In 2017 my Website was migrated to
the clouds and reduced in size.
Hence some links below are broken.
One thing to try if a “www” link is broken is to substitute “faculty” for “www”
For example a broken link
http://www.trinity.edu/rjensen/Pictures.htm
can be changed to corrected link
http://faculty.trinity.edu/rjensen/Pictures.htm
However in some cases files had to be removed to reduce the size of my Website
Contact me atrjensen@trinity.eduif
you really need to file that is missing
From Our World in Data
Financing Health Care ---
https://ourworldindata.org/financing-healthcare/
Lots of interesting comparisons here
Added considerations should be that having insurance with enormous deductibles
is like having no insurance for people who cannot afford thousands of dollars in
deductibles before the insurance kicks in,"
Added considerations include having insurance that the major providers
(hospitals and doctors) refuse to accept is like having no insurance.
Some of Chicago’s largest hospitals said they will not be part of any Cook
County Affordable Care Act marketplace plans in 2017.
University of Chicago Medical Center and Rush University Medical Center both
said they don’t plan to be in network for any Obamacare marketplace plans
next year.
The change means patients with doctors at those hospitals will either need
to find a plan off the marketplace, and lose Obamacare subsides, or find a
new doctor.
Northwestern Memorial Hospital said it will also be out of the marketplace,
but will have exceptions for some of its partner hospitals.
Continued in article
According to emergency room physicians Obamacare made it much worse for
emergency rooms.
American College of Emergency Room Physicians The Uninsured: Access to Medical Care Fact Sheet ---
http://newsroom.acep.org/fact_sheets?item=30032
The Congressional Budget Office is out with
its analysis of the House Republicans’ ObamaCare replacement, the American
Health Care Act (AHCA). The CBO’s report includes an implicit but powerful
indictment of Medicaid, America’s second-largest health care entitlement.
Medicaid has been around since 1965; it was
a core part of LBJ’s Great Society entitlement expansion. The program’s
idiosyncratic design requires states to chip in around 40% of the program’s
funding, while only getting to control about 5% of how the program is run.
The federal Medicaid law—Title XIX of the Social Security Act—mandates a
laundry list of benefits that states must provide through Medicaid, and bars
states from charging premiums. Copays and deductibles cannot exceed a token
amount.
Medicaid is the largest or
second-largest line item in nearly every state budget. But for all practical
purposes, the main tool states have to control costs is to pay doctors and
hospitals less than private insurers pay for the same care. As a result,
fewer doctors accept Medicaid patients, making it very hard for Medicaid
enrollees to get access to care when they need it. Poor access, in turn,
means that Medicaid enrollees—remarkably—have no better health outcomes than
those with no insurance at all.
That brings us back to the AHCA. According
to the CBO, able-bodied adults on Medicaid receive about $6,000 a year in
government health-insurance benefits. They pay no premiums and minimal
copays. You’d think that eligible individuals would need no prodding to sign
up for such a benefit.
And yet, according to its analysis of the
GOP ObamaCare replacement, the CBO believes that there are five million
Americans who wouldn’t sign up for Medicaid if it weren’t for ObamaCare’s
individual mandate. You read that right: Five million people need the threat
of a $695 fine to sign up for a free program that offers them $6,000 worth
of subsidized health insurance. That’s more than 1 in 5 of the 24 million
people the CBO (dubiously) claims would end up uninsured if the AHCA
supplanted ObamaCare.
On its face, there’s reason to doubt the
CBO’s view. The mandate is enforced through the income-tax system, and
enforcement of the mandate has been spotty for those in low tax brackets.
Many of those eligible for Medicaid don’t work or file returns. Under rules
established by the Obama administration, those who do can leave the “I have
insurance” box blank and face no penalty.
Still, it’s remarkable that the CBO believes
people need to be fined into signing up for Medicaid. That tells us
something about the CBO’s assessment of Medicaid’s value to those
individuals—and it buttresses the GOP’s case that Medicaid needs substantial
reform.
Not coincidentally, the AHCA represents the
most significant Medicaid reform since 1965, and thereby the most
significant entitlement reform in American history. The 1996 welfare reform
law is hailed by many conservatives as the most important domestic policy
achievement of the past 25 years. Fiscally speaking, the AHCA is 10 times as
significant.
The AHCA would put Medicaid on a budget,
increasing Medicaid spending per beneficiary at the same rate as the medical
component of the Consumer Price Index. This isn’t a far-right concept;
President Clinton first proposed reforming Medicaid this way in 1995, as an
alternative to the GOP idea of block grants. The 1996 law ended up including
neither provision.
Combined with administrative reforms that
may come from the Department of Health and Human Services, the bill would
give states more flexibility to manage Medicaid’s costs in ways that could
increase access to doctors and other providers, while reducing Medicaid
spending by hundreds of billions in its first decade and trillions
thereafter.
Ultimately, Medicaid for able-bodied
low-income adults should be merged into the system of tax credits that the
AHCA proposes for those above the poverty line. In that way, all Americans,
rich and poor, would have the ability to choose the health coverage and care
that reflects their needs, and build nest eggs in health savings accounts
that could be passed on to their heirs.
Obamacare ---
http://en.wikipedia.org/wiki/Obamacare#Term_.22Obamacare.22
Although President Obama never proposed using that term, eventually he said is
was an honor for him to assi8ate his name with this legislation that he promoted
to be the crowning achievement of his Presidency. "President
Obama endorsed the nickname, saying, "I have no problem with people saying Obama
cares. I do care."
First of all, it’s called the ‘Affordable Care Act"
House Minority Leader Nancy Pelosi more unhappy with the
use of the word "Obamacare in 2014.
Chuck Schumer upbraided his
own party Tuesday for pushing the Affordable Care Act through Congress in
2010.
While Schumer emphasized
during a speech at the National Press Club that he supports the law and that
its policies "are and will continue to be positive changes," he argued that
the Democrats acted wrongly in using their new mandate after the 2008
election to focus on the issue rather than the economy at the height of a
terrible recession.
"After passing the stimulus,
Democrats should have continued to propose middle-class-oriented programs
and built on the partial success of the stimulus, but unfortunately
Democrats blew the opportunity the American people gave them," Schumer said.
"We took their mandate and put all of our focus on the wrong problem—health
care reform."
The third-ranking Senate
Democrat noted that just about 5 percent of registered voters in the United
States lacked health insurance before the implementation of the law, arguing
that to focus on a problem affecting such "a small percentage of the
electoral made no political sense."
The larger problem,
affecting most Americans, he said, was a poor economy resulting from the
recession. "When Democrats focused on health care, the average middle-class
person thought, 'The Democrats aren't paying enough attention to me,' "
Schumer said.
Despite the enduring
unpopularity of Obamacare, Congressional Democrats have up to now stood by
their health care law, allowing that “it’s not perfect” but that they are
proud of their votes to pass it. That all changed on Tuesday, when the
Senate’s third-highest-ranking Democrat—New York’s Chuck Schumer—declared
that “we took [the public’s] mandate and put all our focus on the wrong
problem—health care reform…When Democrats focused on health care, the
average middle-class person thought, ‘The Democrats aren’t paying enough
attention to me.’”
Sen. Schumer
made his
remarks at the National Press Club in Washington.
“Democrats blew the opportunity the American people gave them…Now, the
plight of uninsured Americans and the hardships caused by unfair insurance
company practices certainly needed to be addressed,” Schumer maintained.
“But it wasn’t the change we were hired to make. Americans were crying out
for the end to the recession, for better wages and more jobs—not changes in
health care.”
“This makes sense,” Schumer
continued, “considering 85 percent of all Americans got their health care
from either the government, Medicare, Medicaid, or their employer. And if
health care costs were going up, it really did not affect them. The
Affordable Care Act was aimed at the 36 million Americans who were not
covered. It has been reported that only a third of the uninsured are even
registered to vote…it made no political sense.”
The response from Obama
Democrats was swift. Many, like Obama speechwriters Jon Lovett and Jon
Favreau and NSC spokesman Tommy Vietor, took to Twitter. “Shorter Chuck
Schumer,” said Vietor, “I wish Obama cared more about helping Democrats than
sick people.”
Jensen Comment
So what's wrong with the ACA?
Firstly it expanded the piñata for fraud --- Medicaid. Half the people on
Medicaid in Illinois were found not to be eligible for Medicaid. It's bad
in most other states that just are paying for audits while the Federal
government is paying the tab.
Secondly it's a windfall for ACA insurance
companies since the Federal government guarantees their profits and promises
taxpayer money if they begin to fail. In capitalism, business firms are supposed
to take on financial risks.
Thirdly, the affordable policies have
40%-60% co-pays that essentially prevents insured people from going to doctors,
medical clinics, and hospitals unless they are really, really sick because of
what it costs them up front. Insurance companies love that, because they are
selling insurance that people don't use as much as they should be using that
insurance.
Fourthly, insurance companies love the ACA
because paying for medical services and medications for people behind on the
payments of their ACA premiums are passed on to doctors and hospitals after 30
days. Is it any surprise that so many doctors and hospitals are refusing to
accepted patients with ACA insurance?
And the list of complaints against the ACS
goes on and on --- See below
I'm in favor of nationalized health
care. Between 2008 and 2010 the Democrats had substantial majorities in the
House and Senate and an enormously popular President Obama could've legislated
nationalized health care without any help from a single Republican. Instead the
Democrats blew it and gave birth to an abomination that is yet another
unfunded entitlement nail in the coffin of the United States.
But every system has rationing in some form or another. Rich Canadians
unwilling to wait many months for treatments pay cash in the USA for immediate
health care. Rich Swedes go elsewhere as well, often to Switzerland or the USA.
I also like Germany's combination of public and private health insurance
system for a number of reasons, including the fact that it like the health plans
of most other nations is a pay-as-you go plan.
Health Insurance in Germany ---
http://www.toytowngermany.com/wiki/Health_insurance
Don't confuse wanting a government-managed health care system like the one in
Germany with the private insurance company rip off in the ACA in the USA where
insurance companies have guaranteed profits while shifting the bad debts to the
doctors and hospitals.
To add pain to misery these ACA insurance companies are offering over-priced
policies with enormous deductibles that discourage patients from having medial
treatments except in emergencies.
Hopefully, President Hillary Clinton will have the courage to reduce
for-profit insurance companies to offer only supplemental elective plans like
they do in Germany and for Medicare in the USA.
I vote for the German system that operates a lot like Medicare for all ages
of citizens but with better fraud controls. I used to lean toward the Canadian
system, but it's elective medical procedure delays for new hips, knees, and
shoulders forces too many Canadians to pay cash for such procedures in the USA.
when they grow weary of waiting out Canadian health plan approval.
What bothers me the most are the blatant lies
our leaders broadcast to voters just to get a health care bill passed. I would
be much less critical if they had flat out been honest about what they really
intend for this legislation to cost. One example of a political lie is that
Cadillac insurance plans will be taxed. The unions didn't object very loudly
because they know full well that by 2018 when the tax is supposed to commence,
Congress will have repealed all or most of the Cadillac tax. The same is
true with many other provisions of the legislation that can be altered at
taxpayer expense. Also our leaders promised that nearly a half trillion dollars
will be saved by reducing third party payments to physicians. But those
projections are easily altered if physicians truly demand higher reimbursements.
I just wish that Congress had passed a pay-as-you-go tax as part of this
legislation, where people at all levels of income and wealth pay their fair
share of the health benefits they receive. Middle class America should foot
their own bills for health care through substantial tax increases on the middle
class.
Jensen Comment
One reason higher education costs more in the USA is that more
attempts are made to bring college education to everybody with
nearby physical campuses such as community colleges and online
degree programs from major universities. In Europe and most other
parts of the world higher education is available only to a much
smaller portion of the population. In Germany, for example, less
than 25% of young graduates are admitted to college and
opportunities for adult college education are much more limited than
in the USA. Those other nations, however, often offer greater
opportunities for learning a trade that does not require a college
education.
There are many reasons health care costs more in the USA. One reason
is that the USA is the world leader in medical and medication
research. Another reason is that the USA imposes a costly private
sector insurance intermediary where other nations offer insurance
from a more efficient public sector.
Still another reason is that malpractice lawsuits are a legal
punitive damages lottery in most parts of the USA such that
hospitals and physicians must pay ten or more times as much for
malpractice insurance relative to nations like Canada that restrict
malpractice to actual damages only, leaving out the lottery for
lawyers.
Still another reason is that the USA keeps extremely premature
babies alive that other nations throw away. Even more expense if
what Medicare spends on keeping people hopelessly and artificially
alive, dying people that other nations let slip away without all the
very costly artificial life extensions.
On November 22, 2009 CBS Sixty Minutes aired a video featuring
experts (including physicians) explaining how the single largest
drain on the Medicare insurance fund is keeping dying people
hopelessly alive who could otherwise be allowed to die quicker and
painlessly without artificially prolonging life on ICU machines.
"The Cost of Dying,"CBS Sixty Minutes Video, November
22, 2009 ---
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
The Australian Health Care System Sounds a Whole Lot like the German
System of a Choice Between a National Health Care Plan or a Private Insurance
Plan
Obviously the private plans would not survive unless there was value added when
paying for private insurance
Jensen Comment
Since Australia has slightly over 30 million people with relatively few medical
schools compared the USA with over 320 million people and many more medical
schools, one has to question whether Australia can provide the highly
specialized services (think neonatal care) available in the USA and India and
other nations having many more medical schools for research and clinical
service. For example, medical schools in the USA do a lion's share of the
clinical testing of new drugs and devices for big pharmaceutical companies.
Canadian Malpractice Insurance Takes Profit
Out Of Coverage," by Jane Akre, Injury
Board, July 28, 2009 ---
Click Here
TheSt.
Petersburg Timestakes
a look at the cost of insurance in Canada for health care providers.
A neurosurgeon in Miami pays about
$237,000 for medical malpractice insurance. The same professional in
Toronto pays about $29,200, reports Susan Taylor Martin.
A Canadian orthopedic surgeon pays just
over $10,000 for coverage that costs a Miami physician $140,000. An
obstetrician in Canada pays $36,353 for insurance, while a Tampa Bay
obstetrician pays $98,000 for medical malpractice insurance.
National health systems, including the Australian system, avoid much of the
useless cost of keeping terminal patients hopelessly alive in near vegetative
states.
On November 22, 2009 CBS Sixty Minutes aired a video featuring experts
(including physicians) explaining how the single largest drain on the Medicare
insurance fund is keeping dying people hopelessly alive who could otherwise be
allowed to die quicker and painlessly without artificially prolonging life on
ICU machines.
"The
Cost of Dying,"CBS
Sixty Minutes Video, November 22, 2009 ---
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
As I read it its much more common to withhold life-sustaining treatments for
terminally ill patients in Australia.
For years I've been a
proponent of a national healthcare plan supplemented with discretionary private
insurance much like the system in Germany. Some other national healthcare plans
are falling apart ---
http://faculty.trinity.edu/rjensen/Health.htm
Back
home, though, Canadians seem far more critical of the system. If you follow
the internal Canadian debate, you’ll hear the
word “crisis.” In fact, many Canadian healthcare economists warn that their
system is headed for a major collapse. The aging population has continued to
stress an already fragile system. This is the same system that many
proponents of the Affordable Care Act, or Obamacare, pointed to as a model.
Another model of national health care cited by fans of the ACA is the UK’s
National Health Service (NHS). Like the Canadian system, there seems to be
one attitude for export and another for domestic consumption. You may recall
the odd tribute to the UK’s National Health Service (NHS) in the opening
ceremony of the 2012 Olympics. The NHS was portrayed as a sea of Mary
Poppins bliss. At home, though, Brits had reason to complain. The UK was
rated as having the worst patient care and lowest cancer survival rates in
the Western World.
The
NHS is in even worse shape now, and complaints are growing louder.
According to the committee that represents UK hospitals, the
NHS is on the verge of collapse. The former health minister Paul Burstow warned of this outcome two years ago.
At the time, increases in the NIH budget were limited to the rate of
inflation. But that did not allow for the increased cost of a growing
elderly population. The NIH effort to find £30 billion in “efficiency
savings” was already putting enormous strains on the system.
So it shouldn’t be surprising that the Affordable Care Act, which was
inspired by the Canadian and British systems, is in deep trouble.
Though I predicted it, it is worrisome when the act’s biggest supporters,
including The New York Times,
admit the program’s flaws.
The growing aged population is a huge financial burden
Obamacare doesn’t deal with the real source of rising healthcare costs: the
increase in age-related diseases due to a growing elderly population. It is
mathematically impossible to cut societal medical costs while at the same
time providing adequate healthcare to a growing and increasingly expensive
older population.
This is not just a problem with health care. Social Security and pension
funds are running deficits, which will also worsen. Alan Greenspan, former
chairman of the Federal Reserve, recently said that he has lost the optimism
that he has long been known for. The reason
is that “we have a 9 percent annual rate of increase in entitlements, which
is mandated by law. It has got nothing to do with the economy. It has got
to do with age and health and the like.”
Greenspan points out that politicians refuse to deal with the “third rail”
of entitlements. I agree, but I think there’s a solution. Politicians claim
that voters won’t accept delayed retirement. But the evidence shows that
most people would like to work longer and save more to pay their own way.
Zoya Financial reports that almost two thirds of Americans have to retire
earlier than planned, largely due to problems with their own health or a
spouse’s.
Anti-aging biotechnologies are in labs right now that could lengthen health
spans and working careers. This would allow us to save our entitlement
systems. But economists and politicians still have no clue about the
biotechnological progress that has marked the start of the 21st
century. This will change because it must… but I hope it happens soon
Like health-care systems around the world, the National Health Service (NHS)
is struggling to provide good care at low cost for patients such as Mrs
Evans (not her real name). Its business model has not kept up with the
changing burden of disease. For as more people enter and live longer in
their dotage, demand increases for two costly types of care. The first is
looking after the dying. About 25% of all hospital
inpatient spending during a person’s lifetime occurs in the final three
months. The second is caring for those with more than one chronic
condition. About 70% of NHS spending goes on long-term illnesses. More than
half of over-70s have at least two and a quarter have at least three. In
south Somerset 50% of health and social-care funding is spent on 4% of
people.
. . .
If one fallacy about the NHS is that it is the envy
of the world, as its devotees claim, another is that it is a single
organisation. In fact it is a series of interlocking systems. Public health,
hospitals, general practitioners (or GPs, the family doctors who provide
basic care outside hospitals) and mental-health services all have separate
funding and incentives. Social care, which includes old-folks’ homes and the
like, is run by local councils, not the NHS
. . .
So the NHS must do more with what it already
spends. A sign of inefficiency is the 6,000 patients in English hospitals
who are ready to go home but not yet discharged, up from 4,000 in 2013. They
cost the service hundreds of millions of pounds per year and obstruct others
from treatment. The bed-blockers themselves are harmed, too. Elderly
patients lose up to 5% of muscle strength for every day they are laid up in
hospital. Some delays are the result of council cuts: about 400,000 fewer
old people receive social care than in 2010, meaning that hospitals are
sometimes used as expensive alternatives to care homes. But most are due to
how hospitals are run.
. . .
On average, the framework made GPs some of the
highest-paid family doctors in the world when it was introduced in 2004. But
since then it has become less generous. GPs’ real-terms income has fallen by
one-fifth. This, and poor planning, has led to a shortage of them. England
needs 5,000 more in the next five years. The NHS is mulling a deal with
Apollo, whereby the Indian health-care firm supplies enough doctors to fill
the gap.
. . .
The move from “volume to value”—that is, from
paying providers for the procedures they carry out to paying them for the
outcomes they achieve—has helped to stem the cost of Medicare, the American
health system for pensioners. The expansion of ACOs as part of Obamacare led
to reduced mortality rates and savings for providers of about 1-2%. But Dan
Northam Jones, a visiting fellow at Harvard,
warns that the potential for savings is greater in systems like Medicare,
where there is no cap on spending.
And yet ACOs reflect a growing belief that if you
want radically to improve health care you have to change how you pay for it.
They will not solve all the problems of the NHS, some of which are inherent
in its taxpayer-funded model. But perhaps its business model may yet catch
up with how illness is changing. The NHS should forget being the envy of the
world, and instead learn from it.
A Personal Experience
Why many physicians will turn away their Medicare patients just like my wife was
turned away by her surgeon in the South Texas Spinal Clinic in San Antonio
because she was on Medicare ---
http://faculty.trinity.edu/rjensen/Health.htm#SpinalClinic
"The Worst Bill Ever: Epic new spending and taxes, pricier insurance, rationed
care, dishonest accounting: The Pelosi health bill has it all," The Wall
Street Journal, November 1, 2009 ---
http://faculty.trinity.edu/rjensen/Health.htm#110709
Jensen Comment
Nancy Pelosi catered to just about every special interest in the United States
(except Medicare patients) and doled out earmark frauds like jelly beans to get
economy/jobs destroying bill through the House. Please pray for Senate
sensibility.
A Brief History of Health Insurance
in the United States ---
http://everylearner.com/bm/knowledgenews/americana/health-insurance-history-1.shtml
A key stimulus was in 1945 when the National War Labor Board made it possible
for unions to negotiate coverage.
More importantly, however, business firms could get tax deductions for health
benefits that were not taxable,
Thereby, workers did not have to pay for health insurance out of after-tax
dollars.
Fathom the odd hypocrisy that the administration wants
every citizen to prove they are insured, but people don't have to prove they are
citizens. Ben Stein
October 15, 2010 message from Bob Jensen to the AECM
Hi David,
There are many reasons why people cannot or should not stay in the main
careers. Professional athletes are generally over the hill before age 40 in
terms of beating out their competitors, but they generally find alternative
employment. We can't trust many pilots and bus drivers and combat buddies
after age 55. But they too can find alternative employment.
Trinity University has a management professor named Don VanEynde who was
a Battalion Commander in Vietnam, earned a PhD from Columbia University
after military retirement, and has been one of the most popular, if not the
most popular, campus-wide professors for 15 years. He's still going strong
even though he's older than me. .
Professors have many advantages in that many physical ailments like
Professor Fordham's arthritis do not detract from outstanding performance as
long as wisdom, memory, scholarship, and enthusiasm have not yet waned. .
When tragedy does strike at any age that prevents working in virtually
any productive capacity, it's possible to start collecting social security
and Medicare before the prescribed ages for retirement. Due to being injured
on the job as a surgical nurse, my wife commenced collecting SS disability
benefits and Medicare when she 54 years old. After her spinal injury (she
was ordered by a surgeon to lift a 300 lb instrument table over a power cord
and had to be put immediately on traction for 30 days in the hospital) she
worked for 10 more painful years before undergoing the first of her eventual
12 spine surgeries. Each surgery led to worse enduring pain ---
http://faculty.trinity.edu/rjensen/Erika2007.htm She most certainly is not a
poster child for million-dollar spine surgeries. Worker compensation paid
for the early surgeries until she was declared eligible for social security
disability and Medicare.
The problem is that Congress provided disability entitlements without
nearly enough funding such that these entitlements now are enormous drivers
of present and future multi-trillion deficits being passed on to current and
future children in the United States. Extending SS retirement ages will most
certainly increase the numbers of disability claims, but the majority of
older workers are gratefully not eligible for disability status before
retirement at higher ages. Disabled people can start collecting Medicare at
any age as soon as they are declared eligible for SS disability benefits.
Disabled people should've been funded outside the SS retirement system,
but members of Congress were too chicken to establish a separate Disability
and Medical Fund. They sneaked the financial entitlements of the disabled
onto the SS retirement and Medicare systems and passed the funding deficits
on to our present and future children.
Between 1776 and 1950 the care of the elderly and disabled was the
responsibility of their own savings, their parents, their children, and in
extreme cases the County Homes. After the disabled became the responsibility
of the Federal government, heirs confiscated their parents' savings and
children were unburdened of parental care responsibilities. Federal and
state governments took on the housing, care, and feeding of every disabled
person. In theory, savings of the elderly are to be used for nursing home
care, but fraud is rampant in terms of passing these costs on to taxpayers.
We can argue endlessly whether disabled people should be the
responsibilities of their families or taxpayers or employers. For example,
perhaps I should've been more financially responsible for my wife's
disability than the social security and Medicare systems. On this subject I
can truly be an academic who can take on any side in a debate. Perhaps
worker compensation insurance should've covered my injured wife for a longer
period of time, but the worker compensation insurance firm worked tooth and
nail to pass her on to SS and Medicare.
The point is that government funding for the disabled should be a
pay-as-you-go system taxation rather than a Ponzi scheme of deficit
financing. The present entitlement system is not only unfair to future
generations, it threatens the very survival of the United States ---
http://faculty.trinity.edu/rjensen/Entitlements.htm
Long-term problem:
There has been a lot of political hysteria expressed over the annual
deficits of the past two years.
Fiscal experts note, however, that the abnormally
large deficits incurred in the wake of the financial crisis are not the
primary source of the country's biggest fiscal problems.
The biggest source of fiscal concern remains the
so-called structural deficit, which is made up primarily of spending on the
big three entitlement programs. That structural deficit will continue to
balloon faster than the economy grows long after the current downturn has
ended.
Indeed, the Government Accountability Office
projects that by the end of this decade, the vast majority of all federal
tax revenue will be swallowed up by just four things: Interest payments on
the country's debt, and the payment of Medicare, Medicaid and Social
Security benefits.
The president's bipartisan fiscal commission,
charged with recommending ways to get U.S. debt under control, will issue a
report in December.
I'm in favor of health care reform that completely nationalizes health
insurance phased in reasonably with high tax pay-as-you-go restriction and strict
cost-saving caps on punitive damage lawsuits. I really favor former Senator Bill
Bradley's long-forgotten Canada-like proposal:
The bipartisan trade-off in a viable health care
bill is obvious: Combine universal coverage with malpractice tort reform in
health care. Universal coverage can be obtained in many ways — including the
so-called public option. Malpractice tort
reform can be something as commonsensical as the establishment of medical
courts — similar to bankruptcy or admiralty courts — with special judges to
make determinations in cases brought by parties claiming injury. Such a
bipartisan outcome would lower health care costs, reduce errors (doctors and
nurses often don’t report errors for fear of being sued) and guarantee all
Americans adequate health care. Whenever
Congress undertakes large-scale reform, there are times when disaster
appears certain — only to be averted at the last minute by the good sense of
its sometimes unfairly maligned members. What now appears in Washington as a
special-interest scrum could well become a triumph for the general interest.
But for that to happen, the two parties must strike a grand bargain on
universal coverage and malpractice tort reform. The August recess has given
each party and its constituencies a chance to reassess their respective
strategies. One result, let us hope, may be that Congress will surprise
everyone this fall.
Bill Bradley, "Tax Reform’s Lesson for Health Care Reform,"
The New York Times, August 30, 2009 ---
http://www.nytimes.com/2009/08/30/opinion/30bradley.html?_r=1
IOUSA (the most frightening movie in American
history) --- (see a 30-minute version of the documentary at
www.iousathemovie.com )
I have come to the conclusion that the real reason
this gifted communicator (Obama) has become
so bad at communicating is that he doesn't really believe a word that he is
saying. He couldn't convey that health-care reform would be somehow cost-free
because he knows it won't be. And he can't adequately convey either the
imperatives or the military strategy of the war in Afghanistan because he
doesn't really believe in it either. He feels colonized by mistakes of the past.
He feels trapped by the hand that has been dealt him.
Leftist Leaning Tina Brown, "Obama's Fog War," The
Daily Beast ---
http://www.thedailybeast.com/blogs-and-stories/2009-12-03/what-is-obama-talking-about/
Jensen Comment
And President Obama was the dealer.
Voters are increasingly worried about unemployment,
but Democratic leaders in Congress remain obsessed with passing health- care
reform. Senate Majority Whip Richard Durbin was asked recently if a health-care
bill would pass the Senate by the end of this month. "It must," he said. "We
have to finish it." Still, many in the trenches are uneasy about the sprawling,
complex bill they privately acknowledge has no bipartisan support, doesn't
seriously tackle soaring costs and will increase insurance premiums. That may
explain Majority Leader Harry Reid's haste—he has ordered a rare Sunday session
this weekend to hurry up the debate. Public support for the bill averages only
39.2% backing in all polls compiled by Pollster.com. John Fund, "Why Dems Are Obsessed by
Health Reform: They believe the liberal base expects them to deliver and
will punish them if they don't," The Wall Street Journal, December 4,
2009 ---
http://online.wsj.com/article/SB10001424052748704007804574575584229775884.html#mod=djemEditorialPage
America spends far more on health care per capita than any other nation in
the world.
One reason is that America spends trillions each year on people that other
nations let go of for cost reasons:
(1) Extremely premature and lightweight newborns that other nations
cannot or do not afford to save;
(2) Dying people prolonged by machines in intensive care units that have no
hope of leaving ICU alive.
Born at 9.1 Ounces She Would've been
thrown away in most other nations Cozy in her incubator, set to 81.5 degrees, heart going
at 174 beats a minute as she snoozed in her red, footy pajamas, Oliviyanna
Harbin-Page may be a global record-holder. Born Aug. 5 to 16-year-old Jamesha
Harbin of Eight Mile after 21 to 24 weeks of gestation, Oliviyanna weighed only
259 grams, or 9.1 ounces -- possibly making her, according to the University of
South Alabama Children's & Women's Hospital, the world's smallest surviving
baby. She now weighs 3 pounds 2 ounces. One of three girl triplets -- the other
two are identical, she is fraternal
"Baby who may be world's smallest surviving newborn could go home soon," by Roy
Hoffman, al.com, December 18, 2009 ---
http://blog.al.com/live/2009/12/baby_who_may_be_worlds_smalles.html
What went so wrong in the health care system of the United States?
Mostly what went wrong is our ill-conceived and underfunded attempts to reform
the system!
The $61 Trillion Margin of Error, and What "Empire Decline" Means in
Layman's Terms
This is a bipartisan disaster from the beginning and will be until the end
Call it the fatal arithmetic of imperial decline.
Without radical fiscal reform, it could apply to America next. Niall Ferguson, "An Empire at
Risk: How Great Powers Fail," Newsweek Magazine
Cover Story, November 26, 2009 ---
http://www.newsweek.com/id/224694/page/1
Please note that this is NBC’s liberal Newsweek Magazine and not Fox News
or The Wall Street Journal.
. . .
In other words, there is no end in sight to the
borrowing binge. Unless entitlements are cut or taxes are raised, there will
never be another balanced budget. Let's assume I live another 30 years and
follow my grandfathers to the grave at about 75. By 2039, when I shuffle off
this mortal coil, the federal debt held by the public will have reached 91
percent of GDP, according to the CBO's extended baseline projections.
Nothing to worry about, retort -deficit-loving economists like Paul Krugman.
. . .
Another way of doing this kind of exercise is to
calculate the net present value of the unfunded liabilities of the Social
Security and Medicare systems. One recent estimate puts them at about
$104 trillion, 10
times the stated federal debt.
Niall Ferguson is the Laurence A. Tisch
professor of history at Harvard University and the author of The Ascent of
Money. In late 2009 he puts forth an unbooked discounted present value
liability of $104 trillion for Social Security plus Medicare. In late 2008, the
former Chief Accountant of the United States Government, placed this estimate
at$43 trillion. We can hardly attribute the $104-$43=$61 trillion difference to
President Obama's first year in office. We must accordingly attribute the $61
trillion to margin of error and most economists would probably put a
present value of unbooked (off-balance-sheet) present value of Social Security
and Medicare debt to be somewhere between $43 trillion and $107 trillion To this
we must add other unbooked present value of entitlement debt estimates which
range from $13 trillion to $40 trillion. If the Affordable Care Act passes it will add untold
trillions to trillions more because our legislators are not looking at
entitlements beyond 2019.
The Meaning of "Unbooked" versus "Booked" National Debt
By "unbooked" we mean that the debt is not included in the current "booked"
National Debt of $12 trillion. The booked debt is debt of the United States for
which interest is now being paid daily at slightly under a million
dollars a minute. Cash must be raised daily for interest payments. Cash is
raised from taxes, borrowing, and/or (shudder) the current Fed approach to
simply printing money. Interest is not yet being paid on the unbooked debt for
which retirement and medical bills have not yet arrived in Washington DC for
payment. The unbooked debt is by far the most frightening because our leaders
keep adding to this debt without realizing how it may bring down the entire
American Dream to say nothing of reducing the U.S. Military to almost nothing.
This matters more for a superpower than for a small
Atlantic island for one very simple reason. As interest payments eat into
the budget, something has to give—and that something is nearly always
defense expenditure. According to the CBO, a significant decline in the
relative share of national security in the federal budget is already baked
into the cake. On the Pentagon's present plan, defense spending is set to
fall from above 4 percent now to 3.2 percent of GDP in 2015 and to 2.6
percent of GDP by 2028.
Over the longer run, to my own estimated departure
date of 2039, spending on health care rises from 16 percent to 33 percent of
GDP (some of the money presumably is going to keep me from expiring even
sooner). But spending on everything other than health, Social Security, and
interest payments drops from 12 percent to 8.4 percent.
This is how empires decline. It begins with
a debt explosion. It ends with an inexorable reduction in the resources
available for the Army, Navy, and Air Force. Which is why voters are right
to worry about America's debt crisis. According to a recent Rasmussen
report, 42 percent of Americans now say that cutting the deficit in half by
the end of the president's first term should be the administration's most
important task—significantly more than the 24 percent who see health-care
reform as the No. 1 priority. But cutting the deficit in half is simply not
enough. If the United States doesn't come up soon with a credible plan to
restore the federal budget to balance over the next five to 10 years, the
danger is very real that a debt crisis could lead to a major weakening of
American power.
The Meaning of Present Value
Initially it might help to explain what present value means. When I moved from
Florida State University to Trinity University in 1982, current mortgage rates
were about 18%. As part of my compensation package, President Calgaard agreed to
have Trinity University carry my mortgage. I purchased a home at 9010 Village
Drive for $300,000 by paying $100,000 down and signing a 240 month mortgage at
12% APR and a 1982 present value of $200,000. At payments of $2,202 per month my
total cash obligation (had I not refinanced from a bank when mortgage rates went
below 12%) would've been $528,521. However, since money has time value, the
present value of that $528,521 was only $200,000.
In a similar manner, Professor Ferguson's $104 trillion present value
translates to over $300 trillion in cash obligations of Social Security and
Medicare before being tinkered with changed entitlement obligations.
The "Burning Platform" of the United States Empire
Former Chief Accountant of the United States, David Walker, is spreading the
word as widely as possible in the United States about the looming threat of our
unbooked entitlements. Two videos that feature David Walker's warnings are as
follows:
IOUSA (the most frightening movie in
American history) ---
(see a 30-minute version of the documentary at
www.iousathemovie.com
)
David Walker claims the U.S. economy is on a "burning platform" but does not
go into specifics as to what will be left in the ashes.
The
US government is on a “burning platform” of unsustainable policies and
practices with fiscal deficits, chronic healthcare underfunding, immigration
and overseas military commitments threatening a crisis if action is not
taken soon. David M.
Walker,
Former Chief Accountant of the United States ---
http://www.financialsense.com/editorials/quinn/2009/0218.html
An "Empire at Risk"
Harvard's Professor Niall Ferguson is equally vague about what will happen if
the U.S. Empire collapses from its entitlement burdens.
Niall Ferguson, "An Empire at Risk: How Great Powers Fail," Newsweek
Magazine Cover Story, November 26, 2009 ---
http://www.newsweek.com/id/224694/page/1
This is how empires decline. It begins with a debt
explosion. It ends with an inexorable reduction in the resources available
for the Army, Navy, and Air Force. Which is why voters are right to worry
about America's debt crisis. According to a recent Rasmussen report, 42
percent of Americans now say that cutting the deficit in half by the end of
the president's first term should be the administration's most important
task—significantly more than the 24 percent who see health-care reform as
the No. 1 priority. But cutting the deficit in half is simply not enough. If
the United States doesn't come up soon with a credible plan to restore the
federal budget to balance over the next five to 10 years, the danger is very
real that a debt crisis could lead to a major weakening of American power.
The precedents are certainly there. Habsburg Spain
defaulted on all or part of its debt 14 times between 1557 and 1696 and also
succumbed to inflation due to a surfeit of New World silver.
Prerevolutionary France was spending 62 percent of royal revenue on debt
service by 1788. The Ottoman Empire went the same way: interest payments and
amortization rose from 15 percent of the budget in 1860 to 50 percent in
1875. And don't forget the last great English-speaking empire. By the
interwar years, interest payments were consuming 44 percent of the British
budget, making it intensely difficult to rearm in the face of a new German
threat.
Call it the fatal arithmetic of imperial decline.
Without radical fiscal reform, it could apply to America next.
Empire Collapse in Layman's Terms
In 2010, hundreds upon hundreds of people will daily sneak across the U.S.
border illegally in search of a job, medical care, education, and a better life
under the American Dream. By 2050 Americans will instead be exiting in
attempts to escape the American Nightmare and sneak illegally into BRIC nations
for a job, medical care, education, and a better life under the BRIC Dream.
A BRIC nation at the moment is a nation that has vast resources and virtually
no entitlement obligations that drag down economic growth ---
http://en.wikipedia.org/wiki/BRIC
In
economics, BRIC (typically rendered as "the
BRICs" or "the BRIC countries") is an
acronym that refers to
the
fast-growing developing economies of
Brazil,
Russia,
India, and
China. The acronym was first coined and
prominently used by
Goldman Sachs in 2001. According to a paper
published in 2005,
Mexico and
South Korea are the only other countries
comparable to the BRICs, but their economies were excluded initially because
they were considered already more developed. Goldman Sachs argued that,
since they are developing rapidly, by 2050 the combined economies of the
BRICs could eclipse the combined economies of the current richest countries
of the world. The four countries, combined, currently account for more than
a quarter of the world's land area and more than 40% of the
world's population.
Brazil, Russia, India and China,
(the BRICs) sometimes lumped together as
BRIC to represent fast-growing developing economies, are selling off
their U.S. Treasury Bond holdings. Russia announced earlier this
month it will sell U.S. Treasury Bonds, while China and Brazil have
announced plans to cut the amount of U.S. Treasury Bonds in their
foreign currency reserves and buy bonds issued by the International
Monetary Fund instead. The BRICs are also soliciting public support
for a "super currency" capable of replacing what they see as the
ailing U.S. dollar. The four countries account for 22 percent of the
global economy, and their defection could deal a severe blow to the
greenback. If the BRICs sell their U.S. Treasury Bond holdings, the
price will drop and yields rise, and that could prompt the central
banks of other countries to start selling their holdings to avoid
losses too. A sell-off on a grand scale could trigger a collapse in
the value of the dollar, ending the appeal of both dollars and bonds
as safe-haven assets. The moves are a challenge to the power of the
dollar in international financial markets. Goldman Sachs economist
Alberto Ramos in an interview with Bloomberg News on Thursday said
the decision by the BRICs to buy IMF bonds should not be seen simply
as a desire to diversify their foreign currency portfolios but as a
show of muscle.
"BRICs Launch Assault on Dollar's Global Status," The Chosun IIbo,
June 14, 2009 ---
http://english.chosun.com/site/data/html_dir/2009/06/12/2009061200855.html
Their
report, "Dreaming with BRICs: The Path to 2050," predicted that
within 40 years, the economies of Brazil, Russia, India and China -
the BRICs - would be larger than the US, Germany, Japan, Britain,
France and Italy combined. China would overtake the US as the
world's largest economy and India would be third, outpacing all
other industrialised nations.
"Out of the shadows," Sydney Morning Herald, February 5, 2005
---
http://www.smh.com.au/text/articles/2005/02/04/1107476799248.html
The first economist, an early Nobel
Prize Winning economist, to raise the alarm of entitlements in my
head was Milton Friedman. He has written extensively about the
lurking dangers of entitlements. I highly recommend his fantastic
"Free to Choose" series of PBS videos where his "Welfare of
Entitlements" warning becomes his principle concern for the future
of the Untied States 25 years ago ---
http://www.ideachannel.com/FreeToChoose.htm
Stephen C. Goss, chief actuary of the
Social Security Administration, said that while
the Congressional projection would probably be borne out, the change would
have no effect on benefits in 2010 and retirees would keep receiving their
checks as usual.
The problem, he said, is that payments have risen
more than expected during the downturn, because jobs disappeared and people
applied for benefits sooner than they had planned. At the same time, the
program’s revenue has fallen sharply, because there are fewer paychecks to
tax.
Analysts have long tried to predict the year when
Social Security would pay out more than it took in because they view it as a
tipping point — the first step of a long, slow march to insolvency, unless
Congress strengthens the program’s finances.
“When the level of the trust fund gets to zero, you
have to cut benefits,”
Alan Greenspan, architect of the
plan to rescue the Social Security program the
last time it got into trouble, in the early 1980s, said on Wednesday.
That episode was more dire because the fund could
have fallen to zero in a matter of months. But partly because of steps taken
in those years, and partly because of many years of robust economic growth,
the latest projections show the program will not exhaust its funds until
about 2037.
Still, Mr. Greenspan, who later became chairman of
the Federal Reserve Board, said: “I think very much the same issue exists
today. Because of the size of the contraction in economic activity, unless
we get an immediate and sharp recovery, the revenues of the trust fund will
be tracking lower for a number of years.”
The Social Security Administration is expected to
issue in a few weeks its own numbers for the current year within the annual
report from its board of trustees. The administration has six board members:
three from the president’s cabinet, two representatives of the public and
the Social Security commissioner.
Though Social Security uses slightly different
methods, the official numbers are expected to roughly track the
Congressional projections, which were one page of a voluminous analysis of
the
federal budget proposed by
President Obama in January.
Mr. Goss said
Social Security’s annual report last year
projected revenue would more than cover payouts until at least 2016 because
economists expected a quicker, stronger recovery from the crisis. Officials
foresaw an average unemployment rate of 8.2 percent in 2009 and 8.8 percent
this year, though unemployment is hovering at nearly 10 percent.
