflicted with institutional racism and discrimination.

Yet of all major racial/ethnic groups, Asians are the healthiest. By far. Here in Virginia, according to the study, Asians experienced the lowest level of “premature deaths,” measured by years lost per 100,000 — only 2,600. Hispanics fared next best, with 3,100 years lost, whites with 6,200, and blacks with 8,700.

Another remarkable finding: Whites reported the highest incidence of poor mental health days: 1.6 for Asians, 2.7 for Hispanics, 3.5 for blacks, and 3.8 for whites.

Results conformed to stereotype for poor or fair health, while self-reported “poor health days” showed almost no difference between whites, blacks, and Hispanics. Asians reported the fewest poor health days.

The comparative good health of Hispanics in Virginia is all the more remarkable given that, as the report documents but takes little note of, Hispanics have lower high school graduation rates, have less health insurance, and have a higher rate of teen births than any other group.

Asians and Hispanics do not fit the dominant narrative of the relationship between race and health in the United States. It strikes me that these anomalies are worth exploring. Persuading public health researchers to dig deeper may be a hard thing to do, however. The received wisdom, once established, is a hard thing to dislodge.

Update: And then there’s this headline from the Roanoke Times: “Report finds death rates rise for white, middle-class Virginians.”

The Virtues of an Ancestral Diet

Elicer Tribz explains how to make cinnamon spice from the bark of the cinnamon tree.

On the hillside above the Blancaneaux Lodge in Belize, six gardeners tend to a three-and-a-half-acre organic garden that supplies the hotel’s three restaurants with delectable vegetables, fruits, beans, and herbs.

As a prelude to a communal dinner at the hotel’s Garden restaurant, Elicer Tribz takes lodge guests on a tour of the garden. He proudly describes how he and his fellow gardeners nurture the soil and tend to the lettuces (10 varieties), the cherry and Roma tomatoes, the squash, zucchini, carrots and celery, and innumerable herb bushes and fruit trees. He explains how the gardeners create a natural fungicide using microorganisms found in the rain forest, and how they man the garden literally around the clock when fending off attacks of woolly caterpillars.

Throughout the tour, Tribz pinches off leaves for the guests to smell and taste. The vegetables are not only free of pesticides and herbicides, thus safe to eat off the vine without washing, they are very flavorful. The fresh food at Blancaneaux puts to shame the grocery store vegetables that I normally eat, genetically engineered as they are to survive lengthy spells as agricultural inventory. At Blancaneaux guests enter a world of more intense taste.

I can also vouch that after three days of hiking like a mountain goat and eating healthy meals, I felt great. This was life in the blue zone — the recipe for living a longer, healthier life.

Eating organic food was not an experience my wife and I had been looking for when planning our vacation. It was an unexpected bonus. As total coincidence would have it, on the airline flight to Belize I plowed through “The Dental Diet,” which touted the virtues of organic and free-range foods. Combining the theory from that book with the experience of eating organic food at Blancaneaux set into motion a train of thought about the relationship between health, the “ancestral diet” (as author Steven Lin calls it), economic disruption, food deserts, and economic inequality.

Let me advance three nested propositions. First, many of the chronic diseases in 21st century society — not just the biggies like heart disease, obesity and diabetes but a host of auto-immune diseases — originate from our modern diet. To prevent those diseases rather than merely treat them, North Americans, Europeans, and anyone else embracing a conventional “western” diet” must radically change their eating patterns — most notably by consuming fewer processed sugars and carbohydrates, more grass-fed cattle and poultry, and more fresh fruits, beans and vegetables. Second, a dietary revolution by necessity will require a wrenching agricultural and food-processing revolution. And third, the transition from industrial agriculture to free range/organics will accentuate the divide between those who can afford good food and the health benefits that accrue from it and those who can’t.

Lin looks at health and diet issues through the prism of his discipline: dentistry and oral health. Our mouths host an extensive biome that interacts with our bloodstream (especially if we have gum disease) and our gut biome (every time we swallow saliva). Lin’s exploration of this interaction, which medical science is only beginning to understand, led him to several intriguing perspectives and insights.

