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The NC House: Hospitals are Too Important to Fail, but Taxpayers are Too Unimportant to Save Them Money
This past week, NC house representatives in Raleigh addressed one of the biggest ideological battles of this legislative session - does government work for the taxpayer or for special interests, and the answer has come back to us loud and clear -- the NC House works for special interests, namely, such healthcare powerhouses as the North Carolina Healthcare Association (the state hospital) and Vidant Health.
On Wednesday, April 3, the NC House voted to pass the anti-Folwell bill, HB-145 - a bill crafted by the big healthcare players in the state and forced upon the lowly taxpayers by (many) bill sponsors who clearly have ties to the medical field in order to remove NC Treasurer Dale Folwell from his task of fixing the State Health Plan mess, saving the state, state employees and retirees, and taxpayers money, and preventing a financial crisis all so that they can continue over-billing the state through the Plan in order that their status and interests remain strong and well-funded.
HB-184 has one goal and one goal only, despite the title of the bill ("Study State Health Plan Design"), and that is to block implementation of Folwell's plan and the reforms to State Health Plan.
We've all heard the phrases "Too big to fail" or "Too important to fail." We heard these at the time of the federal bail-out bills, when the federal government stepped in to rescue specific banks and businesses from financial crises. In other words, the government was picking those who it deemed were most important; it was picking and making "winners." It was this mentality and this action on the part of the federal government, with taxpayer money, that led to the start of the great Tea Party movement - a movement tasked and devoted to constitutionally limited government, fiscal responsibility, and oversight in government to identify abuse and over-reached. The Tea Party seeks nothing more than to ensure that government works as intended, and no more.
When a government becomes more concerned with special interests, then it ceases to be a government "for the people." When a government is more concerned that hospitals, banks, car manufacturers, and other special interests are shielded from failure (despite their bad management decisions) than making sure the taxpayers are taxed only for those costs and services that touch on their lives and residency in the country or state and when government is more concerned with the financial solvency of those businesses and institutions rather than the financial well-being of its citizens, treating them like an endless source of revenue and nothing more, then it ceases to be a government "for the people." Gradually, the people become an enslaved taxing class, with hard-earned money going down rat-holes that provide not a single benefit to them. And that's the threat we are facing should the NC Senate pass HB184 and this horribly bad bill be signed into law.
The first step, however, has been taken. The NC House has decided to remove Treasurer Dale Folwell completely from his responsibility of straightening out the State Health Plan mess. Reporters and commentators, and opponents of the bill have described the vote on Wednesday as "Dale Folwell losing to NC Healthcare and Vidant Health and other interested healthcare parties. But Folwell perhaps said it best to a reporter: "I didn't lose anything today. It's the taxpayers who lost. The taxpayers lost because every dollar that's unnecessarily spent on health care is a dollar that cannot be spent on public safety, public education, or public roads." House legislators who voted for the bill clearly did not see the issue in those terms. They cowered to the scare tactics that big healthcare monopolies like Vidant Health might have to close rural hospitals.
State employees, retirees, and taxpayers are not the only ones who have been opposed to this bill. State conservative policy organizations, conservative policy think-tank organizations, conservative talk-radio shows, and conservative journals are united against it as well - the Civitas Institute, the John Locke Society, the Carolina Journal, the County Compass, Wake Up Call (107.1), the Chad Adams Show, etc.
I. BACKGROUND:
A. DALE FOLWELL and the STATE HEALTH PLAN
Dale Folwell enjoys an outstanding reputation, and not only for being an all-around nice guy and a man of utmost integrity. He did an excellent job serving four terms in the NC General Assembly but an even more significant job when he served in Governor Pat McCrory's administration (2013-2015). Serving as Assistant Secretary of Commerce with the Division of Employment Security, he took the most "broke and broken" unemployment system in the United States and turned it into a national leader in debt-repayment, quality and customer service. This outstanding accomplishment continues to save North Carolina's employers significant sums annually.
Folwell is known, and rightfully so, as a problem solver.
In 2013, he resigned from McCrory's administration to run for the State Treasurer position. The State Treasurer is the keeper of the public purse. In North Carolina, the Treasurer over-sees such big ticket items as the State Pension Plan, from which one in every ten North Carolinians receive a check each month, and the State Health Plan, which for those who do not know, is the state-administered insurance plan used by state employees; it pays for the medical expenses of teachers, state troopers, firefighters, and other state and local employees, and retirees (retired state employees). The State Health Plan is equivalent in size to the domestic employment base of Amazon, Bircher-Hathaway, and JP Morgan combined.
