The Palmetto Insider

Louisiana has become the first state with a Democrat-controlled legislature to pass the Freedom of Choice in Health Care Act. The law makes it the public policy of Louisiana, “consistent with our constitutionally recognized and inalienable right of liberty, that every person … is and shall be free from governmental intrusion in choosing or declining to choose any mode of securing health insurance coverage without penalty.” The law also prohibits the state from imposing a penalty on persons who choose not to purchase health insurance.

As reported by the Pelican Institute, however, the legislation was amended such that it should not be read to supersede the federal Patient Protection and Affordable Care Act of 2010. That said, the statute bolsters the state’s current lawsuit challenging the constitutionality of ObamaCare. Along with South Carolina, Louisiana is 1 of 20 states suing the federal government over the constitutionality of a new federal law requiring all Americans to purchase health insurance.  

In a recent poll, a majority of Louisiana voters gave George W. Bush higher marks (50 percent) for his handling of Hurricane Katrina than they did Obama’s response (35 percent) to the recent BP oil spill. These numbers may explain why even La. Democrats are wary of opposing voters who are also unhappy about federal health care legislation. 

Here in South Carolina, the state’s Republican-led legislature failed to pass similar legislation. Although lawmakers introduced a variety of measures aimed at protecting the right to purchase health care services, none of these received a vote on the floor of either chamber. (One joint resolution (H 4181) was read on the floor of the House and then contested, with the result that debate was repeatedly adjourned.)

Meanwhile, the law has passed in 4 states, including Georgia and Virginia.

To read more about this legislation, see the testimony the Policy Council provided to the Senate and House subcommittees in March:

Five Things You Need to Know About the S.C. Freedom of Choice in Health Care Act

VIDEO: Policy Council Senate Judiciary Subcommittee Testimony

As we predicted before session began, there was a fair chance the General Assembly would try to raise the cigarette tax this year. The House has already passed a 30-cent per pack tax increase via a budget proviso. (To read our review of the new House budget, click here.) The measure would theoretically expire after a year and need to be reauthorized in subsequent budgets.

Raising the stakes, the Senate passed on second reading a 50-cent per pack tax increase.

The increase is the cornerstone of a bill (3584) passed last year by the House as part of a half-hearted lurch toward free market health care reform. The House proposal would have offered subsidies to Medicaid clients to purchase health insurance on the free market. Instead of subsidies, we argued for deregulation. Still, injecting even subsidized market forces into Medicaid would have been better than nothing.

The House measure, however, stalled – primarily owing to objections by Senator John Land who strenuously argued we should give the revenue “all to Medicaid.” “It’s hard to argue against that,” added Land. Look at that again, “all to Medicaid.”

And that has been the story ever since. Abandoning any pretense of tying the cigarette tax increase to health care reform, the House proviso passed as part of the 2010 budget allocates the new tax revenue to a Medicaid Reserve Fund (oh, and also, agricultural marketing; and the General Reserve Fund; and the General Fund, too).

The refrain was picked up by The State as well, which asserted that without the tax increase Medicaid services could be cut. As we wrote last month, though, the real reason the cigarette tax was being increased was to subsidize the state’s ever-growing economic development commitments.

And so it has come to pass.  The Senate gutted the original House bill, and the new revenue will be used for:

• $5 million in annual funding to the Medical University of South Carolina for cancer research;

• $5 million in annual funding for a smoking prevention fund;

• More money for agricultural marketing (five hundredths of a cent of the surtax on each cigarette);

• And, wait for it … $3.5 million for the I-95 Corridor Authority.

Last of all, remaining revenue will be deposited into a Medicaid Reserve Fund.

For those of you who haven’t heard, the I-95 Corridor Authority would be charged with carrying “out economic development and educational improvement activities, which in the opinion of the authority, “will improve the economic conditions in its member counties.” Grants from the authority would be distributed to counties located within 30 miles of I-95 that have a population less than 40,000.

The new agency would be authorized to enter into whatever partnerships or contracts would further its ends, and could also acquire and purchase whatever property it might consider necessary.

