Let’s Fix This Before We Increase Medicaid

On Thursday, NC Political News reported the following:

Nonprofit hospital executives enriched themselves while fueling a crisis of health care affordability in North Carolina. A new analysis of hospital data finds that nonprofit hospital CEOs doubled their paychecks in less than five years — a fraction of the time previously thought. Existing research had gravely underestimated the growth of wage inequity across nonprofit hospitals. 

State Treasurer Dale R. Folwell, CPA, invited researchers from the North Carolina State Health Plan for Teachers and State Employees, Johns Hopkins University Bloomberg School of Public Health, and Rice University’s Baker Institute for Public Policy to study executive compensation across North Carolina’s nine largest hospital systems, including Atrium, Mission, Novant, UNC, Vidant, Duke, Cone, WakeMed and Wake Forest Baptist Health, as well as the Midwest system Advocate Aurora Health that merged with Atrium Health.  

“This is the biggest transfer of wealth in our generation, and it’s being financed disproportionately on the backs of sick, low- and fixed-income people,” said Treasurer Folwell. “These nonprofit hospital executives have lost their mission. They are supposed to make people better, not make themselves richer.”

When North Carolina hospitals paid $1.75 billion to their top executives, chief executive officers (CEO) captured almost 20% of that pay from 2010 to 2021. Researchers also found troubling trends in hospital executive compensation during the pandemic. Frontline workers gained national recognition for their work caring for patients, but nurse and physician wages have risen far more slowly than executive pay over the past decade. Despite pleading poverty and taking $1.5 billion in taxpayer-funded COVID relief, the majority of hospital top executives did not cut their own paychecks in 2020.

I don’t ever support wage-and-price controls, but it seems as if there are a number of people whose wages have increased dramatically in recent years for no apparent reason.

The article also notes:

While hospital executives enjoyed huge raises, workers’ wages have remained largely flat over the past decade. Rising health care costs are eroding families’ upward mobility. The average worker now loses 20% of a paycheck to health care costs, and one in five North Carolinians is in debt collections for medical bills. State employees must work one week out of every month just to pay the family premium. 

“This report is a wake-up call to anyone who sits on the board of a nonprofit hospital,” said Dr. Vivian Ho, James A. Baker III Institute Chair in Health Economics at Rice University. “Executives are being handsomely rewarded for earning high profits and burdening North Carolinians with medical debt, rather than guaranteeing affordable care to hard-working families that form the backbone of the economy.”

If a non-profit hospital has that much money to spend, they should use it to cut costs for its patients, which in turn will cut costs for people with medical insurance, which will give people more disposable income, which will result in economic growth for everyone. That way everyone wins.

Shenanigans In North Carolina

Governor Roy Cooper was elected in 2016 and began his term in 2017. Previously he served as North Carolina’s Attorney General. My sources tell me that he runs the Democrat party much the way a mafia don would, using threats to make sure no legislators break ranks in their voting. He also seems to have some problems controlling spending in some of the state agencies.

The Carolina Journal posted an article today citing some of Governor Cooper’s current challenges.

The article reports:

Consider, for example, the current cash crunch at North Carolina’s Department of Transportation. Secretary Jim Trogdon blames the problem on hundreds of millions of dollars of hurricane damage and payouts to property owners whose rights were violated by the state’s abusive Map Act.

While these costs are real, they don’t fully explain DOT’s overspending. An outside consultant’s report dinged the department for faulty forecasting and cash management. State Treasurer Dale Folwell cited the report’s findings as well as DOT’s transfer of $1.1 billion from the Highway Trust Fund to the Highway Fund without his legally required authorization as reasons why Cooper should replace Trogdon.

Rather than responding to these specific concerns, the governor’s press office put out a statement rejecting what it termed “a financial lecture from the nation’s least effective state Treasurer.” DOT’s money woes have complex origins and consequences, to be sure. But Trogdon’s defense neither required nor was advanced by such adolescent name-calling.

Much less money is at stake over at the Department of Military and Veterans Affairs, but its recent miscue inflicted more political damage.