[To learn more about what the state Treasurer in NC does, check out Dale Folwell's presentation, "The Price of Promises" He begins talking about the State Health Plan at time 12:30]
When Folwell took office as North Carolina's Treasurer, he was faced with a crisis concerning the State Health Plan and tasked with solving it. When he ran for the position of Treasurer in 2016, many voted for him expecting him to solve the Plan's problems as its administration was in the Treasurer's portfolio. And as soon as he won the election, he immediately went to work to reform the state's Plan. The State Health Plan is seriously underfunded and currently burdens the state with unsustainable unfunded liabilities (obligations to employees and retirees), and therein lies the crisis. In fact, a recent report by the Pew Charitable Trusts confirmed that NC's unfunded retirement and health care costs are among the worst in the country. The reality is that the Plan that Folwell inherited is only 5% funded, with $35 billion of the Plan's liabilities being unfunded. Current spending projections estimate that the Plan will be insolvent by 2023, and unable to pay providers, unless action is taken. Without action, the state Treasurer estimates that every man, woman, and child in the state would have to pay almost $3,200 each to cover our current promises of health care for state and local government retirees.
Just a few days ago (April 4), Folwell gave even more troubling figures. He told the John Locke Foundation that the State Health Plan, which covers 720,000 state employees, retirees, and dependents, is less than 4% funded.
Back in December, Folwell proposed a possible solution - to restructure reimbursement rates for the State Health Plan. His intention was to tie State Health Plan rates to the federally-set Medicare rates, setting reimbursements at up to 235% of Medicare rates, which he calculated would save hundreds of millions of dollars annually. That sounds more than reasonable, yes? Bur for many providers, this would be less than what they currently charge the Plan for their services. A December 2018 NC Health News article on the issue explained, "Hospitals argue that governmental payers such as Medicare and Medicaid both pay less than what it costs to provide care, and so they often depend on commercial payers, such as the State Health Plan, to pay a little more and make up the difference."
Healthcare prices for the privately-insured, as well as those on the State Health Plan, are higher due to the lower rates paid by Medicaid and Medicare. This essentially means that North Carolinians pay for those programs directly though their state and federal tax dollars, then additionally subsidize the programs through higher insurance prices that are passed on to them by their private or state health insurers. Yet Governor Roy Cooper and some legislators want to add an additional half a million enrollees to North Carolina's Medicaid program through Medicaid expansion during this current legislative session. House Democratic leader Darren Jackson (D-Wake), for example, said too many patients use hospitals for routine care because they lack health insurance, and so his solution is Medicaid expansion.
Medicaid expansion would likely further compound the financial burden on our state regarding healthcare.
We can start to see what is coming down the road for taxpayers.
Folwell's plan was/ is called the "Clear Pricing Project" (or "Clear Pricing Plan") to highlight the fundamental and essential elements of his reform - transparency in the costs of services, procedures, tests, scans, etc and what hospitals charge and establishing a standard formula to use in paying hospitals. The plan, which he planned to launch in January 2020, would require health care providers to publish their prices and not alter or inflate them, thus providing health care consumers pricing information upfront and giving them the opportunity to shop around and compare. The plan would spark competition and ultimately reduce costs. Folwell understands the benefits of a free market type solution.
As Folwell moved forward with his reforms (again, the "Clear Pricing Project" or "Clear Pricing Plan"), NC Healthcare Association and Vidant Health began to push back. The big hospitals claim they will suffer if Folwell's Clear Pricing Plan goes into effect; they have threatening that if their reimbursements are cut, they may very likely have to close rural hospitals. The scare tactics have been circulated and people are buying into this fake media. On social media and on their website, the Partnership for Innovation in Health Care (PIHC) makes arguments regarding a potential loss of health care jobs if the state implements Folwell's plan, while claiming that the Treasurer already has transparency in hospital pricing. That last claim, of course, is patently false. In fact, it is the absolute lack of transparency by hospitals in their pricing that led Folwell to suspect that they were not dealing with the State Health Plan honestly and in good faith. And it was the absolute refusal of the hospitals to provide Folwell with pricing information that led the hospitals to seek to have his efforts thwarted and his inquiries stopped and his efforts thwarted. (See later, in the debate from the House floor). Meanwhile, the group that will be most directly affected by any change to the State Health Plan, the State Employees Association of North Carolina (SEANC) has endorsed Folwell's plan.