The trustees did foresee, in late 2008, that the
recession would be severe enough to deplete Social Security’s funds more
quickly than previously projected. They moved the year of reckoning forward,
to 2037 from 2041. Mr. Goss declined to reveal the contents of the
forthcoming annual report, but said people should not expect the date to
lurch forward again.
The long-term costs of Social Security present
further problems for politicians, who are already struggling over how to
reduce the nation’s debt. The national predicament echoes that of many
European governments, which are
facing market pressure to re-examine their
commitments to generous pensions over extended retirements.
The United States’ soaring debt — propelled by tax
cuts, wars and large expenditures to help banks and the housing market — has
become a hot issue as Democrats gauge their vulnerability in the coming
elections. President Obama has appointed a
bipartisan commission to examine the debt problem,
including Social Security, and make recommendations on how to trim the
nation’s debt by Dec. 1, a few weeks after the midterm Congressional
elections.
Although Social Security is often said to have a
“trust fund,” the term really serves as an accounting device, to track the
pay-as-you-go program’s revenue and outlays over time. Its so-called balance
is, in fact, a history of its vast cash flows: the sum of all of its revenue
in the past, minus all of its outlays. The balance is currently about $2.5
trillion because after the early 1980s the program had surplus revenue, year
after year.
Now that accumulated revenue will slowly start to
shrink, as outlays start to exceed revenue. By law, Social Security cannot
pay out more than its balance in any given year.
For accounting purposes, the system’s accumulated
revenue is placed in
Treasury securities.
In a year like this, the paper gains from the
interest earned on the securities will more than cover the difference
between what it takes in and pays out.
Mr. Goss, the actuary, emphasized that even the $29
billion shortfall projected for this year was small, relative to the roughly
$700 billion that would flow in and out of the system. The system, he added,
has a balance of about $2.5 trillion that will take decades to deplete. Mr.
Goss said that large cushion could start to grow again if the economy
recovers briskly.
Indeed, the Congressional Budget Office’s
projection shows the ravages of the recession easing in the next few years,
with small surpluses reappearing briefly in 2014 and 2015.
After that, demographic forces are expected to
overtake the fund, as more and more baby boomers leave the work force, stop
paying into the program and start collecting their benefits. At that point,
outlays will exceed revenue every year, no matter how well the economy
performs.
Mr. Greenspan recalled in an interview that the
sour economy of the late 1970s had taken the program close to insolvency
when the commission he led set to work in 1982. It had no contingency
reserve then, and the group had to work quickly. He said there were only
three choices: raise taxes, lower benefits or bail out the program by
tapping general revenue.
The easiest choice, politically, would have been
“solving the problem with the stroke of a pen, by printing the money,” Mr.
Greenspan said. But one member of the commission, Claude Pepper, then a
House representative, blocked that approach because he feared it would
undermine Social Security, changing it from a respected, self-sustaining
old-age program into welfare.
Mr. Greenspan said that the same three choices
exist today — though there is more time now for the painful deliberations.
“Even if the trust fund level goes down, there’s no
action required, until the level of the trust fund gets to zero,” he said.
“At that point, you have to cut benefits, because benefits have to equal
receipts.”
Where Did Social Security Go So Wrong?
Social Security in the United States currently refers to the Federal Old-Age,
Survivors, and Disability Insurance (OASDI) program. It commenced only as an old
age ("survivors:") retirement insurance program as a forced way of saving for
retirement by paying worker premiums matched by employer contributions into the
SS Trust Fund. Premiums were relatively low due heavily to the proviso that the
SS Trust Fund got to keep all the premiums paid for each worker and spouse that
did not reach retirement age (generally viewed as 65). Details are
provided at
http://en.wikipedia.org/wiki/Social_Security_(United_States)#Creation:_The_Social_Security_Act
If Congress had not tapped the SS Trust Fund for other (generally unfunded
social programs of various types), the SS Trust Fund would not be in any trouble
at all if it were managed like a diversified investment fund. But it became too
tempting for Congress to tap the SS Trust Fund for a variety of other social
programs, the costliest of which was to make monthly living allowance payments
to each person of any age who is declared "disabled." In many cases a disabled
person collects decades of benefits after having paid less than a single penny
into the SS Trust Fund. It's well and good for our great land to provide living
allowances to disabled citizens, but without funding from other sources such as
a separate Disability Trust Fund fed with some type of other taxes, the
disability payments mostly drained the SS Trust Fund to where it is in dire
trouble today.
The obligation to pay pensioners as well as disabled persons was passed on to
current and future generations to a point where the Social Security and
Disability Program is no longer self-sustaining with little hope for meeting
entitlement obligations from worker premiums and employer matching funds. The SS
Trust Fund will have deficits beginning in 2010 that are expected to explode as
baby boomers collect benefits for the first time.
Where Did Medicare Go So Wrong?
Medicare is a much larger and much more complicated entitlement burden relative
to Social Security by a ratio of about six to one or even more. The Medicare
Medical Insurance Fund was established under President Johnson in1965.
Note that Medicare, like Social Security in general, was intended to be
insurance funded by workers over their careers. If premiums paid by workers and
employers was properly invested and then paid out after workers reached
retirement age most of the trillions of unfunded debt would not be precariously
threatening the future of the United States. The funds greatly benefit when
workers die before retirement because all that was paid in by these workers and
their employers are added to the fund benefits paid out to living retirees.
The first huge threat to sustainability arose beginning in 1968 when medical
coverage payments payments to surge way above the Medicare premiums collected
from workers and employers. Costs of medical care exploded relative to most
other living expenses. Worker and employer premiums were not sufficiently
increased for rapid growth in health care costs as hospital stays surged from
less than $100 per day to over $1,000 per day.
A second threat to the sustainability comes from families no longer concerned
about paying up to $25,000 per day to keep dying loved ones hopelessly alive in
intensive care units (ICUs) when it is 100% certain that they will not leave
those ICUs alive. Families do not make economic choices in such hopeless cases
where the government is footing the bill. In other nations these families are
not given such choices to hopelessly prolong life at such high costs. I had a
close friend in Maine who became a quadriplegic in a high school football game.
Four decades later Medicare paid millions of dollars to keep him alive in an ICU
unit when there was zero chance he would ever leave that ICU alive.
On November 22, 2009 CBS Sixty Minutes aired a video featuring experts
(including physicians) explaining how the single largest drain on the Medicare
insurance fund is keeping dying people hopelessly alive who could otherwise be
allowed to die quicker and painlessly without artificially prolonging life on
ICU machines.
"The Cost of Dying,"CBS Sixty Minutes Video, November 22, 2009
---
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
What is really sad is the way Republicans are standing in the way of making
rational cost-benefit decisions about dying by exploiting the "Kill Granny"
political strategy aimed at killing a government option in health care reform.
See the "Kill Granny" strategy at ---
www.defendyourhealthcare.us
The third huge threat to the economy commenced in when disabled persons
(including newborns) tapped into the Social Security and Medicare insurance
funds. Disabled persons should receive monthly benefits and medical coverage
in this great land. But Congress should've found a better way to fund disabled
persons with something other than the Social Security and Medicare insurance
funds. But politics being what it is, Congress slipped this gigantic
entitlement through without having to debate and legislate separate funding for
disabled persons. And hence we are now at a crossroads where the Social Security
and Medicare Insurance Funds are virtually broke for all practical persons.
Most of the problem lies is Congressional failure to sufficiently increase
Social Security deductions (for the big hit in monthly payments to disabled
persons of all ages) and the accompanying Medicare coverage (to disabled people
of all ages). The disability coverage also suffers from widespread fraud.
Other program costs were also added to the Social Security and Medicare
insurance funds such as the education costs of children of veterans who are
killed in wartime. Once again this is a worthy cause that should be funded. But
it should've been separately funded rather than simply added into the Social
Security and Medicare insurance funds that had not factored such added costs
into premiums collected from workers and employers.
The fourth problem is that most military retirees are afforded full
lifetime medical coverage for themselves and their spouses. Although they can
use Veterans Administration doctors and hospitals, most of these retirees opted
for the underfunded
TRICARE plan the pushed most of the hospital and physician costs onto the
Medicare Fund. The VA manages to push most of its disabled veterans onto the
Medicare Fund without having paid nearly enough into the fund to cover the
disability medical costs. Military personnel do have Medicare deductions from
their pay while they are on full-time duty, but those deductions fall way short
of the cost of disability and retiree medical coverage.
The fifth threat to sustainability came when actuaries failed to factor in
the impact of advances in medicine for extending lives. This coupled with the
what became the biggest cost of Medicare, the cost of dying, clobbered the
insurance funds. Surpluses in premiums paid by workers and employers disappeared
much quicker than expected.
A sixth threat to Medicare especially has been widespread and usually
undetected fraud such as providing equipment like motorized wheel chairs to
people who really don't need them or charging Medicare for equipment not even
delivered. There are also widespread charges for unneeded medical tests or for
tests that were never really administered. Medicare became a cash cow for
crooks. Many doctors and hospitals overbill Medicare and only a small proportion
of the theft is detected and punished.
The seventh threat to sustainability commenced in 2007 when the costly
Medicare drug benefit entitlement entitlement was added by President George W.
Bush. This was a costly addition, because it added enormous drains on the fund
by retired people like me and my wife who did not have the cost of the drug
benefits factored into our payments into the Medicare Fund while we were still
working. It thus became and unfunded benefit that we're now collecting big time.
In any case we are at a crossroads in the history of funding medical care in
the United States that now pays a lot more than any other nation per capita and
is getting less per dollar spent than many nations with nationalized health care
plans. I'm really not against the Affordable Care Act legislation. I'm only against the lies
and deceits being thrown about by both sides in the abomination of the current
proposed legislation.
Democrats are missing the boat here when they truly have the power, for now
at least, in the House and Senate to pass a relatively efficient nationalized
health plan. But instead they're giving birth to entitlements legislation that
threatens the sustainability of the United States as a nation.
The New York Times Timeline History of Health Care Reform in the
United States ---
http://www.nytimes.com/interactive/2009/07/19/us/politics/20090717_HEALTH_TIMELINE.html
Click the arrow button on the right side of the page. The biggest problem with
"reform" is that it added entitlements benefits without current funding such
that with each reform piece of legislation the burdens upon future generations
has hit a point of probably not being sustainable.
Call it the fatal arithmetic of imperial decline.
Without radical fiscal reform, it could apply to America next. Niall Ferguson, "An Empire at Risk: How Great Powers Fail,"
Newsweek Magazine Cover Story, November 26,
2009 ---
http://www.newsweek.com/id/224694/page/1
. . .
In other words, there is no end in sight to the
borrowing binge. Unless entitlements are cut or taxes are raised, there will
never be another balanced budget. Let's assume I live another 30 years and
follow my grandfathers to the grave at about 75. By 2039, when I shuffle off
this mortal coil, the federal debt held by the public will have reached 91
percent of GDP, according to the CBO's extended baseline projections.
Nothing to worry about, retort -deficit-loving economists like Paul Krugman.
. . .
Another way of doing this kind of exercise is to
calculate the net present value of the unfunded liabilities of the Social
Security and Medicare systems. One recent estimate puts them at about
$104 trillion, 10
times the stated federal debt.
Continued in article
This is now President Obama's problem with or without new the Affordable Care
Act
entitlements that are a mere drop in the bucket compared to the entitlement
obligations that President Obama inherited from every President of the United
States since FDR in the 1930s. The problem has been compounded under both
Democrat and Republican regimes, both of which have burdened future generations
with entitlements not originally of their doing.
Professor Niall Ferguson and David Walker are now warning us that by year
2050 the American Dream will become an American Nightmare in which Americans
seek every which way to leave this fallen nation for a BRIC nation offering some
hope of a job, health care, education, and the BRIC Dream.
Let me get this straight. We're about to get a health care plan shoved down our
throats that is Written by a committee whose head says he doesn't understand it,
Passed by a Congress that hasn't read it but exempts themselves from it, signed
by a president that also hasn't read it, With funding administered by a treasury
chief who was caught not paying his Taxes, overseen by a surgeon general who is
obese, and financed by a Country that's nearly broke.
What could possibly go wrong?
IS THIS A GREAT COUNTRY OR WHAT!
Forwarded by Maureen
"How can Obama Top a Great Speech," by
Joan Walsh, Salon, September 10, 2010 ---
http://www.salon.com/opinion/walsh/politics/2009/09/10/healthcare_speech/index.html
Jensen Answer
Dear Ms Walsh, President Obama can top his great speech by filling in details of
truthful estimates of the Affordable Care Act costs and how he plans to finance these added
costs of wider coverage of health issues and more people covered. Thus far his
sweeping claims of cost savings sound like snake oil.
Jensen Comment
Because of the present health care
system in the United States is unjust and inefficient, I am in favor of a
National Health Plan modeled after the Canadian National Health Plan where
Canadians are taxed for a huge portion of their health services irrespective of
their levels of income. Any system that does not make users of the system share
heavily in the cost of the services will be unjust, abused, and inefficient ---
http://faculty.trinity.edu/rjensen/Health.htm#Canada
Having said that I prefer a
Canadian-style national health plan for the U.S., I wish democrats in Congress
would use their power and vote one in in spite of protests around the country.
With a 60-vote surplus in the House and only needing 51 votes in the Senate, the
Democrats could vote in National Health Care in an instant. The reason they
won't is that most of them would be voted out of office the next time they come
up for re-election. They know this!
But Americans at all levels of income would have to
agree to much higher taxes
The average Canadian family
spends more money on taxes than on necessities of life such as food, clothing,
and housing, according to a study from The Fraser Institute, an independent
research organization with offices across Canada. The Canadian Consumer Tax
Index, 2007, shows that even though the income of the average Canadian family
has increased significantly since 1961, their total tax bill has increased at a
much higher rate. The Fraser Institute,
April 16, 2007 ---
http://www.newswire.ca/en/releases/archive/April2007/16/c5234.html
Jensen Comment
I put the portion of the Canadian tax dollars going into comparable health and
social services contained in the Affordable Care Act legislation to be about 40% of each
Canadian's tax dollar where malpractice coverage and government fraud is greatly
controlled relative to the United States ---
http://faculty.trinity.edu/rjensen/Health.htm#Canada
Canada greatly restricts the number of free riders in the system and negotiates
much lower prescription drug prices relative to insurance companies and Medicare
in the United States. Malpractice awards in Canada are tightly controlled.
So the present (health care) system is an
unsustainable disaster, but you can keep your piece of it if you want. And the
Democrats wonder why selling health care reform to the public has been so hard?
Ramesh Ponuru, "the Affordable
Care Act's Fatal Flaw:
Democrats claim their plans will save money, but they have too many conflicting
goals," Time Magazine August 17, 2009, Page 35
Jensen Comment
The problem is that they keep adding expensive medical services that sound great
on paper, but few people, companies, and certainly not government can afford
these uncapped benefits.
Americans who want to tip the debate in the most
progressive direction should take advantage an opening provided at the last
minute during negotiations to get a bill approved by the House Energy and
Commerce Committee. And they should do so by advocating even more aggressively
for
single-payer health care. John Nichols, "Why Single Payer
Advocacy Matters Now More Than Ever ," The Nation, August 4, 2009 ---
Click Here
Jensen Comment
Passionate advocates of universal health care are screaming "yes, yes, yes"
without even caring how health care will be funded or whether or not it will
further destruct the U.S. economy. The cannot care because they're so willing to
vote yet before a funding proposal is even put forth. I actually favor
single-payer nationalized health care but I'm unwilling to destroy by beloved
homeland in a passionate rage for the gold plated version that this debt-ridden
nation can ill afford at the present time ---
http://faculty.trinity.edu/rjensen/Entitlements.htm
"Schumer: Healthcare Changes This Year 'No Matter What'" ---
Click Here U.S. Debt/Deficit Clock ---
http://www.usdebtclock.org/
But what helps many Americans as individuals may
hurt society as a whole. That's the paradox. Unchecked health spending is
depressing take-home pay, squeezing other government programs—state and local
programs as well as federal—and driving up taxes and budget deficits. The
president has said all this; he simply isn't doing much about it. He offers the
illusion of reform while perpetuating the status quo of four decades: expand
benefits, talk about controlling costs. The press should put "reform" in quote
marks, because this is one "reform" that might leave the country worse off.
Robert J. Samuelson, Health Reform
That Isn't: Despite the Rhethoric, Costs (and trillion dollar deficits)
Will Rise, Newsweek Magazine, August 3, 2009, Page 26 ---
http://www.newsweek.com/id/208439/page/2
Samuelson is the author of The Great -Inflation and Its Aftermath.
For starters, $1 trillion of extra debt-financed
spending would cause the government to pay about $300 billion of extra interest
in the next decade. Moreover, the CBO's method of estimating the cost of such a
program doesn't recognize the incentives it creates for households and firms to
change their behavior. The House health-care bill gives a large subsidy to
millions of families with incomes up to three times the poverty level (i.e., up
to $66,000 now for a family of four) if they buy their insurance through one of
the newly created "insurance exchanges," but not if they get their insurance
from their employer. The CBO's cost estimate understates the number who would
receive the subsidy because it ignores the incentive for many firms to drop
employer-provided coverage. It also ignores the strong incentive that
individuals would have to reduce reportable cash incomes to qualify for higher
subsidy rates. The total cost of ObamaCare over the next decade likely would be
closer to $2 trillion than to $1 trillion. Martin Feldstein, "ObamaCare's
Crippling Deficits The higher taxes, debt payments and interest rates needed to
pay for health reform mean lower living standard," The Wall Street Journal,
September 7, 2009 ---
http://online.wsj.com/article/SB10001424052970203585004574393110640864526.html?mod=djemEditorialPage
In 1935 President Franklin
Roosevelt engineered the Social Security Act with honest and well-defined
components of benefits and costs. It was intended to only be a supplemental
pension program to force people to save something for their retirements. Later
on Congress muddled the program up by adding social services (such as lifetime
pensions for disabled people of all ages and death benefits for families of
soldiers who died in service). Medicare and Medicaid health coverage was later
added to massively increase the entitlements obligations of Social Security as
pension fund (as originally crafted).
When you knowingly pay someone to lie to
you, we call the deceiver an illusionist or a magician. When you unwittingly
pay someone to do the same thing, I call him a politician.
President Obama insists that health care
"reform" not "add a dime" to the
budget deficit, which daily grows to ever more
frightening levels. So the House-passed bill and the one the Senate now
deliberates both claim to cost less than $900 billion. Somehow "$900 billion
over 10 years" has been decreed to be a magical figure that will not
increase the deficit.
It's amazing how precise government gets
when estimating the cost of 10 years of subsidized medical care. Senate
Majority Leader Harry Reid's bill was scored not at $850 billion, but $849
billion. House Speaker Nancy Pelosi said her bill would cost $871 billion.
How do they do that?
The key to magic is misdirection, fooling
the audience into looking in the wrong direction.
I happily suspend disbelief when a
magician says he'll saw a woman in half. That's entertainment. But when
Harry Reid says he'll give 30 million additional people health coverage
while cutting the deficit, improving health care and reducing its cost, it's
not entertaining. It's incredible.
The politicians have a hat full of tricks
to make their schemes look cheaper than they are. The new revenues will pour
in during Year One, but health care spending won't begin until Year Three or
Four. To this the Cato Institute's
Michael Tanner asks, "Wouldn't it
be great if you could count a whole month's income, but only two weeks'
expenditures in your household budget?"
To be deficit-reducers, the health care
bills depend on a $200 billion cut in Medicare. Current law requires cuts in
payments to doctors, but let's get real: Those cuts will never happen. The
idea that Congress will "save $200 billion" by reducing payments for groups
as influential as doctors and retirees is laughable. Since 2003, Congress
has suspended those "required" cuts each year
Do you feel the leaked information from a
global warming alarmist organization is meaningful? This was an illegal
information leak that should be ignored It makes me question my belief in
global warming activists It's an example of dangerous scientific
politicization I haven't really heard about the controversy
This was an illegal information leak that
should be ignored (1 %)
It makes me question my belief in global
warming activists (8 %)
It's an example of dangerous scientific
politicization (86 %)
I haven't really heard about the
controversy (5 %)
Our pandering congressmen rarely cut. They
just spend. Even as the deficit grows, they vomit up our money onto new pet
"green" projects, bailouts for irresponsible industries, gifts for special
interests and guarantees to everyone.
Originally, this year's suspension, "the
doc fix," was included in the health care bills, but when it clearly pushed
the cost of "reform" over Obama's limit and threatened to hike the deficit,
the politicians moved the "doc fix" to a separate bill and pretended it was
unrelated to their health care work.
Megan McArdle of The Atlantic reports that
Rep. Paul Ryan of Wisconsin asked the Congressional Budget Office what the
total price would be if the "doc fix" and House health care overhaul were
passed together. "The answer, according to the CBO, is that together they'd
increase the deficit by $89 billion over 10 years." McArdle explains why the
"doc fix" should be included: "They're passing a bill that increases the
deficit by $200 billion in order to pass another bill that hopefully reduces
it, but by substantially less than $200 billion. That means that passage of
this bill is going to increase the deficit."
From the start, Obama has promised to pay
for half the "reform" cost by cutting Medicare by half a trillion over 10
years. But, Tanner asks, "how likely is it that those cuts will take place?
After all, this is an administration that will pay seniors $250 to make up
for the fact that they didn't get a Social Security cost-of-living increase
this year (because the cost of living didn't increase). And Congress is in
the process of repealing a scheduled increase in Medicare premiums."
Older people vote in great numbers. AARP
is the most powerful lobby on Capitol Hill. Like the cut in doctor's pay,
the other cuts will never happen.
I will chew on razor blades when Congress
cuts Medicare to keep the deficit from growing.
Medicare is already $37 trillion in the
hole. Yet the Democrats proudly cite Medicare when they demand support for
the health care overhaul. If a business pulled the accounting tricks the
politicians get away with, the owners would be in prison.
There is a little-noticed provision buried deep in
both the House and Senate health-care reform bills that is intended to save
billions of dollars—but instead will hurt millions of seniors, impose new
costs on taxpayers, and charge employers millions in new taxes.
As part of the Medicare Modernization Act in 2003,
Congress created a new drug benefit—called Medicare Part D—for retirees at a
cost of about $1,900 per recipient per year. Many private employers already
provided drug coverage for their retirees, and the administration and
Congress did not want to tempt employers into dropping their coverage.
Actuaries calculated that if the government provided a subsidy of at least
$800, employers would not stop covering retirees.
The legislation created a $600 tax-free benefit
(the equivalent of $800 cash for employers), and it worked. Employers
continued to cover about seven million retirees who might have otherwise
been dumped into Medicare Part D.
It was a good arrangement for all involved. An $800
subsidy is cheaper than the $1,900 cost of providing drug coverage. And
millions of seniors got to keep a drug benefit they were comfortable with
and that in many cases was better than the benefit offered by the
government.
But now that subsidy is coming in to be clipped.
This fall congressional staff, looking for a new revenue source to pay for
health reform, proposed eliminating the tax deductibility of the subsidy to
employers. The supposed savings were estimated by congressional staff to be
as much as $5 billion over the next decade.
It sounds smart—except that nobody asked how many
employers will drop retiree drug coverage. Clearly, many will. The result is
that, instead of saving money, the proposed revenue raiser will force
Medicare Part D costs to skyrocket as employers drop retirees into the
program.
The careful calculation that was made in 2003 to
minimize federal spending and maximize private coverage will go out the
window if this provision becomes law. Any short-term cost savings that
Congress gets by changing the tax provision will be overwhelmed by higher
costs in the long run.
Some members in the House want to mitigate the cost
of this provision by mandating that employers maintain existing levels of
retiree coverage despite the reduced subsidy. But it's not that simple. A
mandate would increase costs on businesses, which in turn would make it
harder for those businesses to hire new employees. The mandate would
effectively be a tax on employers that provide retiree benefits; this in
turn will simply induce some unknown number of employers to terminate their
retiree drug programs before the mandate kicks in.
In short, if the changes that are proposed for
employer subsidies in the current Medicare Part D program are enacted,
everyone will lose. Unions will lose as employers seek ways to drop retiree
drug coverage. Seniors will lose as employers drop them into Medicare Part
D. Medicare and taxpayers will lose as they face higher costs. And employers
will lose as they find it harder to provide benefits.
To make matters worse, accounting rules for
post-retirement benefits will require companies that keep their retiree
benefits to record the entire accrued present value of the new tax the day
the provision is signed into law. This would cause many employers to
immediately post billions in losses, which could significantly impact our
financial markets.
There are many reasons to pass health-care reform.
There is no reason to hurt seniors, employers and taxpayers in the process.
Businesses are struggling, and the Medicare trust funds have plenty of
problems as it is. It makes no sense to make these problems worse.
Mr. Scully was the administrator of the Centers for Medicare and
Medicaid Services from 2001-04 and was one of the designers of the Medicare
Part D benefit.
"What the Pelosi Health-Care Bill Really Says: Here are
some important passages in the 2,000 page legislation," by Betsy McCaughey,
The Wall Street Journal, November 7, 2009 ---
Click Here
The health bill that House Speaker Nancy Pelosi is
bringing to a vote (H.R. 3962) is 1,990 pages. Here are some of the details
you need to know.
What the government will require you to do:
• Sec. 202 (p. 91-92) of the bill requires you to
enroll in a "qualified plan." If you get your insurance at work, your
employer will have a "grace period" to switch you to a "qualified plan,"
meaning a plan designed by the Secretary of Health and Human Services. If
you buy your own insurance, there's no grace period. You'll have to enroll
in a qualified plan as soon as any term in your contract changes, such as
the co-pay, deductible or benefit.
• Sec. 224 (p. 118) provides that 18 months after
the bill becomes law, the Secretary of Health and Human Services will decide
what a "qualified plan" covers and how much you'll be legally required to
pay for it. That's like a banker telling you to sign the loan agreement now,
then filling in the interest rate and repayment terms 18 months later.
On Nov. 2, the Congressional Budget Office
estimated what the plans will likely cost. An individual earning $44,000
before taxes who purchases his own insurance will have to pay a $5,300
premium and an estimated $2,000 in out-of-pocket expenses, for a total of
$7,300 a year, which is 17% of his pre-tax income. A family earning $102,100
a year before taxes will have to pay a $15,000 premium plus an estimated
$5,300 out-of-pocket, for a $20,300 total, or 20% of its pre-tax income.
Individuals and families earning less than these amounts will be eligible
for subsidies paid directly to their insurer.
• Sec. 303 (pp. 167-168) makes it clear that,
although the "qualified plan" is not yet designed, it will be of the "one
size fits all" variety. The bill claims to offer choice—basic, enhanced and
premium levels—but the benefits are the same. Only the co-pays and
deductibles differ. You will have to enroll in the same plan, whether the
government is paying for it or you and your employer are footing the bill.
• Sec. 59b (pp. 297-299) says that when you file
your taxes, you must include proof that you are in a qualified plan. If not,
you will be fined thousands of dollars. Illegal immigrants are exempt from
this requirement.
• Sec. 412 (p. 272) says that employers must
provide a "qualified plan" for their employees and pay 72.5% of the cost,
and a smaller share of family coverage, or incur an 8% payroll tax. Small
businesses, with payrolls from $500,000 to $750,000, are fined less.
Eviscerating Medicare:
In addition to reducing future Medicare funding by
an estimated $500 billion, the bill fundamentally changes how Medicare pays
doctors and hospitals, permitting the government to dictate treatment
decisions.
• Sec. 1302 (pp. 672-692) moves Medicare from a
fee-for-service payment system, in which patients choose which doctors to
see and doctors are paid for each service they provide, toward what's called
a "medical home."
The medical home is this decade's version of
HMO-restrictions on care. A primary-care provider manages access to costly
specialists and diagnostic tests for a flat monthly fee. The bill specifies
that patients may have to settle for a nurse practitioner rather than a
physician as the primary-care provider. Medical homes begin with
demonstration projects, but the HHS secretary is authorized to "disseminate
this approach rapidly on a national basis."
A December 2008 Congressional Budget Office report
noted that "medical homes" were likely to resemble the unpopular gatekeepers
of 20 years ago if cost control was a priority.
• Sec. 1114 (pp. 391-393) replaces physicians with
physician assistants in overseeing care for hospice patients.
• Secs. 1158-1160 (pp. 499-520) initiates programs
to reduce payments for patient care to what it costs in the lowest cost
regions of the country. This will reduce payments for care (and by
implication the standard of care) for hospital patients in higher cost areas
such as New York and Florida.
• Sec. 1161 (pp. 520-545) cuts payments to Medicare
Advantage plans (used by 20% of seniors). Advantage plans have warned this
will result in reductions in optional benefits such as vision and dental
care.
• Sec. 1402 (p. 756) says that the results of
comparative effectiveness research conducted by the government will be
delivered to doctors electronically to guide their use of "medical items and
services."
Questionable Priorities:
While the bill will slash Medicare funding, it will
also direct billions of dollars to numerous inner-city social work and
diversity programs with vague standards of accountability.
• Sec. 399V (p. 1422) provides for grants to
community "entities" with no required qualifications except having
"documented community activity and experience with community healthcare
workers" to "educate, guide, and provide experiential learning
opportunities" aimed at drug abuse, poor nutrition, smoking and obesity.
"Each community health worker program receiving funds under the grant will
provide services in the cultural context most appropriate for the individual
served by the program."
These programs will "enhance the capacity of
individuals to utilize health services and health related social services
under Federal, State and local programs by assisting individuals in
establishing eligibility . . . and in receiving services and other benefits"
including transportation and translation services.
• Sec. 222 (p. 617) provides reimbursement for
culturally and linguistically appropriate services. This program will train
health-care workers to inform Medicare beneficiaries of their "right" to
have an interpreter at all times and with no co-pays for language services.
• Secs. 2521 and 2533 (pp. 1379 and 1437)
establishes racial and ethnic preferences in awarding grants for training
nurses and creating secondary-school health science programs. For example,
grants for nursing schools should "give preference to programs that provide
for improving the diversity of new nurse graduates to reflect changes in the
demographics of the patient population." And secondary-school grants should
go to schools "graduating students from disadvantaged backgrounds including
racial and ethnic minorities."
• Sec. 305 (p. 189) Provides for automatic Medicaid
enrollment of newborns who do not otherwise have insurance.
There is a huge
contradiction at the heart of Bernie Sanders' Medicare for All plan.
On the
one hand, Sanders not only wants to expand government-provided coverage to
everyone in the country, he wants that coverage to be significantly more
generous than Medicare, private insurance, or comparable government-run
systems in other countries. On the other hand, he wants to drastically cut
payments to hospitals, many of which lose money on Medicare right now,
making up for the program's relatively low payments by charging much higher
prices to private insurers.
What
Sanders is proposing, in other words, is that the government finance a
significant increase in government services while also radically reducing
the amount it pays for those services. Even making generous assumptions,
it's almost impossible to see how his plan could work.
Let's
start with the promises Sanders makes about Medicare for All. No networks,
premiums, deductibles, or copayments. Under his plan, essentially all
non-cosmetic services would be free at the point of care for everyone.
Sanders calls this
Medicare for All, but what he's describing isn't Medicare as we now know it.
As The New York Times noted
earlier this year upon the release of a Sanders-inspired Medicare for All
bill in the House, the new program would "drastically reshape Medicare
itself," changing both what it pays for and how. In many ways, it would be a
completely different program. Medicare for All, in other words, isn't really
Medicare.
And that
program would be far more expansive and expensive than nearly any other
comparable system. It would cover more, and require less direct financial
outlays (not including taxes), than either today's Medicare or typical
private insurance plans in the U.S.
It would also be substantially more generous
than the national health systems set up in other countries. Sanders likes to
unfavorably contrast America's mixed public-private health care system with
foreign systems where the government is more directly involved. When he
announced the 2017 version of his Medicare for All plan, for example, he
bemoaned
the state of affairs in the United States "a time when every other major
country on earth guarantees health care to every man, woman, and child."
Discussions about health care policy on social media often include some
variant of the question, "If every other country with a developed economy
can do it, why can't the United States?"
The problem with this line of questioning is
that what Sanders is proposing isn't what other
countries do. Canada, for example, has a
single-payer system, but it doesn't cover dental care, vision, drugs, or any
number of other services. A majority of Canadians carry private insurance in
order to cover those services. In Britain, which offers a fully socialized
medical system where health care providers are government employees, many
resident still buy private coverage. Sanders, on the other hand, would
effectively wipe out
private coverage in the space of just four
years.
There are
similar limitations on coverage in other countries, like the Netherlands.
It's also true in Australia, where patients typically pay a percentage of
the cost of specialty services. It's true that in these countries,
government plays a more central role in health care financing. But their
systems have also reckoned with costs and tradeoffs in a way that Sanders,
after so many years, has not.
Indeed,
the main trade-off that Sanders seems willing to discuss is the elimination
of insurance companies, which he portrays as greedy middlemen driving up the
cost of health care. Wiping out the industry in one fell swoop, as Sanders
has proposed, would be a unprecedented and disruptive move that would have
significant economic repercussions, including the probable loss of thousands
of insurance industry jobs. But it still wouldn't do much to bring down the
cost of health care, because so much money in the nation's health care
system is tied up in provider payments, especially hospitals.
And
therein lies the
(first)
contradiction.
Most
people probably think of hospitals as places where you go to get health care
services. Politically and economically, however, they also fulfill another
role: They are hubs for stable middle-class jobs, paying reasonably good
wages to thousands of highly trained workers, most of whom are not doctors
or specialists earning stratospheric salaries.
To
acquire the revenue to pay for all these jobs, hospitals rely on a mix of
private and public payments. Public payments make up a somewhat larger share
of total hospital budgets, but private payers are typically charged much
higher prices.
Hospitals
like to argue that Medicare and Medicaid payments are too low to cover their
costs, and that as a result, higher private payments effectively subsidize
public health coverage. Critics (with some evidence) often respond that
hospitals either overstate or don't really understand their own costs, and
that this is just a ploy to extract more money from government health
programs and private payers.
But when
considering Medicare for All, the particulars of this debate are largely
beside the point, because there is simply no question that eliminating
private insurance and payment for all services would drastically reduce the
amount of revenue for hospitals.
Yet that
is exactly what Sanders wants to do. His plan calls for paying for health
care services at Medicare rates, which means that, practically overnight,
hospitals would end up with far, far less revenue. Exactly how much is
unclear, but one estimate indicated that payments could drop by as much as
40 percent.
That would leave hospitals with a couple of
difficult choices. They could eliminate services. They could try to force
some employees to take pay cuts. They could fire large numbers of workers.
Or they could simply shut down. As a recent New York Timesreport
on how Medicare for All would affect hospitals noted, rural hospitals—many
of which are already struggling to stay afloat—would be particularly at risk
of closing.
Whatever
ended up happening, there is simply no way most hospitals would or could
continue operating as they do now under the payment regime that Sanders
envisions. Lots of middle class jobs would disappear. Services would be
eliminated or cut back.
Yet Sanders not only imagines that hospitals
would continue to operate as they do now, but that they would expand their
services to
even more people, since more people would have coverage. And since he
also imagines a system with no deductibles or copays, those people would
almost certainly end up dramatically increasing utilization of hospital
services.
Studies of health insurance have consistently
shown
that expansions of health insurance result in increased demand for (and use
of) health care services; more people with coverage means more people lining
up to get care. (Relatedly, introducing even very small copays—on the order
of just a few dollars—can reduce the number of visits to doctors and
hospitals.) Greater utilization of health care services does not necessarily
translate into
measurably better
physical health outcomes. But it does
increase the strain on the health care delivery system—which is to say, it
puts a huge amount of pressure on hospitals.
Continued in article
Jensen Comment
Another contradiction is that to pay for Medicare-for-All program Bernie Sanders
wants to tax most of what high-income workers earn, and the highest income
professionals in the USA on average are physicians. There is currently a
shortage of physicians. This shortage will become critical as medical care
becomes virtually free and often overused as a free service by hundreds of
million residents of the USA.
Here's the second contraction
Taxing physician income at 70% or more will discourage students from becoming
physicians and will give existing physicians incentives to retire early or work
at leisurely part-time doctoring. Far better work two days per week and pay a
30% income tax rate than to be a 60--hour week highly stressed, and overworked
physician being taxed at 70% of every extra dollar earned.
Vox: The Bernie Sanders national medical plan has
lots of details about what single-payer would cover. It has less information on
how to pay for it (well over $3 trillion per year and growing for more generous
coverage than all other national health plans) ---
https://www.vox.com/2019/4/10/18304448/bernie-sanders-medicare-for-all
. . .
Medicare, employer coverage, and these other countries show that nearly every
insurance scheme we’re familiar with covers a smaller set of benefits with
more out-of-pocket spending on the part of citizens.
Private insurance plans often spring up to fill these gaps (in Canada, for
example, vision and dental insurance is often sponsored by employers, much
like in the United States).
The reason they went this way is clear: It’s cheaper to run a health plan
with fewer benefits. The plan Sanders proposes has no analog among the
single-payer systems that currently exist. By covering a more comprehensive
set of benefits and asking no cost sharing of enrollees, it is likely to
cost the government significantly more than programs other countries have
adopted
. . .
But who pays how
much more is a key question this Sanders bill doesn’t answer yet. Until
there is a version that does, we can’t know whether the health system the
Vermont senator envisions could actually become reality.
Jensen Comment
The Sanders plan eliminates all private-sector medical insurance companies and
eliminates Medicare and Medicaid.
The good news for us retired folks is that long-term care insurance that is
not covered presently under Medicare will cover us retired folks. Hooray for
Bernie! I can eat, drink, and be merry on my long-term care savings.
Two things Bernie does not like to discuss is the impact on doctors and
hospitals. At present many (most?) of the top physicians and hospitals refuse
Medicaid patients because of caps placed on fees. Many also reject Medicare
patients, but more of them are covered because of supplemental private insurance
benefits that can be added to Medicare insurance. Presently Erica and I pay over
$1,200 for supplemental benefits that will not be allowed under the Sanders'
plan.
I think Sanders does not like to discuss caps that will be placed on
physician billings and hospital rates because the medical profession would
otherwise crank up an huge lobbying effort against his plan. The medical
profession has only begun to fight.
Also Sanders does not like to discuss the shortage of physicians and hospital
services that will arise when bringing tens of millions of people into his plan
(think nearly 20 million undocumented residents that will be covered in rural
areas already underserved with doctors and hospitals).
Also Sanders does not like to discuss the transition costs in creating the
vast government bureaucracy that does not exist for processing medical insurance
claims. At present Medicare and Medicaid outsource
claims processing to the private sector. Bernie plans to kill that outsourcing
sector.
Bernie Sanders: "You’re Damn Right We’re Going to Destroy Private Health
Insurance" ---
Click Here
And he will limit the number of doctors by regulating what they're allowed to
earn.
And Bernie plans on taxing high income
earners in the USA by taking away 70% or more of what they now earn. What will
be the incentive for spending years of misery to become a physician good at a
craft that will be taxed to death rather than rewarded after all those years of
misery?
The problem with becoming a physician is not just the cost of medical school.
The problem is the ordeal --- those years of education and training needed to
become masters of their crafts. The time needed varies with specialties, but you
don't become a neurosurgeon without years of ordeal in training before you can
bill your first paying patient. And there's a lot of blood, sweat, and tears in
those training years. Even worse is that there's a lot of weekly tension and
risk of burn out in the years of practice that follow. Tell that to the
advocates of Medicare-for-All combined with soaring taxes!
Why did Cuba
abandon its socialist/communist dream of equality for everybody? The Guardian: This was the
egalitarian dream of Cuba in the 1960s: For years in Cuba, jobs as varied as
farm workers and doctors only had a difference in their wages of the equivalent
of a few US dollars a month.
https://www.theguardian.com/world/2008/jun/12/cuba
Jensen Comment
Only now is Cuba backtracking from its egalitarian dream by uncapping wages and
legalizing profits while liberals in the USA want to return again to the 1960s
Cuban dream.
But is Denmark socialist? …Denmark doesn’t at
all fit the classic definition of socialism, which involves government ownership
of the means of production. It is, instead, social-democratic: a market economy
where the downsides of capitalism are mitigated by government action, including
a very strong social safety net. …The simple fact is that there is far more
misery in America than there needs to be. Every other advanced country has
universal health care and a much stronger social safety net than we do.
Paul Krugman
https://www.nytimes.com/2015/10/19/opinion/something-not-rotten-in-denmark.html
Jensen Comment
What Krugman does not mention is that Denmark is mostly a homogeneous (white)
nation of less than 6 million people. It's much more difficult and expensive to
afford and maintain a similar safety net with over 300 million highly diverse
people located on top of a very porous border with thousands trying to sneak in
daily to enjoy the safety nets.
Ending Jensen Comment
But don't get me wrong! Erika and I will vote for Bernie Sanders since
our possible expensive long-term health care not funded by Medicare will soon be
free. To hell with the future economic engine of the USA. Bring on the Bernie
Sanders' socialism since I'm too old to witness the chaos and economic
destruction that follows in its path. Since Democrats are promising free
everything why shouldn't Erika and I get in on the free everything?
"But (American) virtuous feelings have been played
on by some facts with more fiction; they have been the dupes of artful
maneuvers, and made for a moment to be willing instruments in forging chains for
themselves.” Thomas Jefferson
William J. Watkins, Jr., Winter 1999, “The Kentucky and Virginia
Resolutions: Guideposts of Limited Government,”
The Independent Review,
Vol. III, No. 3, pp. 406-407.
March 21, 2019
Hi Elliot,,
You must also realize that when the wealthy people fund the new
ventures they are also taking on highe financial risks. For some the payout is
more wealth. For others there are huge losses. Bill Gates and Warren Buffet and
other billionaires lost big time in Theranos. But Theranos and other more
successful ventures got a chance that they would never get in Europe due to all
the regulations and red tape entanglements and high taxes.