The department handles a decades-old program called the N.C. State Scholarship for Children of War Veterans. The department sent out a letter informing colleges and universities that scholarship payments would be “delayed until further notice,” citing the budget impasse between Gov. Cooper and the General Assembly. But according to reporting by WBTV’s Nick Ochsner, there was neither a fiscal nor a legal reason to suspend payment. Whether this was simply an administrative screw-up or a purposeful attempt to pressure GOP lawmakers, it was incredibly foolish.

There are also some questions regarding Medicaid in the state:

Meanwhile, the Department of Health and Human Services is mired in its own controversy over awarding a Medicaid contract to a managed-care network led by Blue Cross Blue Shield of North Carolina instead of one led by Aetna. In its legal challenge to the decision, Aetna argues that one of the DHHS employees in charge of evaluating the bids was living with a key Blue Cross executive.

Furthermore, according to reporting by Carolina Journal’s Don Carrington, an internal document shows that Aetna’s bid originally ranked above the Blue Cross bid. A DHHS official then intervened to create a new criterion after the fact, which had the effect of displacing Aetna in favor of Blue Cross.

There are also charges that the Governor attempted to obstruct an investigation into some aspects of the Atlantic Coast Pipeline.

The article concludes:

Cooper and three of his aides have been asked to testify on the pipeline at a legislative hearing on November 8. Will the sober-minded former state senator and attorney general show up and provide a persuasive defense of his administration’s conduct? Or will North Carolinians be treated to another round of political hackery and juvenile tweets?

Lt. Governor Dan Forest will be running against Governor Cooper in 2020. Dan Forest definitely has my vote.

 

Trying To Get It Right

Dale Folwell is the State Treasurer of North Carolina. He was responsible for getting the state out of debt to the federal government unemployment benefits program (over the objections of many Democrats) and is now working to bring transparency to health benefits for state workers (again over the objections of Democrats and some Republicans).

The Carolina Journal reported on June 17th that Mr. Folwell is actually  making some progress.

The article reports:

With a deadline just 13 days away, Community Care Physician Network, North Carolina’s largest network of independent physician clinics, announced Monday, June 17, it signed on to the State Health Plan’s cost-cutting Clear Pricing Project.

Community Care Physician Network is associated with 2,500 primary care clinicians, pediatricians, family medicine physicians, obstetricians/gynecologists, psychiatrists, psychologists, nurse practitioners, and physician assistants. The group has more than 880 practices statewide. The network treats more than 2.5 million North Carolinians, including 700,000 Medicaid beneficiaries.

“Their physicians are leaders in our state in developing the highly regarded medical home model. They’re known nationwide for high quality care, patient satisfaction and by using their innovative, collaborative approach to drive down costs,” Folwell said in a news release announcing the move.

Folwell says health care costs must be reduced immediately. The State Health Plan is only 3% funded, has $35 billion in unfunded liabilities, and will become insolvent in 2023. The Treasurer’s Office projects taxpayers could save $258 million and plan members $57 million annually under the Clear Pricing Project. The changes take place in 2020. Providers have until June 30 to join the project.

“It made good sense to us,” Conrad Flick, Community Care Physician Network co-president, said of linking with the reconstructed plan. “We’re dedicated to our communities and our patients, and focused on providing them with better and more cost-effective health care.”

The article concludes:

The N.C. Healthcare Association, the lobbying arm of hospitals and large health systems, continues to oppose Folwell’s plan. The group pushed for passage of House Bill 184 to halt the reforms and launch a two-year study instead. The House passed the measure, but it has gotten no traction in the Senate.

Hospitals say the cost-cutting features of Folwell’s plan jeopardize the survival of rural hospitals. Folwell said most rural hospitals will be better off financially under the plan, and nine of 10 primary care physicians will get more money.

Montana is among a handful of states that use the reference-based pricing model for their state health plans. Officials there told Carolina Journalthe results are positive.

Dale Folwell is attempting to bring the same sort of fiscal sanity to healthcare in North Carolina that he brought to unemployment benefits. Let’s hope that he is successful.

Good Deeds Rarely Go Unpunished

In late February, H.R. 184 was introduced into the North Carolina House of Representatives. In early April, H.R. 184 made it to the North Carolina Senate where it was referred to the Committee On Rules and Operations of the Senate. There it sits. It’s a bad bill, catering to special interests, and need to die there.