As it turns out, Senator Land is cosponsoring the legislation that would create the I-95 Corridor Authority. Hear his passionate plea to use funding, that would otherwise go to Medicaid, for the I-95 economic development project.

As Land notes, though, farmers in his district fear the tax increase will cost them jobs – if not their very livelihoods.

And, indeed, it will. Economists estimate the tax hike will kill 4,100 jobs and reduce real disposable income for South Carolinians by more than $200 million.

Never mind that. Clearly, lawmakers believe their own economic development plans will produce more fruit than letting the free market work. In other words, they believe more taxes and more government intervention are a better strategy for attaining prosperity than is more freedom, more choices and more individual initiative.

To find out more about how well that’s working, click here.

Last week, the Senate Finance Sales and Income Taxation Subcommittee contemplated a comprehensive strike and insert amendment to H. 4478, the Economic Development Competitiveness Act. One change the amendment would make to the House version of the bill would be to delete the section that eliminates the corporate income tax. Sen. Chip Campsen spoke briefly to the subcommittee, notifying them that if they approve the bill as is (with the elimination of the corporate income tax), he will propose an amendment that gives small businesses tax relief as well. Sen. Campsen noted his concerns with the lack of parity between corporations and small businesses the elimination of the corporate income tax would create. Lawmakers voted to carry the bill over, giving them more time to review both the bill and the amendment.

The subcommittee plans to meet again on Tuesday at 1:30. By all accounts, the House proposal to eliminate the corporate income tax will continue to be a sticking point in the Senate. Of course, the worst case scenario is that H. 4478 passes without any broad based tax cut whatsoever. To learn more, read here.

Unless you’ve had your head in a ditch these past few days, you know by now that President Obama signed a sweeping health care bill. At a grand total of 2,700 pages – with amendments still being debated even after the bill has already passed.

But that does not mean the South Carolina legislature should simply sit on its hands and wait for the federal legislation to fall on our heads.

As the Policy Council detailed in testimony to the Senate Judiciary subcommittee yesterday and the House Constitutional Laws subcommittee today, the federal takeover of 1/6 of the U.S. economy is arguably unconstitutional.

Some states – like Virginia and Idaho – have already passed legislation that would protect the right to opt out of the federal law’s mandate requiring all Americans to purchase health insurance.

But, so the argument goes, won’t these people need health care at some point? And shouldn’t we thus require those who can afford it to buy health insurance and then subsidize coverage for everyone else? What about the uninsured?

The thing to remember here is that many people in America choose not to purchase health insurance, but are still able to afford to purchase discrete health care services on the free market.

According to economist Keith Hennessey, 10.1 million uninsured are members of families that have income of 300 percent of the federal poverty line or greater and so can afford to purchase health care on the free market.

Similarly, a study by former Congressional Budget Office director June O’Neill concluded that “43 percent of the uninsured have incomes higher than 250 percent of the poverty level ($55,125 for a family of four). And slightly more than a third have incomes in excess of $66,000.”

Those numbers are further corroborated by a study in Health Affairs that found 20 percent of the uninsured can afford coverage.

Several pieces of legislation currently before the S.C. General Assembly would protect those individuals and preserve their right to make a choice not to purchase insurance.

Congress would have you believe the new federal law is meant to help people who want insurance – shouldn’t we also try and help people who don’t want insurance?

We’ve already written on why the cigarette tax hike is a job killer. For those of you who didn’t catch that piece, the House budget (proviso 90.14) includes a 30-cent-per-pack tax increase that ostensibly will be used to recoup Medicaid operating deficits. After funding reaches 1.5 percent of Medicaid appropriations, however, “excess” revenue will be channeled into the General Reserve Fund, and then the General Fund.

As we wrote earlier: “It is misleading to suggest that cigarette taxes must be increased to help pay for Medicaid. If funding Medicaid were a priority, lawmakers would be cutting non-essential programs first, instead of eyeing a cigarette tax increase.” Three days later, The State published a predictable article long on impassioned pleas for more Medicaid funding and short on the big picture that state spending is out of control.