How many innovative ventures that succeeded and failed have been
funded by European nations like the Nordic nations? And in China and Russia
these new ventures probably could not get started without having the best ideas
stolen/hacked from the USA.
You raised the question: "At what point do most
people take Sen. Warren or Rep. AOC more seriously and consider
their solutions
as reasonable instead of fringe?"
Do you really think Warren and AOC have thought out "their
solutions" even to the satisfaction of their own party?
Most Democrats consider AOC and Warren economics fringe and worry
that at adding $100+ trillion in social spending might destroy the USA economic
engine.
If the nation were building a health-care system from scratch, single-payer
might be the rational choice. Even now, with many Americans reasonably satisfied
with their employer-sponsored coverage, politicians can make an argument that
they’d be better off in a different system. But
they should not make that argument by exaggerating the benefits or lowballing
the costs of single-payer, as Medicare-for-all advocates so often do.
Any system will demand tradeoffs and constraints.
The Democratic Party is Split
“You have to make decisions that you’re going to reach certain goals, and some
of our goals
we think are achievable”
Nancy Pelosi
(when criticizing Alexandria's Green New Deal and Basic (Guaranteed) Income
Medicare-for-All) Click Here
What
do you see in the Warren and AOC solutions that are sustainable from the
standpoint of economic reality?
Yes we can move toward universal healthcare in a number of ways, but certainly
not in the way that the fringe candidates want to do by eliminating all private
sector insurance
in two years.
The US
military budget is such a bloated monstrosity that it contains accounting
errors that could finance two-thirds of the cost of a government-run
single-payer health insurance system. All Americans could visit an unlimited
array of doctors at no out of pocket cost. At least that’s a notion
spreading on left-wing Twitter and endorsed and amplified by newly elected
Rep. Alexandria Ocasio-Cortez,
one of Democrats’ biggest
2018 sensations
and an undeniable master at the fine art of staying in the public
eye.
Unfortunately, it’s not true.
The idea
spread like a game of telephone from a Nation article
to the US Congress while losing a crucial point of detail: The Pentagon’s
accounting errors are genuinely enormous, but they’re also just accounting
errors — they don’t represent actual money that can be spent on something
else.
Proponents of this vision have the political wind at their backs and
continue to deploy the idea effectively to win intra-party arguments without
really making any headway on the core obstacles to writing a
Medicare-for-all bill that could become law. That said, to the extent that
political power rather than concrete legislation is the goal, that’s
probably for the best.
Misunderstandings fly around on Twitter all the time, and
AOC’s level of policy knowledge is pretty typical for a member of Congress.
But this particular flub is telling about progressive frustration over the
double standard on military versus non-military spending, and also the
fraught state of play regarding the push for a Medicare-for-all program.
The Pentagon’s mystery $21 trillion, explained
The underlying article by Dave Lindorff in the Nation
that kicked this off is an investigative report into the
Defense Department’s accounting practices.
Lindorff reveals that Pentagon accounting is quite weak, that the department
keeps flunking outside audits, that funds are shifted between accounts
without proper oversight, and that overall documentation of what’s actually
happening with the Pentagon’s vast budget is extremely poor.
Lindorff goes beyond these observations to allege that what’s happening
amounts to deliberate fraud, the purpose of which is to persuade Congress to
increase appropriations levels beyond what would otherwise be approved.
Continued in article
Jensen Comment
We really cannot compare proposed Medicare-for-All plan without more specific
definitions of "Medicare-for-All" and the "cared for population." For example,
Medicare currently does not pay for the enormous cost of long-term nursing care.
Medicare only pays 80% of most of the things it does cover like hospital and
doctor care.
Also Medicare has built up trust funds over the 50 years using payroll
deductions from individuals and employers. The trust funds are not sustainable
at predicted usage rates, but it's not like the existing Medicare program did
not accumulate any finds for the elderly and disabled. A
Medicare-for-All plan does not have 50 years of payroll deductions to help pay
for an abrupt shock to the system.
Advocates of Medicare-for-All never mention that Medicare for all is mostly a
private sector program where claims are serviced in the private sector along
with private sector doctor, nursing, and medicine delivery of goods and
services. Medicare is not like the U.K. system where most services are delivered
by government employees.
The Nation's analysis of the Defense Department's expenses ignores the fact
that even if we entirely eliminated the current Army, Navy, and Air Force the
government's obligations to retired and disabled former military personnel would
carry on for hundreds of billions of dollars into the indefinite future. And how
long would the USA and its Medicare-for-All program survive without any Army,
Navy, and Air Force?
The Nation's analysis is an example of totally irresponsible and misleading
statistics.
“Medicare for all…would mean allowing individuals and employers to buy into
Medicare – basically a big public option.” Who says? Well Paul Krugman and
many others. This is not simply a debate about labels. This is a debate
about fundamental policy. Are we going to accept the status quo with the
tweak of a public option, or are we going to address the fundamental defects
in our system that have driven up costs, perpetuated mediocrity, and left
tens of millions vulnerable with impaired access to health care with all of
its consequences and often with intolerable financial hardship?
This
is similar to the debate that took place within the Democratic Party just
before Hillary Clinton and Barack Obama began jockeying for the 2008
presidential nomination. The Democratic Party machine was in complete
control of the policy debate on health care reform. The neoliberal party
elite had decided that we were going to “build on what works” –
employer-sponsored and union-supported plans – and reject single payer based
on their concepts of what was politically feasible. Those of us advocating
for the expanded and improved Medicare for all single payer approach were
ejected from the conversations (often rudely so – they were in charge!).
Similarly, with the contest for the 2016 Democratic presidential nomination,
the debate at the platform committee confirmed that the battle had not
changed. The neoliberal leadership, represented by Neera Tanden, was
successful in rejecting the single payer Medicare for all plank.
Tanden,
of the Center of American Progress, has continued the fight for control of
the policy debate by releasing their new proposal, “Medicare Extra For All.”
Although some of the tweaks proposed seem beneficial, it basically continues
the current dysfunctional, fragmented financing system, but with one
important political change. They have stolen the “Medicare for all” label!
This has contributed to the ubiquitous deception that the public option is
Medicare for all. When the current candidates campaign on Medicare for all
but behind the scenes are supporting an option to buy into Medicare while
accepting campaign funds from the insurance and pharmaceutical industries,
we need to call them on their deception.
It is
no wonder the public is confused, even if they do not realize it. When Nobel
laureate Paul Krugman jumps in and says Medicare for all is allowing
individuals and employers to buy into Medicare as a public option, then we
know that the political campaigns are corrupted with deceptions. How can we
get the public to understand that a well designed, single payer national
health program – a bona fide Improved Medicare for All – is the reform that
they crave?
From the CFO Journal's Morning Ledger on May 11, 2017
Aetna to pull out of Affordable Care Act exchanges
Aetna Inc.
said it would pull out of the Affordable Care Act exchanges in Delaware and
Nebraska next year, confirming that the insurer will exit all of the
marketplaces where it currently sells plans.
Jensen Comment
I must admit that I too am in favor of a German-style medical insurance system
where there is a national plan funded by taxpayers with added premium plans
funded by companies or people themselves.
Jensen Comment
One misleading statement that 20 million uninsured got medical insurance under
Obamacare. That may be literally true, but most either got added to Medicaid
(free medical insurance that could have happened without the complicated
legislation of Obamacare) or insurance with such enormous deductibles that those
insured could not afford to use that insurance and went to emergency rooms
instead for free medical care.
The other sad thing about Obamacare (and Medicaid) is that so many doctors
and hospitals refused to accept patients insured by Obamacare.
Some of Chicago’s largest hospitals said they will not be part of any Cook
County Affordable Care Act marketplace plans in 2017.
University of Chicago Medical Center and Rush University Medical Center both
said they don’t plan to be in network for any Obamacare marketplace plans
next year.
The change means patients with doctors at those hospitals will either need
to find a plan off the marketplace, and lose Obamacare subsides, or find a
new doctor.
Northwestern Memorial Hospital said it will also be out of the marketplace,
but will have exceptions for some of its partner hospitals.
Continued in article
According to emergency room physicians Obamacare made it much worse for
emergency rooms.
American College of Emergency Room Physicians The Uninsured: Access to Medical Care Fact Sheet --- http://newsroom.acep.org/fact_sheets?item=30032
ObamaCare has suddenly been injected back into the
2016 election debate, on the news of the law’s 25%-plus average premium
increase for 2017. Even Donald Trump is talking about it. With only two
weeks to go, this is a moment for voters to hold accountable the Democrats
who imposed this debacle on the country over voter objections.
Next year’s enormous price increases are merely the
latest expression of ObamaCare’s underlying problems, and the dysfunction is
undermining the health security of Americans who lack employer coverage. A
wave of major insurers have quit the exchanges, and those that are left have
raised deductibles and copays and restricted choices of doctors and
hospitals. The public is witnessing—and the unlucky are experiencing—the
collapse of one progressive promise after another.
At every stage of the ObamaCare saga, liberals said
not to worry. Sure, the law was unpopular when Democrats rammed it through
Congress on a partisan vote in 2009-10, but voters would learn to love it
once the subsidies started rolling. That didn’t happen, and in 2014
President Obama tried to buck up Democrats by saying that “five years from
now” people will look back on the law as “a monumental achievement.” Two
years later it’s worse.
Nothing
could shake the liberal faith in their supposed landmark: Not the
Healthcare.gov website fiasco of 2013, or the millions of individual health
plans that were cancelled despite President Obama’s promise about keeping
them. The left kept the faith as the entitlement subtracted from economic
growth, hurt incomes and killed jobs. MIT economist Jonathan Gruber called
the critics stupid, and Mr. Obama denigrates anyone who disagrees with him
as illegitimate or politically motivated.
Now
reality is confirming what the critics predicted. ObamaCare’s regulatory
mix—benefit mandates, requiring insurers to sell coverage to all comers, and
narrow ratings bands that limit how much premiums can vary by health
status—was tried by several states in the 1980s and ’90s. Every one saw the
same results that are now unspooling nationally: high and rising costs, low
and declining enrollment, and less insurer and provider competition.
The
Affordable Care Act was supposed to solve these predictable disruptions with
subsidies and a mandate to buy insurance or pay a penalty. But most people
don’t think ObamaCare plans provide value for the money, especially if they
are non-subsidized.
So
now the liberal line is that ObamaCare has a few problems, but don’t worry:
The same geniuses who wrote the law know how to fix it. The Bernie
Sanders-Elizabeth Warren left wants a new “public option,” higher subsidies,
more price controls and even more intrusive regulatory control.
Hillary Clinton
has endorsed all of this.
“The
Affordable Care Act has done what it was designed to do,” Mr. Obama declared
last week in Miami, apparently meaning that the law has reduced the number
of uninsured. But most of the coverage gains have come from dumping patients
into Medicaid, a failing program that provides substandard care. Nominally
private exchange plans increasingly resemble Medicaid too.
Mrs.
Clinton may be horse-whispering Ms. Warren now, but ObamaCare’s failures
aren’t likely to bring the U.S. closer to their single-payer nirvana any
time soon. ObamaCare was the best Democrats could do when they had a 60-vote
Senate supermajority and bought off interest groups like the insurers,
hospitals, drug makers and American Medical Association.
The only
way to break the ObamaCare status quo is if the public returns a Republican
Congress to Washington. If Republicans can hold the Senate amid a Clinton
victory, they’d be in a better position to negotiate solutions along the
lines of the House GOP “Better Way” blueprint that would start to repair the
individual market and create incentives for more choice and competition.
Take
Wisconsin, where Democrat Russ Feingold cast the deciding 60th vote for
ObamaCare and voters fired him for it in 2010. He’s back hoping voters
forget. Evan Bayh, who also cast the deciding vote before retiring to become
a superlobbyist, is back facing Indiana voters and Hoosiers can deliver a
verdict.
In
Arizona, premiums will rise a mind-boggling 116%, only two insurers are
still selling plans, and John McCain
has made ObamaCare a major theme. His opponent, Congresswoman Ann
Kirkpatrick, calls ObamaCare her “proudest vote.” Katie McGinty likes to say
Pennsylvanians should be “proud of ObamaCare,” though the commonwealth is
slated for a 53% increase. A memo about ObamaCare pride month must have gone
out from Democratic HQ.
Mr. Trump
has missed a chance by not prosecuting a consistent case against ObamaCare,
despite Mrs. Clinton’s past as the chief architect of its HillaryCare
prototype in the 1990s. As that episode shows, the longstanding progressive
goal has been to centralize political control over American health care.
Now
voters are finally seeing what happens when the planners try to design a
single health-care solution for a large and diverse country. Mr. Obama
called ObamaCare “a starter home” in Miami. Republicans ought to campaign as
the bulldozer.
From the CFO Journal's Morning Ledger on December 2, 2016
Obamacare’s bright spots and drawbacks
Here’s the good news: Thanks to the Affordable Care
Act, or Obamacare, more Americans have access to health care than ever
before, Leemore Dafny and Dr. Thomas Lee write for Harvard Business Review.
The bad news? The care itself hasn’t improved much. Despite the hard work of
dedicated providers, our health-care system remains chaotic, unreliable,
inefficient and crushingly expensive.
Some of Chicago’s largest hospitals said they will not be part of any Cook
County Affordable Care Act marketplace plans in 2017.
University of Chicago Medical Center and Rush University Medical Center both
said they don’t plan to be in network for any Obamacare marketplace plans
next year.
The change means patients with doctors at those hospitals will either need
to find a plan off the marketplace, and lose Obamacare subsides, or find a
new doctor.
Northwestern Memorial Hospital said it will also be out of the marketplace,
but will have exceptions for some of its partner hospitals.
Continued in article
According to emergency room physicians Obamacare made it much worse for
emergency rooms.
American College of Emergency Room Physicians The Uninsured: Access to Medical Care Fact Sheet --- http://newsroom.acep.org/fact_sheets?item=30032
Despite the enduring
unpopularity of Obamacare, Congressional Democrats have up to now stood by
their health care law, allowing that “it’s not perfect” but that they are
proud of their votes to pass it. That all changed on Tuesday, when the
Senate’s third-highest-ranking Democrat—New York’s Chuck Schumer—declared
that “we took [the public’s] mandate and put all our focus on the wrong
problem—health care reform…When Democrats focused on health care, the
average middle-class person thought, ‘The Democrats aren’t paying enough
attention to me.’”
Sen. Schumer made his
remarksat the National Press Club in
Washington. “Democrats blew the opportunity the American people gave
them…Now, the plight of uninsured Americans and the hardships caused by
unfair insurance company practices certainly needed to be addressed,”
Schumer maintained. “But it wasn’t the change we were hired to make.
Americans were crying out for the end to the recession, for better wages and
more jobs—not changes in health care.”
“This
makes sense,” Schumer continued, “considering 85 percent of all Americans
got their health care from either the government, Medicare, Medicaid, or
their employer. And if health care costs were going up, it really did not
affect them. The Affordable Care Act was aimed at the 36 million Americans
who were not covered. It has been reported that only a third of the
uninsured are even registered to vote…it made no political sense.”
The
response from Obama Democrats was swift. Many, like Obama speechwriters Jon
Lovett and Jon Favreau and NSC spokesman Tommy Vietor, took to Twitter.
“Shorter Chuck Schumer,” said Vietor, “I wish Obama cared more about helping
Democrats than sick people.
On Donald
Trump’s victory Republicans in Congress are primed for an ambitious agenda,
and not a moment too soon. One immediate problem is ObamaCare’s expansion of
Medicaid, which has seen enrollment at least twice as high as advertised.
Most of the
insurance coverage gains from the law come from opening Medicaid eligibility
beyond its original goal of helping the poor and disabled to include
prime-age, able-bodied, childless adults. The Supreme Court made this
expansion optional in 2012, and Governors claimed not joining would leave
“free money” on the table because the feds would pick up 100% of the costs
of new beneficiaries.
In a new
report this week for the Foundation for Government Accountability, Jonathan
Ingram and Nicholas Horton tracked down the original enrollment projections
by actuaries in 24 states that expanded and have since disclosed at least a
year of data on the results. Some 11.5 million people now belong to
ObamaCare’s new class of able-bodied enrollees, or 110% higher than the
projections.
Analysts in
California expected only 910,000 people to sign up, but instead 3.84 million
have, 322% off the projections. The situation is nearly as dire in New York,
where enrollment is 276% higher than expected, and Illinois, which is up
90%. This liberal state triumvirate is particularly notable because they
already ran generous welfare states long before ObamaCare.
Continued in article
Jensen Comment
President Obama baited the hook by claiming the Federal Government would pay for
Medicaid expansion. But the states that took the bait are now on the hook.
Medicaid is not the largest single expense item in most states, and the expense
that will go completely out of control (heavily due to fraud) will be the cost
of caring for older people where medical expenses are greatest, especially since
Medicaid foots sometimes years of all nursing home and medication costs.
Many doctors won’t take the insurance, and the care
patients do receive is inferior. Here’s a solution.
The two principal expenditures of the Affordable
Care Act so far include $850 billion for insurance subsidies and a similar
outlay for a massive Medicaid expansion. The truth is that Medicaid—a
program costing $500 billion a year that rises to $890 billion in
2024—funnels low-income families into substandard coverage. Instead of
providing a pathway to excellent health care for poor Americans, ObamaCare’s
Medicaid expansion doubles down on their second-class health-care status.
Already 55% of doctors in major metropolitan areas
refuse new Medicaid patients, according to the 2014 Merritt Hawkins annual
survey. Even of those providers signed up with Medicaid, 56% of primary-care
doctors and 43% of specialists are not available to new patients. Moreover,
numerous studies have found that the quality of medical care is inferior
under Medicaid, compared with private insurance. Lower quality means more
in-hospital deaths, more complications from surgery, shorter survival after
treatment, and longer hospital stays than similar patients with private
insurance.
The two principal expenditures of the Affordable
Care Act so far include $850 billion for insurance subsidies and a similar
outlay for a massive Medicaid expansion. The truth is that Medicaid—a
program costing $500 billion a year that rises to $890 billion in
2024—funnels low-income families into substandard coverage. Instead of
providing a pathway to excellent health care for poor Americans, ObamaCare’s
Medicaid expansion doubles down on their second-class health-care status.
Already 55% of doctors in major metropolitan areas
refuse new Medicaid patients, according to the 2014 Merritt Hawkins annual
survey. Even of those providers signed up with Medicaid, 56% of primary-care
doctors and 43% of specialists are not available to new patients. Moreover,
numerous studies have found that the quality of medical care is inferior
under Medicaid, compared with private insurance. Lower quality means more
in-hospital deaths, more complications from surgery, shorter survival after
treatment, and longer hospital stays than similar patients with private
insurance.
.
Legislation signed by President Bill Clinton in 1996 transformed the federal
welfare program into a pathway to self-sufficiency. In the same way,
Medicaid should be redesigned as a bridge toward affordable private
insurance. First, the new Medicaid should include a private-insurance option
with catastrophic coverage but few coverage mandates for all enrollees.
Second, new Medicaid should establish and put
initial funds into health savings accounts using part of the current federal
dollars already going into Medicaid. This will empower beneficiaries and
give them incentives to follow healthy lifestyles to protect those new
assets. With these reforms, doctors and hospitals would receive payments
from the same insurance as from non-Medicaid patients. Because health
providers receive the same payments whether they treat Medicaid or
non-Medicaid patients, the limited access and substandard treatment options
under Medicaid would be eliminated.
To ensure availability of the same coverage to both
Medicaid and non-Medicaid beneficiaries, federal funding would go only to
eligible people in states that offer these same coverage choices to the
entire state population. Federal money will be contingent on states meeting
thresholds for the number of Medicaid enrollees moved into private coverage.
Federal funds would go directly into beneficiary HSAs or to premium
payments, rather than into state bureaucracies. States should want this new
program because it will reduce the administrative costs of running a
separate insurance program and, most important, provide access to quality
health care for their residents.
Ultimately, traditional Medicaid would be
eliminated as new enrollees move into private coverage. These reforms would
change the purpose and culture of Medicaid agency offices from running
government-administered plans to establishing HSAs and finding private
insurance for beneficiaries.
Why focus on lower-cost, high-deductible health
insurance coupled with HSAs? Published studies have shown that pairing HSAs
with high-deductible coverage reduces health-care costs. Patient spending
averages 15% lower in high-deductible plans, with even more savings when
paired with HSAs—without any consequent increases in emergency visits or
hospitalizations and without a harmful impact on low-income families.
Secondarily, wellness programs that HSA holders more commonly use improve
chronic illnesses, reduce health claims and save money.
The flaws in existing long term care insurance policies are many. One common
gripe is that premiums are too high relative to benefits. But Tonetti’s
model shows that demand for long-term care insurance isn’t very sensitive to
price — increasing premiums by 30% over the actuarially fair price had
little effect on purchases.
The bigger deterrent, surely, is that the policies one can buy today don’t
actually eliminate risk. “Those earlier studies basically assumed we all
have access to a state-contingent asset and choose not to buy it,” Tonetti
says. “But these aren’t state-contingent assets at all. They work on a
reimbursement model. You pay for the care yourself and then hope to get your
money back.”
Stories abound of insurance companies denying claims or dragging out the
process. “It can get adversarial,” Tonetti says, “and you might be in no
shape to fight back or might be dying and have a short horizon.”
Short stays in a facility, the most common case, are not covered because of
deductibles. Long stays, often needed for patients with cognitive decline —
the most expensive case — are not covered because benefits end after one to
five years. Within those bounds, there are limits on the services paid for
and where they can be delivered. And, oh, your premiums might be raised at
any time; fail to pay and you lose your coverage.
Future Potential
Tonetti says those flaws don’t entirely explain the under-insurance puzzle.
When the better policy was explained to test subjects, not all those
predicted to want it said they’d actually buy it. But that gap arose mainly
among the wealthiest individuals, who can rely on their own resources.
For the majority of elderly Americans, the introduction of an improved form
of long-term care insurance would offer a tremendous increase in quality of
life, not to mention peace of mind. And by lightening the load on Medicaid,
it would be a relief for state and federal finances as well.
That’s not to say it would be easy. These papers don’t analyze why the
market appears to be failing, but fears of “adverse selection” are likely a
factor; that’s when coverage is purchased mainly by people who expect to
cash in on the benefits, making it unprofitable. But Tonetti and his
colleagues have convincingly demonstrated that there’s an unmet demand for
long-term care insurance — a big opportunity for any insurer who can figure
it out.
Jensen Comment
One thing the article does not mention is a tactic taken by many, many folks
approaching possible long-term care (usually in nursing homes but sometimes at
home). The tactic is to plan ahead and push all the assets to the heirs before
long-term care is needed. Then the heirs support the old folks until if and when
those "impoverished" old folks now qualify for Medicaid to pay all the long-term
care bills. Their Medicare will not pay for long-term care but their Medicaid
will pay for all long-term care. A friend of mine insists this tactic is
perfectly legal. But if it's legal (I'm not entirely convinced) its certainly
not ethical to shield the savings of older folks from the expenses of their
long-term care.
Younger folks such as severely disabled young adults generally can be turned
over to states to pay for their long-term care. This is all perfectly legal. And
in my opinion it's ethical since these unfortunates generally do not have their
own savings for such purposes. Decades ago parents usually had to pay for the
long-term care of their disabled children, and some still do contribute to their
long-term care. But this is less and less common.
In other nations like Canada and the United Kingdom long-term care expenses
created crises in funding.
Back
home, though, Canadians seem far more critical of the system. If you follow
the internal Canadian debate, you’ll hear the
word “crisis.” In fact, many Canadian healthcare economists warn that their
system is headed for a major collapse. The aging population has continued to
stress an already fragile system. This is the same system that many
proponents of the Affordable Care Act, or Obamacare, pointed to as a model.
Another model of national health care cited by fans of the ACA is the UK’s
National Health Service (NHS). Like the Canadian system, there seems to be
one attitude for export and another for domestic consumption. You may recall
the odd tribute to the UK’s National Health Service (NHS) in the opening
ceremony of the 2012 Olympics. The NHS was portrayed as a sea of Mary
Poppins bliss. At home, though, Brits had reason to complain. The UK was
rated as having the worst patient care and lowest cancer survival rates in
the Western World.
The
NHS is in even worse shape now, and complaints are growing louder.
According to the committee that represents UK hospitals, the
NHS is on the verge of collapse. The former health minister Paul Burstow warned of this outcome two years ago.
At the time, increases in the NIH budget were limited to the rate of
inflation. But that did not allow for the increased cost of a growing
elderly population. The NIH effort to find £30 billion in “efficiency
savings” was already putting enormous strains on the system.
So it shouldn’t be surprising that the Affordable Care Act, which was
inspired by the Canadian and British systems, is in deep trouble.
Though I predicted it, it is worrisome when the act’s biggest supporters,
including
The New York Times,
admit the program’s flaws.
The growing aged population is a huge financial burden
Obamacare doesn’t deal with the real source of rising healthcare costs: the
increase in age-related diseases due to a growing elderly population. It is
mathematically impossible to cut societal medical costs while at the same
time providing adequate healthcare to a growing and increasingly expensive
older population.
This is not just a problem with health care. Social Security and pension
funds are running deficits, which will also worsen. Alan Greenspan, former
chairman of the Federal Reserve, recently said that he has lost the optimism
that he has long been known for. The reason
is that “we have a 9 percent annual rate of increase in entitlements, which
is mandated by law. It has got nothing to do with the economy. It has got
to do with age and health and the like.”
Greenspan points out that politicians refuse to deal with the “third rail”
of entitlements. I agree, but I think there’s a solution. Politicians claim
that voters won’t accept delayed retirement. But the evidence shows that
most people would like to work longer and save more to pay their own way.
Zoya Financial reports that almost two thirds of Americans have to retire
earlier than planned, largely due to problems with their own health or a
spouse’s.
Anti-aging biotechnologies are in labs right now that could lengthen health
spans and working careers. This would allow us to save our entitlement
systems. But economists and politicians still have no clue about the
biotechnological progress that has marked the start of the 21st
century. This will change because it must… but I hope it happens soon
Like health-care systems around the world, the National Health Service (NHS)
is struggling to provide good care at low cost for patients such as Mrs
Evans (not her real name). Its business model has not kept up with the
changing burden of disease. For as more people enter and live longer in
their dotage, demand increases for two costly types of care. The first is
looking after the dying.
About 25% of all hospital
inpatient spending during a person’s lifetime occurs in the final three
months. The second is caring for those with more than one chronic
condition. About 70% of NHS spending goes on long-term illnesses. More than
half of over-70s have at least two and a quarter have at least three. In
south Somerset 50% of health and social-care funding is spent on 4% of
people.
. . .
If one fallacy about the NHS is that it is the envy
of the world, as its devotees claim, another is that it is a single
organisation. In fact it is a series of interlocking systems. Public health,
hospitals, general practitioners (or GPs, the family doctors who provide
basic care outside hospitals) and mental-health services all have separate
funding and incentives. Social care, which includes old-folks’ homes and the
like, is run by local councils, not the NHS
. . .
So the NHS must do more with what it already
spends. A sign of inefficiency is the 6,000 patients in English hospitals
who are ready to go home but not yet discharged, up from 4,000 in 2013. They
cost the service hundreds of millions of pounds per year and obstruct others
from treatment. The bed-blockers themselves are harmed, too. Elderly
patients lose up to 5% of muscle strength for every day they are laid up in
hospital. Some delays are the result of council cuts: about 400,000 fewer
old people receive social care than in 2010, meaning that hospitals are
sometimes used as expensive alternatives to care homes. But most are due to
how hospitals are run.
. . .
On average, the framework made GPs some of the
highest-paid family doctors in the world when it was introduced in 2004. But
since then it has become less generous. GPs’ real-terms income has fallen by
one-fifth. This, and poor planning, has led to a shortage of them. England
needs 5,000 more in the next five years. The NHS is mulling a deal with
Apollo, whereby the Indian health-care firm supplies enough doctors to fill
the gap.
. . .
The move from “volume to value”—that is, from
paying providers for the procedures they carry out to paying them for the
outcomes they achieve—has helped to stem the cost of Medicare, the American
health system for pensioners. The expansion of ACOs as part of Obamacare led
to reduced mortality rates and savings for providers of about 1-2%. But Dan
Northam Jones, a visiting fellow at Harvard,
warns that the potential for savings is greater in systems like Medicare,
where there is no cap on spending.
And yet ACOs reflect a growing belief that if you
want radically to improve health care you have to change how you pay for it.
They will not solve all the problems of the NHS, some of which are inherent
in its taxpayer-funded model. But perhaps its business model may yet catch
up with how illness is changing. The NHS should forget being the envy of the
world, and instead learn from it.
On November 22, 2009 CBS Sixty Minutes aired a video featuring experts
(including physicians) explaining how the single largest drain on the Medicare
insurance fund is keeping dying people hopelessly alive who could otherwise be
allowed to die quicker and painlessly without artificially prolonging life on
ICU machines.
"The Cost of Dying,"CBS Sixty Minutes Video, November 22, 2009
---
Rarely has the Atlantic seemed as wide as
when America's health-care debate provoked a near unanimous response from
British politicians boasting of the superiority of their country's National
Health Service. Prime Minister Gordon Brown used Twitter to tell the world
that the NHS can mean the difference between life and death. His wife added,
"we love the NHS." Opposition leader David Cameron tweeted back that his
plans to outspend Labour showed the Conservatives were more committed to the
NHS than Labour.
This outbreak of NHS jingoism was brought
to an abrupt halt by the Patients Association, an independent charity. In a
report, the association presented a catalogue of end-of-life cases that
demonstrated, in its words, "a consistent pattern of shocking standards of
care." It provided details of what it described as "appalling treatment,"
which could be found across the NHS.
A few days later, a group of senior
doctors and health-care experts wrote to a national newspaper expressing
their concern about the Liverpool Care Pathway, a palliative program being
rolled out across the NHS involving the withdrawal of fluids and nourishment
for patients thought to be dying. Noting that in 2007-08, 16.5% of deaths in
the U.K. came after "terminal sedation," their letter concluded with the
chilling observation that experienced doctors know that sometimes "when all
but essential drugs are stopped, 'dying' patients get better" if they are
allowed to.
The usual justification for socialized
health care is to provide access to quality health care for the poor and
disadvantaged. But this function can be more efficiently performed through
the benefits system and the payment of refundable tax credits.
The real justification for socialized
medicine is left unstated: Because health-care resources are assumed to be
fixed, those resources should be prioritized for those who can benefit most
from medical treatment. Thus the NHS acts as Britain's national triage
service, deciding who is most likely to respond best to treatment and
allocating health care accordingly.
It should therefore come as no surprise
that the NHS is institutionally ageist. The elderly have fewer years left to
them; why then should they get health-care resources that would benefit a
younger person more? An analysis by a senior U.K.-based health-care expert
earlier this decade found that in the U.S. health-care spending per capita
goes up steeply for the elderly, while the U.K. didn't show the same
pattern. The U.K.'s pattern of health-care spending by age had more in
common with the former Soviet bloc.
A scarcity assumption similar to the
British mentality underlies President Barack Obama's proposed health-care
overhaul. "We spend one-and-a-half times more per person on health care than
any other country, but we aren't any healthier for it," Mr. Obama claimed in
his address to Congress last Wednesday, a situation that, he said,
threatened America's economic competitiveness.
This assertion is seldom challenged. Yet
what makes health care different from spending on, say, information
technology—or any category of consumer service—such that spending on health
care is uniquely bad for the American economy? Distortions like malpractice
suits that lead to higher costs or the absence of consumer price
consciousness do result in a misallocation of resources. That should be an
argument for tackling those distortions. But if high health-care spending
otherwise reflects the preferences of millions of consumers, why the fuss?
The case for ObamaCare, as with the NHS,
rests on what might be termed the "lump of health care" fallacy. But in a
market-based system triggering one person's contractual rights to health
care does not invalidate someone else's health policy. Instead, increased
demand for health care incentivizes new drugs, new therapies and better ways
of delivering health care. Government-administered systems are so slow and
clumsy that they turn the lump of health-care fallacy into a reality.
According to the 2002 Wanless report, used
by Tony Blair's government to justify a large tax hike to fund the higher
spending, the NHS is late to adopt and slow to diffuse new technology.
Still, NHS spending more than doubled to £103 billion in 2009-10 from £40
billion in 1999-2000, equivalent to an average growth rate of over 7% a year
after inflation.
In 1965, economist (and future Nobel
laureate) James Buchanan observed of the 17-year old NHS that "hospital
facilities are overcrowded, and long delays in securing treatment, save for
strictly emergency cases, are universally noted." Forty-four years later,
matters are little improved. The Wanless report found that of the five
countries it looked at, the U.S. was the only one to be both an early
adopter and rapid diffuser of new medical techniques. It is the world's
principal engine driving medical advance. If the U.S. gets health-care
reform wrong, the rest of the world will suffer too.
Mr. Darwall, a London-based strategist, is
currently writing a book on the history of global warming, to be published
by Quartet Books in Spring 2010.
Jensen Plea If and when I become gaga please
sedate me to the max (meaning euthanize me)! I fear my wife, who is quite
religious, will not allow that to happen.
The Obama administration will tell any lie and break any law to prevent the
president's signature health program from collapsing. Insurance companies,
such as UnitedHealthcare and Aetna, are losing billions trying to sell
Obamacare plans, and the risk is they'll drop out at the end of 2016. No
insurance companies means no Obamacare. In 2014, the White House tried to
avert that disaster by promising insurers a bailout funded with taxpayer
dollars, but public outrage and quick action by Senator Marco Rubio put a
stop to it. Now the administration is at it again.
Desperate to keep insurers on board, the administration scrambled to find
another source of money. Unfortunately, a big part of that money pot belongs
to the public. Disregarding that fact, the administration announced on Feb.
12 that the money will be handed out to insurers — a whopping $7.7 billion
this year alone. That huge handout to the insurance industry violates the
law.
This is money you and everyone else who already has insurance is forced to
pay, called a reinsurance fee. You pay the fee whether you buy your own plan
or get covered at work, even if your employer self-insures. You may be
clueless about it, but the fee is buried in your premium or taken out of
your compensation.
The language of section 1341 of the Affordable Care Act,
which details what this money can be used for, is clear as a bell. Some of
these annual fees — adding up to billions a year — belong to the public, not
the insurance companies.
The law states a fixed share "shall be deposited into the general fund of
the Treasury of the United States and may not be used" to offset insurance
companies' losses. But the administration gave all of it to the insurance
companies last year, and got away with that heist. So they're trying it
again.
Anyone in the corporate world who misused funds that way would be headed to
prison. This rogue administration is going to any length — including running
afoul of the law — to keep insurers hooked into Obamacare.
In the words of University of Houston law professor Seth Chandler, who tried
to call attention to the crime several months ago, this is an illegal
"diversion of funds to enrich insurers." Last year alone, Cross Blue Shield
of Texas got $549 million of these reinsurance funds, while Anthem Blue
Cross of California got $401 million.
How did this fly under the radar last year? Because no one — especially
members of Congress — has read the law. Insurance companies weren't about to
object to getting more money than the law allows. Plus, the announcements of
these payments were buried in mind-numbing federal agency releases. The
latest such disclosure came late on the Friday of a holiday weekend. The
business press reported the announcement but didn't go back to read section
1341 of the law and find that the payouts are illegal.
Last week, a few health scholars took notice, including Doug Badger, senior
fellow at the Galen Institute. He says the illegal maneuver is "designed to
keep a sinking ship from hitting rock bottom."
Congress should step in immediately and exercise its oversight duties to
stop this looting. The next payments to insurers are promised for March. No
time to waste.
Obamacare was sold on lies: You can keep your health plan if you like it.
And you can keep your doctor if you like your doctor. Then, once it was
passed, the administration resorted to a long string of lawless executive
actions to keep an unworkable scheme going, despite the damage being done to
employers, doctors and consumers.
The administration's diversion of public funds to its insurance company
cronies is just the latest defiance of the law. The president has illegally
delayed the employer mandate repeatedly. He's handing out free Obamacare
plans to illegal immigrants. Statutory deadlines are routinely ignored, and
funds are slyly shifted from one program to another — the law be damned.
The State Department released the last batch of
Hillary Clinton’s emails on Monday, and the exercise has been instructive
about her recklessness with classified material. But as a side note, we
ought to memorialize what President Obama’s aides were telling Mrs. Clinton
about the Affordable Care Act, which was the opposite of what their boss was
telling the public.
Despite her duties as top diplomat, Mrs. Clinton
found time to follow ObamaCare’s progress in Congress, and she received
regular updates from Neera Tanden, then a White House health staffer. Ms.
Tanden is now president of the liberal Center for American Progress, Mrs.
Clinton’s economic policy shop.
In an Oct. 19, 2009 email, Mrs. Clinton asked Ms.
Tanden, “Are you worried about the lack of cost controls in the current
bills?” Ms. Tanden replied that “the dirty little secret is that we don’t
have a lot of good evidence on what works—in a way that Congress has any
appetite to do. I mean, cost controls, as we all know, is [sic] attacked as
rationing. So everyone likes to discuss this, including the Administration,
but then on the other hand, says they won’t touch the benefits. Now there is
a lot of fat in the system, but some of that excess is just too much care.
Yet no one really wants care to be restricted.”
Not a month earlier, the President had promised
Congress that the bill would save “hundreds of billions of dollars,”
according to “Democratic and Republican experts.” In March 2010 he said that
“we have now incorporated almost every single serious idea from across the
political spectrum about how to contain the rising cost of health care.”
Ms. Tanden was telling Mrs. Clinton that the truth
was closer to the reverse. She wrote that “the other problem” is that the de
minimis cost-control problems that ObamaCare did include “need some time to
incubate because we don’t have all the evidence we need. . . . We may have
oversold what these bills will (or even can) do.” Critics at the time,
including us, argued that White House claims about cost control were always
a bill of goods. But we’d be curious to hear what ObamaCare architects like
Peter Orszag think of Ms. Tanden’s private candor, or the credulous
columnists they duped.
By the way, the Clinton-Tanden correspondence is
heavily redacted for some reason, and its release was delayed almost a year
for interagency review—though emails about health care shouldn’t compromise
national security. Perhaps they also shared a between-us laugh about the
other health-care deceptions the White House was getting away with.
Inspector General's report warns that billions in federal loans might not be
repaid.
"Obamacare’s Government-Backed Nonprofit Health Plans Are a Disaster—and
Could Cost Taxpayers Billions," by Peter Suderman, Reason Magazine,
July 31, 2015 ---
http://reason.com/blog/2015/07/31/obamacares-government-backed-nonprofit-h
The federal government shelled out $2.4 billion in
loans to a series of non-profit health plans under Obamacare, but now
they’re struggling to stay alive.
The plans, dubbed CO-OPs (Consumer Operated and
Oriented Plans) were intended to
increase competition in the insurance market and
serve as a check on private insurers by providing an alternative that wasn’t
focused on profit. They were a
compromise measure intended to satisfy liberals
who wanted the law to set up a fully government-run health insurance
option.
As it turns out, Obamacare’s CO-OPs weren’t focused
on profit—or, it seems, financial viability of any kind.
The CO-OPs have struggled to meet enrollment
targets, with 13 of the 23 non-profit plans showing “considerably lower”
enrollment than projected, according to a
report by the Health and Human Services Inspector General.
Finances were shaky all around with 21 of 23 plans
incurring losses through the end of 2014, the report says.
This isn’t just a problem for the CO-OPs. It’s a
problem for the taxpayers. The $2.4 billion in loans given to these startup
plans were supposed to be repaid to the government with interest. Loans
given to start the plans were supposed to be repaid in five years;
“solvency” loans were supposed to be repaid in 15 years.
The Affordable Care Act was supposed to make
insurance, well, more affordable. But now hard results are starting to
emerge: premium surges that often average 10% to 20% and spikes that
sometimes run as high as 50% or 60% or more from coast to coast. Welcome to
the new abnormal of ObamaCare.
This summer insurers must submit rates to state
regulators for approval on the ObamaCare exchanges in 2016—and even liberals
are shocked at the double-digit requests, or at least the honest liberals
are. Under ObamaCare, year-over-year premium increases above 10% must also
be justified to the Health and Human Services Department, and its data base
lists about 650 such cases so far.
In a study across 45 states, the research outfit
Health Pocket reports that mid-level Exclusive Provider Organization plans
are 20% more expensive in 2016 on average. HMOs are 19% more expensive, and
for all plan types the average is 14%.
President Obama dropped by Nashville last week to
claim Tennessee as a state where “the law has worked better than we
expected” and “actually ended up costing less than people expected,” so
let’s test the reality of those claims. As a baseline, in 2015 premium
increases for Tennessee plans ranged from 7.5% to 19.1%.
For 2016 BlueCross BlueShield of Tennessee—one of
the state’s two major insurers—is requesting a 36.3% increase. One product
line from Community Health Alliance Mutual is rising 32.8%, while another
from Time Insurance Co. hits 46.9%. Offerings from
Cigna,
Humanaand UnitedHealthcare range from 11% to 18%.
If this means ObamaCare is working better than the President expected, then
what, exactly, was he expecting?
The health law’s expansion of Medicaid in many
states hasn’t benefited nonprofit hospitals in those states as expected,
according to a new report by Moody’s Investors Service.
Hospitals in the mostly blue states that expanded
Medicaid were largely expected to benefit from fewer unpaid bills and more
paying customers, but that hasn’t generally translated into better operating
margins or cash flow, Moody’s found.
Performance improved across the board—including in
the mostly Republican-led states that opted out of the law’s Medicaid
expansion—as the economy gained steam last year and unemployment declined.
In expansion states, hospitals’ unpaid bills fell
13% on average last year compared with 2013, the report found. But, their
2014 operating margins didn’t increase any more than hospitals in the 22
states that have sat out the expansion, the report shows.
“Clearly, reducing bad debt is positive, but it is
not this silver bullet,” said Daniel Steingart, a Moody’s analyst and author
of the report. He said the findings call into question “a narrative out
there that Medicaid expansion has lowered bad debt and that is driving
[financial] improvements at hospitals.”