Lin argues that dental disease was almost non-existent among early homo sapiens. Likewise, crooked teeth, which we moderns think of as the unlucky outcome of the genetic lottery, were equally rare. The absence of dental maladies among pre-agricultural humans is all the more remarkable when one considers that they did not avail themselves of tooth brushes, tooth paste, dental picks, braces, and orthodontics! How could that be possible? Lin’s answer: The ancestral diet of meat, grains, fruit, and, later, dairy — not processed carbohydrates — allowed the mouth biome to remain in balance, reducing acidity, and for the upper and lower jaws to grow larger and stronger with room to accommodate more teeth. With plenty of space in the jaw, teeth in early homo sapiens, like those of pre-agricultural societies documented within living memory, grew in straight and even.

Cavities, bleeding gums and crooked teeth are only the most visible of the health disorders set into motion by the agricultural revolution, with its widespread adoption of carbohydrate-laden wheat, rice, and maize, and then the industrial revolution, with its widespread adoption of processed sugars. The positive accomplishment of the agricultural and industrial revolutions is that they fed billions of people. The downside is that industrially produced food afflicts mankind with a host of chronic diseases.

Animal products, says Lin, should be sourced from pasture-raised and free-range livestock, not from grain-fed livestock pumped up with antibiotics. Likewise, seafood should be caught from natural waters, not farmed. Fruits and vegetables should not be sprayed with pesticides and antibiotics, which alter the microbiome of the soil as well as that of their own genes. We should purge sugar, white flour, vegetable oils from our diets. In their place we should consume more fiber, probiotics and prebiotics. Throw your Captain Crunch into the trashcan, and eat your Brussel sprouts.

To my mind, the virtue of Lin’s book is not the nutritional guidelines — they will be familiar to many readers following other dietary regimens — as much as the persuasive, science-based justification he offers for them. For purposes of argument, let us accept that widespread adoption of a organic/free-range diet is necessary to restore the health of America’s population with its many chronic medical conditions. Now let us confront the implications of adopting those guidelines on a massive scale.

We know that vegetables, beans and fruits can be raised free of herbicides, pesticides and antiobiotics on a fairly large scale. Blancaneaux shows how it can be done, as do innumerable other organic farms such as Polyface Farm in Virginia’s Shenandoah Valley. The question is at what cost. Organic produce is more expensive, mainly because the gardening is more labor intensive. Grass-fed beef and free-range chicken also are more expensive, mainly because they require more land.

Organic and free-range foods are niche products, accounting for 4% of total U.S. food sales, and they have little impact on agricultural land and labor markets. But increase organics’ market share to 50% — never mind 100% — and farms will experience massive labor shortages and land scarcity. As these key inputs of organic food increase in cost, the price of organic food will rise as well. While organic and free-range food command, say, a 30% price premium in grocery stores today — I base that guesstimate on the price differential I see at Kroger — I conjecture that the premium could well triple or quadruple.

America’s educational divide will accentuate the differential impact on different segments of the population. Those most motivated to alter their diets — not any easy task — are those with the education, income and inclination to read books like “The Dental Diet” and the agency to believe that they have the power to change their lives for the better. Lower-income Americans, who tend to be more fatalistic about their lot in life, will be less likely to change.

If America has a problem now with food deserts — unequal access to healthy food — the disparity will increase dramatically if the price of organic/free-range food doubles. The nutritional divide will become more marked, and so will the ensuing health divide.

How do we offset such a pessimistic outcome? The default response would be to give poor people more fresh food. But giving them healthier food provides no guarantee that they will eat it. Far better would it be to involve the poor in raising their own food, whether cooperatively in communal urban farms, individually in back-yard gardens, or perhaps as employees in multi-storied urban greenhouses. People place far greater value in a thing that they earn through their own sweat and toil.

Whatever the long-term solution to the problem of food inequality, the scientific case is growing for the argument that we are what we eat. I’m ready to do what it takes to stay healthy and active, even if it means eating more cauliflower and fewer french fries. Hopefully, other Americans will find a way to do so, too.

