How the Gruber Model Failed in Colorado

March 10, 2015 by Linda Gorman · Comments Off
Filed under: Issue Backgrounder, Publications 

IB-A-2015 (Feb 2015)
Author: Linda Gorman

PDF of full Issue Backgrounder

Executive Summary:
MIT professor Jonathan Gruber made millions predicting the effect of Obamacare. Given that people who make unkind remarks can do good work, it is important to assess how well the Gruber predictive model has performed. In Colorado, its poor predictions will likely end up costing taxpayers billions of dollars.

Numbers cast doubt on Hickenlooper’s teen pregnancy claims

July 29, 2014 by Linda Gorman · Comments Off
Filed under: Op-Eds, Publications 

Has Colorado really had more success in preventing “teen” pregnancies than other states? Gov. John Hickenlooper said yes in a news conference convened within days of the U.S. Supreme Court’s recent Hobby Lobby decision. But the numbers cast serious doubt on his story.

According to the Denver Post, the governor said that the Colorado Family Planning Initiative led to a 40 percent drop in teen births over the past five years. Funded by a private, anonymous donor, the initiative provides IUDs and implants in 68 family planning clinics.

The article quoted officials who said that the birth rate for Colorado women 15 to 19 years old fell from 27 births per 1,000 in 2009 to 22 per thousand in 2013. To government health care programs, babies are a cost. So the reduced birth rates were said to have prevented $42.5 million in health care expenditures.

While it seems logical to associate a reduction in births with a new program for providing access to contraceptives, the Youth Risk Behavior Survey suggests that U.S. adolescents’ contraceptive use was unchanged from 2007 to 2013. The data also show that birth rates for 15, 16, and 17 year olds declined by 63 percent between 1991 and 2012.

According to the Centers for Disease Control, Colorado experienced a 31 percent drop in teen birth rates from 2007 to 2011. Colorado’s downward trend is similar to declines in Idaho, Florida, and Minnesota, but lower than the 35 percent decline in Arizona and Utah.

For the sake of argument, let’s assume that reducing births by 15-19 year olds is a reasonable policy goal, even though in 2012 the National Vital Statistics Reports attributed about 10 percent of 18 year old births, and 16 percent of 19 year old births, to married women. As a whole, 18 and 19 year olds account for about three-fourths of total “teen” births.

And let’s assume that having the state fund programs with money from private anonymous donors is perfectly fine public policy, even though it invites corruption by providing a channel through which rich, well-connected people can buy the public policies they want.

State programs to increase contraceptive use are presumably aimed at the relatively small fraction of sexually active “teens” who do not use contraceptives. Estimates suggest this group makes up about 13 percent of sexually active 15 to 19 year olds. Not all teens are sexually active. About half of high school students reported having sex in the 2013 Youth Risk Behavior Surveillance Summary, a fraction that is lower than the 54 percent reported in 1991.

As one would expect, the 13 percent of sexually active teens who do not use contraceptives accounts for about half of unintended teen births, according to 2004-2008 estimates from Pregnancy Risk Assessment Monitoring System.

Contrary to what state officials implied, “access” to contraceptives does not appear to be a widespread problem in the group that declined to use them. About 1 in 7 of the people surveyed in the sexually active non-using group said they had trouble getting birth control. If accurate, this suggests that in a group of 100 sexually active people aged 15 to 19 fewer than 2 reported that contraceptives access was a problem.

Taking them at their word, roughly 7 percent of unintended “teen” births were potentially due to a lack of contraceptives. However, in the same survey over a fifth of those who did not use contraceptives, and who said that they had an unintended birth, also said that they “did not mind” getting pregnant.

Perhaps the teen contraceptive access problem was particularly acute in Colorado and was solved by Hickenlooper’s secret donor. But it is also possible that access to contraceptives is almost universal for this group, that state programs have reached a point of diminishing returns and that the drop in teen births has more to do with a long-term change in public attitudes than a privately funded program run through a compliant executive branch.

Linda Gorman is director of the Health Care Policy Center at the Independence Institute, a free market think tank in Denver.

The Colorado health exchange costs federal taxpayers $1,427 per enrollee

June 3, 2014 by Linda Gorman · Comments Off
Filed under: Op-Eds, Publications 

A May 2014, report from the law firm Mehri & Skalet estimates that the Colorado health exchange is costing federal taxpayers $1,427 per enrollee. That was before its director, Patty Fontneau, got the $14,000 bonus, and a 2.5 percent salary bump that raised her salary to $195,314 a year and sweetened an already generous retirement plan. Only exchange directors in California and Connecticut make more.

In California, the exchange cost is $758 per person. In New York it is $1,158 per person. In Washington, it is $1,630 per person, in Connecticut it is $2,077 per person.