Continued in article
Jensen Comment
When I lived in San Antonio, over $1,000 of my property tax billing went to the
Bexar County Hospital to cover charity medicine and bad debts of people who were
treated but did not pay for the treatments. As a rule there's at least one
hospital in larger cities, usually the largest non-profit hospital, that
receives local tax dollars to contribute toward the hospital's bad debts.
Obamacare's promise of relieving the
burden of local taxpayers for charity medicine turned into another one of the
lies. Indeed there are fewer bad debts due to expanded Medicaid coverage such
that more Federal dollars are pouring into hospitals who accept Medicaid
patients. However, the bad news is that Medicaid only covers (according to the
article) about half the cost of treating Medicaid patients in hospitals. This
leaves hospitals with tow choices. Provide lower-cost care or ask for more
dollars from local taxpayers to cover the added losses of the expanded Medicaid
coverage.
It turns out that states who refused to
expand Medicaid coverage are better off for having refused.
MediCal is California's Version of
Medicaid free medical services for poor people. MedicCal also has a price-fixing
program that is preventing many doctors and hospitals from providing services to
patients insured by MediCal. This is an example of where price fixing either
results in either having no goods and services or inferiors goods and service.
Julie Moreno felt lucky to be among more than 2.7
million previously uninsured Californians to be added to Medi-Cal, the
state's health care program for the poor.
Until she needed cataract surgery.
For three months after her November 2013 diagnosis,
the 49-year-old Mountain View resident said, she tried to get an
appointment, but each time she called, no slots were available. Desperate
and worried, she finally borrowed $14,000 from her boyfriend's mother to
have the procedure done elsewhere last February.
One year into the explosive, health law-induced
growth of Medi-Cal, it appears one of the most alarming predictions of
critics is coming true: The supply of doctors hasn't kept up with demand.
One recent study suggests the number of primary care doctors in California
per Medi-Cal patient is woefully below federal guidelines.
"If you're pregnant, you get help," Moreno said.
"But if you're 49 and not pregnant, you have to wait for everything."
In fact, seven months after Moreno's surgery, her
original surgeon's office called just to say they still couldn't fit her in.
At least 1.2 million Californians have signed up
for a private insurance plan since enrollment began in October 2013 under
the Affordable Care Act, better known as Obamacare. But it's Medi-Cal that
has witnessed the largest growth -- 2.7 million since the controversial law
opened the program up to many more recipients in January 2014.
By mid-2016, more than 12.2 million people --
nearly a third of all Californians --
will be on Medi-Cal, state health officials say.
Those officials continue to insist that the current
delays to see a doctor and crowded emergency rooms are all part of
to-be-expected growing pains. But many experts say the problems are so
widespread they shouldn't be ignored.
"California did a good job of getting people signed
up, but they basically stuck their heads in the sand and assumed that
California physicians would just jump right on board and want to take more
Medi-Cal patients," said Dr. Del Morris, president of the California Academy
of Family Physicians, which represents many of the first-line doctors who
treat Medi-Cal patients. "It's unacceptable to say, 'We are not ready for
you yet, you'll just have to suffer with your disease.'"
Morris and other experts say the situation is about
to get worse, in part because of Medi-Cal's health care reimbursement rates.
For years, the rates paid by Medi-Cal -- called
Medicaid in the rest of the country -- have been among the nation's lowest.
A provision of Obamacare hiked the rates for primary care doctors to the
substantially higher Medicare rates for two years, but those increases ended
on Dec. 31. A second blow came last month when the state cut the Medi-Cal
reimbursement rate by another 10 percent, a reduction approved by California
lawmakers in 2011 but delayed in a court battle that doctors ultimately
lost.
Even before the latest cuts, Medi-Cal doctors --
particularly specialists -- in California's rural areas often seemed nearly
impossible to find. And the shortage of Medi-Cal physicians appears to be
causing spikes in the number of Medi-Cal patients being treated in hospital
emergency rooms around the state. Data from the Office of Statewide Health
Planning and Development show that in the first three quarters of 2014,
"treat and release" visits to emergency rooms by Medi-Cal patients jumped 30
percent from the same period the year before.
At least once a week at the MayView Community
Health Center in Mountain View, the clinic is so swamped that it is forced
to send Medi-Cal patients to hospital emergency rooms "because they cannot
go anywhere else," clinic operations director Harsha Mehta said.
Since January 2014, Axis Community Health in
Pleasanton has added about 1,700 new Medi-Cal patients to its five
facilities that serve the Tri-Valley area, bringing the total to about
14,000. While 700 of those patients were already being treated at Axis
before they enrolled in Medi-Cal, the overall jump in new patients is
forcing Dr. Divya Raj, Axis' medical director, to hire more hard-to-find
doctors.
A recent report by the California HealthCare
Foundation that tried to determine if the state has enough doctors to handle
the influx of Medi-Cal patients reinforces Raj's trepidation.
The report found the ratio of patients to full-time
primary care doctors participating in Medi-Cal -- including family medicine
physicians, general internists, pediatricians and ob/gyns -- was 35 to 49
physicians per 100,000 enrollees, well below the federal guidelines of 60 to
80.
"We had a shortage of primary care doctors before
this flood (of Medi-Cal enrollees) came about," said Dr. Steven Harrison, a
veteran primary care doctor who directs a residency program for such
physicians at Natividad Medical Center in Salinas. "Now we have a dire
shortage."
Bait and Switch for Primary Care "Doctors"
Nationwide there was an enormous shortage of primary care doctors before
Obamacare. Obamacare greatly increased the demand for such doctors, thereby,
making the shortage much worse. This has led to nationwide bait and switch
primary care that is similar to three of the medical clinics in Littleton, New
Hampshire. Each clinic has one MD and one or more added "physicians assistants"
who are not medical doctors but can examine patients and prescribe common
medications.
The bait and switch part is that patients in each clinic are not allowed to
see the MD at all or must wait much longer for an appointment to see the the MD.
In the meantime they are encouraged to be examined by only the physicians
assistant or to go to emergency rooms.
Another sad part of the bait and switch tactic is that many specialists such
as those at the Dartmouth medical center will only see patients referred by an
MD or osteopath. Without such referrals patients are not allowed to make
appointments with such specialists such as dermatologists, psychiatrists, and
surgeons.
One other clinic up here has a really lousy and uncaring foreign-trained MD and an osteopath. My
primary care doctor is the osteopath. He seems pretty good to me, but then my
medical needs are fairly simple and routine. Our Littleton Regional Hospital
does have an outstanding emergency room, although it's not a trauma center and
has to send a relatively large number of patients by helicopter to the Dartmouth
medical center about 50 miles away.
Of course patients with serious problems have discovered how to get
referrals. The go directly to emergency rooms and maybe wait the better part of
a day to be examined. But they eventually leave with a referral to see a
specialist provided that specialist will accept their insurance.
The huge problem in New Hampshire is that nearly half (slightly less this
year) of the hospitals and specialists will not accept ACA insurance.
The health insurance market is changing. And the
changes are not good. Even before there was Obamacare, most insurers most of
the time had perverse incentives to attract the healthy and avoid the sick.
But now that the Affordable Care Act has completely changed the nature of
the market, the perverse incentives are worse than ever.
Writing in Sunday’s New York Times
Elizabeth Rosenthal gives these examples:
When Karen Pineman of Manhattan sought
treatment for a broken ankle, her insurer told her that the nearest
in-network doctor was in Stamford, Connecticut – in another state.
Alison Chavez, a California breast cancer
patient, was almost on the operating table when her surgery had to be
cancelled because several of her doctors were leaving the insurer’s
network.
When the son of Alexis Gersten, a dentist in
East Quogue New York, needed an ear, nose and throat specialist, the
insurer told her the nearest one was in Albany – five hours away.
When Andrea Greenberg, a New York lawyer,
called an insurance company hotline with questions she found herself
speaking to someone reading off a script in the Philippines.
Aviva Starkman Williams, a California computer
engineer, tried to determine whether the pediatrician doing her son’s
2-year-old checkup was in-network, the practice’s office manager “said
he didn’t know because doctors came in and out of network all the time,
likening the situation to players’ switching teams in the National
Basketball Association.”
But aren’t these insurers worried that if they
mistreat their customers, their enrollees will move to some other plan?
Here’s the rarely told secret about health insurance in the Obamacare
exchanges: insurers don’t care if heavy users of medical care go to some
other plan. Getting rid of high-cost enrollees is actually good for the
bottom line.
To appreciate how different health insurance has
become, let’s compare it to the kind of casualty insurance people buy for
their home or their cars.
Dennis Haysbert is the actor I remember best for
playing the president of the United States in the Jack Bauer series, 24.
You probably know him better as the spokesman for Allstate. In one
commercial he is standing in front of a town that looks like it has been
demolished by a tornado. “It took only two minutes for this town to be
destroyed,” he says. And he ends by asking “Are you in good hands?”
The point of the commercial is self-evident.
Casualty insurers know you don’t care about insurance until something bad
happens. And the way they are pitching their products is: Once the bad thing
happens, we are going to take care of you.
Virtually all casualty insurance advertisements
carry this message, explicitly or implicitly. Nationwide used to run a
commercial in which all kinds of catastrophes were caused by a
Dennis-the-Menace type kid. In a State Farm ad, a baseball comes crashing
through a living room window. Nationwide’s “Life comes at you fast” series
features all kinds of misadventures. And of course, the Aflac commercials
are all about unexpected mishaps.
My favorite casualty
insurer print ad is sponsored by Chubb. It features a man fishing in a small
boat with his back turned to a catastrophe. He is about to go over what
looks like Niagara Falls. Here’s the cutline: “Who insures you doesn’t
matter. Until it does.”
Now let’s compare those messages
to what we see in the health insurance exchange. Federal employees have been
obtaining insurance in an exchange, similar to the Obamacare exchanges, for
several decades. Every fall, during “open enrollment,” they select from
among a dozen or so competing heath plans. In Washington, DC where the
market is huge, insurers try to attract customers by running commercials on
TV, in print and in other venues.
Continued in article
From the CFO Journal's Morning Ledger on December 9, 2014
Does Santa Claus live after all? According to the
C.B.O., between now and 2019 the net cost of insuring new enrollees in
Medicaid and private insurance plans will be $788 billion,
but other provisions in the legislation will generate
revenues and cost savings of $933 billion. Subtract the first figure from
the second and—voila!—you get $143 billion in deficit reduction.
The first objection to these figures is that the
great bulk of the cost savings—more than $450 billion—comes from cuts in
Medicare payments to doctors and other health-care providers. If you are
vaguely familiar with Washington politics and the letters A.A.R.P. you might
suspect that at least some of these cuts will fail to materialize. Unlike
some hardened skeptics, I don’t think none of them will happen. One part of
the reform involves reducing excessive payments that the Bush Administration
agreed to when it set up the Medicare Advantage program in 2003. If Congress
remains under Democratic control—a big if, admittedly—it will probably enact
these changes. But that still leaves another $300 billion of Medicare
savings to be found.
The second problem is accounting gimmickry. Acting
in accordance with standard Washington practices, the C.B.O. counts as
revenues more than $50 million in Social Security taxes and $70 billion in
payments towards a new home-care program, which will eventually prove very
costly, and it doesn’t count some $50 billion in discretionary spending.
After excluding these pieces of trickery and the questionable Medicare cuts,
Douglas Holtz-Eakin, a former head of the C.B.O., has calculated that the
reform will actually raise the deficit by $562 billion in the first ten
years. “The budget office is required to take written legislation at face
value and not second-guess the plausibility of what it is handed,” he wrote
in the Times. “So fantasy in, fantasy out.”
Holtz-Eakin advised John McCain in 2008, and he has
a reputation as a straight shooter. I think the problems with the C.B.O.’s
projections go even further than he suggests. If Holtz-Eakin’s figures
turned out to be spot on, and over the next ten years health-care reform
reduced the number of uninsured by thirty million at an annual cost of $56
billion, I would still regard it as a great success. In a $15 trillion
economy—and, barring another recession, the U.S. economy should be that
large in 2014—fifty or sixty billion dollars is a relatively small sum—about
four tenths of one per cent of G.D.P., or about eight per cent of the 2011
Pentagon budget.
My two big worries about the reform are that it
won’t capture nearly as many uninsured people as the official projections
suggest, and that many businesses, once they realize the size of the
handouts being offered for individual coverage, will wind down their group
plans, shifting workers (and costs) onto the new government-subsidized
plans. The legislation includes features designed to prevent both these
things from happening, but I don’t think they will be effective.
Consider the so-called “individual mandate.” As a
strict matter of law, all non-elderly Americans who earn more than the
poverty line will be obliged to obtain some form of health coverage. If they
don’t, in 2016 and beyond, they could face a fine of about $700 or 2.5 per
cent of their income—whichever is the most. Two issues immediately arise.
Even if the fines are vigorously enforced, many
people may choose to pay them and stay uninsured. Consider a healthy single
man of thirty-five who earns $35,000 a year. Under the new system, he would
have a choice of enrolling in a subsidized plan at an annual cost of $2,700
or paying a fine of $875. It may well make sense for him to pay the fine,
take his chances, and report to the local emergency room if he gets really
sick. (E.R.s will still be legally obliged to treat all comers.) If this
sort of thing happens often, as well it could, the new insurance exchanges
will be deprived of exactly the sort of healthy young people they need in
order to bring down prices. (Healthy people improve the risk pool.)
If the rules aren’t properly enforced, the problem
will be even worse. And that is precisely what is likely to happen. The
I.R.S. will have the administrative responsibility of imposing penalties on
people who can’t demonstrate that they have coverage, but it won’t have the
legal authority to force people to pay the fines. “What happens if you don’t
buy insurance and you don’t pay the penalty?” Ezra Klein, the Washington
Post’s industrious and well-informed blogger, asks. “Well, not much. The law
specifically says that no criminal action or liens can be imposed on people
who don’t pay the fine.”
So, the individual mandate is a bit of a sham.
Generous subsidies will be available for sick people and families with
children who really need medical care to buy individual coverage, but
healthy single people between the ages of twenty-six and forty, say, will
still have a financial incentive to remain outside the system until they get
ill, at which point they can sign up for coverage. Consequently, the number
of uninsured won’t fall as much as expected, and neither will prices.
Without a proper individual mandate, the idea of universality goes out the
window, and so does much of the economic reasoning behind the bill.
The question of what impact the reforms will have
on existing insurance plans has received even less analysis. According to
President Obama, if you have coverage you like you can keep it, and that’s
that. For the majority of workers, this will undoubtedly be true, at least
in the short term, but in some parts of the economy, particularly industries
that pay low and moderate wages, the presence of such generous subsidies for
individual coverage is bound to affect behavior eventually. To suggest this
won’t happen is to say economic incentives don’t matter.
Take a medium-sized firm that employs a hundred
people earning $40,000 each—a private security firm based in Atlanta,
say—and currently offers them health-care insurance worth $10,000 a year, of
which the employees pay $2,500. This employer’s annual health-care costs are
$750,000 (a hundred times $7,500). In the reformed system, the firm’s
workers, if they didn’t have insurance, would be eligible for generous
subsidies to buy private insurance. For example, a married forty-year-old
security guard whose wife stayed home to raise two kids could enroll in a
non-group plan for less than $1,400 a year, according to the Kaiser Health
Reform Subsidy Calculator. (The subsidy from the government would be
$8,058.)
In a situation like this, the firm has a strong
financial incentive to junk its group coverage and dump its workers onto the
taxpayer-subsidized plan. Under the new law, firms with more than fifty
workers that don’t offer coverage would have to pay an annual fine of $2,000
for every worker they employ, excepting the first thirty. In this case, the
security firm would incur a fine of $140,000 (seventy times two), but it
would save $610,000 a year on health-care costs. If you owned this firm,
what would you do? Unless you are unusually public spirited, you would take
advantage of the free money that the government is giving out. Since your
employees would see their own health-care contributions fall by more than
$1,100 a year, or almost half, they would be unlikely to complain. And even
if they did, you would be saving so much money you afford to buy their
agreement with a pay raise of, say, $2,000 a year, and still come out well
ahead.
Even if the government tried to impose additional
sanctions on such firms, I doubt it would work. The dollar sums involved are
so large that firms would try to game the system, by, for example, shutting
down, reincorporating under a different name, and hiring back their
employees without coverage. They might not even need to go to such lengths.
Firms that pay modest wages have high rates of turnover. By simply refusing
to offer coverage to new employees, they could pretty quickly convert most
of their employees into non-covered workers.
The designers of health-care reform and the C.B.O.
are aware of this problem, but, in my view, they have greatly underestimated
it. According to the C.B.O., somewhere between eight and nine million
workers will lose their group coverage as a result of their employers
refusing to offer it. That isn’t a trifling number. But the C.B.O. says it
will be largely offset by an opposite effect in which employers that don’t
currently provide health insurance begin to offer it in response to higher
demand from their workers as a result of the individual mandate. In this
way, some six to seven million people will obtain new group coverage, the
C.B.O. says, so the overall impact of the changes will be minor.
Continued in article
"Senate Bill Sets a Plan to Regulate Premiums," by Robert Pear, The New York
Times, April 20, 2010 --- http://www.nytimes.com/2010/04/21/health/policy/21healt
. . .
Grace-Marie Turner, president of the Galen
Institute, a research center that advocates free-market health policies,
said the Democrats’ proposal was unlikely to succeed in lowering insurance
costs.
“Capping premiums without recognizing the forces
that are driving up costs would be like tightening the lid on a pressure
cooker while the heat is being turned up,” Mrs. Turner said.
Mrs. Feinstein said her bill would close what she
described as “an enormous loophole” in the new law. And she said health
insurance should be regulated like a public utility.
“Water and power are essential for life,” Mrs.
Feinstein said. “So they are heavily regulated, and rate increases must be
approved. Health insurance is also vital for life. It too should be strictly
regulated so that people can afford this basic need.”
What the reviewers failed to mention is that the
book is also chock-a-block with misinformation and outright falsehoods about
the law Gruber helped construct — many of which Gruber himself exposed later
on. Among the most glaring:
• Gruber claims that for individuals and small
firms qualifying for a tax credit, "this bill will lower your health care
costs." But Gruber would later go on to tell several states the opposite.
One of them was Wisconsin, where he said fewer than 6% would see lower
premiums, and 41% would get hit with hikes of 50% or more. Meanwhile,
millions learned that Gruber's claim was a fantasy last year, when they
confronted
ObamaCare's sky-high premiums after seeing their
existing plans canceled.
• Gruber declares that the law doesn't raise taxes
on anyone "with incomes below $200,000 per year." Yet several of the dozens
of tax hikes stuffed into the bill hit the middle class, or soon will.
Americans for Tax Reform counted seven big ones.
• In the section on the Cadillac tax, which depicts
Gruber tooling around in a Caddy, he claims this tax would apply "only to
the top few percent of health insurance plans" and would hit more only if
premiums climb faster than inflation.
But in videotaped comments, Gruber explains that
the tax was purposely designed to start small and then eventually hit all
employer plans, "essentially getting rid of the exclusion for
employer-sponsored plans."
• Gruber emphatically declares that ObamaCare will
cut the federal deficit by $1 trillion over its second decade because "the
deficit-reducing effects of this legislation grow over time."
But all the Congressional Budget Office said was
that a "rough outlook" for ObamaCare's second decade resulted in deficit
cuts "in a broad range of around one-half percent of GDP." And that assumed
the law was enacted exactly as written, and worked exactly as predicted,
both of which have already failed to come true.
When the Government Accountability Office ran the
numbers using more realistic scenarios, it found ObamaCare adding
significantly to the long-term deficit. The CBO, meanwhile, has given up
making even short-term forecasts of ObamaCare's impact on the deficit.
• Throughout the book, Gruber cites CBO projections
of ObamaCare's effects on premiums and coverage, calling it "the best
independent source for evaluating bills like the ACA." What he doesn't
mention is that when the CBO developed its health care forecasting model in
2007, Gruber had a role in creating it. It even credits
Gruber for his "helpful comments and feedback ...
throughout the model's development."
And in a 2011 paper, Gruber himself said that his
own health care
model "mirrors
the CBO approach to modeling health reform."
• Gruber says that if the law's many cost-control
measures work as expected, "the ACA will end up solving our cost problem in
the U.S." But earlier this year Gruber told the Washington Post that it was
"misleading" to say ObamaCare will save money. "The law isn't designed to
save money," he said. "It's designed to improve health, and that's going to
cost money."
Rita Gorenflo’s 7-year-old son Nathaniel was in
severe pain from a sinus infection.
But since the boy was covered by Medicaid, she
couldn’t immediately find a specialist willing to see him. After days of
calling, she was finally able to get Nathaniel an appointment nearly a week
later near their South Florida home. That was in 2005.
Last month, ruling in a lawsuit brought by the
state’s pediatricians and patient advocacy groups, a federal district judge
in Miami determined Nathaniel’s wait was “unreasonable” and that Florida’s
Medicaid program was failing him and nearly 2 million other children by not
paying enough money to doctors and dentists to ensure the kids have adequate
access to care.
The Florida case is the latest effort to get
federal judges to force states to increase Medicaid provider payment rates
for the state and federal program that covers about 70 million low-income
Americans. In the past two decades, similar cases have been filed in
numerous states, including California, Illinois, Massachusetts, Oklahoma,
Texas and the District of Columbia– with many resulting in higher pay.
But while providers and patient advocates
nationwide hailed the Florida decision, they are deeply worried about a U.S.
Supreme Court case that they say could restrict their ability across the
country to seek judicial relief from low Medicaid reimbursement rates.
The high court on Jan. 20 will hear a case from
Idaho seeking to overturn a 2011 lower court order to increase payments to
providers serving Medicaid enrollees with development disabilities. In the
original case, five centers serving developmentally disabled adults and
children argued that Idaho was unfairly keeping Medicaid reimbursement rates
at 2006 levels despite studies showing that the cost of providing care had
risen.
Idaho officials argue only the state and federal
government should be able to set provider fees in Medicaid and all other
“private parties,” including patients and providers, should not be able to
use the court system to gain higher rates. Twenty-seven states and the Obama
administration are supporting Idaho’s appeal, along with the National
Governors Association
What the reviewers failed to mention is that the
book is also chock-a-block with misinformation and outright falsehoods about
the law Gruber helped construct — many of which Gruber himself exposed later
on. Among the most glaring:
• Gruber claims that for individuals and small
firms qualifying for a tax credit, "this bill will lower your health care
costs." But Gruber would later go on to tell several states the opposite.
One of them was Wisconsin, where he said fewer than 6% would see lower
premiums, and 41% would get hit with hikes of 50% or more. Meanwhile,
millions learned that Gruber's claim was a fantasy last year, when they
confronted
ObamaCare's sky-high premiums after seeing their
existing plans canceled.
• Gruber declares that the law doesn't raise taxes
on anyone "with incomes below $200,000 per year." Yet several of the dozens
of tax hikes stuffed into the bill hit the middle class, or soon will.
Americans for Tax Reform counted seven big ones.
• In the section on the Cadillac tax, which depicts
Gruber tooling around in a Caddy, he claims this tax would apply "only to
the top few percent of health insurance plans" and would hit more only if
premiums climb faster than inflation.
But in videotaped comments, Gruber explains that
the tax was purposely designed to start small and then eventually hit all
employer plans, "essentially getting rid of the exclusion for
employer-sponsored plans."
• Gruber emphatically declares that ObamaCare will
cut the federal deficit by $1 trillion over its second decade because "the
deficit-reducing effects of this legislation grow over time."
But all the Congressional Budget Office said was
that a "rough outlook" for ObamaCare's second decade resulted in deficit
cuts "in a broad range of around one-half percent of GDP." And that assumed
the law was enacted exactly as written, and worked exactly as predicted,
both of which have already failed to come true.
When the Government Accountability Office ran the
numbers using more realistic scenarios, it found ObamaCare adding
significantly to the long-term deficit. The CBO, meanwhile, has given up
making even short-term forecasts of ObamaCare's impact on the deficit.
• Throughout the book, Gruber cites CBO projections
of ObamaCare's effects on premiums and coverage, calling it "the best
independent source for evaluating bills like the ACA." What he doesn't
mention is that when the CBO developed its health care forecasting model in
2007, Gruber had a role in creating it. It even credits
Gruber for his "helpful comments and feedback ...
throughout the model's development."
And in a 2011 paper, Gruber himself said that his
own health care
model "mirrors
the CBO approach to modeling health reform."
• Gruber says that if the law's many cost-control
measures work as expected, "the ACA will end up solving our cost problem in
the U.S." But earlier this year Gruber told the Washington Post that it was
"misleading" to say ObamaCare will save money. "The law isn't designed to
save money," he said. "It's designed to improve health, and that's going to
cost money."
1. HUGE DEFICITS AND NEW TAXES.
According to the Congressional Budget Office, the latest projections for the
net cost of ObamaCare over the next ten years are
just over $1.4 trillion. Whereas
President Obama promised in 2009 that it would
cost less than $1 trillion
over ten years. In order to partially pay for this,
ObamaCare has added more than
20 new taxes totaling
over $500 billion.
2. BUREAUCRACY. Speaking of Orwellian
politics, ObamaCare includes
159 new boards and agencies
to restrict and govern your health care choices.
3. STILL MORE BUREAUCRACY. Dysfunctional state exchanges with high
deductible policies, narrow doctor networks,
including federally-run exchanges in 36 states
which may not be allowable under the law (SCOTUS currently considering this
case).
Here are three new things coming up
in 2015 that are highely controversial:
1. PENALTIES WILL RISE – INDIVIDUAL MANDATE.
In 2014, people are facing a penalty of $95 per
person or 1% of income.
In 2015, the penalty will more than triple to $325
per person or 2% of income, whichever is higher.
Subsidies will continue to be a
huge part of the program. In 2014, subsidies
provided ¾ of the premiums for the federally-run exchanges.
3. EMPLOYER MANDATE WILL TAKE EFFECT.
After being delayed for a year, large businesses (100
or more employees in 2015, 50 or more in 2016)
will be required to offer affordable (and
subsidized) health plans to at least 70 percent of their full time employees
or face a $2,000-$3,000 penalty per employee.
This mandate will lead to fewer full time employees
being hired.
The AP story says, “Minnesota's legislative
auditor says the state Department of Human Services has failed to adequately
verify the eligibility of people who enroll in public health care programs
through the state's health insurance exchange MNsure. In a report released
Wednesday, the Office of the Legislative Auditor says it found many
instances where department paid for Medical Assistance and MinnesotaCare
benefits for people who weren't eligible because their incomes were too high
or didn't qualify for other reasons. It says the department also charged
incorrect MinnesotaCare premium rates.”
According to the Centers for Medicare &
Medicaid Services (CMS), spending on Medicaid, the jointly funded
state-federal welfare program that provides health benefits to low-income
people,
increased 6.7 percent in 2013 to $449.5 billion.
And it will keep growing at a fast rate.
In 2014, total Medicaid spending is
projected to grow 12.8 percent because Obamacare has added about 8 million
dependents. A large minority of states have chosen to increase residents’
eligibility for Medicaid by expanding coverage to adults making up to 138
percent of the federal poverty level.
Unfortunately, more states are likely to
expand this welfare program. This is expected to result in a massive
increase in the number of Medicaid dependents: From 73 million in 2013 to 93
million in 2024. Medicaid spending is expected to grow by 6.7 percent in
2015, and 8.6 percent in 2016. For 2016 to 2023, spending growth is
projected to be 6.8 percent per year on average.
This comprises a massive increase in
welfare dependency and burden on taxpayers. Further, official estimates
often low-ball actual experience. This is because it is hard to grapple with
how clever states are at leveraging federal dollars.
The Office of the Inspector General of
the U.S. Department of Health & Human Services has just released
a report that
summarizes a decade of research on how states game the system to increase
spending beyond that which the federal government anticipated.
The incentive lies in Medicaid’s
perverse financing merry-go-round. In a rich state
like California, for example, the federal government (pre-Obamacare) spent
50 cents on the dollar for adult dependents. So, if California spent 50
cents, it automatically drew 50 cents from the U.S. Treasury. And most
states had a bigger multiplier. Which state politician can resist a deal
like that?
One heavily-scrutinized part of the ACA reads that
subsidies should be given to healthcare recipients who are enrolled "through
an Exchange established by the State". Some have read this to mean that
subsidies can be given only in states that have chosen to create their own
healthcare exchanges, and do not use the federal exchange, while the Obama
administration says that the wording applies to all states. This dispute is
currently part of an ongoing series of lawsuits referred to collectively as
King v. Burwell. In July 2014, two separate
recordings of Gruber, both from January 2012, surfaced in which he seemed to
contradict the administration's position.[5]
In one, Gruber states, in response to an audience question, that "if you’re
a state and you don’t set up an exchange, that means your citizens don’t get
their tax credits",[21]
while in the other he says, "if your governor doesn't set up an exchange,
you're losing hundreds of millions of dollars of tax credits to be delivered
to your citizens."[22]
When these recordings emerged, Gruber called these statements mistaken,
describing them as "just a speak-o — you know, like a typo".[21]
In November 2014, a series of four videos emerged
of Gruber speaking at different events, from 2010 to 2013, about ways he
felt the ACA was misleadingly crafted and marketed to get the bill passed;
in several of these videos he specifically refers to American voters as
ill-informed and "stupid." In the first, most widely-publicized video taken
at a panel discussion about the ACA at the
University of Pennsylvania in October 2013, Gruber
said the bill was deliberately written "in a tortured way" to disguise the
fact that it creates a system by which "healthy people pay in and sick
people get money." He said this obfuscation was needed due to "the stupidity
of the American voter" in ensuring the bill's passage. Gruber said the
bill's inherent "lack of transparency is a huge political advantage" in
selling it.[23]
The comments caused significant controversy.[24][25][26][27][28]
In two subsequent videos, Gruber was shown talking about the decision (which
he attributed to
John Kerry) to have the bill tax insurance
companies instead of patients, which he called fundamentally the same thing
economically but more palatable politically. In one video, he stated that
"the American people are too stupid to understand the difference" between
the two approaches, while in the other he said that the switch worked due to
"the lack of economic understanding of the American voter."[29]
In another video, taken in 2010, Gruber
expressed doubts that the ACA would significantly reduce health care costs,
though he noted that lowering costs played a major part in the way the bill
was promoted.[30]
"Yes, Jonathan Gruber Is An
Obamacare “Architect” The health law’s allies are trying to distance themselves
from the economist’s remarks about the deception involved in passing the law.
But they’re only proving him right," by Peter Suderman, Reason Magazine,
November 18, 2014 ---
http://reason.com/archives/2014/11/18/yes-jonathan-gruber-is-an-obamacare-arch
Obamacaregate Question
Who disclosed the embarrassing Johathan Gruber videos?
Vox is a liberal/progressive Website, and
this is a pretty good explanation of the Gruber embarrassment to date.
"The Jon Gruber controversy and what it means for Obamacare, explained,"
by Sarah Kliff, Vox, November 16, 2014 ---
http://www.vox.com/2014/11/13/7211279/obamacare-jon-gruber-controversy
. . .
4) Who keeps finding all these clips?
Rich Weinstein, a forty-something investment
advisor whose insurance policy was canceled under Obamacare, has surfaced
the last three videos. Dave Weigel has written a
great profile of him, including this part where
Weinstein describes how he got started:
"When Obama said 'If you like your plan, you
can keep your plan, period'-frankly, I believed him," says Weinstein.
"He very often speaks with qualifiers. When he said 'period,' there were
no qualifiers. You can understand that when I lost my own plan, and the
replacement cost twice as much, I wasn't happy."
So Weinstein, new plan in hand, started
watching the news. "These people were showing up on the shows, calling
themselves architects of the law," he recalls. "I saw David Cutler, Zeke
Emanuel, Jonathan Gruber, people like that. I wondered if these guys had
some type of paper trail. So I looked into what Dr. Cutler had said and
written, and it was generally all about cost control. After I finished
with Cutler, I went to Dr. Gruber. I assume I went through every video,
every radio interview, every podcast. Every everything."
Continued in article
Jensen Comment
What are the biggest mistakes when the ACA was enacted?
Answer
In my opinion, apart from the technical things that need to be corrected such as
foisting patient bad debts (due to premium payment lapses) on doctors and
hospitals, the biggest mistake was the CBO's estimates of ACA costs, cost
estimates that are largely traceable to Johathan Gruber.
As a rule, Americans don’t like to be called
“stupid,” as Jonathan Gruber is discovering. Whatever his academic contempt
for voters, the ObamaCare architect and Massachusetts Institute of
Technology economist deserves the Presidential Medal of Freedom for his
candor about the corruption of the federal budget process.
In his now-infamous talk at the University of
Pennsylvania last year, Professor Gruber argued that the Affordable Care Act
“would not have passed” had Democrats been honest about the
income-redistribution policies embedded in its insurance regulations. But
the more instructive moment is his admission that “this bill was written in
a tortured way to make sure CBO did not score the mandate as taxes. If CBO
scored the mandate as taxes, the bill dies.”
Mr. Gruber means the Congressional Budget Office,
the institution responsible for putting “scores” or official price tags on
legislation. He’s right that to pass ObamaCare Democrats perpetrated the
rawest, most cynical abuse of the CBO since its creation in 1974.
In another clip from Mr. Gruber’s seemingly
infinite video library, he discusses how he and Democrats wrote the law to
game the CBO’s fiscal conventions and achieve goals that would otherwise be
“politically impossible.” In still another, he explains that these ruses are
“a sad statement about budget politics in the U.S., but there you have it.”
Yes you do. Such admissions aren’t revelations,
since the truth has long been obvious to anyone curious enough to look. We
and other critics wrote about ObamaCare’s budget gimmicks during the debate,
and Rep. Paul Ryan exposed them at the 2010 “health summit.” President Obama
changed the subject.
But rarely are liberal intellectuals as full
frontal as Mr. Gruber about the accounting fraud ingrained in ObamaCare.
Also notable are his do-what-you-gotta-do apologetics: “I’d rather have this
law than not,” he says.
Recall five years ago. The White House wanted to
pretend that the open-ended new entitlement would spend less than $1
trillion over 10 years and reduce the deficit too. Congress requires the
budget gnomes to score bills as written, no matter how unrealistic the
assumption or fake the promise. Democrats with the help of Mr. Gruber
carefully designed the bill to exploit this built-in gullibility.
So they used a decade of taxes to fund merely six
years of insurance subsidies. They made-believe that Medicare payments to
hospitals will some day fall below Medicaid rates. A since-repealed program
for long-term care front-loaded taxes but back-loaded spending, meant to
gradually go broke by design. Remember the spectacle of Democrats waiting
for the white smoke to come up from CBO and deliver the holy scripture
verdict?
On the tape, Mr. Gruber also identifies a special
liberal manipulation: CBO’s policy reversal to not count the individual
mandate to buy insurance as an explicit component of the federal budget. In
1994, then CBO chief Robert Reischauer reasonably determined that if the
government forces people to buy a product by law, then those transactions no
longer belong to the private economy but to the U.S. balance sheet. The
CBO’s face-melting cost estimate helped to kill HillaryCare.
The CBO director responsible for this switcheroo
that moved much of ObamaCare’s real spending off the books was Peter Orszag,
who went on to become Mr. Obama’s budget director. Mr. Orszag nonetheless
assailed CBO during the debate for not giving him enough credit for the
law’s phantom “savings.”
Then again, Mr. Gruber told a Holy Cross audience
in 2010 that although ObamaCare “is 90% health insurance coverage and 10%
about cost control, all you ever hear people talk about is cost control. How
it’s going to lower the cost of health care, that’s all they talk about.
Why? Because that’s what people want to hear about because a majority of
Americans care about health-care costs.”
*** Both political parties for some reason treat
the CBO with the same reverence the ancient Greeks reserved for the Delphic
oracle, but Mr. Gruber’s honesty is another warning that the budget rules
are rigged to expand government and hide the true cost of entitlements. CBO
scores aren’t unambiguous facts but are guesses about the future, biased by
the Keynesian assumptions and models its political masters in Congress
instruct it to use.
Republicans who now run Congress can help taxpayers
by appointing a new CBO director, as is their right as the majority. Current
head Doug Elmendorf is a respected economist, and he often has a dry wit as
he reminds Congressfolk that if they feed him garbage, he must give them
garbage back. But if the GOP won’t abolish the institution, then they can
find a replacement who is as candid as Mr. Gruber about the flaws and
limitations of the CBO status quo. The Tax Foundation’s Steve Entin would be
an inspired pick.
Democrats are now pretending they’ve never heard of
Mr. Gruber, though they used to appeal to his authority when he still had
some. His commentaries are no less valuable because he is now a political
liability for Democrats.
After Massachusetts, California came calling.
So did Connecticut, Delaware, Kansas, Minnesota, Oregon, Wisconsin and
Wyoming.
They all wanted
Jonathan Gruber, a numbers wizard at
M.I.T., to help them figure out how to fix their
health care systems, just as he had helped Mitt Romney overhaul health
insurance when he was the Massachusetts governor.
Then came the call in 2008 from President-elect
Obama’s transition team, the one that officially turned this stay-at-home
economics professor into Mr. Mandate.
Mr. Gruber has spent decades modeling the intricacies
of the health care ecosystem, which involves making predictions about how
new laws will play out based on past experience and economic theory. It is
his research that convinced the Obama administration that
health care reform could not work without
requiring everyone to buy insurance.
And it is his work that explains why
President Obama has so much riding on the three
days of
United States Supreme Court hearings, which ended
Wednesday, about the constitutionality of the mandate. Questioning by the
court’s conservative justices has suggested deep skepticism about the
mandate, setting off waves of worry among its backers — Mr. Gruber included.
“As soon as I started reading the dispatches my
stomach started churning,” Mr. Gruber said of the arguments on Tuesday,
while taking a break from quizzing his son for a biology test. “Losing the
mandate means continuing with our unfair individual insurance markets in a
world where employer-based insurance is rapidly disappearing.”
Mr. Gruber, 46, hates traveling without his wife and
three children, so he is tracking the case from his home in Lexington, Mass.
There he crunches numbers and advises other states on health care, in
between headbanging at Van Halen concerts with his 15-year-old son and
cuddling with the family’s eight parrots. (His wife, Andrea, volunteers at a
bird rescue center.)
If the court rules against the mandate, Mr. Gruber
says he believes the number of newly insured Americans could fall to eight
million from the projected 32 million. He insists that without a mandate,
the law will result in a terrible spiral: only relatively sick Americans
will choose to get insurance, leading premium prices to rise and causing the
healthier of even those sick people to drop their insurance, sending prices
higher and higher.
Some other economists quibble, though, with Mr.
Gruber’s pessimistic assessment.
“My general thought about the mandate is if insurance
is affordable and accessible, most people will buy it anyway,” said David
Cutler, an economist at Harvard and longtime collaborator of Mr. Gruber’s.
Others, like Paul Starr, a Princeton sociologist, say
they believe Mr. Gruber’s work does not account for how hard it will be to
enforce the mandate.
“There is this groupthink about how important the
mandate is,” Mr. Starr says. “Most people don’t understand or won’t
acknowledge how weak the enforcement mechanism is.”
Mr. Starr said he thought Mr. Gruber in particular was
overstating the effectiveness of the mandate because “it’s his baby.”
That said, it is difficult for too many other experts
to categorically refute Mr. Gruber’s work, since he has nearly cornered the
market on the technical science behind these sorts of predictions. Other
models exist — built by nonprofits like the
RAND Corporation or
private consultancies like the
Lewin Group — but they all use Mr. Gruber’s work
as a benchmark, according to Jean Abraham, a health economist at the
University of Minnesota and former senior economist in both the Obama and
George W. Bush administrations.
“He’s brought a level of science to an issue that
would otherwise be just opinion,” Mr. Cutler says. “He’s really the only
person who has been doing all this careful modeling for so long. He’s the
only person you can go to for that kind of thing, which is why the White
House reached out to him in the first place.”
Mr. Obama had made health care reform a cornerstone of
his campaign, and wanted to announce a credible proposal quickly after
taking office. But members of the Obama administration’s transition team
said they had inherited an executive branch that had vastly underinvested in
modeling research on health care, especially compared to the technical
modeling that had been done in areas like tax policy.
“Creating a good model from scratch would have taken
months, maybe years,” said Lawrence H. Summers, who was the director of
President Obama’s National Economic Council and had advised Mr. Gruber on
his dissertation when they were at Harvard.
Mr. Gruber had already spent years researching
government mandates, starting with his 1991 dissertation about how mandated
employer benefits cut into workers’ wages.
He also did similar analyses, on a broader range of
public policies for the Treasury Department in the Clinton administration
from 1997-98. He was recruited by Mr. Summers, who was then deputy secretary
of Treasury.
Then in 2001, after returning to M.I.T., Mr. Gruber
received an e-mail from Amy Lischko, who was then an assistant commissioner
in the Massachusetts healthy policy department under then-Gov. Jane M.
Swift, a Republican.
She was familiar with his work, and contracted him to
model some potential ways that Massachusetts could expand health insurance
coverage.
“He certainly wasn’t as well known then as he is now
in the health care arena,” said Ms. Lischko, now a professor at Tufts
University School of Medicine. “We couldn’t exactly kick the tires on these
kinds of models back then, but we knew he had done work on simulations
before.”
Mr. Gruber calls himself a “card-carrying Democrat.”
He and his wife host a “great quadrennial Democratic victory party” whether
or not the Democratic candidate wins, he said. But given his reputation and
relatively rare expertise, he still ended up working for two Republican
governors in Massachusetts.
When Mr. Romney succeeded Ms. Swift in 2003, he
proposed using an individual mandate to help the state achieve universal
health care coverage. Mr. Gruber was again brought in to analyze the idea,
which he had not formally modeled before.
“Romney saw it as a traditional Republican moral issue
of personal responsibility, getting rid of the free riders in the system,
not as much of an economic issue,” Mr. Gruber said. “Not only were the
Republicans for it, the liberals hated it. People forget that.”