So exactly what is H.R. 184? On April 4, 2019, Raynor James wrote an article describing the debate in the North Carolina House of Representatives over H.R. 184. In her article Raynor explained that H.R. 184 would tie the hands of State Treasurer Dale Folwell in dealing with the rapidly growing problems with the State Health Plan.

An article in The Daily Haymaker on March 26 explains some of what is going on:

Former state representative Dale Folwell (R) worked wonders in cleaning up the highly FUBAR-ed unemployment insurance system. You would think it would be a no-brainer to put him on fixing that money-bleeding nightmare known as the state health plan. (The plan made it to its current sorry state in no small part to the micro-managing mischief by legislators in both parties who saw it as their own personal piggy-bank and slush fund.)

So, along comes Dale Folwell trying to do exactly what the legislature empowered the state treasurer’s office to do years ago:  competently manage the state health plan.  Folwell decided taxpayers needed to understand exactly what  health care providers were billing the health plan FOR.

This did not sit well with the folks at the hospitals and clinics sending in those fat, vague, non-specific bills.  Armies of lobbyists were dispatched to spend dark money on ads smearing Folwell and his pricing transparency plan.  A lot of politician pockets were lined.  A bill got drafted (with a lot of lobbyist, um. “help”)  that tied Folwell’s hands on exactly what he could to in regard to the state health plan.

The bill, H184, got its first hearing in the House Health Committee today.  Conveniently, there was NO roll call vote on this expensive legislation — with a total cost over 3 years of $400 to 600 MILLION. 

The bill did get amended.  The time frame for the “study” on  changing the health plan was shortened. The state employees — who stand to be affected the most by this bill — got their representation on the “study committee” expanded from ONE to TWO.  (Isn’t that nice?)    And the whole package is still going to cost the taxpayers an additional $241 MILLION.

The article then explains the problem:

There was no real good reason to do this. It went against one of the alleged core principles of the majority party. The prime beneficiaries of the state health plan — the state employees — appear to be solidly behind what Folwell is doing. Taxpayers — seeking to avoid a $400-600 MILLION hit from doing NOTHING and “studying” the idea of reform — appear to be all for it.

But the deep-pocketed lobbyists who are so kind and compassionate to campaign accounts all over Jones Street were not happy and HAD to be mollified.

Some Republicans are fighting back. There was a Resolution at the North Carolina Third District Republican Convention today that backed Dale Folwell and his efforts to clean up the State Health Plan. The Resolution passed easily.

The Resolution included the following:

In 2008, expenses for the North Carolina State Health Plan were roughly $2.2 billion; today they are roughly $3.4 billion. Medical and pharmaceutical costs are increasing five to nine percent annually and current spending projections estimate that the plan will be insolvent by 2023 unless action is taken. The campaign to fix the state healthcare plan is opposed mainly by special interests–hospitals and those who profit by the inefficiency and inflated costs of medical care under the current system.

I was told that the bill would probably die in committee. I hope that happens. However, the fact that saving taxpayer money was opposed by special interest groups should not come as a shock to any of us. That fact underlines the need for citizens to stay aware of what our legislature is doing. North Carolina is in a strong position economically–it is a place where businesses relocate. If our State Health Plan is not brought under control, our taxes will increases to cover the cost of the program and we will be much less attractive to businesses looking for a place to be.

Bad Day at Black Rock

Below is a guest post by Raynor James, an eastern North Carolina resident who has followed the debate on North Carolina House Bill 184 very closely:

Tuesday, April 3rd was a sad day in the North Carolina House of Representatives.

Let me tell you about it. Dale Folwell is North Carolina’s Treasurer. He’s a very popular fellow for all the right reasons. He did a good job when he served in the North Carolina General Assembly. He got North Carolina’s unemployment insurance out of debt to the Federal Government when he served in Governor McCrory’s administration, an accomplishment that continues to save North Carolina’s employers significant sums annually. He’s known as a problem solver.

North Carolina’s State Health Plan (which pays for medical expenses of current and retired state employees) is seriously underfunded and is projected to be bankrupt by the year 2023.When Dale Folwell was elected Treasurer, many who voted for him expected him to solve the Plan’s problems as its administration was in the Treasurer’s portfolio.