Go Back
On Wednesday, April 3, the NC House voted to pass the anti-Folwell bill, HB-145 - a bill crafted by the big healthcare players in the state and forced upon the lowly taxpayers by (many) bill sponsors who clearly have ties to the medical field in order to remove NC Treasurer Dale Folwell from his task of fixing the State Health Plan mess, saving the state, state employees and retirees, and taxpayers money, and preventing a financial crisis all so that they can continue over-billing the state through the Plan in order that their status and interests remain strong and well-funded.
HB-184 has one goal and one goal only, despite the title of the bill ("Study State Health Plan Design"), and that is to block implementation of Folwell's plan and the reforms to State Health Plan.
We've all heard the phrases "Too big to fail" or "Too important to fail." We heard these at the time of the federal bail-out bills, when the federal government stepped in to rescue specific banks and businesses from financial crises. In other words, the government was picking those who it deemed were most important; it was picking and making "winners." It was this mentality and this action on the part of the federal government, with taxpayer money, that led to the start of the great Tea Party movement - a movement tasked and devoted to constitutionally limited government, fiscal responsibility, and oversight in government to identify abuse and over-reached. The Tea Party seeks nothing more than to ensure that government works as intended, and no more.
When a government becomes more concerned with special interests, then it ceases to be a government "for the people." When a government is more concerned that hospitals, banks, car manufacturers, and other special interests are shielded from failure (despite their bad management decisions) than making sure the taxpayers are taxed only for those costs and services that touch on their lives and residency in the country or state and when government is more concerned with the financial solvency of those businesses and institutions rather than the financial well-being of its citizens, treating them like an endless source of revenue and nothing more, then it ceases to be a government "for the people." Gradually, the people become an enslaved taxing class, with hard-earned money going down rat-holes that provide not a single benefit to them. And that's the threat we are facing should the NC Senate pass HB184 and this horribly bad bill be signed into law.
The first step, however, has been taken. The NC House has decided to remove Treasurer Dale Folwell completely from his responsibility of straightening out the State Health Plan mess. Reporters and commentators, and opponents of the bill have described the vote on Wednesday as "Dale Folwell losing to NC Healthcare and Vidant Health and other interested healthcare parties. But Folwell perhaps said it best to a reporter: "I didn't lose anything today. It's the taxpayers who lost. The taxpayers lost because every dollar that's unnecessarily spent on health care is a dollar that cannot be spent on public safety, public education, or public roads." House legislators who voted for the bill clearly did not see the issue in those terms. They cowered to the scare tactics that big healthcare monopolies like Vidant Health might have to close rural hospitals.
State employees, retirees, and taxpayers are not the only ones who have been opposed to this bill. State conservative policy organizations, conservative policy think-tank organizations, conservative talk-radio shows, and conservative journals are united against it as well - the Civitas Institute, the John Locke Society, the Carolina Journal, the County Compass, Wake Up Call (107.1), the Chad Adams Show, etc.
I. BACKGROUND:
A. DALE FOLWELL and the STATE HEALTH PLAN
Dale Folwell enjoys an outstanding reputation, and not only for being an all-around nice guy and a man of utmost integrity. He did an excellent job serving four terms in the NC General Assembly but an even more significant job when he served in Governor Pat McCrory's administration (2013-2015). Serving as Assistant Secretary of Commerce with the Division of Employment Security, he took the most "broke and broken" unemployment system in the United States and turned it into a national leader in debt-repayment, quality and customer service. This outstanding accomplishment continues to save North Carolina's employers significant sums annually.
Folwell is known, and rightfully so, as a problem solver.
In 2013, he resigned from McCrory's administration to run for the State Treasurer position. The State Treasurer is the keeper of the public purse. In North Carolina, the Treasurer over-sees such big ticket items as the State Pension Plan, from which one in every ten North Carolinians receive a check each month, and the State Health Plan, which for those who do not know, is the state-administered insurance plan used by state employees; it pays for the medical expenses of teachers, state troopers, firefighters, and other state and local employees, and retirees (retired state employees). The State Health Plan is equivalent in size to the domestic employment base of Amazon, Bircher-Hathaway, and JP Morgan combined.