Mr. Obama had vehemently opposed an individual mandate
before his election in 2008.
After the Massachusetts plan passed in 2006, Arnold
Schwarzenegger, then the Republican governor of California, invited Mr.
Gruber to Sacramento to help model a similar proposal.
“That was awesome,” Mr. Gruber says, his eyes widening
at the memory. “I got to see the sword from Conan the Barbarian.”
The California proposal fell apart, but soon Mr.
Gruber had a little cottage industry helping states model potential health
system changes. He also serves on the Massachusetts board that oversees the
state’s new health care exchanges.
Along with these credentials, Mr. Gruber’s position as
an adviser to the influential Congressional Budget Office also left him
perfectly positioned to advise the White House on health reform.
“The most important arbiter of everything was the
C.B.O.,” said Neera Tanden, who was a senior adviser for health reform at
the Department of Health and Human Services.
The C.B.O.’s assessment of a bill’s efficacy and costs
strongly influences political debate, but the office does not publicly
reveal how it calculates those numbers.
“We knew the numbers he gave us would be close to
where the C.B.O. was likely to come out,” Ms. Tanden said. She was right.
After Mr. Gruber helped the administration put
together the basic principles of the proposal, the White House lent him to
Capitol Hill to help Congressional staff members draft the specifics of the
legislation.
This assignment primarily involved asking his graduate
student researchers to tweak his model’s software code. It was also almost
entirely conducted from his home office, while his children were at school
and then after they had gone to bed.
“If I wanted to be in Washington, I’d have taken a job
in Washington,” he said. “I wanted to be around for my family.”
Even though he was brought in by the White House,
Congressional staff members from both parties trusted him because he was
seen as an econometric wonk, not a political agent. But soon his very
involvement with the bill caused questions about his objectivity to be
raised in the news media.
During and after the bill’s slog through Congress, he
frequently spoke with reporters and wrote opinion pieces supporting the
Affordable Care Act but did not always mention his role in helping to devise
it.
He says he regrets not being more upfront about his
involvement with the administration. But he does not apologize for publicly
advocating the legislation, and continuing to do so — including through a
comic book he wrote to explain the law.
“Yes, I want the public to be
informed by an objective expert,” he says.“But the thing is, I know more about this law than any
other economist.”
The unintentional Obamacare Wrecking
Ball Professor from MIT
MIT economist Jonathan Gruber is one of the foremost architects of Obamacare,
having bragged that he "knows more about this law" than anyone else in his
field. He's also emerged as an unintentional one-man wrecking ball against
Obamacare, making public statements that have undermined the Obama
administration's legal and political defenses of the president's signature
domestic legacy.
http://www.townhallmail.com/zlzjrctbjjwkrbjbkbrptkgllfkllbftddpcqrwdbwmdms_wzvdnjvgdsn.html
It's even harder to believe now that he has
admitted that he thinks it's fine to mislead people if doing so
bolsters the policy goals he favors. It's really quite telling,
about the law and also about Gruber. Gruber may believe that American voters
are stupid, but he was the one who was dumb enough to say all this on
camera.
Jensen Comment Condoning the misleading of the public for political
purposes by a scientist borders on fabrication of data and may be in violation
of his university's (MIT) academic integrity policy.
Similar issues arose in the allegations
against Phil Jones regarding integrity of his climate temperature recordings ---
http://en.wikipedia.org/wiki/Climatic_Research_Unit_email_controversy
Professor Jones stepped aside temporarily but was reinstated. Nevertheless these
and similar allegations badly damaged the public's confidence in climate change
data.
Jon Krosnick, professor of communication, political
science and psychology at Stanford University, said scientists were
overreacting. Referring to his own poll results of the American public, he
said "It's another funny instance of scientists ignoring science." Krosnick
found that "Very few professions enjoy the level of confidence from the
public that scientists do, and those numbers haven't changed much in a
decade. We don't see a lot of evidence that the general public in the United
States is picking up on the (University of East Anglia) emails. It's too
inside baseball."[139]
The Christian Science Monitor, in an article titled
"Climate scientists exonerated in 'climategate' but public trust damaged,"
stated, "While public opinion had steadily moved away from belief in
man-made global warming before the leaked CRU emails, that trend has only
accelerated."[140] Paul Krugman, columnist for the New York Times, argued
that this, along with all other incidents which called into question the
scientific consensus on climate change, was "a fraud concocted by opponents
of climate action, then bought into by many in the news media."[141] But UK
journalist Fred Pearce called the slow response of climate scientists "a
case study in how not to respond to a crisis" and "a public relations
disaster".[142]
A. A. Leiserowitz, Director of the Yale University
Project on Climate Change, and colleagues found in 2010 that:
Climategate had a significant effect on public
beliefs in global warming and trust in scientists.
The loss of trust in scientists, however, was
primarily among individuals with a strongly individualistic worldview or
politically conservative ideology. Nonetheless, Americans overall continue
to trust scientists more than other sources of information about global
warming.
In late 2011, Steven F. Hayward wrote that "Climategate
did for the global warming controversy what the Pentagon Papers did for the
Vietnam war 40 years ago: It changed the narrative decisively."[143] An
editorial in Nature said that many in the media "were led by the nose, by
those with a clear agenda, to a sizzling scandal that steadily defused as
the true facts and context were made clear."
Jensen Comment
Professor Gruber's confession will similarly affect the public opinion of the
way Obamacare was foisted on the public. This is not a proud moment in science
or the life of a scientist and his university.
Jensen Comment
Health insurance is currently a very good business for companies, because bad
debts from people who do not pay contracted premiums are passed on to the
doctors and hospitals after 30 days. In any case Obamacare promises guaranteed
profits for insurance companies at taxpayer expense if necessary. This is not
capitalism since one of the tenants of capitalism is that businesses take risks
risks of losses and failure.
It's the doctors and hospitals that take the financial risks. In New
Hampshire nearly half the hospitals refuse to admit patients with ACA insurance
except in dire emergencies. Many doctors are turning patients away unless they
have something other than ACA medical insurance.
Another good thing for insurers is that the deductibles have become so huge
(40% to 60%) that insured people put off getting medical care until absolutely
necessary --- thereby greatly reducing the number of claims to be processed and
paid.
My point is that just to say that more people now have ACA health insurance
is not saying a whole lot about the quality of health care that this insurance
is buying. There will probably be gridlock for years in Washington DC for any
attempts to bring quality health care to all citizens of the USA. I favor
national health insurance, although national health insurance plans in most
non-OPEC nations like Sweden, Denmark, and the UK are doing badly these days. I
consider Canada to be an OPEC nation. Germany is doing better because it allows
people to take on supplemental health insurance using their own savings.
The USA is now an one of the world's largest oil producers, but gridlock
politics have all but destroyed possibilities for great health care for all
citizens. It's one of the best nations for health care for people who can afford
to pay for the services, including those lucky enough to be on Medicaid or
Medicare.
Voters in November might be ready to show Democrats
what they think about removing choice and hiking costs, as well as their
arrogance in determining that a few politicians in Washington know better
about their choices than they do. Unfortunately, Barack Obama doesn’t appear
to have figured out this problem. In an interview with WebMD, Obama finally
acknowledged that, contra his promise, people might not be able to keep the
doctors they liked, but that they probably shouldn’t have liked those
doctors in the first place.
Jensen Comment
Why won't he still admit the truth. Many of those doctors that "they liked" tend
to be so good that they get more than enough business without working for
medical clinics and
Here in New Hampshire 10 of the 26 hospitals and many of the best physicians
in the state refuse to go on network. One of the main reasons is that patients
in default on their health exchange premiums must be treated for 90 days with
physicians and hospitals bearing the treatment costs for the last 60 of those 90
days. God forbid that the fat-cat insurance companies or the Federal government
take the risks of paying for the free care during those 60-days.
Questions
Was President Obama correct in promising that the ACA insurance would transfer
Medicaid patients from ER rooms to ACA networked physicians?
How does the ACA expansion of Medicaid greatly increase the moral hazard
of new Medicare patients?
One of the naive promises made by President Obama was that uninsured people
previously seeking free care in Emergency Rooms (ER) would relieve the ER rooms
for all the new Medicaid patients who could now have access to network
physicians with their new free medical care and medication insurance policies.
This was naive because he should have known that previous Medicaid patients
preferred ER rooms even when they had freeMedicaid insurance. He should
have known that when Oregon expanded the number of people on Medicaid that
demand for ER services increased by 40%.
People receiving free medical care and medications are inclined to favor ER
services even when they can have care from network physicians. Reasons are
complicated especially when walk-in medical clinics are available. One reason is
that walk-in clinics serving Medicaid patients are not usually as close by as
hospitals with ER services. The physicians in the ER facilities are likely to
not only be MDs, they are sometimes better MDs that the staff of walk-in medical
clinics who often hire newly graduated MDs still in residency or physicians
assistants. In other words, if you want the best physicians the odds are usually
better for ER rooms than networked ACA physicians and walk-in clinics.
When walk-in clinics are not convenient, getting an appointment with a
networked physician may take weeks or even months. Top physicians are available
24/7 for emergency patients and non-emergency Medicaid patients. Insured
patients not on Medicaid may be discouraged by co-pays of expensive ER services.
But Medicaid patients never have to worry about co-payments.
Last night CBS News reported that ER use expanded by 40% due to new Medicaid
patients.
Giving poor people health insurance, the belief
was, would decrease their dependence on hospital emergency rooms by
providing them access to more appropriate, lower-cost primary care.
But a study published in the journal
Science on Thursday finds that's not the case.
When you give people Medicaid, it seems they use both more primary care and
more emergency room services.
"Medicaid coverage increases emergency department
use, both overall and for a broad range of types of visits, conditions, and
subpopulations," says
Amy
Finkelstein, an economics professor at MIT and one
of the authors of the study. "Including visits for conditions that may be
most readily treatable in primary care settings."
In other words, people are going to the emergency
department for things that aren't emergencies. This is exactly what
policymakers hoped to avoid by giving people health insurance – including
the
huge increase in Medicaid coverage coming as part
of the Affordable Care Act.
And the increase in ER use found in the study was
significant – "about 40 percent," Finkelstein said.
This would be a good place to point out this is not
just any study. It is the third major paper from something called the
Oregon Health Insurance Experiment,
which Finkelstein heads along with
Katherine Baicker from the Harvard School of
Public Health.
The experiment was a rare opportunity to create a
randomized controlled experiment – the gold standard of scientific research.
It came about almost by accident, thanks to Oregon's decision in 2008 to
expand its Medicaid program via a lottery.
The result, said Finkelstein, was that the groups
of people with or without insurance were identical, "except for the fact
that some have insurance and some don't. You've literally randomized the
allocation of insurance coverage."
And that gave researchers the ability to compare
the effects of having health insurance — in this case, Medicaid.
The first paper from the research team, published
in 2011, was
mostly positive. It found that people who got
Medicaid coverage were more likely to use health services in general, less
likely to suffer from depression, and less likely to suffer financial
problems related to medical bills than those who remained uninsured.
The results in the second paper, published last
spring,
were more equivocal. Researchers found no
measurable health benefits in the Medicaid group for several chronic
conditions, including hypertension, high cholesterol and diabetes.
It's not clear that the emergency room results will
translate nationwide: The study only lasted 18 months and the study
population is both more while and more urban than the rest of the nation.
But that's not stopping critics of Medicaid
expansion.
"When you make ER care free to people, they consume
more of it. They consume 40 percent more of it," says Michael Cannon, head
of health policy for the libertarian
Cato Institute. "Even as they're consuming more
preventive care. And so one of the main arguments for how Obamacare was
going to reduce health care costs is just flat out false."
Cannon says the study will likely further hurt
President Obama's credibility for vowing that expanding Medicaid would help
get people out of emergency rooms. But what's likely to bother the
administration even more, he says, is what it may do to the half of the
states that have yet to adopt the Medicaid expansion.
"This study is going to make it less likely that
the 25 states that decided not to expand Medicaid are going to change their
minds and decide to expand Medicaid," Cannon predicts.
But this study doesn't come as much of a surprise
to those people who actually run Medicaid programs around the country.
"This is not something that is unexpected and not
something that we're not prepared for," says Kathleen Nolan. She's director
of state policy and programs for the
National Association
of Medicaid Directors.
Continued in article
Jensen Comment
The majority of new Medicaid patients will be poor, although it is possible for
millionaires to now qualify for Medicaid with devious financial planning such as
low income students having million dollar trust funds. The poor patients have
incentives to game the ER services for prescription pain medicine. With one
network physician or clinic, there will be records as to when prescriptions can
be renewed. Given the Administration's track record for implementing databases,
I strongly doubt that a Medicaid patient intent upon selling prescription pain
killers can be prevented by traveling around to different hospital ER service
for prescriptions that would not be granted if the ER physician was aware of the
last time a Medicaid patient received such a prescription in another hospital
and another and another.
I'm not certain how well pharmacies share prescription data or even if
privacy laws even allow CVC and Walgreen and Wal-mart to even share a person's
prescription data without receiving permission from the patient.
The moral hazard is greater with poor people in need of selling their pills
like they sell food stamps.
Can prescription data be shared between different corporations without
patient consent?
And then there's the problem of granting Medicaid to people who do not
qualify for Medicaid. For example, an audit in Illinois revealed that half the
people on Medicaid did not qualify for Medicaid. This appears to be yet another
entitlement going crazy at taxpayer expense.
Due in heavy part that the Affordable Care Act is passing both its deductible
nonpayment bad debts and its premium non-payment bad debts (two of
the three months of a three-month nonpayment grace period), many
hospitals like the Andersen Cancer Center and many doctors (70% in
California) are refusing to serve patients insured by the exchanges.
The TV networks and major newspapers seem to conspire to not report
this.
You may not be able to choose your doctor or hospital unless you pay
cash or go on a high premium Cadillac plan that, in 2015, will cease to
be tax deductible by you or your employer..
After his gun control initiatives failed in Congress, President Obama
unilaterally added very expensive mental health coverage to the Affordable
Care Act
without mentioning that most psychiatrists will refuse to serve patients
having any type of insurance.. Psychiatrists are already in short
supply in the USA. Nearly half already only serve cash-paying patients and
currently won't bill any insurance companies, including Medicare or
Medicaid. I think even more will reject the the exchanges.
I have a relative who needs psychiatric medications daily. Even though her
husband is on a good state university medical insurance plan for coverage of
most of her medical needs, she's dependent upon the only (overworked)
psychiatrist in the area. That psychiatrist does not accept insurance.
Why are there so few psychiatrists?
One reason is that psychiatry is the most dangerous medical specialty.
Exhibit A is the recent mass murderer James Holmes in Aurora, Colorado who
was booted off campus for threatening his psychiatrist. Personally I think
another reason is that doctors do not like going into a specialty having
such a low proportion of cure rates and having to be on call 24/7 (usually
to prevent suicides).
Something will have to be done to prevent passing bad bad debts onto
hospitals and doctors.
Now that the GOP has given up on deficit reduction (Sen. Ryan lied by
excluding interest on the debt in his budget), perhaps legislation to
Federal coverage of bad debts on to the Federal government along with
assurances that doctors can bill at their full rates they charge cash paying
patients. The blow to the deficit will be devastating since patients have
little incentive to pay their deductibles if the government will pay those
deductibles.
What we now have is two political parties so desperate to win elections that
both are now promising nearly-free medical coverage that will explode the
deficit and provide false promises about the quality of medical care in
short supply to meet exploding demand.
Medical care will be almost free as long as the government fails to
seriously prevent frauds in Medicaid. Medicare phony disability coverage,
and the Affordable Care Act subsidies --- all three
of which are now frauds out of control due to failed government
enforcement
It's a question that's popping up more and more. On
the surface, the question answers itself. We're talking about pinstriped
insurance company executives, not Hells Angels. One doesn't want to paint
with too broad a brush, but if you were going to guess which vocations lend
themselves least to revolutionary zeal, actuaries rank slightly behind
embalmers.
Still, it's hard not to wonder how much more these
people are willing to take. Even an obedient dog will bite if you kick it
enough. Since Obamacare's passage, the administration has constantly moved
the goalposts on the industry. For instance, when the small-business mandate
proved problematic in an election year, the administration delayed it,
putting its partisan political needs ahead of its own policy and the needs
of the industry.
But the insurers kept their eyes on the prize: huge
guaranteed profits stemming from the diktat of the health insurance mandate.
When asked how he silenced opponents in the health industry during his
successful effort to socialize medicine, Aneurin Bevan, creator of the
British National Health Service, responded, "I stuffed their mouths with
gold."
Hence, the insurers were ready on Oct. 1. They
rejiggered their industry. They sent out millions of cancellation letters to
customers whose plans no longer qualified under the new standards set by the
Affordable Care Act. They told their customers to go to the exchanges to get
their new plans.
But because President Obama promised Americans "if
you like your health care plan, you can keep it," (PolitiFact's "Lie of the
Year"), those cancellations became a political problem of Obama's own
making.
In response, the president blamed it on the
insurance companies or "bad apple" insurers. White House spokesman Jay
Carney insisted that it was the insurance companies that unilaterally
decided not to grandfather existing plans. (The Washington Post's "Fact
Checker" columnist, Glenn Kessler, gave this claim "Three Pinocchios.")
Then, just last week, Health and Human Services
Secretary Kathleen Sebelius announced that she was "urging" insurers to
ignore both their contracts and the law and simply cover people on the honor
system -- as if they were enrolled and paid up. She also wants doctors and
hospitals to take patients, regardless of whether they are in a patients'
insurance network or even if the patient is properly insured at all. Just go
ahead and extend the deadline for paying, she urged insurers; we'll work out
the paperwork later.
Of course, urging isn't forcing. But as Avik Roy of
Forbes notes, the difference is subtle. Also last week, HHS also announced
last week that it will consider compliance with its suggestions when
determining which plans to allow on the exchanges next year. A request from
HHS is like being asked a "favor" by the Godfather; compliance is less than
voluntary.
The irony, as Christopher DeMuth recently noted in
the Weekly Standard, is that if the architects of Obamacare had their way,
the insurers would have been in even worse shape today. The original plan
was for a "public option" that would have, over time, undercut the private
insurance market to the point where single-payer seemed like the only
rational way to go. If it weren't for then-Sen. Joe Lieberman's insistence
that the provision be scrapped, DeMuth writes, "Obamacare's troubles would
today be leading smoothly to the expansion of direct federal health
insurance to pick up millions of canceled policies and undercut rate
increases on terms no private firm could match."
In other words, the insurers knew the
administration never had their best interests at heart but got in bed with
it anyway.
Continued in article
Jensen Comment
Until recently the enthusiasm of medical insurance companies was understandable
since the the losses for deductible portions of contracts were passed on mostly
to patients themselves and possibly their doctors. Most medical service bad
debts of for default of premium payments were passed on to hospitals and
doctors.
Also the big and prosperous insurance companies were allowed to opt out of
participating in the more risky health insurance exchanges. Most did opt out
such that the government had to make loans for new exchange companies to to
become insurers for individuals not covered by their employers. These exchanges
are poorly capitalized, and many will probably have to be bailed out by the
government if and when they encounter insolvency.
To get more heavily capitalized insurance companies to participate would
require higher premium rates and more protection against bad debt losses. But
this in turn would raise premiums dramatically and be counter to the whole
purpose of the Affordable Care Act --- to get more people insured and using more
preventative care options. High premiums and low deductibles could destroy
the Affordable Care Act by making more rather than fewer people insured.
The silence of the media on astute health care providers is more
problematic.
Many of the biggest and best hospitals like the Andersen Cancer Center will not
serve patients covered by the exchanges. Over 70% of California's physicians
will not serve patients covered by the exchanges (except in the case where
emergency treatment is called for).
Has any media source complained that with proper investment planning very
wealthy people, especially college students on trust funds, may get free
Medicaid medical care and medications.
Jensen Question I asked the following question on the Turbo Tax Forum Regarding the
Affordable Care Act
Questions: Question
I'm told that only income, not wealth, will be the deciding factor on
eligibility for Medicaid beginning in 2014.
If I'm a full time student having zero income and $10 million trust fund of
stock paying no dividends, will I be eligible for Medicaid?
A Turbo Tax expert says that wealth may still be a criterion in the states
that rejected the Medicaid expansion. Having valuable assets is no longer a
criterion in those states that yielded to Whitehouse pressure and temporary
funding to expand Medicaid roles.
There are 24 states who are not expanding Medicaid and may, therefore,
still deny Medicaid to millionaires. The other 26 states may now grant free
health care to millionaires who strategically lock in their wealth for long-term
growth and negligible current income ---
https://www.statereforum.org/tracking-health-coverage-enrollment-by-state
The next Obamacare fight is going to be about
access.
After three months of enrollment, January will be the first month when
shoppers can see what they purchased. We know that the plans for sale on the
marketplace tend to have relatively limited networks, as insurers restricted
doctor access to hold down premium prices. New subscribers could find that a
doctor they want isn't in network, and get frustrated. Co-payments may seem
alarmingly high -- a byproduct of keeping premiums low. While the
health-care system probably has the capacity to absorb a few million new
insurance subscribers (for a variety of reasons explored here) there is
still room for issues about access to specific doctors and the price tag
that comes along with trips to the doctor's office.
Continued in article
Jensen Comment
While the new Medicaid patients will probably flood the hospital ERs instead of
seeking out network physicians, the patients on plans requiring co-payments and
deductibles will probably seek out physicians on their network plans. Hospital
ERs tend to charge large co-payments which of course do not matter to Medicaid
patients since they do not have to pay any co-payments.
A group of New York doctors is suing insurance
giant UnitedHealthcare, charging that it booted doctors from its network to
avoid cost hikes imposed by ObamaCare.
The company’s decision to kick more than 2,000 docs
from its Medicare Advantage network threatens to harm elderly and disabled
patients, according to the filing in Brooklyn federal court.
“By terminating numerous physicians from the . . .
network, United seeks to stem financial losses occasioned by reduced federal
payments under the Affordable Care Act,” the suit launched by the Medical
Society of the State of New York claims.
“This, of course, comes at the expense of
physicians,” the suit continues, arguing that the company violated doctors’
contracts by failing to give sufficient notice, among other things.
Tugging at the heartstrings, the suit specifically
mentions elderly and disabled patients “who must now either find new
physicians (including traveling farther distances to find a participating .
. . provider), switch plans to continue treatment with the terminated
physicians, or pay significant additional out-of-pocket costs to continue
treatment with an ‘out-of-network’ provider.”
It accuses United of “shifting the financial
burdens imposed by the Affordable Care Act from itself, a
multibillion-dollar company,” to providers and patients.
Medical Society President Sam Unterricht told The
Post the company’s decision was unfair to patients, since they had to choose
a new plan under Medicare Advantage, a private alternative to traditional
Medicare, by Dec. 7, when company Web sites still showed doctors who were
being kicked out of the network at the start of the new year.
“For some people who are medically fragile it can
really be dangerous. There can be gaps in care,” he said.
Unterricht said reduced Medicare Advantage payments
to physicians are being used as a cost-saving measure to fund ObamaCare. He
said docs would get paid 20 percent or even 40 percent less per patient.
“A lot of doctors are not going to be able to
accept that and really give good medical care at that kind of a price,” he
said.
Continued in article
Jensen Comment
This is a reversal of the stories we are hearing about physicians boycotting the
ACA networks.
We are seeing a bit about this up here. In their separate offices in our
Littleton Regional Hospital three different medical network groups each dropped
one of its MDs. Interestingly, all three of the dropped physicians at one time
or another been general practitioners for my wife or me. The dropped MDs were
all women MDs who were replaced by new and much cheaper Physician Assistants who
are permitted, at least up here, to examine patients like a physician and write
prescriptions.
One of the MDs, Dr. Virginia Jeffryes, after facing the huge expense of
starting a new practice, was hired back by her network group but now has to
commute to Whitefield. Dr. Kathleen Smith and Dr. Robin Hallquist are incurring
the expenses of commencing new practices in Littlleton and Twin Mountain
respectively. The startup expenses include renting office space, hiring medical
and administrative staff, buying computers and other equipment,, going it alone
for malpractice insurance premiums. Plus there is an enormous amount of red tape
involved in getting permission to bill third parties like Medicare and Worker
Comp.
I firmly believe these quality physicians were dropped by their respective
medical network groups and replaced by Physician Assistants (PAs) and/or
Osteopaths to save money. That, however, is only my opinion since I have no
inside tracks to the accounting records.
One of the network groups retained a cheap and uncaring MD trained in another
country. She needs and attitude adjustment. I'm told by a neighbor who works in
the hospital that her patients are continually asking for another "doctor" be it
a PA or an Osteopath.
Why didn't the group fire the lousy MD and retain the high quality MD? That's
a no-brainer question for a managerial accounting student.
Deloitte's Map of the Number of Healthcare Exchanges Estimated Per State ---
http://www.deloitte.com/assets/Dcom-UnitedStates/Local
Assets/Documents/Health Plans/us_hp_hix_IndividualMarketCompetition_81313.pdf
For example, New Hampshire and West Virginia have one whereas Texas has 11,
Wisconsin has 13, and New York has 16.
Each carrier does have multiple plans that vary largely on the size of the
deductibles with bronze plans having 40% deductibles and silver having 30%
deductibles. Prices vary in different states. Prices also vary with age and smoking.
There are differences even among states who are not providing their own
exchanges. Currently there are 26 states who rely on Federally provided
exchanges ---
https://www.statereforum.org/where-states-stand-on-exchanges
Why does Maine have only two exchanges while Texas has 11 exchanges?
How to Mislead With Statistics and Graphs
Question
If you were teaching statistics how could you use the following article to
illustrate how to mislead with statistics?
The drafters of the Affordable Care Act imagined vibrant marketplaces
that would give consumers options from many insurers. So far, competition is
limited: 40 percent of Americans live in counties with three or fewer
companies selling Obamacare policies, leaving them more wireless carriers to
choose from than health plans.
Jensen Comment
No matter how much we preach that correlation is not causation, journalists,
students, and even professors fall into the same old trap of not digging deeper
for causes rather than implying that correlation is synonymous with causation.
Yes premiums do seem to be correlated with
competition. But how much is the competition really affecting price relative to
underlying causal factors that affect such things as companies refusing to enter
the competition?
Insurance companies themselves are not very forthcoming about why they avoid
certain markets other than providing vague statements about those markets not
being profitable. The bottom line is that I don't know why there is so little
medical insurance competition in some parts of the country relative to other
parts of the USA. But I would not be so naive to imply that lack of competition
is a causal factor. Where there's lack of competition there are most likely
either underlying barriers to entry or other causal factors that make medical
insurance less profitable in those areas. Charging higher prices for insurance
in those markets is a result of whatever factors are driving potential
competitors out of those markets.
A skilled analyst would probe deeper as to why there is so little competition
in come counties and states.
Could regulations at the state or county level be making the insurance
market so unprofitable that most companies elect not to enter those markets?
Could litigation risks may be so high in a state or county that most
companies are avoiding the market?
Could there be underlying causes result in higher medical service costs that
drive the competition away in some counties? For example, some states
have more county hospitals that are funded by property taxes, thereby
allowing for lower priced services of the hospitals.
Could it be that some counties/states have a higher proportion of people
likely to become bad debts? Remember that in case an insured person defaults
on a premium, the insurance company must pay for the medical care of that
person for 30 days and the health care provider must pick up 60 more days in
a 90-day grace period where a person remains insured in spite of defaulting
on payments under Obamacare.
SweetieJean commented on an answer to your question:
Why does the
number of exchanges vary so greatly. For example, New Hampshire and West
Virginia have only one exchange whereas New York has 16 exchanges and Texas
has 11 exchanges?
Saw a recent article about someone who had only 1 insurance in their
Exchange, but their across the street neighbor (who lived in a different
zip code) had 15. In very rural areas (NH, WV), there isn't enough of a
customer population for most insurance companies to make a profit.
To view the comment, click
(or copy and paste in your browser) the link below:
And there’s more: most insurance companies don’t
tell you about the taxes they add to their premiums. The numbers will vary,
but one subscriber said their tax amount is $23.14 a month, or nearly $278
annually.;
Other add-ons include:
* A 2 percent premium tax on every health plan.
* A user fee of 3.5 percent to sell through the
online marketplace.
* A $2-per-policy fee.
Nonetheless, supporters of the Affordable Care Act
claim the neediest will get the best coverage.
“People who make a little more will pay more;
people who make a little less will pay less,” Arevalo said.
Critics say most insurers don’t specifically post
taxes on invoices, and some question how, in the case Brennan showed
earlier, Alabama Blue Cross-Blue Shield was able to be so specific.
More than half of the counties in 34 states
using the federal health insurance exchange lack even a bronze plan that's
affordable — by the government's own definition — for 40-year-old
couples who make just a little too much for financial assistance, a USA
TODAY analysis shows.
Many of these counties are in rural, less populous
areas that already had limited choice and pricey plans, but many others are
heavily populated, such as Bergen County, N.J., and Philadelphia and
Milwaukee counties.
More than a third don't offer an affordable plan in
the four tiers of coverage known as bronze, silver, gold or platinum for
people buying individual plans who are 50 or older and ineligible for
subsidies.
Those making more than 400% of the federal poverty
limit — $47,780 for an individual or $61,496 for a couple — are ineligible
for subsidies to buy insurance.
The USA TODAY analysis looked at whether premiums
for the least expensive plan in any of the metal levels was more than 8% of
household income. That's similar to the affordability test used by the
federal government to determine whether premiums are so expensive consumers
aren't required to buy plans under the Affordable Care Act.
The number of people who earn close to the subsidy
cutoff and are priced out of affordable coverage may be a small slice of the
estimated 4.4 million people buying their own insurance and ineligible for
subsidies. But the analysis clearly shows how the sticker shock hitting many
in the middle class, including the self-employed and early retirees, isn't
just a perception problem. The lack of
counties with affordable plans means many middle-class people will either
opt out of insurance or pay too much to buy it.
The prices of exchange plans have shocked many
shoppers, especially those who had plans canceled because they did not meet
the ACA coverage requirements. But experts are not surprised.
"The ACA was not designed to reduce costs or, the
law's name notwithstanding, to make health insurance coverage affordable for
the vast majority of Americans," says health care consultant Kip Piper, a
former government and insurance industry official. "The law uses taxpayer
dollars to lower costs for the low-income uninsured but it also increases
costs overall and shifts costs within the marketplace."
Along with underscoring how high rates are in many
places, the analysis could portend more problems for the health law's
troubled rollout. The Congressional Budget Office projected 7 million people
would sign up for the law by the end of 2014 and enrollment is already
falling several million short of that goal. Insurers need a lot of
relatively healthy people to sign up for insurance to make up for the higher
cost of insuring the less healthy. Highly subsidized lower-income consumers
who haven't had insurance before often weren't getting regular doctors'
visits. If many of those making about $50,000 for an individual or about
$62,000 in household income for a couple opt out of the new health care
system, it will deprive it of some of the counterbalancing effect needed.
Still, about 95% of consumers live in states where
the average premiums are below earlier estimates, says Department of Health
and Human Services spokeswoman Joanne Peters.
"The new Marketplace is night and day from what
consumers faced in the individual market before the health care law, where
they could see unlimited out-of-pocket expenses for plans with limited
benefits and high deductibles, if they can even get coverage without being
denied for a pre-existing condition," says Peters.
Many ACA-compliant plans will cover prescription
drugs, routine care for chronic conditions and primary care visits even
before deductibles are met, Peters notes.
But those aren't the plans that are affordable to
many middle-class individuals buying insurance. In many cases, catastrophic
plans — which USA TODAY excluded from its analysis — may be all that's left
for consumers on the exchanges. These high-deductible plans are generally
only available for consumers under 30, who are least likely to need to use
them, but they can also be purchased by people who don't have other
affordable options available in their area. These plans generally require
consumers to pay all of their medical costs up to a certain amount — often
$6,000 or more — although preventive benefits such as physicals have to be
covered under the new law.
President Obama said last week that people whose
plans were canceled and think the options on the exchanges are too expensive
aren't required to buy insurance or can buy a catastrophic plan through
what's known as a "hardship exemption." But most people actually do want
insurance, says financial counselor and author Karen McCall.
"Every one of those people, if they have any
consciousness and aren't totally self-medicating, would prefer to have
insurance," says McCall, author of the book Financial Recovery. "You could
go a year and not get any benefit of health insurance, but there is a deep
emotional need to know that we have proper insurance."
State and federal exchange officials approve the
rates health insurers can offer, and plans are then subsidized to levels
that make them affordable for those below 400% of the poverty level. Karen
Pollitz, a senior fellow at the Kaiser Family Foundation, acknowledges that
catastrophic and even bronze plans would be very difficult for many 40 or
50-something consumers to afford with their $5,000-$6,000 annual
deductibles.
"Most people don't have that kind of money in the
bank, and I think it's going to create problems for people," Pollitz says.
Although premiums are unaffordable in many places
now, protections in the law will prevent the massive jumps in premiums that
characterized the individual insurance market before the ACA, she says.
Individual policies before had only the "optics of
affordability and no dependability," Pollitz says. "What good is protection
if it doesn't work when you need it?"
More than half of the counties in 34 states using
the federal health insurance exchange lack even a bronze plan that's
affordable — by the government's own definition — for 40-year-old couples
who make just a little too much for financial assistance, a USA TODAY
analysis shows.
Many of these counties are in rural, less populous
areas that already had limited choice and pricey plans, but many others are
heavily populated, such as Bergen County, N.J., and Philadelphia and
Milwaukee counties.
More than a third don't offer an affordable plan in
the four tiers of coverage known as bronze, silver, gold or platinum for
people buying individual plans who are 50 or older and ineligible for
subsidies.
Those making more than 400% of the federal poverty
limit — $47,780 for an individual or $61,496 for a couple — are ineligible
for subsidies to buy insurance.
Jensen Comment
If we are going to have affordable health care for all then the premiums
should be affordable by all and not my some zip codes suffer much more than
people living in other zip codes.
The new rules in many states for extending free Medicaid on the bases of
only income without tests of assets (such as students having million dollar
trust funds) are huge moral hazards for millions of people to get totally
free medical service and medications. My wife's long term friend (for over
years) has a daughter living across the street in Longview Texas. The
daughter put her share of their $200,000 plus house into her husbands name,
divorced her husband, quit her job, and is now on welfare and Medicaid for
herself and her children. She still lives in the house with her husband and
readily admits this was a sham divorce. Her "husband" makes over $70,000.
She tells the welfare folks she's living across the street with her parents
--- which is a blatant lie.
In Texas she had to sign off on her ownership of the house. In one of the
states relaxing Medicaid rules she should get Medicaid and completely own
the house herself. as long as her "former husband" paid the property taxes
and other house expenses. In fact she could own a million dollar house and
still get Medicaid's free health care.
In order to make their premiums lower (with or without subsidies) most
people are opting for bronze and silver plans where they must pay 30%-50%)
of all medications and medical care. If they get hit with big bills most of
these people just do not have the money to pay their deductibles. Either
they will forego treatment or pass their bad debts on to doctors and
hospitals .
The ACA law should have been enacted only after rule enforcement checks
were in place. I think the law should not have commenced without having the
IRS matching incomes against subsidies and Medicaid expansion.
In the past people who defaulted on premiums became uninsured people who
were treated in special facilities such as county hospitals funded by
taxpayers. Now people who default on premiums get a 90-day grace period
where insurance companies pay their medical costs for 30 days and the
doctors and hospitals have to pay for their medical care for 60 days.
President Obama was smart to delay the employer-provided plans for a
year. The main advantage of this is that employees are not yet shocked by
how much more they will be paying out-of-pocket for higher premiums, higher
co-pays, and hi9gher deductibles.
"Employees will pay more for health care in 2014: New year likely to
bring higher deductibles and co-pays, smaller employer contributions." by
Julie Appleby, USA Today, December 19, 2013 ---
http://www.usatoday.com/story/money/personalfinance/2013/12/19/employee-health-insurance/3958071/
Jensen Comment
The problem is that the ACA is just not sustainable unless drastic changes are
made. The ACA assumed that wealthier and healthier people were going to pay for
almost all the expansion of free Medicaid medical care and subsidized premiums.
But the prices that were set are just not affordable to too many people and in
order to have medical plans other people are opting for high deductibles that
they will not be able to pay in times of expensive medical care needs.
Furthermore, the pricings are too variable and unfair across all the counties of
the USA.
The ACA is just not sustainable. It should have been a national health plan
from the beginning. Turning it into a national health plan in the future will be
an enormous shock to the slowly expanding economy and a disaster to the
entitlements disaster.
But I don't really care all that much. I will be dead before the enormous
disasters hit.
I just hate the fraud and unfairness that the ACA is exacerbating. It turns out
that the preconditions problem for uninsured people was not all that great a
problem that could have been solved much more cheaply. The majority of the the
problem with uninsured people was that they either could not afford or did not
want to afford medical insurance that is now ever more costly to many of these
same peopl
The Obama administration has
expanded mental health care coverage, but the latest research shows that
psychiatrists often do not accept insurance at all. When only 43% of
psychiatrists accept Medicaid, it is difficult to see how expanded coverage
will help mental health patients.
Psychiatrists accept medical insurance less
frequently than other specialists across the board, according to the
study published in JAMA Psychiatry by
researchers from three separate medical schools:
55.3% of
psychiatrists accepted medical insurance in general, compared to
88.7% of other physicians
54.8% of
psychiatrists accepted Medicare, compared to 86.1% of other
physicians
43.1% of
psychiatrists accepted Medicaid, compared to 73.0% of other
physicians
The mainline media seems to avoid the greatest concerns of the Affordable
Care Act ---
concerns about making hospitals and doctors absorb most of the costs of medical
care during the 90-day premium default grace period and the cost of serving
patients who afterwards renege on paying the deductible portions that they
agreed to pay to get lower premium plans.
The USA now has a dual health care program --- the highest quality health
care in the world for the wealthy on Cadillac medical insurance plans and
inferior quality health care in the chaos of the Affordable Care Act that will force soaring
inflation in health care provider pricings. Your local Congressional
representative is signing up for a Cadillac plan paid for by taxpayers.
the Affordable Care Act: Limits Placed Upon Choosing Your Own Doctor and Hospital
Jensen Comment
The media along with President Obama led us to believe that medical insurance
plans were going to vary only be the amount of the deductibles and age of the
applicant. We are now learning more about differences in medical networks of
hospitals and doctors. The President kept insisting that we could keep our
present doctors. Technically that was not a lie, but what was left unsaid is
that to literally keep your favored doctors and hospitals you may have to opt
for the more expensive Cadillac plans having "broader network coverage "of
physicians and selective hospitals that opted out of serving the lower-priced
limited network plans.
Mr. Wallace: "It's a simple yes or no question.
Didn't he say if you like your doctor, you can keep your doctor?"
Dr. Emanuel: "Yes. But look, if you want to pay
more for an insurance company that covers your doctor, you can do that. This
is a matter of choice. We know in all sorts of places you pay more for
certain—for a wider range of choices or wider range of benefits. The
issue isn't the selective networks. People keep saying, 'Oh, the problem is
you're going to have a selective network.'"
Mr. Wallace: "Well, if you lose your doctor or lose
your hospital—"
Dr. Emanuel: "Let me just say something. People are
going to have a choice as to whether they want to pay a certain amount for a
selective network or pay more for a broader
network."
Mr. Wallace: "Which means your premiums would
probably go up."
Dr. Emanuel: "They get that choice. That's a choice
you've always made."
It's nice to hear a central planner embrace choice,
except this needs translating too. The truth is that you may be able to pay
more to keep your doctor, but only after you choose one of ObamaCare's
preferred plans that already costs you more than your old plan that
ObamaCare forced you to give up.
Jensen Comment
What Dr. Emanuel failed to mention is that the "broader expensive network" plans
are Cadillac plans for which employers lose their tax deductions.
The Cadillac Tax: A Game Changer for U.S. Health Care: Can you
explain this tax to your students?
Do you understand the Cadillac Tax provision of the Affordable Healthcare Act
that will have a monumental 2018 impact on healthcare coverage of employees who
are now covered by employer plans --- plans now costing the government over $250
billion per year? But not for long!
Do you understand the Cadillac Tax provision?
Me neither. As Nancy Pelosi said years ago, Congress passed the ACA before
anybody in the USA had a chance to study all the surprises in this the enormous
bill.
If you're covered presently on your employer's plan you should most certainly
learn about the Cadillac Tax provision that kicks in in 2018.
Jensen Comment
Non-profit organizations, especially labor unions, for whom Cadillac plans are
especially popular will be allowed to keep their plans without penalty since tax
deductions are not of concern to them.
Having preferred networks of doctors and hospitals is not unheard of in
national health care plans. Germany, for example, has both public health
insurance plus premium coverage with private insurance. Cuba notoriously has
bourgeoisie plans for members of the Communist Party and the wealthy versus
proletariat plans for the poor people.
If you Congressional representative brags about signing
up for Obamacare ask if he or she has a Cadillac Obamacare plan that lets them
choose their own doctors and hospitals.
As a presumed constitutional scholar, Barack Obama
should know that while a president has authority to check the Legislative
Branch by recommending legislation to be passed by Congress, or through
presidential veto, he or she cannot legislate through executive fiat or pick
which parts of the law to comply with or decline. Article 2, Section 3,
Clause 5 of our Constitution requires that the president “…shall take care
that the Laws be carefully executed.” It doesn’t limit those laws or
encapsulated provisions to the particular ones that he or she likes.
Speaking before the House Judiciary Committee on
December 3, Professor Jonathan Turley of George Washington University
observed that the president isn’t taking that “Laws be faithfully executed”
oath very seriously, particularly with regard to his signature Affordable
Care Act (aka.“ObamaCare”).
Although Turley had voted for Obama and professes
to agree with him on health care and other issues, he warned that his power
grabs are causing “the most serious constitutional crisis in my
lifetime.”
