Wednesday, June 01, 2005

Corzine's Health Care Plan

Last week, I questioned the costs of Corzine Care, both here and on the Corzine Connection. Surprisingly, the Senator's staff has an answer, claiming Corzine's Health Care Plan: Why It Saves Money and Doesn't Tax NJ Citizens. Their introduction is more of a pitch for the plan than an explanation of how they expect to achieve a 20,000% return on investment. Curtis Fisher, the policy analyst who wrote the plan, writes:

Thanks for the question. The answer in short is that the Corzine plan changes how the system works.
Senator Corzine's plan makes our health care system: (1) more accessible -- providing access to 95% of New Jersey citizens;
Point (1) might be a good thing, if it were the state's responsibility to provide health care access for 95% of citizens. The state's Constitution grants no such power or responsibility to the government. Even if it did, enacting law or regulation to provide health care access to anything less than 100% of the citizens would probably run afoul of equal protection.
(2) more affordable -- reducing costs by 10% below what they would otherwise be, over the next three years; and
In Economics 101, I learned that the law of supply and demand forces price to increase proportionally with demand. If we increase the demand for medical services by opening coverage to more people, how does that make it less expensive?
(3) safer -- improving technology and allowing doctors and patients to make medical decisions.
Again, might be a good thing, but not within the purview of the state. Doctors and patients already make medical decisions. Bill-payers make monetary decisions. Somewhere, a balance is reached. State intervention by eliminating the moderating effects of cost-consciousness will inevitably drive costs up. Improving technology might help make medicine safer, but the medical industry already works hard to keep ahead of the curve in that regard.
Your question focuses on how we intend to provide increased access to health care without asking state taxpayers for more money.
No, my question was "So exactly where does the Senator propose acquiring the $3-4 billion dollars his program would cost each year?" Changing the question is intended to distract from the basic fact that this will cost more than you are claiming. (An aside: The government has never "asked" me for more money, it has simply confiscated it, under threat of prosecution, from my weekly paycheck.)
Before discussing the financing of the plan, we should all remember that either through our taxes, or when we pay for health care insurance, we are paying for the 1.2 million NJ citizens who are uninsured.
Assuming you can pass the equal protection test, to get to your 95% goal, you will need to find a way to cover 1,140,000 people. Miss 60,000 of the 1.2 million, and you miss the target. But wait, Matt said, "Jon Corzine [sic] plan will help 776,000 New Jerseyans who are falling through those cracks today." So, is it 776k, or 1.2 million?
These folks often have chronic illnesses, and end up seeking treatment in costly emergency visits. This year the state provided hospitals $582 million for "charity care" to cover uncompensated care (and that only met part of their expenses).
While the state may write a check for that amount, it's not the state's money. A breakdown from Governor Codey's 2006 budget, page 21, shows that only 8% of the total $532 million will be drawn from the general fund. The rest:
- 38% diverted from the Unemployment Compensation Fund
- 29% from cigarette taxes
- 8% from federal revenues
- 16% from assessments levied on health care providers (HMOs, ambulatory medical facilities, cosmetic surgery procedures).
This is nothing more than a subsidy to big city hospitals.

The bottom-line is that we can save a lot of money if the uninsured get preventive care at a doctor's office, instead of at expensive emergency rooms across the state.

Here is the Corzine plan to increase health care access, simplified:

Require insurance companies to offer coverage to about 370,000 uninsured 19-30 years olds, through their parents. By allowing these individuals to join their family's health care plan, they can get coverage for less than 50% of the cost they'd face as an individual, in the private market. No state costs.

Imposing a cost on insurers, by forcing them to offer coverage at children's rates for grown adults, is an abuse of government power, pure and simple. It also imposes additional costs on insurance premium payers (who are also taxpayers), in the form of half the cost of the premium for each new subscriber under your plan.
But let's assume that it's OK to do this anyway. In a 2000 paper published by the Urban Institute, a non-partisan economic and social policy research organization, John Holahan and Niall J. Brennan noted (Table 2) that while 9.6 million young adults (ages 18-34) were uninsured, only 28% of them were "low-income" uninsured. This suggests that 72% of your 370,000 can afford insurance coverage, but choose not to purchase it. Assuming you can convince half of them of the need for insurance, this group alone will cause you to miss your 95% goal by 73,000 people.

Allow all children and pregnant women, plus adults with kids in FamilyCare program, to "buy-in" and purchase FamilyCare coverage at the rate the state pays. In other words, the state is offering people their "bulk" rate they get from insurance companies to these people - and the cost is about half the rate in the individual private market. This gives affordable access to about 400,000 people (with some overlap in the above category). No state costs.
As of June 1, 2004, there were 229,743 people enrolled in FamilyCare. According to the program's web site, "NJ FamilyCare is a federal and state funded health insurance program created to help New Jersey's uninsured children to have affordable health coverage." Also, on their FAQ page is this little tidbit:
Is NJ FamilyCare no longer allowing parents and guardians to apply?
In order to assure that there would be enough money to continue to insure children, we have stopped enrolling parents and guardians whose applications were received after June 14, 2002.
So, either your claim of no state costs is incorrect, or the state is publishing false information on one of its web sites. Care to tell us which it is?
Cover about 200,000 children and pregnant women in the traditional FamilyCare system that will maximize federal money (65%) and take advantage of a federal "waiver" for the state costs (35%). Legislation to implement this initiative is cosponsored by Republican Senator Tom Kean Jr. A similar effort to secure the federal "waiver" was recently signed by Missouri Republican Governor Blunt. No state costs.
This effectively shifts costs from state taxpayers to federal taxpayers. That'd be great if this was Alaska. In case you hadn't noticed, the New Jersey tax dollar is only worth 57 cents in federal spending. Either way, my tax dollars have to fund your pipe dream.
To further reduce the costs that all New Jersey citizens pay for the uninsured, Senator Corzine also will expand the hours of operation of community health centers with an investment of $5 million. These centers provide affordable primary and prevention care for close to 300,000 New Jersey citizens but unfortunately their full potential is not realized because many centers have limited hours during nights and weekends.
Gov. Codey proposed a $5 million increase to this program in his 2006 budget (Budget in Brief, page 21). He claimed that a $5 million investment would enable the health centers to increase the number of uninsured served by 30,000, not 300,000. Your characterization of increased operating costs as an "investment" is somewhat disingenuous, as investment would imply a non-recurring capital cost to build new infrastructure. Placing the increased cost in a paragraph with the total number of people served by the program is also deceptive. That total cost is currently $26 million, and I assume that the Senator's proposal would run that up to $31 million.

Overall, I'm not convinced you've answered the question, Curtis. Let's see you sell this plan to a new business review board at a company that has to answer to its shareholders. They'd throw you out before you got past the first claim.