But even if we believed that raising the cigarette tax was about paying for Medicaid, last week’s news that South Carolina will likely receive a $200 million federal bailout should put even that claim to rest. Consider The State reporter John O’Connor’s lead: “The S.C. House will not have to tighten the belt on state spending quite so much when legislators begin debating the budget next week.” The article does not mention the cigarette tax, but notes that the federal funds will be used to assist the disabled, poor children and Medicaid patients. Apparently the cigarette tax is still necessary – to fund even more Medicaid services it seems.

Alternatively, we could cut spending. Not for the poor and the needy (and the children) but how about for Boeing, the Sembler Company and every other multimillion dollar corporation in line for a taxpayer funded subsidy or tax break? Or, how about cutting that $15 million from the budget (proviso 89.112) that the House plans to use “to provide more flight options, more competition for air travel, and more affordable air fares.” In other words, more taxpayer funded economic development – this time for the airline industry.

The question is really one of priorities. But legislators refuse to prioritize. And so taxpayers continue to be asked for pay for everything from retail malls to airline tickets to an ever more bloated Medicaid program that has long been out of control.

When is enough enough?

If you’re anything like me, you’re at the point where you wish the federal health care “debate” would just go away for a while. First things first, though: there is no real debate and there hasn’t been for a long time, if ever – only a power play by desperate congressional leaders and their president.

If there had been a real debate on health care, we would have heard how free market reforms could lower the price of health care for everyone.

The single most important reform South Carolina could enact would be lifting insurance coverage mandates and allowing the purchase of out-of-state policies. We have written about that in detail in our Best & Worst legislative guide.

Unfortunately, the S.C. General Assembly seems intent on expanding, rather than lifting, coverage mandates.

But what about Governor Sanford? The governor has consistently advocated free market health care reform, especially in relation to Medicaid.

And if federal health care legislation has all but made state-based Medicaid reform impossible for now, the governor could take a cue from his neighbor to the south – Gov. Sonny Perdue of Georgia.

Georgia Public Policy Foundation Senior Fellow Ronald Bachman commends Perdue for taking the lead in trying to create a voluntary multi-state market for health insurance consumers.

Writes Bachman:

The cross-state concept has been accepted by Republicans and Democrats as a good starting point for national bipartisan reform. Studies have shown that up to 12 million Americans would become insured with effective national legislation for cross-state selling. While Congress debates, however, Governor Perdue innovates.  His push for free-market insurance reform is embodied in bills making their way through Georgia’s House and Senate. The slight differences will likely be ironed out when the two bills are merged.

Georgia’s legislation has two major components. First, it promotes a unilateral acceptance of comprehensive individual health policies from other states. As a show of good faith, Georgia would accept individual health policies approved in other selected states without the requirement that they accept policies approved here. There are, of course, minimum standards and consumer protections governing the acceptance of such policies.

Second, the real power and value of the cross-state selling concept is to establish a coalition of states with a combined large consumer base that will encourage insurers to develop and bring new, low-cost and affordable plans to Georgia. Currently, the 50 state-specific state filing processes take insurers years and millions of dollars in development costs, administrative mandates, filing requirements and fees.

Clearly, South Carolina could further Georgia’s efforts by also recognizing health policies approved in that state. Whether this could be done by executive order alone is unlikely, but the governor could at least become part of the dialogue by working with the Legislature and the Department of Insurance to replicate the reforms being pursued in Georgia.

For the third time in as many years, the General Assembly is attempting to push through a cigarette tax increase. As related by a new fact sheet from the Policy Council, here are five things you need to know about this tax increase:

This is a Tax Increase

Lawmakers don’t really want to highlight that fact, but that’s what it is. Similar proposals has been referred to as “health care user fees.” Also, under the current proviso, should the funds going to the Medicaid Reserve Fund reach a certain level, remaining revenue will go to the General Reserve Fund, and then General Fund expenditures.