The White House Earns Its Union Label
In addition to delaying and rewriting key ACA
provisions and carving out a special subsidy for members of Congress,
Obama’s latest constitutional violation will exempt unions from a fee the
law imposes upon all large group health plans. That provision which appears
in Section 1341 (b)(1)(A) establishes a reinsurance program to compensate
insurers on exchanges in the individual market if they are hit with higher
than expected costs to cover those with pre-existing conditions. This will
come from insurers and self-insured employers who pay in proportion to the
number of people they cover. The target is to raise $25 billion during 2014,
amounting to $63 per covered employee. The union exemption would kick in for
2015 and 2016.
As reported in a
Wall Street Journal editorial, “The unions hate this reinsurance
transfer because it takes from their members in the form of higher premiums
and gives to people on the exchanges.”
The
union exemption deal
will require that insurers who aren’t fully reimbursed
by fees along with non-exempted self-insured employers will have to pay more
to make up the shortfall. How will they make that up? How else but by
passing on higher costs to their customers? The Department of Health and
Human Services has confirmed that the fee for other non-exempt plans will be
higher as a result.
Responding to union pressure, an exemption buried
on page 72,340 of the December 2 Federal Register states: “Our
continued study of this issue leads us to believe that this provision may
reasonably be interpreted in one of two ways – it may be interpreted to mean
that self-insured, self- administered plans must make reinsurance
contributions, or it may be interpreted to mean that such plans are excluded
from the obligation…upon further consideration of the issue, we believe the
statutory language can reasonably be read…”
Yet as
Betsy McCaughey points out in an Investor’s
Business Daily piece, while Taft-Hartley plans self -insure and
self-administer, the weasel-wording is a ruse. She writes: “That’s a
lie. The ACA’s reinsurance provision doesn’t use the word ‘self-insured’ or
distinguish between plans that pay their own claims and plans that hire
administrators.”
Here, “self-insured” refers to a business which
pays directly for its workers’ policy costs and hires an insurer as a
third-party administrator to process claims and manage care.
“Self-administered” plans go one step farther and manage their benefits
in-house. As the Wall Street Journal observes, other than
collectively-bargained Taft-Hartley plans, “Almost no business in the
real world still follows this old –fashioned practice”. Such insurance
covers about 20 million union members, and about four out of five
Taft-Hartley trusts.
Eleven Republican senators who see the exemption as
blatant congressional circumvention and cronyism by the Obama administration
to curry favor with political allies have introduced a bill called the
“Union Tax Fairness Act” (S. 1724) to block it. Included are U.S. Senators
Orrin Hatch (R-UT), John Thune (R-SD), Lamar Alexander (R-Tenn.), James
Inhofe (R-OK), David Vitter (R-LA), Mike Enzi (R-WY), Ron Johnson (R-WS),
John Barrasso (R-WY), Tim Scott (R-SC), Saxby Chambliss (R-GA), and Tom
Coburn (R-OK).
Senator Hatch commented: “Since
the overwhelming majority of self-administered health insurance plans are
run by unions, let’s call this what it is: a political payback by the
administration to its union friends for backing this disastrous law. But the
fact is, the White House doesn’t have the authority to change the law on its
own and, as this bill makes clear, any attempt at a Big Labor carve-out from
ObamaCare must be approved by Congress.”
Senator Thune said:
“Unions should not be granted a special exemption
from ObamaCare’s reinsurance tax just because the president fears further
union backlash on his signature law. These unions agreed to pay this tax
when they endorsed ObamaCare, but now that they are finding out what the law
means for them and their plans, they want out. Rather than granting special
backroom deals to political allies, the administration should support
fairness for all by permanently delaying the law for every American.”
Senator Alexander added: “The
Obama administration should not reward its labor union friends and allies
who helped pass the health care law by giving them a carve-out from the
law’s worst provisions. This hefty reinsurance fee is one of the many
job-killing taxes that helped pay for the passage of the law – the
administration should be embarrassed that it would consider exempting their
union cronies without providing similar relief to our nation’s employers and
faith-based and charitable organizations.”
The unions weren’t the only cronies to get a
special ObamaCare break. Insurers who went along with ACA from the beginning
in order to expand markets from previously uninsured populations on the
taxpayer dole didn’t want any of that same medicine for themselves.
Ten giant health insurance companies, including
Blue Cross/Blue Shield, Cigna and Aetna, went to the White House and
received waivers
allowing them to impose yearly cap limits on health
coverage they provide to their own employees. Under ObamaCare, companies
which aren’t exempt are required to phase out caps on annual health care
benefits by 2014.
Cigna Corp., the largest waiver exemption
beneficiary, was allowed to cap benefits for its 265,000 employees. This
exception was granted just slightly less than one month before its CEO David
M. Cordani told attendees at a November 9, 2010 Reuters Health Summit: “I
don’t think it’s in our society’s best interest to expend energy in
repealing the law.”
Aetna was granted a waiver on October 1, 2010
allowing it to cap benefits for its 209,423 enrollees. The company’s CEO
Mark Bertolini had previously expressed mixed feelings about the
legislation. Writing in a March 2010 Op/Ed which appeared in the Hartford
Courant shortly after it became law, he said: “When fully
implemented, the new law will have a major effect on the market…Individuals
and small employers will have more options and choices. The private sector
will do what it does best: innovate to solve problems,”
The BCS Insurance Group which notes on their
website “We are the premier source for insurance and reinsurance for Blue
Cross and Blue Shield plans” received an ObamaCare waiver for its
115,000 enrollees. In fact three divisions of Blue Cross/Blue Shield
reportedly received waivers. They include Excellus Blue Cross/Blue Shield
(18,860 enrollees), Blue Cross/Blue/Shield of Tennessee (20,205 enrollees),
and Mountain State Blue Cross/Blue Shield with 270 enrollees.
HHS waivers from oversight rules were granted to
“Medigap” policy providers which exempts them from releasing and explaining
health care payment rate increases. According to the Daily Caller,
AARP, the largest of these, advocated for ObamaCare to include an attack on
their biggest competitor, Medicare Advantage.
AARP was a
driving force behind getting ObamaCare through
Congress. They conducted a $121 million advertising campaign to push it,
plus spent millions more lobbying for it on Capitol Hill. After President
Obama called for $313 billion in Medicare cuts to fund his signature
program, Medicare Advantage took the big hit.
Broken Premises
Don’t forget that ObamaCare would have encountered
the same forgotten fate as HillaryCare had it not been for the
support of big unions and insurers. Perhaps recall
those throngs of United Federation of Teachers (UFT) and Service Employee
International Union (SEIU) members picketing the Supreme Court in favor of
its approval carrying signs that read “Protect Working Families, Protect
the Law”.
And they already received gratitude. Immediately
after the provisions took effect, unions requested and were granted 1,231
waivers exempting 543,812 of their employees compared with only 69, 813
non-union worker exemptions.
Continued in article
Jensen Comment
With most of the millions of signing up "affordable health care" getting free
medical care under the expanded Medicaid programs or premiums subsidized by the
government, it shouldn't end up as a surprise who will really pay for medical
care in the future. That's becoming a no-brainer. Even clever millionaires such
as students with trust funds are now eligible for free Medicaid health care.
Jensen Comment
Fraud is inevitable and cannot be prevented when it comes to giving out
subsidies to to insured that are not legally entitled to such subsidies.
Firstly, there's the $2 trillion underground economy where people are receiving
income that even the IRS cannot detect --- those folks who work for unreported
cash earnings. We're talking about millions of people who do not report any
income to the IRS or greatly under report their incomes ---
http://www.cs.trinity.edu/~rjensen/temp/TaxNoTax.htm
Secondly, the 17 million reported above does not jive with the estimated
49.5% (of 130 million) of taxpayers who file tax returns but do not pay any
income taxes. Some of them have incomes offset by credits such as credits for
dependents, but its likely that the nearly all of 50% of taxpayers who pay no
qualify, at least on paper, for subsidies ---
http://www.cs.trinity.edu/~rjensen/temp/TaxNoTax.htm
Most of those making more than $100,000 pay some income taxes. Bloomberg
reports that 98% of those that pay no income taxes have less than $100,000 in
earnings. Most are availing themselves of recent tax breaks such as energy
credits, tax breaks from employer contributions to medical insurance, increased
tax breaks for dependents, and deferred tax breaks such as breaks professors get
for employer contributions to TIAA-CREF.
A family of four making less than $98,000 qualifies for a health insurance
subsidy from the government.
Hence I think the 17 million estimate is wildly inaccurate unless tens of
millions of those eligible for subsidies simply go uninsured because they cannot
afford the deductibles even if the premiums with subsidies are affordable.
One added qualifier is the huge unknown (at least to me) number of Medicaid
and Medicare recipients who are scoped out of the Affordable Health Care Act.
Those on Medicaid do not pay income taxes. Most of those on Medicare do pay
income taxes such that the sources of error in estimating the number of others
who will actually claim subsidies under the Affordable Health Care Act is
probably impossible to estimate within a 10 million range of error or more.
The enormous source of error that cannot be eliminated is that $2 trillion
underground cash-only economy that takes place under the noses of the IRS
enforcers of taxes.
When Obama repeatedly made the claim – "If you like
your health plan; you can keep your health plan" – objective observers knew
it wasn't so. This morning, the media is buzzing with evidence that Obama
knew it was a lie, but deliberately kept spinning the same phony claim for
years.
The shock in all this is not that Obama was lying;
he has a well established record of that. It's that somebody has uncovered
the evidence; the smoking gun. The following is the NBC News account of the
mess du jour for the White House and ObamaCare.
Our sources deeply involved in the Affordable Care
Act tell NBC NEWS that 50 to 75 percent of the 14 million consumers who buy
their insurance individually can expect to receive a “cancellation” letter
or the equivalent over the next year because their existing policies don’t
meet the standards mandated by the new health care law. One expert predicts
that number could reach as high as 80 percent. And all say that many of
those forced to buy pricier new policies will experience “sticker shock.”
None of this should come as a shock to the Obama
administration….
Buried in Obamacare regulations from July 2010 is
an estimate that because of normal turnover in the individual insurance
market, “40 to 67 percent” of customers will not be able to keep their
policy. And because many policies will have been changed since the key date,
“the percentage of individual market policies losing grandfather status in a
given year exceeds the 40 to 67 percent range.”
That means the administration knew that more than
40 to 67 percent of those in the individual market would not be able to keep
their plans, even if they liked them.
Yet President Obama, who had promised in 2009, “if
you like your health plan, you will be able to keep your health plan,” was
still saying in 2012, “If [you] already have health insurance, you will keep
your health insurance.”
Of course, it also sounds great when a Nigerian
prince offers to give you millions of dollars to help him get money into the
United States. Unfortunately, those Nigerian princes with the funny names
won't make you any richer, just as Presidents with funny names won't improve
your health care. They'll just tell you lies like these.
President Obama (promised)...that the cost of
insurance would go down “by $2,500 per family per year.” ...In fact, the
average 25 and 40-year-old will pay double under Obamacare what they
would need to pay today, based on rates posted at eHealthInsurance.com (NASDAQ:EHTH).
More specifically, for the typical 25-year-old male non-smoker, the
average Obamacare “bronze” exchange plan in California will cost between
64 and 117 percent more than the cheapest five plans on eHealth. For
40-year-old male non-smokers, it’s between 73 and 146 percent more.
2) Obamacare will not increase the deficit.
Calling for a massive new government program to cut costs is sort of like
moving to Death Valley for the reduced air conditioning bills. Alas,
it's not so.
Obamacare will increase the long-term federal
deficit by $6.2 trillion, according to a Government Accountability
Office (GAO) report released today.
Senator Jeff Sessions (R., Ala.), who requested the report, revealed the
findings this morning at a Senate Budget Committee hearing. The report, he
said, “confirms everything critics and Republicans were saying about the
faults of this bill,” and “dramatically proves that the promises made
assuring the nation that the largest new entitlement program in history
would not add one dime to the deficit were false.”
President Obama and other Democrats attempted to
win support for the health-care bill by touting it as a fiscally responsible
enterprise. “I will not sign a plan that adds one dime to our deficits —
either now or in the future,” Obama told a joint-session of Congress in
September 2009. “I will not sign it if it adds one dime to the deficit, now
or in the future, period.”
You mean Obama lied to us AGAIN? Who would have
ever guessed?
Eighty-three percent of American physicians have
considered leaving their practices over President Barack Obama’s health
care reform law, according to a survey released by the Doctor Patient
Medical Association.
The DPMA, a non-partisan association of
doctors and patients, surveyed a random selection of 699 doctors
nationwide. The survey found that the majority have thought about
bailing out of their careers over the legislation, which was upheld last
month by the Supreme Court.
Even if doctors do not quit their jobs over the
ruling, America will face a shortage of at least 90,000 doctors by 2020.
The new health care law increases demand for physicians by expanding
insurance coverage. This change will exacerbate the current shortage as
more Americans live past 65.
What good is health care, even the bad health care
we'll get through Obamacare, if you can't find a doctor to see you when
you're sick?
Retailers are cutting worker hours at a rate not
seen in more than three decades — a sudden shift that can only be
explained by the onset of ObamaCare’s employer mandates.
Nonsupervisory employees logged an average
30.0 hours per week in April, the shortest retail workweek since early
2010, Labor Department data out Friday show.
…This reversal doesn’t appear related to the
economy, which has been consistently mediocre. Instead, all evidence
points to the coming launch of ObamaCare, which the retail industry has
warned would cause just such a result.
...One way for employers to minimize the costs
of providing “affordable” coverage to modest-wage workers is to shift
more work to part-time, defined as less than 30 hours per week under
ObamaCare.
So not only are they going to get crummy health
care, they're getting their hours cut back, too. Thanks, Obama!
5) If you like your health care plan, you'll be
able to keep it. According to Obama, even though the government is about
to come crashing into the health care market like a Blue Whale bellyflopping
into a pond, it isn't going to have any impact at all on the insurance
companies that were already swimming along. Why, if you like your own
insurance, then there is nothing to worry about because you can keep it.
New health insurance rules under ObamaCare could
lead to a host of personal insurance plans being canceled as early as
this fall, a scenario expected to cause consumer confusion.
Under the federal overhaul, those policies
that cannot meet new insurance plan standards may be discontinued. This
means individuals, and some small businesses, that rely on those plans
will have to find new ones.
The goal is to ensure that most insurance
policies offer a basic set of coverage, as part of the Obama
administration's plan to cover most of the nation's 50 million
uninsured.
Yet it also seems to run afoul of one of the
president's best-known promises on the law: "If you like your health
care plan, you'll be able to keep your health care plan."
In fact, state insurance commissioners largely
are giving insurers the option of canceling existing plans or changing
them to comply with new federal requirements. Large employer plans that
cover most workers and their families are unlikely to be affected.
The National Association of Insurance
Commissioners says it is hearing that many carriers will cancel policies
and issue new ones because administratively that is easier than changing
existing plans.
..."You're going to be forcibly upgraded," said
Bob Laszewski, a health care industry consultant. "It's like showing up
at the airline counter and being told, 'You have no choice, $300 please.
You're getting a first-class ticket, why are you complaining?'"
On a personal note, as someone who buys his own
insurance, the cost of my policy has gone up $50 a month since Obamacare
passed and I expect it to be cancelled this fall, but I guess it's a small
price to pay for us little people if it allows Barack Obama to feel like he
finally accomplished something "historic."
Obamacare hasn't fully taken effect yet, but when
it does, it's only going to get worse. Everything from death panels to
unimaginably long waits for surgeries to bureaucrats denying effective,
relatively common, currently in use treatments because they are "too
expensive" are all coming down the pike. Obamacare is too much of a disaster
to truly fix; so the best thing we can do right now is let this nightmare
become reality, let people see how bad it is and then insist on a repeal or
bust. Either the Democrats live with the disaster they've inflicted on the
American people at the ballot box long term or they do the right thing and
allow us to repeal this monstrosity before it does even more damage to our
country.
The White House is claiming that the Healthcare.gov
website is mostly fixed, that the millions of Americans whose health plans
were canceled thanks to government rules may be able to keep them for
another year, and that in any event these people will get better plans
through ObamaCare exchanges. Whatever the truth of these assertions, those
who expect better days ahead for the Affordable Care Act are in for a rude
awakening. The shocks—economic and political—will get much worse next year
and beyond. Here's why:
The "sticker shock" that many buyers of new, ACA-compliant
health plans have experienced—with premiums 30% higher, or more, than their
previous coverage—has only begun. The costs borne by individuals will be
even more obvious next year as more people start having to pay higher
deductibles and copays.
If, as many predict, too few healthy young people
sign up for insurance that is overpriced in order to subsidize older, sicker
people, the insurance market will unravel in a "death spiral" of ever-higher
premiums and fewer signups. The government, through taxpayer-funded "risk
corridors," is on the hook for billions of dollars of potential
insurance-company losses. This will be about as politically popular as bank
bailouts.
The "I can't keep my doctor" shock will also hit
more and more people in coming months. To keep prices to consumers as low as
possible—given cost pressures generated by the government's rules, controls
and coverage mandates—insurance companies in many cases are offering plans
that have very restrictive networks, with lower-cost providers that exclude
some of the best physicians and hospitals.
Next year, millions must choose among unfamiliar
physicians and hospitals, or paying more for preferred providers who are not
part of their insurance network. Some health outcomes will deteriorate from
a less familiar doctor-patient relationship.
More IT failures are likely. People looking for
health plans on ObamaCare exchanges may be able to fill out their
applications with more ease. But the far more complex back-office side of
the website—where the information in their application is checked against
government databases to determine the premium subsidies and prices they will
be charged, and where the applications are forwarded to insurance
companies—is still under construction. Be prepared for eligibility, coverage
gap, billing, claims, insurer payment and patient information-protection
debacles.
The next shock will come when the scores of
millions outside the individual market—people who are covered by employers,
in union plans, or on Medicare and Medicaid—experience the downsides of
ObamaCare. There will be longer waits for hospital visits, doctors'
appointments and specialist treatment, as more people crowd fewer providers.
Those with means can respond to the
government-driven waiting lines by making side payments to providers or
seeking care through doctors who do not participate in insurance plans. But
this will be difficult for most people.
Next, the Congressional Budget Office's estimated
25% expansion of Medicaid under ObamaCare will exert pressure on state
Medicaid spending (although the pressure will be delayed for a few years by
federal subsidies). This pressure on state budgets means less money on
education and transportation, and higher state taxes.
The "Cadillac tax" on health plans to help pay for
ObamaCare starts four years from this Jan. 1. It will fall heavily on unions
whose plans are expensive due to generous health benefits.
In the nearer term, a political iceberg looms next
year. Insurance companies usually submit proposed pricing to regulators in
the summer, and the open enrollment period begins in the fall for plans
starting Jan. 1. Businesses of all sizes that currently provide health care
will have to offer ObamaCare's expensive, mandated benefits, or drop their
plans and—except the smallest firms—pay a fine. Tens of millions of
Americans with employer-provided health plans risk paying more for less, and
losing their policies and doctors to more restrictive networks. The
administration is desperately trying to delay employer-plan problems beyond
the 2014 election to avoid this shock.
Meanwhile, ObamaCare will lead to more part-time
workers in some industries, as hours are cut back to conform to arbitrary
definitions in the law of what constitutes full-time employment. Many small
businesses will be cautious about hiring more than 50 full-time employees,
which would subject them to the law's employer insurance mandate.
On the supply side, medicine will become a far less
attractive career for talented young people. More doctors will restrict
practice or retire early rather than accept lower incomes and work
conditions they did not anticipate. Already, many practices are closed to
Medicaid recipients, some also to Medicare. The pace of innovation in drugs,
medical devices and delivery is expected to slow significantly, as higher
taxes and even rationing set in.
The repeated assertions by the law's supporters
that nobody but the rich would be worse off was based on a
beyond-implausible claim that one could expand by millions the number of
people with health insurance, lower health-care costs without rationing, and
improve quality. The reality is that any squeezing of insurance-company
profits, or reduction in uncompensated emergency-room care amounts to a tiny
fraction of the trillions of dollars extracted from those people overpaying
for insurance, or redistributed from taxpayers.
The Affordable Care Act's disastrous debut sent the
president's approval ratings into a tailspin and congressional Democrats in
competitive districts fleeing for cover. If the law's continuing
unpopularity enables Republicans to regain the Senate in 2014, the president
will be forced to veto repeated attempts to repeal the law or to negotiate
major changes.
It is exceptionally difficult -- for all practical
purposes, impossible," writes Eberstadt, "for a medical professional to disprove
a patient's claim that he or she is suffering from sad feelings or back pain. In
other words, many people are gaming or defrauding the system. This includes not
only disability recipients but health care professionals, lawyers and others who
run ads promising to get you disability benefits. Between 1996 and 2011, the
private sector generated 8.8 million new jobs, and 4.1 million people entered
the disability rolls. Michael Barone, "Men Find
Careers in Collecting Disability," ---Click Here
http://townhall.com/columnists/michaelbarone/2012/12/03/men_find_careers_in_collecting_disability?utm_source=thdaily&utm_medium=email&utm_campaign=nl
Jensen Comment
Even after one or more spine surgeries it is virtually impossible to determine
whether remaining pain is real or faked. I can claim first hand that after 15
spine surgeries and metal rods from neck to hip that my wife's suffering is
real. However, I know of at least two instances where the disability careers are
faked in order to get monthly lifetime disability payments and access to
Medicare long prior to age 65. This seems to be one of the unsolvable problems
in society that becomes even more problematic when a disability career is easier
to enter than a job-like career.
Two Ivy League Professors Slugging It Out in a Political Arena
It seems to me that
when readers declare that some piece of economics commentary is “wrong”,
they often confuse three different notions of wrongness, which are neither
intellectually nor morally equivalent.
First, there’s the
ordinary business of expressing a view about the economy that the reader
disagrees with – e.g., “Krugman is wrong, because the government can’t
create jobs”; or, if you prefer, “Casey Mulligan is wrong, because we’re
suffering from demand problems, not supply problems.” Obviously it’s OK to
say things like this, and sometimes the criticism is correct. (I’m not
wrong, but Mulligan is!) But equally obviously, there’s nothing, er, wrong
about being wrong in this sense: people will disagree, and that’s
legitimate.
Second, and much
less legitimate, is the kind of wrongness that involves making assertions
that are logically or empirically indefensible. I’d put the
Cochrane/Fama claims that government spending
can’t increase demand as a matter of accounting in this category; this is a
basic conceptual error, which goes beyond mere difference of opinion. And
economists who are wrong in this sense should pay a professional price.
That said, I don’t
think it’s realistic to expect the news media to be very effective at
policing this kind of wrongness. If professors with impressive-sounding
credentials spout nonsense, it’s asking too much of a newspaper or magazine
serving the broader public to make the judgment that they actually have no
idea what they’re talking about.
Matters are quite
different when it comes to the third kind of wrongness: making or
insinuating false claims about readily checkable facts. The case in point,
of course, is Ferguson’s attempt to mislead readers into believing that the
CBO had concluded that Obamacare increases the deficit. This was unethical
on his part – but Newsweek is also at fault, because this is the sort of
thing it could and should have refused to publish.
Now, I don’t expect
a publication that responds to daily or weekly news to do New Yorker-style
fact checking. But it should demand that anyone who writes for it document
all of his or her factual assertions – and an editor should check that
documentation to see that it actually matches what the writer says.
¶There are
multiple errors and misrepresentations in Niall Ferguson’s
cover story in Newsweek — I guess they don’t do
fact-checking — but this is the one that jumped out at me. Ferguson says:
¶The president pledged that health-care
reform would not add a cent to the deficit. But the CBO and the Joint
Committee on Taxation now estimate that the insurance-coverage
provisions of the ACA will have a net cost of close to $1.2 trillion
over the 2012–22 period.
¶Readers are no doubt meant to interpret
this as saying that CBO found that the Act will increase the deficit. But
anyone who actually read, or even skimmed, the
CBO report (pdf) knows that it found that the ACA
would reduce, not increase, the deficit — because the insurance subsidies
were fully paid for.
¶Now, people
on the right like to argue that the CBO was wrong. But that’s not the
argument Ferguson is making — he is deliberately misleading readers,
conveying the impression that the CBO had actually rejected Obama’s claim
that health reform is deficit-neutral, when in fact the opposite is true.
¶More than
that: by its very nature, health reform that expands coverage requires that
lower-income families receive subsidies to make coverage affordable.
So of course reform comes with a positive
number for subsidies — finding that this number is indeed positive says
nothing at all about the impact on the deficit unless you ask whether and
how the subsidies are paid for. Ferguson has to know this (unless he’s
completely ignorant about the whole subject, which I guess has to be
considered as a possibility). But he goes for the cheap shot anyway.
Jensen Comment
The CBO assumes that the requirement (just upheld by a Supreme Court decision)
that all people in the United States have health insurance or otherwise will
have health insurance premiums deducted from their tax refunds that will fund
the added cost of covering current poor people needing subsidies for health
insurance coverage. This is what Krugman means above when he assumes "the
insurance subsidies are fully paid for." This is why the Affordable Health Care
Act (ACA) tried to get states to raise the number of people receiving state
subsidies for Medicaid. About half the states, however, are refusing to along
with the expanded coverage under Medicaid. This means that more higher-end low
income people will depend on the ACA "subsidies" instead of Medicaid coverage
from federal and state Medicaid funding.
It seems to be a matter of semantics whether these tax return add-ons are a
tax or not, but Krugman (probably rightfully) ignores this matter of semantics.
But since about half the taxpayers in the U.S. pay no income taxes and over 90%
of them are below the median in earnings it's not clear whether enough insurance
premiums expected to be collected will really be collected. The CBO may have
been planning on an economic recovery that perhaps will never materialize in
this new era of global competition with Asia. The CBO expectations of lower
unemployment may not materialize (currently there are nearly 13 million
unemployed people not counting the many who've simply given up looking for work
or received fraudulent Social Security lifetime disability awards). The required
subsidies in reality may greatly exceed the added premiums "tax" collected.
But nobody, including the CBO, knows what deficits will become.
Also it's not at all clear that the CBO correctly estimated health care
claims given the double-digit inflation in the cost of medical services. This is
the real Achilles Heel of the Affordable Health Care Act. The costs of actually
providing the promised services in the future may greatly exceed expectations.
What may be more subject to dispute is how accurate the CBO is on estimating
future costs of bringing on people who have prior conditions that prevent them
from currently being able to obtain health care coverage. I'm definitely in
favor of providing affordable coverage to these people with prior conditions.
But I think the eventual coverage costs will exceed CBO estimates since many of
them need high-cost organ transplants and other very expensive medical services.
I am very surprised by the hysterical reaction of
many readers to Krugman's comment. The point of the argument is what the HBO
report says. Does Ferguson lie about the HBO report in his Newsweek article?
Either Ferguson or Krugman is correct. I would expect readers disagreeing
with Krugman to provide quotations from the HBO report showing that he is
wrong and that Ferguson is right.
Instead of that I see a lot of ideological delirium
in too many of the comments.
I cancelled my subscription to Newsweek
today. I do not need this kind of uninformed blather in my home. If I feel
the need to read/hear totally unfactual, biased reporting, I can just turn
on FOX news at any hour of the day or night. Which I will never do.
Laurie Wick
Jensen Comment
Actually, since Tina Brown became editor, Newsweek became a liberal
feminist magazine. Niall Ferguson's column is only there for tokenism. The
Ferguson cover story is most likely a desperate attempt to recover the
millions of conservative subscribers who've defected since Tina Brown took
over. One of the recent cover's of Newsweek accuses Candidate Romney
of "being a Wimp." Are you sure you want to cancel Newsweek Laurie?
FTA: "health reform that expands coverage requires
that lower-income families receive subsidies to make coverage affordable. "
And, exactly,. Mr. Krugman, where do you think those subsidies are gonna
come from? You can continue to carry Obama's water that's what you get paid
to do, but the rest of us know a TAX when we see one.
J. Phillip
Closing Jensen Comment
I wish the Democrats had rammed a national health care plan down our throats in
that short window of time 2008-2010 when they controlled the entire executive
and legislative branches of the federal government. Instead we ended up with a
bastardized public-private ACA that pleases neither the left nor the right. I am
inclined to believe that the ACA will always have insurance premiums falling way
short of costs of delivering medical services. Whether or not this adds to the
deficit is simply a matter of accounting gimmicks the familiar governmental
accounting shell game ---
http://faculty.trinity.edu/rjensen/Theory02.htm#GovernmentalAccounting
The larger reality is that Medicare cannot and will
not continue as it is, as the President used to admit. A sampler of his rhetoric
from the town-hall summer of 2009: "Mark my words," he declared in Grand
Junction, Colorado, "Medicare in about eight to nine years goes into the red. .
. . It is going broke." He added in Portsmouth, New Hampshire, that "What is
truly scary—what is truly risky—is if we do nothing" because Medicare is
"unsustainable" and "running out of money." In Belgrade, Montana, he said the
program must be reformed "to be there for the next generation, not just for this
generation."What he rarely mentions is how he plans to fix
Medicare under ObamaCare. First the government will do things like arbitrarily
commanding providers to deliver the exact same benefits except for $716 billion
less. When that doesn't work, as it surely won't, the feds will take control of
the case-by-case decisions currently made between patients and doctors and
substitute the judgment of technocrats. (See what's already happening in
Massachusetts, "RomneyCare 2.0," August 6.)
"The Mediscare Boomerang," The Wall Street Journal, August 16, 2012 ---
http://professional.wsj.com/article/SB10000872396390444772404577587464183295348.html?mod=djemEditorialPage_t&mg=reno64-wsj
Rewind to 2009. The fight over ObamaCare is raging,
and a few news outlets report that something looks ethically rotten in the
White House. An outside group funded by industry is paying the former firm
of senior presidential adviser David Axelrod to run ads in favor of the
bill. That firm, AKPD Message and Media, still owes Mr. Axelrod money and
employs his son.
The story quickly died, but emails recently
released by the House Energy and Commerce Committee ought to resurrect it.
The emails suggest the White House was intimately involved both in creating
this lobby and hiring Mr. Axelrod's firm—which is as big an ethical no-no as
it gets.
Mr. Axelrod—who left the White House last
year—started AKPD in 1985. The firm earned millions helping run Barack
Obama's 2008 campaign. Mr. Axelrod moved to the White House in 2009 and
agreed to have AKPD buy him out for $2 million. But AKPD chose to pay Mr.
Axelrod in annual installments—even as he worked in the West Wing. This
agreement somehow passed muster with the Office of Government Ethics, though
the situation at the very least should have walled off AKPD from working on
White-House priorities.
It didn't. The White House and industry were
working hand-in-glove to pass ObamaCare in 2009, and among the vehicles
supplying ad support was an outfit named Healthy Economy Now (HEN). News
stories at the time described this as a "coalition" that included the
Pharmaceutical Research and Manufacturers of America (PhRMA), the American
Medical Association, and labor groups—suggesting these entities had started
and controlled it.
House emails show HEN was in fact born at an April
15, 2009 meeting arranged by then-White House aide Jim Messina and a chief
of staff for Democratic Sen. Max Baucus. The two politicos met at the
Democratic Senatorial Campaign Committee (DSCC) and invited representatives
of business and labor.
A Service Employees International Union attendee
sent an email to colleagues noting she'd been invited by the Baucus staffer,
explaining: "Also present was Jim Messina. . . . They basically want to see
adds linking HC reform to the economy. . . . there were not a lot of
details, but we were told that we wd be getting a phone call. well that call
came today."
The call was from Nick Baldick, a Democratic
consultant who had worked on the Obama campaign and for the DSCC. Mr.
Baldick started HEN. The only job of PhRMA and others was to fund it.
Meanwhile, Mr. Axelrod's old firm was hired to run
the ads promoting ObamaCare. At the time, a HEN spokesman said HEN had done
the hiring. But the emails suggest otherwise. In email after email, the
contributors to HEN refer to four men as the "White House" team running
health care. They included John Del Cecato and Larry Grisolano (partners at
AKPD), as well as Andy Grossman (who once ran the DSCC) and Erik Smith, who
had been a paid adviser to the Obama presidential campaign.
In one email, PhRMA consultant Steve McMahon calls
these four the "WH-designated folks." He explains to colleagues that Messrs.
Grossman, Grisolano and Del Cecato "are very close to Axelrod," and that
"they have been put in charge of the campaign to pass health reform." Ron
Pollack, whose Families USA was part of the HEN coalition, explained to
colleagues that "the team that is working with the White House on
health-care reform. . . . [Grossman, Smith, Del Cecato, Grisolano] . . .
would like to get together with us." This would provide "guidance from the
White House about their messaging."
According to White House visitor logs, Mr. Smith
had 28 appointments scheduled between May and August—17 made through Mr.
Messina or his assistant. Mr. Grossman appears in the logs at least 19
times. Messrs. Del Cecato and Grisolano of AKPD also visited in the spring
and summer, at least twice with Mr. Axelrod, who was deep in the health-care
fight.
A 2009 PhRMA memo also makes clear that AKPD had
been chosen before PhRMA joined HEN. It's also clear that some contributors
didn't like the conflict of interest. When, in July 2009, a media outlet
prepared to report AKPD's hiring, a PhRMA participant said: "This is a big
problem." Mr. Baldick advises: "just say, AKPD is not working for PhRMA."
AKPD and another firm, GMMB, would handle $12 million in ad business from
HEN and work for a successor 501(c)4.
A basic rule of White House ethics is to avoid even
the appearance of self-dealing or nepotism. If Mr. Axelrod or his West Wing
chums pushed political business toward Mr. Axelrod's former firm, they
contributed to his son's salary as well as to the ability of the firm to pay
Mr. Axelrod what it still owed him. Could you imagine the press frenzy if
Karl Rove had dome the same after he joined the White House?
Reigniting a debate about the bottom line for
President Barack Obama's health care law, a leading conservative economist
estimates in a study to be released Tuesday that the overhaul will add at
least $340 billion to the deficit, not reduce it.
Charles Blahous, who serves as public trustee
overseeing Medicare and Social Security finances, also suggested that
federal accounting practices have obscured the true fiscal impact of the
legislation, the fate of which is now in the hands of the Supreme Court.
Officially, the health care law is still projected
to help reduce government red ink. The Congressional Budget Office, the
government's nonpartisan fiscal umpire, said in an estimate last year that
repealing the law actually would increase deficits by $210 billion from 2012
to 2021.
The CBO, however, has not updated that projection.
If $210 billion sounds like a big cushion, it's not. The government has
recently been running annual deficits in the $1 trillion range.
The White house dismissed the study in a statement
late Monday. Presidential assistant Jeanne Lambrew called the study "new
math (that) fits the old pattern of mischaracterizations" about the health
care law.
Blahous, in his 52-page analysis released by George
Mason University's Mercatus Center, said, "Taken as a whole, the enactment
of the (health care law) has substantially worsened a dire federal fiscal
outlook.
"The (law) both increases a federal commitment to
health care spending that was already unsustainable under prior law and
would exacerbate projected federal deficits relative to prior law," Blahous
said.
The law expands health insurance coverage to more
than 30 million people now uninsured, paying for it with a mix of Medicare
cuts and new taxes and fees.
Blahous cited a number of factors for his
conclusion:
- The health care's law deficit cushion has been
reduced by more than $80 billion because of the administration's decision
not to move forward with a new long-term care insurance program that was
part of the legislation. The Community Living Assistance Services and
Supports program raised money in the short term, but would have turned into
a fiscal drain over the years.
- The cost of health insurance subsidies for
millions of low-income and middle-class uninsured people could turn out to
be higher than forecast, particularly if employers scale back their own
coverage.
- Various cost-control measures, including a tax on
high-end insurance plans that doesn't kick in until 2018, could deliver less
than expected.
The decision to use Medicare cuts to finance the
expansion of coverage for the uninsured will only make matters worse,
Blahous said. The money from the Medicare savings will have been spent, and
lawmakers will have to find additional cuts or revenues to forestall that
program's insolvency.
Under federal accounting rules, the Medicare cuts
are also credited as savings to that program's trust fund. But the CBO and
Medicare's own economic estimators already said the government can't spend
the same money twice.
In the United States, health care technology
has contributed to rising survival rates, yet health care spending
relative to GDP has also grown more rapidly than in any other country.
We develop a model of patient demand and supplier behavior to explain
these parallel trends in technology growth and cost growth. We show
that health care productivity depends on the heterogeneity of treatment
effects across patients, the shape of the health production function,
and the cost structure of procedures such as MRIs with high fixed costs
and low marginal costs. The model implies a typology of medical
technology productivity: (I) highly cost-effective “home run”
innovations with little chance of overuse, such as anti-retroviral
therapy for HIV, (II) treatments highly effective for some but not for
all (e.g. stents), and (III) “gray area” treatments with uncertain
clinical value such as ICU days among chronically ill patients. Not
surprisingly, countries adopting Category I and effective Category II
treatments gain the greatest health improvements, while countries
adopting ineffective Category II and Category III treatments experience
the most rapid cost growth. Ultimately, economic and political
resistance in the U.S. to ever-rising tax rates will likely slow cost
growth, with uncertain effects on technology growth.
This paper strikes me as sensible, explanatory, and
non-ideological to the max. It would be nifty if the people who work in
Washington read it, and thought about it, and maybe even acted on it. (And
it would be nifty if the Knicks beat the Celtics too, but I’m not holding my
breath for either outcome …)
Here’s a very good paragraph from the paper:
The science section of a U.S. newspaper
routinely features articles on new surgical and pharmaceutical
treatments for cancer, obesity, aging, and cardiovascular diseases, with
rosy predictions of expanded longevity and improved health functioning (Wade,
2009). The business section, on the other hand, features gloomy reports
of galloping health insurance premiums (Claxton et al.,
2010), declining insurance coverage, and unsustainable Medicare and
Medicaid growth leading to higher taxes (Leonhardt,
2009) and downgraded U.S. debt (Stein, 2006). Not
surprisingly, there is some ambiguity as to whether these two trends, in
outcomes and in expenditures, are a cause for celebration or concern.
And the authors offer good specific examples of
what they built their argument on, noting the …
Myth 1: Health care reform will reduce the deficit.
Fact 1: Health care reform will increase the
deficit.
The Patient Protection and Affordable Care Act
includes many provisions that have nothing to do with health care: the CLASS
act, a student loan overhaul, and many new taxes. These provisions don't
change the health care system. They just raise money to pay for the new law.
Strip them away and the law’s actual health care provisions don't lower the
deficit—they increase it!
The chart below uses data from Congressional Budget
Office (CBO) to clarify the fiscal consequences of health care reform.
. . .
As you can see, from 2012 to 2021, the
Congressional Budget Office estimates that the health care act will reduce
deficits by $210 billion (note that this estimate differs from the widely
cited $143 billion figure used during the lead-up to the passage of the
act). During this same time period, however, the actual health care reform
provisions of the law will increase deficits by $464 billion.
Of course, one should not evaluate the health care
legislation on its fiscal impacts alone. In theory we should get some fiscal
benefits. But the key question is how they net out. Still, no matter what
you think about the benefits of the health care legislation, it is incorrect
to claim that health care reform will save money. It won’t.
Myth 2: The U.S. health care system is a
free-market system.
Fact 2: Roughly half of all U.S. health care is
currently paid for by the government.
. . .
Even in the absence of the health care reform law,
government programs including Medicare and Medicaid already fund almost half
of American health care. Roughly a third of the remaining expenditures are
funded by private insurers—mainly through subsidized and highly regulated
employee plans. Not exactly a free market.
As this chart shows, state and federal entities
make up over half of the health insurance market. Of course, the Patient
Protection and Affordable Care Act will only increase the share of
government involvement in the health care market.
Myth 3: Medicare spending increases life expectancy
for seniors. Reductions in Medicare spending will therefore reduce their
life expectancy.
Fact 3: Increases in life expectancy for seniors
are due to increased access to health care, not to Medicare.
While Medicare spending has certainly decreased
seniors’ out of pocket health care expenses (by 1970, Medicare reduced out
of pocket expenses by an estimated 40 percent relative to pre-Medicare
levels), the program’s effect on mortality is much less clear.
President Obama met with the winner of the "save
award" in the Oval Office the other day, the contest for federal employees
who find ways to make government more efficient. Trudy Givens, of Portage,
Wisconsin, suggested that the feds stop mailing out paper copies of the
Federal Register (available online since 1994) to the provinces. Her good
idea will cut about $4 million a year in printing and postage.
We don't work for the government, but here's our
"save" suggestion: How about not spending some $3.5 million to deceptively
promote ObamaCare?
It turns out it cost the Health and Human Services
Department $2.78 million to buy airtime for three cable TV ads last year,
featuring Andy Griffith praising the new entitlement. The "Matlock" eminence
rendered his services pro bono, but Porter Novelli didn't. The media
consulting firm racked up 668 billable hours and earned $404,384.40
producing the spots, according to documents released by the outside GOP
advocacy group Crossroads GPS through the Freedom of Information Act.
At least Porter Novelli didn't charge taxpayers for
fact-checking. Among Mr. Griffith's many deceptive claims, he tells his
fellow seniors that their Medicare benefits won't change (they will, most
immediately in Medicare Advantage) and that ObamaCare strengthens the
program's finances (it doesn't, according to the chief Medicare actuary).
Lovable ol' Andy of Mayberry then says "that new health-care law sure sounds
good" to him, in a transparent bid to win over senior voters in advance of
the 2010 election.
The next time the President wants to run misleading
ads ahead of an election, he might hit up the Democratic Party or use his
bully pulpit, rather than passing the bill to taxpayers. Meantime, an
Administration functionary says in a new promotional Web video for the save
award—how much did that one cost to produce?—that "Something that seems
relatively small if replicated over the full length of the federal
government can really result in substantial savings."
How about we go one better and save several
trillion dollars by repealing a health-care bill that Americans still hate
despite Sheriff Andy's endorsement?