[To learn more about what the state Treasurer in NC does, check out Dale Folwell's presentation, "The Price of Promises" He begins talking about the State Health Plan at time 12:30]
When Folwell took office as North Carolina's Treasurer, he was faced with a crisis concerning the State Health Plan and tasked with solving it. When he ran for the position of Treasurer in 2016, many voted for him expecting him to solve the Plan's problems as its administration was in the Treasurer's portfolio. And as soon as he won the election, he immediately went to work to reform the state's Plan. The State Health Plan is seriously underfunded and currently burdens the state with unsustainable unfunded liabilities (obligations to employees and retirees), and therein lies the crisis. In fact, a recent report by the Pew Charitable Trusts confirmed that NC's unfunded retirement and health care costs are among the worst in the country. The reality is that the Plan that Folwell inherited is only 5% funded, with $35 billion of the Plan's liabilities being unfunded. Current spending projections estimate that the Plan will be insolvent by 2023, and unable to pay providers, unless action is taken. Without action, the state Treasurer estimates that every man, woman, and child in the state would have to pay almost $3,200 each to cover our current promises of health care for state and local government retirees.
Just a few days ago (April 4), Folwell gave even more troubling figures. He told the John Locke Foundation that the State Health Plan, which covers 720,000 state employees, retirees, and dependents, is less than 4% funded.
Back in December, Folwell proposed a possible solution - to restructure reimbursement rates for the State Health Plan. His intention was to tie State Health Plan rates to the federally-set Medicare rates, setting reimbursements at up to 235% of Medicare rates, which he calculated would save hundreds of millions of dollars annually. That sounds more than reasonable, yes? Bur for many providers, this would be less than what they currently charge the Plan for their services. A December 2018 NC Health News article on the issue explained, "Hospitals argue that governmental payers such as Medicare and Medicaid both pay less than what it costs to provide care, and so they often depend on commercial payers, such as the State Health Plan, to pay a little more and make up the difference."
Healthcare prices for the privately-insured, as well as those on the State Health Plan, are higher due to the lower rates paid by Medicaid and Medicare. This essentially means that North Carolinians pay for those programs directly though their state and federal tax dollars, then additionally subsidize the programs through higher insurance prices that are passed on to them by their private or state health insurers. Yet Governor Roy Cooper and some legislators want to add an additional half a million enrollees to North Carolina's Medicaid program through Medicaid expansion during this current legislative session. House Democratic leader Darren Jackson (D-Wake), for example, said too many patients use hospitals for routine care because they lack health insurance, and so his solution is Medicaid expansion.
Medicaid expansion would likely further compound the financial burden on our state regarding healthcare.
We can start to see what is coming down the road for taxpayers.
Folwell's plan was/ is called the "Clear Pricing Project" (or "Clear Pricing Plan") to highlight the fundamental and essential elements of his reform - transparency in the costs of services, procedures, tests, scans, etc and what hospitals charge and establishing a standard formula to use in paying hospitals. The plan, which he planned to launch in January 2020, would require health care providers to publish their prices and not alter or inflate them, thus providing health care consumers pricing information upfront and giving them the opportunity to shop around and compare. The plan would spark competition and ultimately reduce costs. Folwell understands the benefits of a free market type solution.
As Folwell moved forward with his reforms (again, the "Clear Pricing Project" or "Clear Pricing Plan"), NC Healthcare Association and Vidant Health began to push back. The big hospitals claim they will suffer if Folwell's Clear Pricing Plan goes into effect; they have threatening that if their reimbursements are cut, they may very likely have to close rural hospitals. The scare tactics have been circulated and people are buying into this fake media. On social media and on their website, the Partnership for Innovation in Health Care (PIHC) makes arguments regarding a potential loss of health care jobs if the state implements Folwell's plan, while claiming that the Treasurer already has transparency in hospital pricing. That last claim, of course, is patently false. In fact, it is the absolute lack of transparency by hospitals in their pricing that led Folwell to suspect that they were not dealing with the State Health Plan honestly and in good faith. And it was the absolute refusal of the hospitals to provide Folwell with pricing information that led the hospitals to seek to have his efforts thwarted and his inquiries stopped and his efforts thwarted. (See later, in the debate from the House floor). Meanwhile, the group that will be most directly affected by any change to the State Health Plan, the State Employees Association of North Carolina (SEANC) has endorsed Folwell's plan.
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