The Future of Health Care Delivery: Homes not Hospitals

VCU hospital. The future of health care delivery… or the past?

“The days of the hospital, as we know it,” may be numbered,” declares Laura Landro in a Wall Street Journal article today.

In a shift away from their traditional inpatient facilities, health-care providers are investing in outpatient clinics, same-day surgery centers, free-standing emergency rooms and microhospitals, which offer as few as eight beds for overnight stays. They are setting up programs that monitor people 24/7 in their own homes. And they are turning to digital technology to treat and keep tabs on patients remotely from a high-tech hub.

For the most part, the investments in outside treatment are driven by simple economics: Traditional hospital care is too costly and inefficient for many medical issues. Inpatient pneumonia treatment, for example, can cost 15 to 25 times more, yet many low-risk patients who could be safely treated as outpatients are hospitalized, studies have shown.

That’s what’s happening nationally. But I don’t see many signs of it happening here in Virginia. Indeed, when a rural hospital in Patrick County goes out of business, everyone’s instinct is to think about how to revive it so someone else can take it over rather than rethink how health care in a rural county might delivered more effectively and efficiently.

I’m old enough to remember when the Virginia legislature back in the 1980s moved too slowly to deregulate the banking industry. North Carolina got the jump on us, allowing its banks to merge with one another and then acquire out-of-state banks before our banks had a chance to merge, grow and acquire. The Carolina banks ate up the Virginia banks, and the top banking jobs and financial clout shifted from Richmond and Norfolk to Charlotte and Atlanta.

I’m worried that something similar is happening today with the health care sector. The problem is not that Virginia hospitals haven’t merged — to the contrary, huge health care systems have swallowed up competitors in every metropolitan area in the state. The problem is that the General Assembly hews to an outmoded model of the health care industry. By clinging to that model, more appropriate to the 1960s than the 2010s, we run the risk that Virginia healthcare providers will stifle innovation, thwart productivity, and burden the population with an obsolete health care system.

The underlying assumption is that health care should be organized around something called “hospitals,” which are medical complexes in which scores, even hundreds, of medical services are bundled under one roof under common ownership. State policy buttresses this arrangement by requiring providers to obtain a Certificate of Public Necessity (COPN) in order to build a new facility, thus protecting hospitals from competition by free-standing entities. State policy also perpetuates the status quo by allowing nonprofit hospitals to go untaxed, giving them a huge competitive advantage over for-profit competitors organized by physicians or entrepreneurs.

I have long railed against this arrangement without benefit of knowledge of what’s happening in other states. The Wall Street Journal, however, makes it vividly clear how healthcare enterprises in other states are innovating.

Perhaps the biggest drawback to hospitals is that they are germ factories. With the rise in antibiotic-resistant bacteria, any patient entering a hospital runs the risk of infection. Indeed, at any time, reports the WSJ, one in 25 patients in the U.S. is battling a hospital-acquired infection.

It’s also becoming apparent that health care providers often can deliver care at lower cost and better outcomes in independent facilities or at home. Studies, says the WSJ, show that “hospital-level care at home for certain conditions can be provided for 30% to 50% less than inpatient care with fewer complications, lower mortality rates, and higher patient satisfaction.”

Acute care hospitals will always be necessary to deal with medical conditions requiring highly specialized, highly technical, or highly intensive care. But hospitals are clearly not the best setting for chronic or non-intensive conditions.

New York’s Mount Sinai Hospital has developed a hospital-at-home program, HaH-plus, for patents who show up at the emergency room or are referred by primary care physicians. A mobile acute-care team provides staffing, medical equipment, medications and lab tests at home, and is on call around the clock if a condition worsens, says the WSJ. Mount Sinai estimates that nationally, 575,000 cases yearly could qualify for the program. Treating just 20% of them could save Medicare $45 million annually.

Another new concept — potentially well adapted to rural counties — is the microhospital, sometimes referred to as the neighborhood hospital. Typically, says the Journal, 92% of microhospital patients are treated and sent home in an average of 90 minutes, and 8% are admitted overnight for care such as intravenous-medication administration. Says the CEO of Lousiana-based Ochsner Health Systems, 80% of its capital expenditures are going to outpatient clinics. “I don’t see us building new hospitals.”