So the watchdog news outfit called PolitiFact has
decided that its "lie of the year" is the phrase "a government takeover of
health care." Ordinarily, lies need verbs and we'd leave the media criticism
to others, but the White House has decided that PolitiFact's writ should be
heard across the land and those words forever banished to describe ObamaCare.
"We have concluded it is inaccurate to call the
plan a government takeover," the editors of PolitiFact announce
portentously. "'Government takeover' conjures a European approach where the
government owns the hospitals and the doctors are public employees," whereas
ObamaCare "is, at its heart, a system that relies on private companies and
the free market." PolitiFact makes it sound as if ObamaCare were drawn up by
President Friedrich Hayek, with amendments from House Speaker Ayn Rand.
This purported debunking persuaded Stephanie
Cutter, a special assistant to the President. If "opponents of reform
haven't been shy about making claims that are at odds with the facts," she
wrote on the White House blog, "one piece of misinformation always stood
out: the bogus claim . . ." We'll spare you the rest.
PolitiFact's decree is part of a larger
journalistic trend that seeks to recast all political debates as matters of
lies, misinformation and "facts," rather than differences of world view or
principles. PolitiFact wants to define for everyone else what qualifies as a
"fact," though in political debates the facts are often legitimately in
dispute.
For instance, everyone can probably agree that
Medicare's 75-year unfunded liability is somewhere around $30.8 trillion.
But that's different from a qualitative judgment, such as the wisdom of a
new health-care entitlement that was sold politically as a way to reduce
entitlement spending. But anyway, let's try to parse PolitiFact's ObamaCare
reasoning.
Evidently, it doesn't count as a government
takeover unless the means of production are confiscated. "The government
will not seize control of hospitals or nationalize doctors," the editors
write, and while "it's true that the law does significantly increase
government regulation of health insurers," they'll still be nominally
private too.
In fact—if we may use that term without
PolitiFact's seal of approval—at the heart of ObamaCare is a vast expansion
of federal control over how U.S. health care is financed, and thus
delivered. The regulations that PolitiFact waves off are designed to convert
insurers into government contractors in the business of fulfilling political
demands, with enormous implications for the future of U.S. medicine. All
citizens will be required to pay into this system, regardless of their
individual needs or preferences. Sounds like a government takeover to us.
PolitiFact is run by the St. Petersburg Times and
has marketed itself to other news organizations on the pretense of
impartiality. Like other "fact checking" enterprises, its animating conceit
is that opinions are what ideologues have, when in reality PolitiFact's
curators also have political views and values that influence their judgments
about facts and who is right in any debate.
In this case, they even claim that the government
takeover slogan "played an important role in shaping public opinion about
the health-care plan and was a significant factor in the Democrats'
shellacking in the November elections." In other words, voters turned so
strongly against Democrats because Republicans "lied," and not because of,
oh, anything the Democrats did while they were running Congress. Is that a
"fact" or a political judgment? Just asking.
As long as the press corps is nominating "lies of
the year," ours goes to the formal legislative title of ObamaCare, the
Patient Protection and Affordable Care Act. For a bill that in reality will
raise health costs and reduce patient choice, the name recalls Mary
McCarthy's famous line about every word being a lie, including "the" and
"and."
When ObamaCare was passed by the Senate on
Christmas Eve of 2009, senators had less than 72 hours to compare a 383-page
package of amendments to the 2,074-page bill. Public outrage over backroom
deals (such as the Cornhusker Kickback and the Louisiana Purchase) led to
the election of Scott Brown in Massachusetts.
Democrats then cooked up a plan to link the
now-2,409-page Senate-passed ObamaCare bill to dozens of amendments
contained in a separate 150-page Budget Reconciliation bill that could pass
both houses by a simple majority. That's when then-Speaker Nancy Pelosi
famously told the then-Democratic majority, "We have to pass the bill so
that you can find out what is in it."
When President Obama signed ObamaCare into law,
that set in motion a series of funding triggers and money transfers that add
up to $105,464,000,000 in pre-authorized appropriations that are scheduled
to be paid up through FY2019. In laymen's language, that means writing
postdated checks that are guaranteed to be paid out over the next eight
years.
This money was divided into dozens of smaller
amounts so the big total would not be apparent. For example, Section 2953 of
ObamaCare included a pre-funded appropriation of $75 million a year for five
years to "educate adolescents" in "adult preparation subjects" such as
"stress management" and "the development of healthy attitudes and values
about adolescent growth and development, body image, racial and ethnic
diversity, and other related subjects."
Section 4101(a) of ObamaCare prefunded $200 million
a year over four years for the construction of school-based health centers.
In Section 4002, a total of $17,750,000,000 will be deposited over 10 years
to a discretionary account controlled by the HHS secretary (currently
Kathleen Sebelius), who may spend that money "to provide for expanded and
sustained national investment in prevention" and to "help restrain the rate
of growth in private and public sector health care costs."
Is Medicare a "Medicare is a good example of a government program that is
highly efficient?"
-----Original Message-----
From: AECM, Accounting Education using Computers and Multimedia [mailto:AECM@LISTSERV.LOYOLA.EDU]
On Behalf Of Peters, James M Sent: Thursday, September 23, 2010 10:37 AM
To: AECM@LISTSERV.LOYOLA.EDU
Subject: Re: accounting basics
I think it is time to push back against all this
anti-government rhetoric that just isn't based on observed evidence. Whether
goverments work best or markets work best is a function of the task to be
performed and the nature of the product. Governments have proven they can
provide better health insurance and health care than the private sector.
Medicare is a good example of a goverment program that is highly efficient
and spends 97% of your tax dollars on health care while private sector firms
spend only 70% to 75% of your premium dollars on health care. Some firms
reach 80%, but they are the exception. Government run hospitals in the US
are now rated as among the best, if not the best in the nation. The Veterans
Hospitals have better records of treatment success and lower costs that the
vast majority of private hospitals.
Market advocates seem to forget free market theory.
Free markets only work when certain, rather restrictive conditions are met.
Among the most frequently violated are equal power and knowledge among all
market participants. Even Adam Smith in the Wealth of Nations advocated a
strong role for governments in keeping markets free. When conditions are
right, markets work brilliantly. However, (a rhetorical question) how many
market in the industrialize world really meet the conditions of truly free
markets? My answer is very few.
Governments do some things much better than
markets. The key is recognizing the market conditions that lead to
government advantage and letting governments handle those areas. Auditing is
a prime candidate for government intervention because of no auditor can
truly be objective when they are being paid by the client. The markets
cannot function properly in auditing because the true customer, the general
public, isn't a party to the transaction. Audits aren't just for the current
owners, they are for perpsective owners as well, which means the general
public. The general public needs to be represented at the table when
auditors are hired.
The other key is to recognize that governments fail
when people fail to be informed voters. All governments, like all markets,
are not made equal. Some work better than others. In democracies, the
effectiveness of the government is a function of the involvement and
knowledge of the electorate. Thus, we are all responsible for our own
government's success and failures. The fact that America seems to have a
disfunctional government right now is that we have a disfunctional
electorate that seems to enjoy mindless shouting matches over informed
policy dialog. Other nations don't suffer from this disease.
Let's all join John Stewart in Washington DC for
the "Return Sanity to America" rally. It is a start to building a government
that can live up to its potential.
Jim
September 23, 2010 reply from Bob Jensen
Hi Jim,
If this is your idea of "observed evidence" then
I've no hope for you in the academy. For one thing a good academic would be
more precise about definitions like “better health care.” For example, some
other nations come out “better” in infant mortality because they throw away
very premature small babies and don’t count them into survival rates. What
does “better” mean in terms of who invents the latest and greatest
medications to fight cancer?
Medicare, for example, is one of the least-efficient
government programs that arguably has the worst internal accounting controls
of all other government programs except, possibly, the defense program. An
"efficient" program would have stellar internal controls preventing fraud
and error.
And Medicare is not a very good example of
"government" efficiency since the private sector delivers virtually all the
medical services. The Medicare service providers are notoriously inefficient
by prescribing billions of dollars in unneeded services, medications,
non-existent medical equipment, and lifetime disability benefits to crooks
that are not disabled.
I don't care to continue on in the AECM with debates
over extreme political dogma since this is truly outside what subscribers
expect from the AECM. They wanted to learn more about the PwC re-branding
and the future of auditing/assurance services. I doubt that they want to
hear a rant about joining a Glenn Beck-bashing by Jon Stewart in Washington
DC. Most of us do not support the extremes of Beck or Stewart and certainly
do not want the AECM to be a rallying call for either extreme. That is not
in the mission of the AECM.
Also I see no need to censor the other subscribers
of the AECM if they happen to disagree with Jim Peterson’s political dogma.
Even if I were a Glenn Beck supporter (which I’m not) I would not urge AECM
subscribers to join me in Beck’s big Washington DC rally (where you would
never find me).
It’s a free country, and I suspect you will be among
the Glenn Beck bashers at Jon Stewart’s rally for liberals. But I don’t
think you should plead with AECM subscribers to join you in this political
burning of Beck’s books.
Bob Jensen
In 2009 President Barack Obama is
engineering a universal health care bill by appealing to the with blatant and
deceitful estimates of costs in a muddled up system of inclusions of social
services that are only remotely linked to health care (such as marriage
counseling).
Note that I’m not in favor of repealing the recent legislation.
But I am in favor of adding a public option so long as taxation and insurance
premiums are added to fully cover the annual costs of health insurance. And
let's stop the BS on the left and on the right side of this debate.
This is a long and somewhat involved followup to my
previous post on ObamaCare. . For those of you
with O.A.D.D. (online attention-deficit disorder), I’ve provided an express
and local version.
EXPRESS:
The official projections for health-care reform,
which show it greatly reducing the number of uninsured and also reducing the
budget deficit, are simply not credible. There are three basic issues.
The cost and revenue projections rely on
unrealistic assumptions and accounting tricks. If you make some adjustments
for these, the cost of the plan is much higher.
The so-called “individual mandate” isn’t really a
mandate at all. Under the new system, many young and healthy people will
still have a strong incentive to go uninsured.
Once the reforms are up and running, some employers
will have a big incentive to end their group coverage plans and dump their
employees onto the taxpayer-subsidized individual plans, greatly adding to
their cost.
LOCAL:
For future reference (or possibly to roll up and
beat myself over the head with in my dotage) I have filed away a copy the
latest analysis (pdf) of health-care reform from the Congressional Budget
Office. By 2019, it says, the bills passed by the House and Senate will have
cut the number of uninsured Americans by thirty-two million, raised the
percentage of people with some form of health-care coverage from
eighty-three per cent to ninety-four per cent, and reduced the federal
deficit by a cumulative $143 billion. If all of these predictions turn out
to be accurate, ObamaCare will go down as one of the most successful and
least costly government initiatives in history. At no net cost to the
taxpayer, it will have filled a gaping hole in the social safety net and
solved a problem that has frustrated policymakers for decades.
Does Santa Claus live after all? According to the
C.B.O., between now and 2019 the net cost of insuring new enrollees in
Medicaid and private insurance plans will be $788 billion, but other
provisions in the legislation will generate revenues and cost savings of
$933 billion. Subtract the first figure from the second and—voila!—you get
$143 billion in deficit reduction.
The first objection to these figures is that the
great bulk of the cost savings—more than $450 billion—comes from cuts in
Medicare payments to doctors and other health-care providers. If you are
vaguely familiar with Washington politics and the letters A.A.R.P. you might
suspect that at least some of these cuts will fail to materialize. Unlike
some hardened skeptics, I don’t think none of them will happen. One part of
the reform involves reducing excessive payments that the Bush Administration
agreed to when it set up the Medicare Advantage program in 2003. If Congress
remains under Democratic control—a big if, admittedly—it will probably enact
these changes. But that still leaves another $300 billion of Medicare
savings to be found.
The second problem is accounting gimmickry. Acting
in accordance with standard Washington practices, the C.B.O. counts as
revenues more than $50 million in Social Security taxes and $70 billion in
payments towards a new home-care program, which will eventually prove very
costly, and it doesn’t count some $50 billion in discretionary spending.
After excluding these pieces of trickery and the questionable Medicare cuts,
Douglas Holtz-Eakin, a former head of the C.B.O., has calculated that the
reform will actually raise the deficit by $562 billion in the first ten
years. “The budget office is required to take written legislation at face
value and not second-guess the plausibility of what it is handed,” he wrote
in the Times. “So fantasy in, fantasy out.”
Holtz-Eakin advised John McCain in 2008, and he has
a reputation as a straight shooter. I think the problems with the C.B.O.’s
projections go even further than he suggests. If Holtz-Eakin’s figures
turned out to be spot on, and over the next ten years health-care reform
reduced the number of uninsured by thirty million at an annual cost of $56
billion, I would still regard it as a great success. In a $15 trillion
economy—and, barring another recession, the U.S. economy should be that
large in 2014—fifty or sixty billion dollars is a relatively small sum—about
four tenths of one per cent of G.D.P., or about eight per cent of the 2011
Pentagon budget.
My two big worries about the reform are that it
won’t capture nearly as many uninsured people as the official projections
suggest, and that many businesses, once they realize the size of the
handouts being offered for individual coverage, will wind down their group
plans, shifting workers (and costs) onto the new government-subsidized
plans. The legislation includes features designed to prevent both these
things from happening, but I don’t think they will be effective.
Consider the so-called “individual mandate.” As a
strict matter of law, all non-elderly Americans who earn more than the
poverty line will be obliged to obtain some form of health coverage. If they
don’t, in 2016 and beyond, they could face a fine of about $700 or 2.5 per
cent of their income—whichever is the most. Two issues immediately arise.
Even if the fines are vigorously enforced, many
people may choose to pay them and stay uninsured. Consider a healthy single
man of thirty-five who earns $35,000 a year. Under the new system, he would
have a choice of enrolling in a subsidized plan at an annual cost of $2,700
or paying a fine of $875. It may well make sense for him to pay the fine,
take his chances, and report to the local emergency room if he gets really
sick. (E.R.s will still be legally obliged to treat all comers.) If this
sort of thing happens often, as well it could, the new insurance exchanges
will be deprived of exactly the sort of healthy young people they need in
order to bring down prices. (Healthy people improve the risk pool.)
If the rules aren’t properly enforced, the problem
will be even worse. And that is precisely what is likely to happen. The
I.R.S. will have the administrative responsibility of imposing penalties on
people who can’t demonstrate that they have coverage, but it won’t have the
legal authority to force people to pay the fines. “What happens if you don’t
buy insurance and you don’t pay the penalty?” Ezra Klein, the Washington
Post’s industrious and well-informed blogger, asks. “Well, not much. The law
specifically says that no criminal action or liens can be imposed on people
who don’t pay the fine.”
So, the individual mandate is a bit of a sham.
Generous subsidies will be available for sick people and families with
children who really need medical care to buy individual coverage, but
healthy single people between the ages of twenty-six and forty, say, will
still have a financial incentive to remain outside the system until they get
ill, at which point they can sign up for coverage. Consequently, the number
of uninsured won’t fall as much as expected, and neither will prices.
Without a proper individual mandate, the idea of universality goes out the
window, and so does much of the economic reasoning behind the bill.
The question of what impact the reforms will have
on existing insurance plans has received even less analysis. According to
President Obama, if you have coverage you like you can keep it, and that’s
that. For the majority of workers, this will undoubtedly be true, at least
in the short term, but in some parts of the economy, particularly industries
that pay low and moderate wages, the presence of such generous subsidies for
individual coverage is bound to affect behavior eventually. To suggest this
won’t happen is to say economic incentives don’t matter.
Take a medium-sized firm that employs a hundred
people earning $40,000 each—a private security firm based in Atlanta,
say—and currently offers them health-care insurance worth $10,000 a year, of
which the employees pay $2,500. This employer’s annual health-care costs are
$750,000 (a hundred times $7,500). In the reformed system, the firm’s
workers, if they didn’t have insurance, would be eligible for generous
subsidies to buy private insurance. For example, a married forty-year-old
security guard whose wife stayed home to raise two kids could enroll in a
non-group plan for less than $1,400 a year, according to the Kaiser Health
Reform Subsidy Calculator. (The subsidy from the government would be
$8,058.)
In a situation like this, the firm has a strong
financial incentive to junk its group coverage and dump its workers onto the
taxpayer-subsidized plan. Under the new law, firms with more than fifty
workers that don’t offer coverage would have to pay an annual fine of $2,000
for every worker they employ, excepting the first thirty. In this case, the
security firm would incur a fine of $140,000 (seventy times two), but it
would save $610,000 a year on health-care costs. If you owned this firm,
what would you do? Unless you are unusually public spirited, you would take
advantage of the free money that the government is giving out. Since your
employees would see their own health-care contributions fall by more than
$1,100 a year, or almost half, they would be unlikely to complain. And even
if they did, you would be saving so much money you afford to buy their
agreement with a pay raise of, say, $2,000 a year, and still come out well
ahead.
Even if the government tried to impose additional
sanctions on such firms, I doubt it would work. The dollar sums involved are
so large that firms would try to game the system, by, for example, shutting
down, reincorporating under a different name, and hiring back their
employees without coverage. They might not even need to go to such lengths.
Firms that pay modest wages have high rates of turnover. By simply refusing
to offer coverage to new employees, they could pretty quickly convert most
of their employees into non-covered workers.
The designers of health-care reform and the C.B.O.
are aware of this problem, but, in my view, they have greatly underestimated
it. According to the C.B.O., somewhere between eight and nine million
workers will lose their group coverage as a result of their employers
refusing to offer it. That isn’t a trifling number. But the C.B.O. says it
will be largely offset by an opposite effect in which employers that don’t
currently provide health insurance begin to offer it in response to higher
demand from their workers as a result of the individual mandate. In this
way, some six to seven million people will obtain new group coverage, the
C.B.O. says, so the overall impact of the changes will be minor.
The C.B.O.’s analysis can’t be dismissed out of
hand, but it is surely a best-case scenario. Again, I come back to where I
started: the scale of the subsidies on offer for low and moderately priced
workers. If economics has anything to say as a subject, it is that you can’t
offer people or firms large financial rewards for doing something—in this
case, dropping their group coverage—and not expect them to do it in large
numbers. On this issue, I find myself in agreement with Tyler Cowen and
other conservative economists. Over time, the “firewall” between the
existing system of employer-provided group insurance and taxpayer-subsidized
individual insurance is likely to break down, with more and more workers
being shunted over to the public teat.
At that point, if it comes, politicians of both
parties will be back close to where they began: searching for health-care
reform that provides adequate coverage for all at a cost the country can
afford. What would such a system look like? That is a topic for another
post, but I don’t think it would look much like Romney-ObamaCare.
On a quiet Friday afternoon this summer, the
central justification for President Obama’s health-care overhaul died a
quiet death. On that day, a bipartisan coalition in Congress reversed
the scheduled Medicare cuts to physician payments, ensuring that, over
the next decade, the White House’s reforms will cost many billions more
than advertised. After over a year of debate and lofty rhetoric, the
reality is this: the president’s goal of “bending” the health-care cost
curve has unraveled in just a few months.
The president and his supporters argued that we
need ObamaCare in order to tame the federal budget deficit. When he
signed the bill into law, the president touted the importance of the
legislation in reducing long-term deficits. Democrats cited
Congressional Budget Office scoring showing that the health legislation
would reduce the deficit over ten years to the tune of roughly $130
billion. But that was back in March.
In May, the CBO released its quantitative
analysis showing that discretionary spending not accounted for in the
previous scores would cost $115 billion. The CBO director himself
expressed significant doubts about potential deficit reduction. Speaking
to the Institute of Medicine, he said: “Rising health costs will put
tremendous pressure on the federal budget during the next few decades
and beyond. In CBO’s judgment, the health legislation enacted earlier
this year does not substantially diminish that pressure.”
That brings us to the quiet Friday afternoon of
June 25. By cancelling scheduled Medicare cuts, the president and his
Congressional allies have made the fiscal problem even worse: Not only
do those fiscal problems remain, but White House reforms meant to
address them will push net federal-government health expenditures
further into the red. Any notion of fiscal balance has been lost.
Yet cancelling these scheduled Medicare cuts is
nothing new. Time and again, Republican and Democratic leaderships in
Congress have haphazardly voted to undo scheduled cuts.
Congress reversed planned Medicare physician
cuts in 1999—and 2004, 2005, 2006, and 2008. In fact, since 1997, when
members of both parties agreed to automatic cuts if spending rose faster
than population and economic growth, the program has been cut just once,
in 2002. Maybe it’s the pressure of the doctors’ lobby. Maybe it’s the
seniors’ lobby. Maybe it’s both.
And this Democratic Congress has been no
better. In fact, just months after passing Obama’s health-reform
legislation, Democrats vigorously and successfully pushed to postpone
the Medicare cut until November (they had previously voted to delay it
from April to June 2010).
More worrisome is this: in liberal circles,
it’s popular to argue that Congressional efforts to control Medicare
costs under the Sustainable Growth Rate (SGR) formula have been overly
successful. James R. Horney and Paul N. Van de Water make exactly this
point in a publication for the liberal Center on Budget and Policy
Priorities. They write: “Even though Congress did not allow the full
cuts required under the SGR formula to take effect, it has still cut the
physician reimbursement rate substantially – at its current level, the
reimbursement rate in 2010 will be 17 percent below the rate for 2001,
adjusted for inflation.” Picking up on this point, Paul Krugman recently
argued that Medicare has been historically very successful at reigning
in costs. But praising Medicare cost containment in a time of heavy
health-care cost inflation is like praising Lehman Brothers for making
good investments in Latin America when the market for subprime mortgages
was imploding.
Let’s put this in perspective: health inflation
was 3.4 percent last year, just over double the basic inflation rate.
Tellingly, the worst cost increases were experienced by Medicare (costs
were up 8.6 percent), and Medicaid (9.9 percent).
Unfortunately, the White House and Congress
squandered a great opportunity to bend the cost curve downwards, opting
instead for the status quo. The quiet congressional vote in June shows
how far the administration has strayed from its reform rhetoric. If we
are ever to reign in health care spending, we need leaders who will make
tough choices and tough cuts. Their rhetoric must become reality.
On paper, it looks as though the state has made
major progress in insuring the uninsured. From 6.4% of the population in
2006, the uninsured hover around 2% today. However, one
study found that nearly all of the newly
insured are either on Medicaid, in a state-subsidized plan or in an
employer subsidized plan. Only 7% of the newly insured, or about 30,000
people, are directly paying their own way. It’s relatively easy to get
people to sign up for insurance when coverage is free or almost free.
And it’s not very expensive if you pay for the subsidies using money you
would have spent anyway on free care for those who can’t pay their
medical bills.
But aside from moving money from one bucket to
another, have any real problems been solved? The evidence isn’t
positive.
There are three major problems in health care
all over the world: cost, quality and access. Since nothing in the
Massachusetts reform addressed the problems of rising costs and less
than adequate quality, those problems have remained more or less
unchanged. What about access to care? Surely, newly insured people have
more options in the medical marketplace.
The trouble is that almost all of the newly
insured are in health plans that pay doctors and hospitals a lot less
than what private insurance pays. Like other places around the country,
Massachusetts Medicaid (called MassHealth) pays providers so little that
patients often turn to hospital emergency rooms and community health
centers for their care when they can’t find doctors who will see them.
People in the newly subsidized private insurance plans aren’t faring
much better because these plans pay only slightly more than what
Medicaid pays.
The only solid analysis of what has actually
happened to patients at this point is
a study by Sharon Long and Paul Masi published
in the journal Health Affairs. According to the study:
• There has been no significant change in the
number of Massachusetts patients seeking care in hospital emergency
rooms since the reform was implemented, and there has actually been an
increase in emergency room use by people with incomes below 300% of the
poverty level.
• There has been an increase in doctor visits
but no change in visits to specialists and an actual decrease in
“medical tests, treatment and follow up care,” which I assume is care
for the chronically ill.
• There has been no change in the percent of
the population reporting a failure to “get needed care for any reason
within the past 12 months” and remarkably that includes one-third of
those with incomes below 300% of the poverty level.
The problem with counting up doctor visits is
that a visit is not always a visit. Nationally, in the state children’s
health insurance program (CHIP) doctors have responded to an increase in
the demand for their services by scheduling more appointments, but
spending less time with patients. Also, you
would think that the Massachusetts reform would shift health care
resources from the general population to those with less income. But
there is no evidence that has happened. On measures of access, the gap
between the poor plus the near poor and everyone else appears not to
have changed at all!
Ask yourself why you care whether other people
have health insurance? The most likely reason is that you want people to
have access to health care. But lack of access to care is a huge problem
in Massachusetts right now. As I
previously reported more than half of all
family doctors and more than half of all internists are not accepting
new patients. The wait is more than a month before a new patient is able
to see a family doctor, and the wait to see an internist averages 48
days. The average wait in
Boston to see a family doctor is more than two
months.
What I am now reporting will be different than
what you may have read in the newspapers or at other health blogs. MIT
Professor
Jon Gruber calls
Massachusetts an unqualified success, citing some of the very same
studies I am citing. But since Gruber was one of the architects of the
Massachusetts health reform, this is like a student grading his own
exam.
What about elevating the Massachusetts reforms
to the national level in the form of ObamaCare? As I have previously
reported, ObamaCare is likely to result in less access to care for our
most vulnerable populations: the disabled and
the elderly on Medicare, the poor on Medicaid and the near poor in newly
subsidized private insurance. But that is only the beginning.
President Obama said earlier this year that the
health-care bill that Congress passed three months ago is "essentially
identical" to the Massachusetts universal coverage plan that then-Gov. Mitt
Romney signed into law in 2006. No one but Mr. Romney disagrees.
As events are now unfolding, the Massachusetts plan
couldn't be a more damning indictment of ObamaCare. The state's universal
health-care prototype is growing more dysfunctional by the day, which is the
inevitable result of a health system dominated by politics.
In the first good news in months, a state appeals
board has reversed some of the price controls on the insurance industry that
Gov. Deval Patrick imposed earlier this year. Late last month, the panel
ruled that the action had no legal basis and ignored "economic realties."
In April, Mr. Patrick's insurance commissioner had
rejected 235 of 274 premium increases state insurers had submitted for
approval for individuals and small businesses. The carriers said these
increases were necessary to cover their expected claims over the coming
year, as underlying state health costs continue to rise at 8% annually. By
inventing an arbitrary rate cap, the administration was in effect ordering
the carriers to sell their products at a loss.
Mr. Patrick has promised to appeal the panel's
decision and find some other reason to cap rates. Yet a raft of internal
documents recently leaked to the press shows this squeeze play was opposed
even within his own administration.
In an April message to his staff, Robert Dynan, a
career insurance commissioner responsible for ensuring the solvency of state
carriers, wrote that his superiors "implemented artificial price caps on HMO
rates. The rates, by design, have no actuarial support. This action was
taken against my objections and without including me in the conversation."
Mr. Dynan added that "The current course . . . has
the potential for catastrophic consequences including irreversible damage to
our non-profit health care system" and that "there most likely will be a
train wreck (or perhaps several train wrecks)."
Sure enough, the five major state insurers have so
far collectively lost $116 million due to the rate cap. Three of them are
now under administrative oversight because of concerns about their financial
viability. Perhaps Mr. Patrick felt he could be so reckless because
health-care demagoguery is the strategy for his fall re-election bid against
a former insurance CEO.
The deeper problem is that price controls seem to
be the only way the political class can salvage a program that was supposed
to reduce spending and manifestly has not. Massachusetts now has the highest
average premiums in the nation.
In a new paper, Stanford economists John Cogan and
Dan Kessler and Glenn Hubbard of Columbia find that the Massachusetts plan
increased private employer-sponsored premiums by about 6%. Another study
released last week by the state found that the number of people gaming the
"individual mandate"—buying insurance only when they are about to incur
major medical costs, then dumping coverage—has quadrupled since 2006. State
regulators estimate that this amounts to a de facto 1% tax on insurance
premiums for everyone else in the individual market and recommend a limited
enrollment period to discourage such abuses. (This will be illegal under
ObamaCare.)
Liberals write off such consequences as unimportant
under the revisionist history that the plan was never meant to reduce costs
but only to cover the uninsured. Yet Mr. Romney wrote in these pages shortly
after his plan became law that every resident "will soon have affordable
health insurance and the costs of health care will be reduced."
One junior senator from Illinois agreed. In a
February 2006 interview on NBC, Mr. Obama praised the "bold initiative" in
Massachusetts, arguing that it would "reduce costs and expand coverage." A
Romney spokesman said at the time that "It's gratifying that national
figures from both sides of the aisle recognize the potential of this plan to
transform our health-care system."
An entitlement sold as a way to reduce costs was
bound to fundamentally change the system. The larger question—for
Massachusetts, and now for the nation—is whether that was really the plan
all along.
"If you're going to do health-care cost
containment, it has to be stealth," said Jon Kingsdale, speaking at a
conference sponsored by the New Republic magazine last October. "It has to
be unsuspected by any of the key players to actually have an effect." Mr.
Kingsdale is the former director of the Massachusetts "connector," the beta
version of ObamaCare's insurance "exchanges," and is now widely expected to
serve as an ObamaCare regulator.
He went on to explain that universal coverage was
"fundamentally a political strategy question"—a way of finding a
"significant systematic way of pushing back on the health-care system and
saying, 'No, you have to do with less.' And that's the challenge, how to do
it. It's like we're waiting for a chain reaction but there's no catalyst,
there's nothing to start it."
In other words, health reform was a classic bait
and switch: Sell a virtually unrepealable entitlement on utterly unrealistic
premises and then the political class will eventually be forced to control
spending. The likes of Mr. Kingsdale would say cost control is only a matter
of technocratic judgement, but the raw dirigisme of Mr. Patrick's price
controls is a better indicator of what happens when health care is in the
custody of elected officials rather than a market.
Naturally, Mr. Patrick wants to export the rate
review beyond the insurers to hospitals, physician groups and specialty
providers—presumably to set medical prices as well as insurance prices. Last
month, his administration also announced it would use the existing state
"determination of need" process to restrict the diffusion of expensive
medical technologies like MRI machines and linear accelerator radiation
therapy.
Meanwhile, Richard Moore, a state senator from
Uxbridge and an architect of the 2006 plan, has introduced a new bill that
will make physician participation in government health programs a condition
of medical licensure. This would essentially convert all Massachusetts
doctors into public employees.
All of this is merely a prelude to far more
aggressive restructuring of the state's health-care markets—and a preview of
what awaits the rest of the country.
How much will the new health care law cost?
That was a matter of particular dispute during the debate of the Patient
Protection and Affordability Act. The bill's authors monkeyed around
with the numbers, delaying some benefits, creating new revenue raisers,
and pushing off known, needed reforms, so that the Congressional Budget
Office (CBO) could come up with a score below the $900 billion target.
Only the most naïve failed to recognize that
those numbers were meaningless: Ultimately, they would have no
relationship to how much the legislation would add to taxpayers' burdens
and bloat the federal budget. CBO has since been revising its estimates
upward: Another $115 billion for additional administrative costs
associated with the new law. In addition, Congress now struggles to pass
a change to the Medicare reimbursement rates, which will cost $23
billion just to patch the problem over for two years.
Taxpayers must be warned that these are just
the first of many upward revisions by CBO. As Congressman Paul Ryan
pointed out during the health care debate, the CBO score was based on
ten years of increased taxes and Medicare cuts, and only six years of
benefits. Former CBO Director Douglas Holtz-Eakin just released his own
analysis of the law and found that, far from reducing the deficit as the
President and Congressional proponents promised, the law will add more
than $500 billion to the deficit during the first ten years and another
$1.4 trillion in the decade after that.
Yet the program's cost for taxpayers are just a
small part of the costs that will be borne by American citizens. Speaker
Pelosi explained that only when the bill passed would Americans know
what's in it, and she was right. Since the bill became law it's
consequences for businesses and the medical system is becoming more
obvious. Several large companies reported that they would suffer
multi-million dollar losses due to the law's new taxes. Companies are
also noting the incentives created by the law to drop insurance coverage
for their employees. As Holtz-Eakin wrote: “Caterpillar recently noted
that it could save 70 percent on health care costs by dropping coverage
and paying the penalties; AT&T's $2.4 billion cost of coverage would
drop to just $600 million for penalties.” Altogether, Holtz-Eakin
estimates that as many as 35 million Americans could lose their
employer-sponsored health insurance.
So much for being able to keep your insurance.
Americans are also learning how other provisions will drive up insurance
costs. This year, “children” up to the age of twenty-six will become
eligible for their parents' health insurance policy. Analysts estimate
that this change will increase the cost of all family policies by about
one percent.
One percent itself isn't a big deal, but it's a
reminder of the relationship between mandated benefits and price. The
federal government will soon foist numerous new mandates upon insurance
companies: free preventive care services, an end to benefit caps, limits
on price differentials for those with pre-existing conditions, and many
more to come. Far from freebies, these are expensive benefits and their
costs will be spread around the insured population, driving premium
prices up.
The law also gives government new powers to
dictate how much insurance companies operate. As a result, insurance
companies will have to find new ways to make ends meet, such as by
reducing payments to doctors. And those doctors will also find ways to
trim back costs, by consolidating practices to reduce overhead and
taking on fewer patients.
Americans need not wait for the federal law to
fully take effect to understand what's in store. They can also look to
Massachusetts, where a similar health care law is already in force.
Health care policy expert Grace Marie Turner recently reviewed the
problems that plague Massachusetts. Health care costs for a family of
four in the Bay State are the highest in the nation, with per capita
health care spending 27% higher than the rest of the nation. The
increased demand for medical services has created a shortage of doctors,
making it difficult to get an appointment and creating long wait times.
Ironically this has led to increased use of emergency rooms, a problem
that greater insurance coverage was supposed to solve. Insurance
companies need to raise rates to cover additional expenses, but the
Governor is threatening to cap rate hikes, which will leave private
insurers operating at a loss. How long is that sustainable?
The debate about how much this new health care
law will cost Americans is far from over. Undoubtedly, as more of the
law is implemented, we will learn more about its many hidden costs and
consequences. But one thing is for sure, this new law will cost more,
and like much, much more than the law's proponents promised.
There are lies and then there are damn
lies "Pelosi Claims Health Care Reform to Save $1.3 Trillion; No Mention in CBO
Estimate," by Matt Cover, CNS News, March 26, 2010 --- http://www.cnsnews.com/news/article/63373
House Speaker Nancy Pelosi (D-Calif.) said that the
health care reform package the House passed on March 21 would ultimately
save the country $1.3 trillion over the next 20 years. That claim, however,
was not made by the Congressional Budget Office (CBO) in its cost estimate
of the bill.
Pelosi, speaking to reporters at her weekly Capitol
Hill press conference on Thursday, said that one of the most important
reasons for passing the legislation was that it would save the government so
much money.
“[O]ne of the main reasons to do the bill was that
it saves the taxpayers $1.3 trillion — $1.3 trillion — over the life of the
bill and the 10 years beyond,” she said.
However, no such figure appears in the
Congressional Budget Office’s estimate of the package President Obama signed
into law Tuesday.
According to a CBO letter sent to Pelosi on March
20, the day before that House passed the bill, the health reform bill and an
accompanying package of amendments is expected to reduce the deficit by $143
billion over the 2010-2019 time period.
For the following decade, the CBO does not attempt
to quantify the bill’s possible effects on the budget because, as it says,
there are simply too many unknown factors for any estimate to be accurate.
“CBO has developed a rough outlook for the decade
following the 2010–2019 period by grouping the elements of the legislation
into broad categories and (together with JCT) assessing the rate at which
the budgetary impact of each of those broad categories is likely to increase
over time,” the report says.
The CBO did give a broad range that the package
might reduce the deficit, saying that if Congress did not modify the law
over the next 20 years, it could reduce the deficit “during that decade in a
broad range between one quarter percent and one-half percent of gross
domestic product (GDP).”
The CBO said that any estimates beyond 20 years
were unreasonable, and declined to give any in their letter to Pelosi.
“CBO has not extrapolated estimates further into
the future because the uncertainties surrounding them are magnified even
more.”
While some press accounts attributed Pelosi’s
figure to internal calculations based on the CBO’s 20-year projections,
CNSNews.com could not confirm this despite repeated requests to the
Speaker’s office asking to name the source of the figure.
In addition, in a March 19 letter to Rep. Paul Ryan
(R-Wisc.) the CBO explained that the health care bill will begin adding to
the deficit the moment congressional Democrats change the payment system
Medicare uses to pay doctors.
Known as the “Doc Fix,” the change was removed from
earlier versions of the bill in order to make it appear deficit- friendly.
However, if Democrats go ahead with the changes as expected, the CBO
explained that the deficit will rise by nearly $60 billion.
"CBO estimates that enacting H.R. 3961 [Doc Fix],
by itself, would cost about $208 billion over the 2010–2019 period," the CBO
informed Ryan. "CBO estimates that enacting H.R. 3961 together with those
two bills [health care and a companion package of amendments] would add $59
billion to budget deficits over the 2010–2019 period."
"SignThe first big idea that he stresses is the
creation of a new agency to spearhead innovation and scale up any of the
many pilot schemes contained in the bills that manage to reform delivery
or payment systems. It is true that the reform effort began with earnest
intent to “bend the cost curve”. Alas, explains Mark McClellan of the
Brookings Institution, the most meaningful proposals have since been
watered down or delayed.
The second lever of change that Mr Orszag says
is underappreciated is an excise tax introduced on the most expensive
(or “Cadillac”) insurance plans. Most economists like this idea, as it
is likely to discourage excessive consumption of health care.
Unfortunately, because of political pressure from
labour unions and other groups, the Cadillac tax has been diluted, and
delayed until 2018. Sceptics wonder if a future Congress will really
implement this tax when the time comes. Mr Orszag is right that, if
implemented, this provision will represent an important lever of cost
control. But it’s a big “if”.
One of the prime arguments used to sell
ObamaCare was that it would reverse the financial crisis and save the
country a gazillion dollars — with benefits beginning in its first year.
Sadly, somebody’s arm got twisted to produce Congressional Budget Office
(CBO) figures — nicely timed for the House vote — to supposedly back up
the Democrats’ arguments. Nobody seemed to understand that the CBO
figures were just estimates. Yet, as they say, the devil is in the
details. The CBO details clearly indicate that having the government’s
role expanded to provide universal coverage will significantly increase
costs, as well as premiums and taxes. Worse, the CBO notes that most of
the current costs of the U.S. world-class health care are from providing
new, cutting-edge treatments and ever-expanding medical technologies.
They add, “Given the central role of medical technology in cost growth,
reducing or slowing spending over the long term would probably require
decreasing the pace of adopting new treatments and procedures or
limiting the breadth of their application.”
How’s that for dispelling the claims that
quality will remain high, rationing won’t happen, and technology will
continue to expand while costs go down? The real life record of
government control is a long way from matching the soaring rhetoric that
has dominated the media coverage of the health care debate. Further, in
those countries where massive government intervention has replaced free
market enterprise, the reality is far short of the utopian promises and
the policies that have been spun out so recklessly and misleadingly.
Price controls, inevitably, limit innovation. If that happens to medical
research and technological advancement, the results will be disastrous.
Continued in article
Note that I’m not in favor of repealing the recent legislation. But I am in
favor of adding a public option so long as taxation and insurance premiums are
added to fully cover the annual costs of health insurance. And let's stop the BS
on the left and on the right side of this debate.
This is a long and somewhat involved followup to my
previous post on ObamaCare.
. For those of you
with O.A.D.D. (online attention-deficit disorder), I’ve provided an express
and local version.
EXPRESS:
The official projections for health-care reform,
which show it greatly reducing the number of uninsured and also reducing the
budget deficit, are simply not credible. There are three basic issues.
The cost and revenue projections rely on
unrealistic assumptions and accounting tricks. If you make some adjustments
for these, the cost of the plan is much higher.
The so-called “individual mandate” isn’t really a
mandate at all. Under the new system, many young and healthy people will
still have a strong incentive to go uninsured.
Once the reforms are up and running, some employers
will have a big incentive to end their group coverage plans and dump their
employees onto the taxpayer-subsidized individual plans, greatly adding to
their cost.
LOCAL:
For future reference (or possibly to roll up and
beat myself over the head with in my dotage) I have filed away a copy the
latest analysis (pdf) of health-care reform from the Congressional Budget
Office. By 2019, it says, the bills passed by the House and Senate will have
cut the number of uninsured Americans by thirty-two million, raised the
percentage of people with some form of health-care coverage from
eighty-three per cent to ninety-four per cent, and reduced the federal
deficit by a cumulative $143 billion. If all of these predictions turn out
to be accurate, ObamaCare will go down as one of the most successful and
least costly government initiatives in history. At no net cost to the
taxpayer, it will have filled a gaping hole in the social safety net and
solved a problem that has frustrated policymakers for decades.
Does Santa Claus live after all? According to the
C.B.O., between now and 2019 the net cost of insuring new enrollees in
Medicaid and private insurance plans will be $788 billion, but other
provisions in the legislation will generate revenues and cost savings of
$933 billion. Subtract the first figure from the second and—voila!—you get
$143 billion in deficit reduction.
The first objection to these figures is that the
great bulk of the cost savings—more than $450 billion—comes from cuts in
Medicare payments to doctors and other health-care providers. If you are
vaguely familiar with Washington politics and the letters A.A.R.P. you might
suspect that at least some of these cuts will fail to materialize. Unlike
some hardened skeptics, I don’t think none of them will happen. One part of
the reform involves reducing excessive payments that the Bush Administration
agreed to when it set up the Medicare Advantage program in 2003. If Congress
remains under Democratic control—a big if, admittedly—it will probably enact
these changes. But that still leaves another $300 billion of Medicare
savings to be found.
The second problem is accounting gimmickry. Acting
in accordance with standard Washington practices, the C.B.O. counts as
revenues more than $50 million in Social Security taxes and $70 billion in
payments towards a new home-care program, which will eventually prove very
costly, and it doesn’t count some $50 billion in discretionary spending.