On average, it has been more expensive for states to run state exchanges than to join the federal exchange, something that critics of the Colorado effort warned would be the case. The average cost per enrollee in all of the states that use the federal exchange is an estimated $922 per enrollee. All of the states with the lowest cost per enrollee are in the federal exchange. In Florida, the average cost per enrollee is $76, in Texas it is $102, and in Georgia it is $240. The average cost per enrollee for the state do-it-yourself projects is $1,503.

So far, the federal government has spent $7.394 billion building health exchanges to deliver subsidies for the purchase of its poorly designed coverage products. By 2019, the Congressional Budget Office estimates that federal exchange premium, cost-sharing, and insurer risk corridor subsidies will cost $127 billion a year, $6,240 per person enrolled. This does not include the amount that the states will collect in order to run the state exchanges.

Recall that public support for the Obamacare health exchanges was whipped up by people complaining that the US system was broken because people were getting health care without paying for it and those costs were unfairly added to private insurance premiums. In 2009, researchers at the Urban Institute estimated that the cost of uncompensated care was $63 billion a year. They warned that unless Obamacare passed, annual uncompensated care costs would inflate to at least $107 billion, possibly going as high as $141 billion, by 2019.

Instead the Democrats passed Obamacare. It is working so well that $127 billion a year will be added to tax bills to cure a problem that the private sector was handling for $63 billion.

Linda Gorman directs the Health Care Policy Center at the Independence Institute, a free market think tank in Denver.

Colorado’s Obamacare exchange deserves an audit

April 2, 2014 by admin · Comments Off
Filed under: Op-Eds, Publications 

By Joshua Sharf

Imagine you own stock in a company that consistently failed to meet sales targets, yet the CEO asked for a raise. Imagine that a director had been indicted for embezzlement from a previous employer; an ad campaign had been launched that verged on the pornographic in order to achieve its desired customer mix; and that this company had just spent $46,000 on sunscreen.

Unfortunately, Colorado taxpayers don’t have to imagine. This description of the troubles surrounding the state’s Obamacare exchange demands an audit that Democrats in the state Senate have refused to approve, and a closer investigation into how our money has been spent.

If the board of such a company said they had decided against an audit that year, because management said they were already in compliance with the mandated oversight, as a stock-owner you probably would be outraged.

Probably the only thing that would make you madder would be to learn that management had spent $575 an hour on an attorney, even though they had access to in-house counsel, whose job it was to inform the board that they had no authority to order an audit in the first place. But that also is exactly what happened at Connect for Health Colorado.

Like it or not, your tax money is invested in CFHC, the state’s government-run health exchange designed to implement Obamacare.

On March 26, the Senate Health and Human Services Committee Democrats rejected a bill to audit the Obamacare exchange. Every one of the misfortunes and miscues spelled out above had happened before that 4-3 party-line vote. Indeed, the committee voted the bill down after the House of Representatives had passed the identical bill 60-1, the lone Democratic holdout being Rep. Sue Schafer of Jefferson County.

The reason for the audit was clear, at least to the House. CFHC failed to reach its “sustainable” target by 13 percent, enrolling fewer than 120,000 in private insurance. Despite the obvious shortcoming, CEO Patty Fontneau last year asked for a 3 percent raise on her already-generous $190,000 salary.

In an effort to make up the difference, CFHC paid for advertising targeted at younger uninsured Coloradans. Included were the notorious “Brosurance” and “Hosurance” ads, as well as scantily clad models encouraging visitors to Denver’s 16th Street Mall to “GetCovered.”

The Senate committee heard no testimony. However, when the House Health, Insurance, and Environment Committee met to consider the measure, they heard from attorney Marc Grueskin, retained by CFHC to explain why the Legislative Audit Committee had no authority to audit the state-funded entity. Grueskin has long been a legal advocate for Democratic and progressive causes in Colorado.

While some of CFHC’s problems have been covered sporadically in the press, an actual audit with an actual governmental report could prove embarrassing to those Democrats who have wholeheartedly supported the state’s implementation of the increasingly unpopular Obamacare.

The majority party certainly would like to avoid a repeat of the debacle of the audit of the Governor’s Energy Office. In January 2013, it was discovered that the office couldn’t account for over a quarter of a billion dollars.

Republicans produced measures to fund an additional eight hours of research time for the audit, and to suspend funding for the energy office until the question of how the office’s $252 million had been spent from 2007 to 2012. Democrats defeated both measures, but the whole incident has served to tarnish the reputation of “Green” energy and to direct attention to the government subsidies that it uses to survive.

With the unpopularity of Obamacare now approaching Nixonian levels, the law has become an albatross around many Democratic politicians. So it’s little surprise some legislative Democrats wish to prevent an audit.

Colorado citizens and taxpayers, though, deserve better.

This originally appeared in the Greeley Tribune, April 2, 2014.

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