Enter HB-184 which if implemented will tie the Treasurer’s hands and not allow corrective action to be taken while a committee studies the situation.

HB-184 was debated on the floor of the House April 3rd. Let’s look in on how some conservative House members tried to kill the bill.

First, Representative Michael Speciale offered two amendments to the bill. Representative Speciale’s first amendment would give the Treasurer a vote on the study committee and would make it impossible to expand the size of the committee (something that is sometimes done when the “powers that be”don’t like the direction a committee seems to be taking).

That amendment passed by a vote of 106 to 5.

Representative Speciale’s second amendment would remove Section 2 from the bill. Section 2 requires that Blue Cross-Blue Shield continue to be used during the study period.

It also prevents the Treasurer from switching the Plan to using referenced based pricing for medical services to the Plan during the study period.That amendment failed by a vote of 88 to 23.

During debate on HB-184 itself, Representative Larry Pittman cited a memo from the Plan’s Board of Trustees that projects that the plan will be out of money in 2023, and said that we can’t wait on a two year study. He talked about how hospital groups were groaning about how burdensome the Treasurer’s planed payment changes would be on them [tie pricing of medical services to 172% of the average Medicare pays for the same service], and pointed out how well funded many hospitals are. In support of his assertion, Representative Pittman mentioned that the hospital at East Carolina has given $10 million dollars to fund a stadium.

Representative Pittman asked that members not pass the bill and added that when Treasurer Folwell had requested info from the hospital groups, they had sent him the schedules he asked for with page after page blacked out. “They might as well have slapped him in the face and spit on him,” Representative Pittman said.

He continued by saying passage of the bill would hurt both members of the Plan and taxpayers who pay the freight and pointed out that members of the Plan are also taxpayers, so they get hit two ways.

He stated that Dale Folwell is “competent” and “honest” and renewed his request by saying, “Defeat this bill.” Representative Michael Speciale said, “We’re told that if we don’t pass this bill, the sky will fall; we’ll lose our rural hospitals.” He went on to say that they’d heard the same thing when he was trying to get rid of the CON [Certificate of Need] laws [which did not pass] and shortly thereafter they closed one of the hospitals in my district.”

“I hear fake news ads” [on the topic of rural hospitals closing if HB-184 doesn’t pass] when I drive in my district.”

Representative Speciale went on to say that Dale Folwell got the people together who are opposing him [mainly large hospital groups] and asked how much waste, fraud, and abuse there is in the system. The answers they give him ran from 12% to 25%, so he took a middle number and asked them to figure out how they could reduce costs by 15% and said that they needed to get together again as soon as that was done.

After that meeting, Treasurer Folwell tried to set follow up meetings, and time after time he was stonewalled.

Representative Speciale continued, “Now we’re faced with $33 to $36 billion dollars in unfunded liabilities. If we don’t allow him to cut costs, how are we going to cut costs because it’ll be on us!”

“Dale Folwell has increased what would be going into rural hospitals. He’s compromised, but they won’t budge an inch.If we do not pass this bill, then the hospital lobby will sit down and talk to him. Let the state Treasurer do what he was elected to do. Throw the politics aside and vote NO!

Representative Keith Kidwell said, “For the last 10 years, health care costs have gone up and up. We asked Treasurer Folwell to handle it. Let’s not bobble him,or we’ll be faced with taking $235 million to $509 million [dollars] from the general fund to deal with the problem AND $1.1 billion will be added to the unfunded liability.”

“HB-184 will cost us a ton of money!” “Cut through partisanship and look at the numbers! We HAVE to block this bill!’

In spite of those eloquent pleas and others, too, HB-184 passed 75 to 36, and it will now be sent to the North Carolina Senate where it is hoped that wiser voices will prevail.

If you’d like to hear the whole debate, you can go to the NC General Assembly website at which NC House sessions are archived.

Thank you, Raynor. This is a picture of what is going on in the North Carolina state legislature. President Eisenhower warned about the military-industrial complex. What we see here is the result of intense lobbying by the healthcare-industrial complex. We need to stop this bill.