The primary justification for maintaining COPN in Virginia is that preserving hospitals’ monopoly status enabled them to generate the profits they need to cover charity care, bad debts and money-losing Medicaid. If the General Assembly enacts Medicaid expansion, thus relieving hospitals of a significant charity care/bad debt burden, it will kick the props from under COPN.

I would argue that eliminating COPN would be worth the price of expanding the entitlement state. Competition in Virginia would lead to more innovative healthcare delivery systems. If the health care systems didn’t introduce the innovations, local physicians or out-of-state enterprises would. Potential savings for Virginia patients would run into the billions of dollars.

It’s time for an innovation-driven healthcare system. Let’s do it.

Conservatives Win Big with House Healthcare Plan

by John Fredericks

Virginia conservatives – and the Trump Administration – should embrace the health care plan rolled out this week by House of Delegates Speaker Kirk Cox, R-Colonial Heights. The House budget includes a plan to bring billions in taxpayer dollars back to Virginia to help uninsured Virginians get health care coverage through Medicaid Expansion.

For four years, I sang a different tune. I stood shoulder-to-shoulder with my fellow conservatives at Americans for Prosperity, former Speaker Bill Howell, and other Republicans to fight Medicaid Expansion.

At the time, the future of the Affordable Care Act seemed uncertain, and banking on its promises appeared financially risky. There were fears it would collapse, or be repealed, leaving states to pay for a huge new entitlement we couldn’t afford. That seemed like an unsafe bet for Virginia.

That all changed in 2017.

Today, I unequivocally support the House plan to expand Medicaid to hardworking families in Virginia. Here’s why:

Obamacare isn’t going anywhere anytime soon. After years of trying, Congressional Republicans showed us in 2017 they couldn’t repeal the law. And even if they try again, which seems unlikely, it’s doubtful they will be successful this year or beyond.

In addition to lacking votes, federal Republicans last year showed us they’ve never had anything approximating a viable replacement plan after years of making empty promises to constituents in fund-raising letters. In other words, they misled us.

The most shocking realization came last spring at a White House briefing on the Republican plan to repeal and replace Obamacare. I sat the in briefing room aghast at what I heard – the GOP plan rewarded GOP states that expanded Medicaid (like Indiana, Ohio, and Arkansas) with continued funding, and penalized states that resisted expansion by cutting their funding through reduced block grants.

Instead of benefiting from being a prudent holdout, Virginia would have received less Medicaid funding from Washington! Thanks for nothing.

While it’s easy enough to retreat into orthodox ideology in the face of complex policy decisions that don’t fit into neat partisan boxes, I prefer to deal in reality rather than bury my head in the sand.

The House of Delegates budget plan takes the same clear-eyed, reality-based approach by opting to work with President Trump to secure key conservative reforms such as work rules and personal responsibility standards.

Let’s be honest, this is a plan many Democrats won’t like. If you’re a Republican, that means you’re doing something right. You’re reforming a program rather than just providing a handout.

Speaker Cox is developing a plan incorporating conservative ideals like those Vice President Mike Pence championed when he was Governor of Indiana.

In my mind, if it’s good enough for a conservative like Mike Pence and Indiana, then it’s good enough for Virginia.

Speaker Cox undoubtedly will face misguided criticism from those who can’t see past the politics of the moment. It’s better to have Speaker Cox negotiating the details with Democratic Governor Ralph Northam now than waiting too long and ending up with Del. David Toscano, D-Charlottesville, driving the talks.

Because make no mistake: Many Democrats want straightforward Medicaid expansion, or worse – Bernie Sanders-style socialized healthcare.

The GOP-controlled House is taking the conservative approach to health-care reform and will work with the Trump administration to achieve that goal.

The House plan aims to put low-income Virginians in private insurance plans with premiums and co-pays, giving them skin in the game. The plan sets up health savings accounts so people are incentivized to make their own health-care decisions. And, most importantly, they’ve created a “Training, Education, and Employment Opportunity” program to put people on a path to self-sufficiency. Continue reading