The Cigarette Tax is a Job Killer

Last session, the Policy Council demonstrated that raising the cigarette tax by 50 cents would cost 4,100 jobs. Increasing the cigarette tax will also reduce income for mom-and-pop retailers and others.

The Cigarette Tax is Unfair

A tax increase is not a good strategy for making smokers subsidize their own public health care costs. A better solution is to provide incentives for smokers to quit Another option is to require smokers who are on Medicaid to contribute to the additional cost of their coverage, as opposed to passing a tax increase that brings about job and investment losses.

Spending is Already Too High

This is more of the same for South Carolina. Rather than making government smaller and leaner—and in spite of budget cuts caused by the recession—tax and spend remains the most creative policy lawmakers can come up with. Spending remains high for core services, such as education, and also for dubious spending like economic development.

The Cigarette Tax is an Unreliable Revenue Source

Given that increasing the cigarette tax is going to destroy jobs and private investment, increased revenue from the tax will likely be exaggerated. In particular, increasing South Carolina’s cigarette tax will lead to reduced sales, especially for retailers in border counties.

Read the full Policy Council report on the proposed cigarette tax increase.

Hmmm. … Let’s connect the dots.

In 2006, Massachusetts passes massive health care legislation that forces every resident to purchase insurance and also creates public option plan.

Results:

Billion-dollar overruns.

Long waiting periods to see a specialist: “Long wait times in Boston may be driven in part by the healthcare reform initiative that was put in place in Massachusetts in 2006.”

A shortage of primary care physicians.

And very mixed results on access and quality of care.

Not to mention, massive tax increases for middle-class families.

In 2010, Massachusetts voters elect Scott Brown, who campaigned as the 41^st Senate vote that would block ObamaCare.

RomneyCare = ObamaCare = (Tax Increases + Decline in Quality of Care) = Voter Anger

As for real reform, voters in Massachusetts did not so much vote for free-market heath care reform as against the status quo government-run system.

But given that we’ve tried government-run health care, and it’s failed, it’s time to try the free-market alternative.

This is a lesson many American families are beginning to learn. For more on that, see David Goldhill’s profound article in the Atlantic Monthly, “How American Health Care Killed My Father.”

As Congress debates a sweeping health care bill, some South Carolinians aren’t waiting for the silver bullet fix from Washington.

If more people addressed these issues at a local level, perhaps we could solve parts of the health care problem without a 2,000 + page bill.



From what the leadership of the U.S. Senate is saying we are supposed to believe new healthcare legislation will be a bargain. Argues Sen. Max Baucus (D-Mont.), the bill represents a “commonsense, balanced solution.”

While the Congressional Budget Office (CBO) estimates the bill before the Senate will cost $829 billion, other experts have shown that the CBO score is highly suspect and likely grossly underestimates the true costs, which could be as high as $6 trillion.

And just how will these bills be paid? Unfortunately, according to a recent op-ed by the Georgia Public Policy Foundation, a redistribution of wealth will pay the tab. The four methods detailed are:

1) Lower government funding for Medicare
2) Add taxes and fees on private insurance and medical supplies
3) Implement price controls on premiums
4) Mandate costly coverage

The result is an increase in premiums and perverse incentives for individuals – and still leaving at least 25 million uninsured by the year 2019.

[A PricewaterhouseCoopers study] expects that by 2019, small group premiums would increase by an additional $2,100[8] for single coverage and $5,400[9] for family coverage.  Eight in 10 uninsured individuals work mainly in small businesses; hiking premium costs for individual and small group plans will only increase the number of uninsureds. It is no wonder that the CBO estimates that by 2019, there will still be 25 million uninsured individuals.[10]

Healthy Americans would be disadvantaged for their efforts at prevention, early intervention, wellness, and improved eating and exercise habits. The H.E.L.P. Committee proposal would make it illegal for insurers and employers to reward and incentivize good healthy habits to control blood pressure and cholesterol.  Responsible citizens would pay for the lack of personal responsibility in others.