After excluding these pieces of trickery and the questionable Medicare cuts,
Douglas Holtz-Eakin, a former head of the C.B.O., has calculated that the
reform will actually raise the deficit by $562 billion in the first ten
years. “The budget office is required to take written legislation at face
value and not second-guess the plausibility of what it is handed,” he wrote
in the Times. “So fantasy in, fantasy out.”
Holtz-Eakin advised John McCain in 2008, and he has
a reputation as a straight shooter. I think the problems with the C.B.O.’s
projections go even further than he suggests. If Holtz-Eakin’s figures
turned out to be spot on, and over the next ten years health-care reform
reduced the number of uninsured by thirty million at an annual cost of $56
billion, I would still regard it as a great success. In a $15 trillion
economy—and, barring another recession, the U.S. economy should be that
large in 2014—fifty or sixty billion dollars is a relatively small sum—about
four tenths of one per cent of G.D.P., or about eight per cent of the 2011
Pentagon budget.
My two big worries about the reform are that it
won’t capture nearly as many uninsured people as the official projections
suggest, and that many businesses, once they realize the size of the
handouts being offered for individual coverage, will wind down their group
plans, shifting workers (and costs) onto the new government-subsidized
plans. The legislation includes features designed to prevent both these
things from happening, but I don’t think they will be effective.
Consider the so-called “individual mandate.” As a
strict matter of law, all non-elderly Americans who earn more than the
poverty line will be obliged to obtain some form of health coverage. If they
don’t, in 2016 and beyond, they could face a fine of about $700 or 2.5 per
cent of their income—whichever is the most. Two issues immediately arise.
Even if the fines are vigorously enforced, many
people may choose to pay them and stay uninsured. Consider a healthy single
man of thirty-five who earns $35,000 a year. Under the new system, he would
have a choice of enrolling in a subsidized plan at an annual cost of $2,700
or paying a fine of $875. It may well make sense for him to pay the fine,
take his chances, and report to the local emergency room if he gets really
sick. (E.R.s will still be legally obliged to treat all comers.) If this
sort of thing happens often, as well it could, the new insurance exchanges
will be deprived of exactly the sort of healthy young people they need in
order to bring down prices. (Healthy people improve the risk pool.)
If the rules aren’t properly enforced, the problem
will be even worse. And that is precisely what is likely to happen. The
I.R.S. will have the administrative responsibility of imposing penalties on
people who can’t demonstrate that they have coverage, but it won’t have the
legal authority to force people to pay the fines. “What happens if you don’t
buy insurance and you don’t pay the penalty?” Ezra Klein, the Washington
Post’s industrious and well-informed blogger, asks. “Well, not much. The law
specifically says that no criminal action or liens can be imposed on people
who don’t pay the fine.”
So, the individual mandate is a bit of a sham.
Generous subsidies will be available for sick people and families with
children who really need medical care to buy individual coverage, but
healthy single people between the ages of twenty-six and forty, say, will
still have a financial incentive to remain outside the system until they get
ill, at which point they can sign up for coverage. Consequently, the number
of uninsured won’t fall as much as expected, and neither will prices.
Without a proper individual mandate, the idea of universality goes out the
window, and so does much of the economic reasoning behind the bill.
The question of what impact the reforms will have
on existing insurance plans has received even less analysis. According to
President Obama, if you have coverage you like you can keep it, and that’s
that. For the majority of workers, this will undoubtedly be true, at least
in the short term, but in some parts of the economy, particularly industries
that pay low and moderate wages, the presence of such generous subsidies for
individual coverage is bound to affect behavior eventually. To suggest this
won’t happen is to say economic incentives don’t matter.
Take a medium-sized firm that employs a hundred
people earning $40,000 each—a private security firm based in Atlanta,
say—and currently offers them health-care insurance worth $10,000 a year, of
which the employees pay $2,500. This employer’s annual health-care costs are
$750,000 (a hundred times $7,500). In the reformed system, the firm’s
workers, if they didn’t have insurance, would be eligible for generous
subsidies to buy private insurance. For example, a married forty-year-old
security guard whose wife stayed home to raise two kids could enroll in a
non-group plan for less than $1,400 a year, according to the Kaiser Health
Reform Subsidy Calculator. (The subsidy from the government would be
$8,058.)
In a situation like this, the firm has a strong
financial incentive to junk its group coverage and dump its workers onto the
taxpayer-subsidized plan. Under the new law, firms with more than fifty
workers that don’t offer coverage would have to pay an annual fine of $2,000
for every worker they employ, excepting the first thirty. In this case, the
security firm would incur a fine of $140,000 (seventy times two), but it
would save $610,000 a year on health-care costs. If you owned this firm,
what would you do? Unless you are unusually public spirited, you would take
advantage of the free money that the government is giving out. Since your
employees would see their own health-care contributions fall by more than
$1,100 a year, or almost half, they would be unlikely to complain. And even
if they did, you would be saving so much money you afford to buy their
agreement with a pay raise of, say, $2,000 a year, and still come out well
ahead.
Even if the government tried to impose additional
sanctions on such firms, I doubt it would work. The dollar sums involved are
so large that firms would try to game the system, by, for example, shutting
down, reincorporating under a different name, and hiring back their
employees without coverage. They might not even need to go to such lengths.
Firms that pay modest wages have high rates of turnover. By simply refusing
to offer coverage to new employees, they could pretty quickly convert most
of their employees into non-covered workers.
The designers of health-care reform and the C.B.O.
are aware of this problem, but, in my view, they have greatly underestimated
it. According to the C.B.O., somewhere between eight and nine million
workers will lose their group coverage as a result of their employers
refusing to offer it. That isn’t a trifling number. But the C.B.O. says it
will be largely offset by an opposite effect in which employers that don’t
currently provide health insurance begin to offer it in response to higher
demand from their workers as a result of the individual mandate. In this
way, some six to seven million people will obtain new group coverage, the
C.B.O. says, so the overall impact of the changes will be minor.
The C.B.O.’s analysis can’t be dismissed out of
hand, but it is surely a best-case scenario. Again, I come back to where I
started: the scale of the subsidies on offer for low and moderately priced
workers. If economics has anything to say as a subject, it is that you can’t
offer people or firms large financial rewards for doing something—in this
case, dropping their group coverage—and not expect them to do it in large
numbers. On this issue, I find myself in agreement with Tyler Cowen and
other conservative economists. Over time, the “firewall” between the
existing system of employer-provided group insurance and taxpayer-subsidized
individual insurance is likely to break down, with more and more workers
being shunted over to the public teat.
At that point, if it comes, politicians of both
parties will be back close to where they began: searching for health-care
reform that provides adequate coverage for all at a cost the country can
afford. What would such a system look like? That is a topic for another
post, but I don’t think it would look much like Romney-ObamaCare.
The non-partisan Congressional Budget Office
likewise warned last December 23 that Obamacare’s putative savings “would be
received by the government only once, so they cannot be set aside to pay for
future Medicare spending and, at the same time, pay for current spending on
other parts of the legislation or on other programs. . . . To describe the
full amount of [Hospital Insurance] trust fund savings as both improving the
government’s ability to pay future Medicare benefits and financing new
spending outside of Medicare would essentially double-count a large share of
those savings and thus overstate the improvement in the government’s fiscal
position.”
Consequently, Sen. Jeff Sessions (R., Ala.)
predicts: “Taxpayers will be left holding billions in debt bonds to the
Medicare Trust Fund that must be repaid.”
The Senate’s Obamacare bill would take $52 billion
in anticipated Social Security revenues and divert them to offset
Obamacare’s overall net cost. But wait: Those who have been promised future
Social Security payments expect that $52 billion to be available to prevent
their pension checks from bouncing. These $104 billion in political pledges
cost only $52 billion.
This bill also includes something called Community
Living Services and Support. This “CLASS Act” would offer long-term-care
insurance with premiums invoiced immediately, but with benefits commencing
in 2016. In the interim, the CBO expects a $72 billion surplus to
accumulate. Congressional Democrats already have dedicated that sum to
counterbalance and thus lower Obamacare’s perceived cost. But the Treasury
needs that same $72 billion to finance the CLASS Act’s medical services. So,
which is it?
Senate Budget Committee Chairman Kent Conrad (D.,
N.D.) described this scam in the Washington Post as “a Ponzi scheme of the
first order, the kind of thing that Bernie Madoff would have been proud of.”
Continued in article
In his speech Wednesday (March
3, 2010) , demanding an "up or down" vote, the president
seemed convinced and committed—but nothing he said sounded true. His bill will
"bring down the cost of health care for millions," it is "fully paid for," it
will lower the long term deficit by a trillion dollars. "What a Disaster Looks Like: ObamaCare will have been a colossal waste
of time—if we're lucky," by Peggy Noonan, The Wall Street Journal, March 4,
2010 ---
http://online.wsj.com/article/SB10001424052748704187204575101742162779612.html?mod=djemEditorialPage_t
All this contributes to a second problem, which is
a growing credibility gap. In his speech Wednesday, demanding an "up or
down" vote, the president seemed convinced and committed—but nothing he said
sounded true. His bill will "bring down the cost of health care for
millions," it is "fully paid for," it will lower the long term deficit by a
trillion dollars.
Does anyone believe this? Does anyone who knows the
ways of government, the compulsions of Congress, and how history has played
out in the past, believe this? Even a little? Rep. Bart Stupak said Thursday
that he and several of his fellow Democrats won't vote for the Senate
version of the bill because it says right there on page 2,069 that the
federal government would directly subsidize abortions. The bill's proponents
say this isn't so. It would be a relief to have a president who could weigh
in believably and make clear what his own bill says. But he seems to devote
more words to obscuring than clarifying.
Continued in article
"This bill will strengthen Medicare and extend the life
of the program." - President Barack Obama, after the Senate health care bill secured 60
votes.
"This bill will strengthen Medicare and extend
the life of the program." - President Barack Obama, after the Senate health care bill secured 60
votes.
It's from the Wonk Room blog at the Center for
American Progress, and as you can see, it puts this claim up there front and
central. As you can see from the quote above, it's not just an error made by
one pundit. As I recall, the claim was made more than once during the Senate
debate, and of course, by our president in selling the bill. The graphic was
very widely distributed.
Unfortunately, the CBO finally got around to ruling
on this question, and no, this is not actually going to fix the Medicare
budget problem; it's an artifact of the way the government accounting is
done.
The explanation is a little complicated, and I'm
not sure how many of you want to go through it, but I'll try my hand at a
reasonably succinct explanation. Basically, Medicare, like Social Security,
has a "trust fund" (actually, more than one), which is supposed to fund it
until the trust fund is exhausted in 2019. The "trust fund" does not exist
in any meaningful sense, because its "assets" consist of claims on the
general fund, i.e. all the rest of the tax money. As Medicare goes into
deficit, it trades in those assets to cover its funding gap, which means the
general fund has to find the money to pay off the special bonds by either
raising taxes, cutting other spending, or borrowing more money. After the
trust fund is exhausted, the general fund has to find the money to pay for
the Medicare deficit by either . . . raising taxes, cutting other spending,
or borrowing more money. The difference to taxpayers is nil.
Technically, when you cut Medicare spending, that
money shows up as an increase in the Medicare trust fund, rather than some
other possible accounting entry. But the effect on the unified budget is the
same: the money saved by cutting Medicare is spent on other stuff. Whether
Medicare is "calling bonds" or "demanding money to cover its deficit", we
still have to find exactly as much money to pay for Medicare as we did
before. Which is a lot of money. One of the reasons the projected deficits
for the rest of the decade are so big is that the cost of Medicare is
outstripping the revenue raised by its payroll tax, and so we have to shovel
in more and more money from the general fund.
You can dedicate that money to paying for
Medicare--but then you have to introduce a corresponding future liability on
the general fund, in the amount of the Medicare savings. That would mean
that this bill would increase the deficit by hundreds of billions of
dollars, rather than reducing it.
Or as the CBO says:
The key point is that the savings to the HI
trust fund under the PPACA would be received by the government only
once, so they cannot be set aside to pay for future Medicare spending
and, at the same time, pay for current spending on other parts of the
legislation or on other programs. Trust fund accounting shows the
magnitude of the savings within the trust fund, and those savings indeed
improve the solvency of that fund; however, that accounting ignores the
burden that would be faced by the rest of the government later in
redeeming the bonds held by the trust fund. Unified budget accounting
shows that the majority of the HI trust fund savings would be used to
pay for other spending under the PPACA and would not enhance the ability
of the government to redeem the bonds credited to the trust fund to pay
for future Medicare benefits. To describe the full amount of HI trust
fund savings as both improving the government's ability to pay future
Medicare benefits and financing new spending outside of Medicare would
essentially double-count a large share of those savings and thus
overstate the improvement in the government's fiscal position.
It's a little disappointing, really. At the rate
that Democratic politicians were generating ever-more-spectacular budget
savings from the same old set of health care proposals, I had expected our
looming fiscal problems to be permanently resolved by this time next week.
From TheAtlantic -
shaping the national debate on
the most critical issues of our times, from politics, business, and the
economy, to technology, arts, and culture.
Lie: Billions will be saved from new Medicare billing efficiencies and
fraud prevention
Never ending fraud in Medicare billings: Unaudited overpayments, unqualified items, and criminal vendors One spending sinkhole can be traced to large
medical-equipment suppliers, device makers, and pharmaceutical companies, which
government auditors and industry veterans describe as a recalcitrant bunch.
Medical manufacturers know public agencies generally pay first and ask questions
later—if ever. Medicare receives 4.4 million claims
daily; fewer than 3% are reviewed before being paid within the legally required
30 days.
President Barack Obama and his Democratic allies on
Capitol Hill say that a vast expansion of health coverage can be funded by
squeezing out waste and fraud rather than cutting benefits. Whether that
turns out to be true may help determine the success of the sweeping reform
package being debated by Congress. Slashing costs is no easy task, and
stopping fraud is even tougher. No less than $47 billion in Medicare
spending went to dubious claims in the year ended Sept. 30, according to the
U.S. Health & Human Services Dept. That's 10.7% of the $440 billion program
that subsidizes care for the elderly. Medicaid, the government program for
the poor, lets billions trickle away at roughly the same rate. The $10
million annual increase that Congress is allocating to fight fraud may not
be enough to do the trick.
One spending sinkhole can be traced to large
medical-equipment suppliers, device makers, and pharmaceutical companies,
which government auditors and industry veterans describe as a recalcitrant
bunch. Medical manufacturers know public agencies generally pay first and
ask questions later—if ever. Medicare receives 4.4 million claims daily;
fewer than 3% are reviewed before being paid within the legally required 30
days.
One way to get a sense of the scale of the
seepage—and the challenge facing the Administration—is to look at
whistleblower lawsuits filed under the federal False Claims Act. That law
allows company employees to sue on behalf of the government to recover
improperly claimed federal funds.
A suit filed by William A. Thomas, a former senior
sales manager at Siemens Medical Solutions USA, one of the nation's largest
medical suppliers and a unit of German engineering giant Siemens (SI),
offers a case study in the difficulty of containing costs. Thomas, a 15-year
Siemens Medical veteran, alleges in federal court in Philadelphia that for
years the company overbilled the Veterans Affairs Dept. and other government
agencies by hundreds of millions of dollars for MRI and CT scan machines and
other expensive equipment. These high-tech systems—used to examine
everything from damaged knees to suspected cancers—cost $500,000 to $3
million apiece, sometimes more. Thomas, who retired from Siemens in 2008,
claims that with no justification other than larger profits, his former
employer charged its government customers far more than private-sector
buyers for the same equipment.
"Billions and billions could be saved with the
right government regulation and oversight applied to health care," Thomas,
56, says in an interview. "But I think corporations will continue running
circles around the federal government."
In court filings, Siemens has denied any wrongdoing
and has sought to have the Thomas suit dismissed. A company spokesman, Lance
Longwell, declined to elaborate for this article, citing the litigation.
The Thomas suit illustrates some of the vagaries of
False Claims Act cases, hundreds of which are filed every year against
government contractors in a range of industries. As the plaintiff, Thomas
stands to pocket up to 30% of any court recovery, with the rest going to the
Treasury. The Justice Dept., which can intervene in such suits to help steer
them, announced last year that it will stay out of the case against Siemens
for now. Yet Thomas' allegations have helped drive a parallel criminal
investigation of Siemens' equipment marketing practices by the Defense Dept.
and the U.S. Attorney's Office in Philadelphia.
In April federal investigators searched for records
at the headquarters of Siemens Medical in Malvern, Pa., a suburb of
Philadelphia. Ed Bradley, special agent-in-charge of the Defense Criminal
Investigative Service, confirmed that the investigation is continuing but
declined to comment further.
Longwell, the Siemens Medical spokesman, says the
company is cooperating with criminal investigators. In March, just weeks
before the search of its offices, Siemens won a new $267 million contract to
provide radiology equipment to the U.S.
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Jensen Comment The GAO has declared that many huge sink holes for fraud and waste are
unauditable --- the Pentagon, the IRS, Medicare, and the list goes on and on.
But the Congress that funds these programs is manipulated by special interest
groups who do not want these audits. The new sink hole on the block is almost
anything green.
What is happening to America?
Lie: Medicare patients will not lose their doctors because of Obamacare
As Medicare becomes more stingy and malpractice insurance costs soar for
physicians, many Medicare patients will be turned away by their doctors,
especially in states like Texas that for a short time have benefitted from
reductions in the cost of physician malpractice insurance and a sudden expansion of
medical services to seniors and disabled patients having Medicare coverage.
Hi Tom,
Another more serious cost is that physicians sometimes refuse to perform
some of the more risky procedures that expose them to multimillion dollar
punitive damage lawsuits.
Still worse is the costly loss of competition and convenience when
physicians drop risky procedures from their practice such as when OB/GYN
surgeons become only GYN surgeons. One of the huge punitive damage risks of
an OB surgeon comes with prenatal testing where it is common to lose
multimillion dollar lawsuits for failure to diagnose defective babies before
birth.
Another drawback of the the malpractice insurance costs in states having a
punitive damage lottery is that Medicare and Medicaid patients having caps
on what will be paid for procedures are turned away when the revenue from
the procedure is less than the malpractice insurance cost of the procedure.
When Texas passed a constitutional amendment capping the punitive damage
awards (much like in all of Canada), malpractice insurance costs went down
significantly in Texas and had all sorts of positive impacts on medical
practice.
I mentioned the following previously.
Years ago while we were still living in San Antonio, Texas my wife had two
of her 15 spine surgeries performed by a surgeon from the South Texas Spinal
Clinic. When it came time for next surgery her surgeon turned her
away saying that the Clinic no longer accepted any Medicare patients (she
was then covered under Medicare Disability Insurance). Purportedly the
soaring costs, especially malpractice insurance, made complicated Medicare
surgeries, on average, big money losers in for spinal surgeons.
We subsequently moved to New Hampshire where Erika had two spine surgeries
from Dr. Levi at the Concord Hospital. Erika later became so bent over that
we afterwards sought out one of the very few specialists in the nation who
can perform a "Pedicle Subtraction Osteotomity for Severe Fixed Sagittal
Imbalance." She went into a Boston hospital bent over like the Hunchback of Notre
Dame and came out walking Marine-drill erect in 2007 (but with no relief
from her chronic pain).
Out of curiosity in November 2009, I phoned the South Texas
Spinal Clinic and discovered it once again is accepting Medicare patients even
though Erika has no intention of returning to that Clinic. Ostensibly a major
factor in deciding to once again take on Medicare patients is the decline in
malpractice insurance costs due largely to a change in the Texas Constitution.
Interestingly, decreases in malpractice insurance costs
have been a major factor in increasing competition for physician specialists in
Texas:
Four years after Texas voters approved a
constitutional amendment limiting awards in medical malpracticelawsuits, doctors are
responding as supporters predicted, arriving from all parts of the country
to swell the ranks of specialists at Texashospitalsand bring professional health care to
some long-underserved rural areas. “It was hard to believe at first; we
thought it was a spike,” said Dr. Donald W. Patrick, executive director of
the medical board and a neurosurgeon and lawyer. But Dr. Patrick said the
trend — licenses up 18 percent since 2003, when the damage caps were enacted
— has held, with an even sharper jump of 30 percent in the last fiscal year,
compared with the year before. Ralph Blumenthal, "More Doctors
in Texas After Malpractice Caps," The New York Times, October 5, 2007 ---
http://www.nytimes.com/2007/10/05/us/05doctors.html
Sadly, Medicare patients in Texas may once again be turned away by their
doctors under the pending 2009 House version of Obamacare:
"Pelosi Health Care Bill Blows a Kiss to Trial Lawyers," Andrew Breitbart,
October 30, 2009 ---
Click Here
The health care bill recently unveiled by Speaker
Nancy Pelosi is over 1,900 pages for a reason. It is much easier to dispense
goodies to favored interest groups if they are surrounded by a lot of
legislative legalese. For example, check out this juicy morsel to the trial
lawyers (page 1431-1433 of the bill):
Section 2531, entitled “Medical Liability
Alternatives,” establishes an incentive program for states to adopt and
implement alternatives to medical liability litigation. [But]…… a
state is not eligible for the incentive payments if that state puts a
law on the books that limits attorneys’ fees or imposes caps on damages.
Unfortunately, it appears that under Obamacare, Texas will once again have to
return to lawyer-ambulance-chasing days of old and revise its Constitution that
presently limits attorneys' fees and imposes caps on damages. A former colleague
at Trinity University on November 5, 2009 explained in a private message some of
the reasonable details of the current Texas restrictions on damages in Texas
(sounds reasonable to me and is more generous to patients and lawyers than
Canada's really tight restrictions):
It is not true
(under the revised Texas Constitution) that
those who have been harmed by a physician’s malfeasance will not have their
day in a Texas court. They will be able to claim real damages (economic -
loss of income and medical costs) as well as punitive and pain and suffering
damages – the difference is that some types of damages (non-economic) will
be capped. What most of us don’t understand, is that the fear of these huge
punitive damages causes physicians to practice defensive medicine – ordering
more tests, ordering procedures just to make certain that they’re not
missing anything. All these tests and procedures would be great and
expected if they in themselves did not pose a risk to the patient, but many
of them do. So, physicians must constantly balance their certainty of their
diagnosis against the risk to the patient of additional tests. When we add
huge punitive damages, we tip the scales in favor of more tests and
procedures, which may, in fact, be more risky for the patient. And, in the
end the burden for million dollar awards is borne by us all not just the
physicians.
Since it is
difficult to undo the health damage that has occurred, oversight of the
physician is at the heart of the matter. There are ways to insure quality,
standard-of-care medical practice outside of expensive court proceedings.
So in addition to tort reform, the focus should equally be on systems of
accountability for physicians.
I think it is an outright lie that Obamacare will not cause many medical
specialists to turn their backs on Medicare patients for much the same reason
that Erika was turned away by a surgeon from the South Texas Spinal Clinic after
having two of his surgeries. It will be amazing that any highly specialized
neurosurgeon will accept the losses of treating Medicare patients.
The sad part is that Obamacare will reduce fees allowed to be charged to
Medicare patients while at the same time greatly increase the cost of
malpractice insurance for physicians treating those patients.
Canadian Malpractice Insurance Takes Profit Out Of
Coverage," by Jane Akre, Injury Board, July 28, 2009 --- Click Here
The
St. Petersburg Times
takes a look at the cost of
insurance in Canada for health care providers.
A neurosurgeon in Miami pays about $237,000 for medical malpractice
insurance. The same professional in Toronto pays about $29,200, reports
Susan Taylor Martin.
A Canadian orthopedic surgeon pays just over $10,000 for coverage that
costs a Miami physician $140,000. An obstetrician in Canada pays $36,353 for
insurance, while a Tampa Bay obstetrician pays $98,000 for medical
malpractice insurance.
For those of you interested in Erika's saga with spine surgeries, you can
read about more of the details at
http://faculty.trinity.edu/rjensen/Erika2007.htm She has a metal rack on her spine that extends from her neck to her hips.
Surgeons broke her back in three places before attaching the rods and screws, In
spite of the rack she can bend over while standing and pick a paper towel up
from the floor.
Lie: The cost of Obamacare is $1 trillion over ten years which averages
out to a mere $100 billion per year
The Democratic leadership simply shifted
some of the bill's cost to other bills. For example, for purposes of the
health care bill, the Democrats assume that a currently scheduled 21 percent
cut in Medicare reimbursements will take affect next year. However, at the
same time, they have introduced a separate bill repealing those cuts at a
cost of $250 billion, so that cost isn't technically part of health care
reform. And your household budget would look so much better if you didn't
have to pay your mortgage and car payment. (The Senate just tried to do
something similar, only to have the cynical ploy rejected 53-47, with 13
Democrats refusing to play along.)
If you count that cost honestly, the
bill's cost rises to nearly $1.3 trillion. And that still understates the
bill's cost.
The CBO provides ten year projections of a
bill's cost, between 2010 and 2019 in this case. But most provisions of the
health bill don't take effect until 2014. So the "10-year" cost projection
only includes six years of the bill. Again, consider your household budget.
Wouldn't it be great if you could count a whole month's income, but only two
weeks expenditures? If we look at the bill more honestly over the first 10
years that the programs are actually in existence, say from 2014 to 2024, it
would actually cost more than $2.3 trillion. And, this doesn't include
approximately $200 billion in additional spending for public health
programs, a reinsurance program for retiree health care, and new preventive
care programs that was added to the bill after it was submitted for official
"scoring." So call the total cost somewhere in excess of $2.5 trillion.
Continued in article
Lie: Requiring private insurers to cover all pre-existing health
conditions from Day 1 will actually reduce the premiums for medical insurance.
We believe premiums would come down for several
reasons. Companies would no longer need to spend as much money on administrative
costs, to screen out people with pre-existing conditions (prohibited by all
reform bills). If they wanted to participate on the exchanges (and have access
to millions of new customers), the companies would also be forced to compete
with other private plans, and possibly a public option, encouraging them to
lower premiums and accept lower profits. The New York Times Editorial, November 1, 2009 ---
http://www.nytimes.com/2009/11/01/opinion/01sun1.html?hp
Some Democrats and analysts are raising alarms that
bills to reform the U.S. healthcare system fall short of President Obama's
pledge to slow health spending.
Obama has made cost containment a key leg to
healthcare reform. However, health economists say it isn't possible to know
whether the bills would meet that goal, with many saying they doubt they
would even come close, The New York Times reported Tuesday.
Both the House and the Senate propose cost-saving
measures. The House bill, which passed Saturday, projects $440 billion in
Medicare savings over 10 years. The Senate Finance Committee bill projects
about $420 billion. White House officials said additional savings in the
private sector would be realized as well.
Experts, even those whom the White House consulted,
said the measures represent only small steps toward revising the existing
fee-for-service system, which drives up costs by paying health providers for
each visit or procedure performed -- and some lawmakers are paying
attention, the Times said.
"My assessment at this point," said Sen. Ron Wyden,
D-Ore., and a member of the Finance Committee, "is that the legislation is
heavy on health and light on reform."
Sen. Susan Collins, R-Maine, during a news
conference Monday with Sen. Lamar Alexander, R-Tenn., shared her concern
about the cost-containment issue. Collins said she also has met with
moderate Democrats who share her view.
"I don't believe we need more pilot projects to
show us that healthcare delivery reforms are necessary," Collins told the
Times. "I think people are much more upset over the cost of care than the
administration is acknowledging."
Jensen Comment
You can argue for coverage of all new insureds irrespective of pre-existing
conditions on the basis of social equity, but the reasoning of the NYT editorial
above is pure hogwash. If this were true at least one medical insurance company
would've added to profits by ending pre-screening expenses. Pre-existing
conditions often require the most expensive kinds of treatment for such things
as organ transplants, cataracts, kidney dialysis, etc.
Also eliminating pre-existing conditions coupled with the inevitable coverage
of illegal immigrants creates moral hazard in that when Grandma Lopez in Mexico
City needs an eye operation, her relatives will float her across the Rio Grande
primarily for immediate $25,000 eye surgery. If she wants to return she might
even walk back across the border unassisted after she can see better.
Lie: States like Texas that have capped punitive damages in
medical lawsuits probably may not keep their limiting caps according to pending
Obamacare legislation. Such caps purportedly have significantly lowered medical
insurance rates in those states. "Pelosi Health Care Bill Blows a Kiss to Trial Lawyers," Andrew Breitbart,
October 30, 2009 ---
Click Here
The health care bill recently unveiled by Speaker
Nancy Pelosi is over 1,900 pages for a reason. It is much easier to dispense
goodies to favored interest groups if they are surrounded by a lot of
legislative legalese. For example, check out this juicy morsel to the trial
lawyers (page 1431-1433 of the bill):
Section 2531, entitled “Medical Liability
Alternatives,” establishes an incentive program for states to adopt and
implement alternatives to medical liability litigation. [But]…… a
state is not eligible for the incentive payments if that state puts a
law on the books that limits attorneys’ fees or imposes caps on damages.
So, you can’t try to seek alternatives to lawsuits
if you’ve actually done something to implement alternatives to lawsuits.
Brilliant! The trial lawyers must be very happy today!
While there is debate over the details, it is clear
that medical malpractive lawsuits have some impact on driving health care
costs higher. There are likely a number of procedures that are done simply
as a defense against future possible litigation. Recall this from the
Washington Post:
“Lawmakers could save as much as $54 billion
over the next decade by imposing an array of new limits on medical
malpractice lawsuits, congressional budget analysts said today — a
substantial sum that could help cover the cost of President Obama’s
overhaul of the nation’s health system. New research shows that legal
reforms would not only lower malpractice insurance premiums for medical
providers, but would also spur providers to save money by ordering fewer
tests and procedures aimed primarily at defending their decisions in
court, Douglas Elmendorf, director of the nonpartisan Congressional
Budget Office, wrote in a letter to Sen. Orrin Hatch (R-Utah).”
Lie: The U.S. infant mortality rate is much higher than even in Cuba
and Europe
Longtime readers will recall that we
caught Kristof playing similar games with statistics back in
January 2005, when he claimed that the U.S.
infant-mortality rate was worse than communist Cuba's and much worse than
European rates. We pointed out that a central reason U.S. rates are high is
that American physicians make heroic efforts to save extremely premature
infants, who nonetheless have a mortality rate in excess of 50%. In other
countries, these babies are simply discarded and not even counted in the
statistics. Wall Street Journal Editors Newsletter, November 6, 2009
Lie: Capping punitive damages does not save a significant amount of
money in medical costs.
Here’s an academic study of over 10 million insured. Although 1-2% on average
does not sound very large, it adds up if you eventually count in medical
insurance costs of 200-300 million insured people.
Limiting medical malpractice punitive (as opposed to damage) awards has also
been shown in Canada to greatly reduce costs of the National Health Care Plan.
We evaluate the effect of tort reform on
employer-sponsored health insurance premiums by exploiting state-level
variation in the timing of reforms. Using a dataset of healthplans
representing over 10 million Americans annually between 1998 and 2006,
we find that caps on non-economic
damages,
collateral source reform, and joint and several liability reform reduce
premiums by 1 to 2 percent each.
These reductions are concentrated in PPOs rather
than HMOs, suggesting that can HMOs can reduce “defensive” healthcare
costs even absent tort reform. The
results are the first direct evidence that tort
reform reduces healthcare costs in aggregate; prior research has focused
on particular medical conditions.
Lie: Baucus' Senate bill taxes gold plated medical insurance that's
only a tax on the rich
Yeah right! How about postal workers? This is misleading at best since the many
unions have negotiated gold plated coverage for their rank and file. Some of the
best medical insurance in the U.S. is given to some of the lowest-paid
workers in the U.S. who can ill-afford a tax on their premium insurance plans.
Unions are against this tax, so it will most certainly die in the House
negotiations and force our Keystone Cops to scurry for other taxes or borrow
more trillions from China.
This is obvious bait and switch fraud. The
bait is to get Obamacare passed this year by
making grandiose claims about not having government health insurance to compete
unfairly with private health insurance companies. The
switch is that Fannie HIC, like Fannie Mae, is doomed from get
go and will have to be taken over by the government.
Fannie HIC will insure tens of millions of minimum-wage workers,
part-time workers, the unemployable, and the otherwise unemployed. There's
zero chance of having premium revenues come anywhere close to cash outflows
for expanded health, mental health and social service coverage demanded in
H.R. 3200. Before she even commences operation, Fannie HIC will have to
become a government owned and operated and subsidized health insurance
company competing with private insurance companies.
One can only hope that Congress will be so proud of Fannie HIC that this
cooperative-gone-government company will provide the only health insurance
coverage available to members of the House, Senate, and Executive branches
of Federal and State Governments. Fat Chance!
For starters, $1 trillion of extra debt-financed
spending would cause the government to pay about $300 billion of extra
interest in the next decade. Moreover, the CBO's method of estimating the
cost of such a program doesn't recognize the incentives it creates for
households and firms to change their behavior. The House health-care bill
gives a large subsidy to millions of families with incomes up to three times
the poverty level (i.e., up to $66,000 now for a family of four) if they buy
their insurance through one of the newly created "insurance exchanges," but
not if they get their insurance from their employer. The CBO's cost estimate
understates the number who would receive the subsidy because it ignores the
incentive for many firms to drop employer-provided coverage. It also ignores
the strong incentive that individuals would have to reduce reportable cash
incomes to qualify for higher subsidy rates. The total cost of ObamaCare
over the next decade likely would be closer to $2 trillion than to $1
trillion. Martin Feldstein, "ObamaCare's
Crippling Deficits The higher taxes, debt payments and interest rates needed
to pay for health reform mean lower living standard," The Wall Street
Journal, September 7, 2009 ---
http://online.wsj.com/article/SB10001424052970203585004574393110640864526.html?mod=djemEditorialPage
President Barack Obama used only-in-Washington
accounting Wednesday when he promised to overhaul the nation's health care
system without adding "one dime" to the deficit. By conventional arithmetic,
Democratic plans would drive up the deficit by billions of dollars.
The president's speech to Congress contained a
variety of oversimplifications and omissions in laying out what he wants to
do about health insurance.
A look at some of Obama's claims and how they
square with the facts or the fuller story:
---
OBAMA: "I will not sign a plan that adds one dime
to our deficits either now or in the future. Period."
THE FACTS: Though there's no final plan yet, the
White House and congressional Democrats already have shown they're ready to
skirt the no-new-deficits pledge.
House Democrats offered a bill that the
Congressional Budget Office said would add $220 billion to the deficit over
10 years. But Democrats and Obama administration officials claimed the bill
actually was deficit-neutral. They said they simply didn't have to count
$245 billion of it - the cost of adjusting Medicare reimbursement rates so
physicians don't face big annual pay cuts.
Their reasoning was that they already had decided
to exempt this "doc fix" from congressional rules that require new programs
to be paid for. In other words, it doesn't have to be paid for because they
decided it doesn't have to be paid for.
The administration also said that since Obama
already had included the doctor payment in his 10-year budget proposal, it
didn't have to be counted again.
That aside, the long-term prognosis for costs of
the health care legislation has not been good.
CBO Director Douglas Elmendorf had this to say in
July: "We do not see the sort of fundamental changes that would be necessary
to reduce the trajectory of federal health spending by a significant
amount."
---
OBAMA: "Nothing in this plan will require you or
your employer to change the coverage or the doctor you have."
THE FACTS: That's correct, as far as it goes. But
neither can the plan guarantee that people can keep their current coverage.
Employers sponsor coverage for most families, and they'd be free to change
their health plans in ways that workers may not like, or drop insurance
altogether. The Congressional Budget Office analyzed the health care bill
written by House Democrats and said that by 2016 some 3 million people who
now have employer-based care would lose it because their employers would
decide to stop offering it.
In the past Obama repeatedly said, "If you like
your health care plan, you'll be able to keep your health care plan,
period." Now he's stopping short of that unconditional guarantee by saying
nothing in the plan "requires" any change.
---
OBAMA: "The reforms I'm proposing would not apply
to those who are here illegally." One congressman, South Carolina Republican
Joe Wilson, shouted "You lie!" from his seat in the House chamber when Obama
made this assertion. Wilson later apologized.
THE FACTS: The facts back up Obama. The House
version of the health care bill explicitly prohibits spending any federal
money to help illegal immigrants get health care coverage. Illegal
immigrants could buy private health insurance, as many do now, but wouldn't
get tax subsidies to help them. Still, Republicans say there are not
sufficient citizenship verification requirements to ensure illegal
immigrants are excluded from benefits they are not due.
---
OBAMA: "Don't pay attention to those scary stories
about how your benefits will be cut. ... That will never happen on my watch.
I will protect Medicare."
THE FACTS: Obama and congressional Democrats want
to pay for their health care plans in part by reducing Medicare payments to
providers by more than $500 billion over 10 years. The cuts would largely
hit hospitals and Medicare Advantage, the part of the Medicare program
operated through private insurance companies.
Although wasteful spending in Medicare is widely
acknowledged, many experts believe some seniors almost certainly would see
reduced benefits from the cuts. That's particularly true for the 25 percent
of Medicare users covered through Medicare Advantage.
Supporters contend that providers could absorb the
cuts by improving how they operate and wouldn't have to reduce benefits or
pass along costs. But there's certainly no guarantee they wouldn't.
OBAMA: Requiring insurance companies to cover
preventive care like mammograms and colonoscopies "makes sense, it saves
money, and it saves lives."
THE FACTS: Studies have shown that much preventive
care - particularly tests like the ones Obama mentions - actually costs
money instead of saving it. That's because detecting acute diseases like
breast cancer in their early stages involves testing many people who would
never end up developing the disease. The costs of a large number of tests,
even if they're relatively cheap, will outweigh the costs of caring for the
minority of people who would have ended up getting sick without the testing.
The Congressional Budget Office wrote in August:
"The evidence suggests that for most preventive services, expanded
utilization leads to higher, not lower, medical spending overall."
That doesn't mean preventive care doesn't make
sense or save lives. It just doesn't save money.
---
OBAMA: "If you lose your job or change your job,
you will be able to get coverage. If you strike out on your own and start a
small business, you will be able to get coverage."
THE FACTS: It's not just a matter of being able to
get coverage. Most people would have to get coverage under the law, if his
plan is adopted.
In his speech, Obama endorsed mandatory coverage
for individuals, an approach he did not embrace as a candidate.
He proposed during the campaign - as he does now -
that larger businesses be required to offer insurance to workers or else pay
into a fund. But he rejected the idea of requiring individuals to obtain
insurance. He said people would get insurance without being forced to do so
by the law, if coverage were made affordable. And he repeatedly criticized
his Democratic primary rival, Hillary Rodham Clinton, for proposing to
mandate coverage.
"To force people to get health insurance, you've
got to have a very harsh penalty," he said in a February 2008 debate.
Now, he says, "individuals will be required to
carry basic health insurance - just as most states require you to carry auto
insurance."
He proposes a hardship waiver, exempting from the
requirement those who cannot afford coverage despite increased federal aid.
---
OBAMA: "There are now more than 30 million American
citizens who cannot get coverage."
THE FACTS: Obama time and again has referred to the
number of uninsured as 46 million, a figure based on year-old Census data.
The new number is based on an analysis by the Kaiser Commission on Medicaid
and the Uninsured, which concluded that about two-thirds of Americans
without insurance are poor or near poor. "These individuals are less likely
to be offered employer-sponsored coverage or to be able to afford to
purchase their own coverage," the report said. By using the new figure,
Obama avoids criticism that he is including individuals, particularly
healthy young people, who choose not to obtain health insurance.
Jensen Comment
In fairness, a single-payer medical insurance provider that covered all
Americans would probably result in cost savings in the long run. However,
President Obama realistically proclaims that such an abrupt changeover with lead
to unprecedented turmoil and inefficiencies, to say nothing of quality of care,
if the U.S. Government abruptly decided to insure 300 million Americans in one
fell swoop.
And the cost of phasing in a single-payer system would cause massive
deficits, including the windfall profits that government would have to pay
present medical insurance companies to operate efficiently over the years before
they must operate before being terminated.
The fact of the matter is that we will be forced to live with inefficient
private insurers until they are shut down or take over by government. In the
meantime, government spending deficits will soar due to increased numbers of
insured Americans, illegal immigrants, and expanded scope of coverage (mental
health, pre-existing conditions, marriage counseling, and expanded social
services).
"How Congress Is Cooking the Books," by Michael Tanner, The New
York Post, September 30, 2009 ---
Click Here
LAST week, the Senate Finance Committee voted 12-11
not to wait for the Congressional Budget Office to "score" its health-care
bill before the committee votes on it. Imagine that: Some senators actually
wanted to know how much the bill costs before voting on it.
Let them get away with something like that, and
before you know it they'll be demanding honest accounting practices --
sending the whole legislative process to hell in a hand basket.
When it comes to the health-care-reform debate, you
see, honest budgeting is nowhere to be seen.
Start with the simple matter of how much
health-care reform will cost. The House bill, HR 3200, will cost roughly
$1.3 trillion over 10 years -- or so we're told. By the same token, the
Senate Finance Committee bill is supposed to cost just under $900 billion.
Sure, that's a lot of money -- but it still badly understates the true cost.
The CBO provides 10- year projections of a bill's
cost. But most provisions of the health bill don't take effect until 2014.
So the "10-year" cost projection only includes six years of the bill.
Plus, the costs ramp up slowly. In its first year,
the House bill would only cost about $6 billion; in its first three, less
than $100 billion. The big costs are in the final years of the 10-year
budget window -- and beyond. In fact, over the first 10 years that the House
bill would be in existence (2014 to 2024), its costs would be closer to $2.4
trillion. Similarly, the real cost of the Senate bill over 10 years of
operation is estimated at $1.5 trillion.
Worse, the trajectory of the costs after 10 years
rises dramatically -- meaning "reform" would cost even more in its second 10
years and beyond.
Such gimmicks also infest the projections of how
much reform will add to the deficit. CBO says the House bill adds $235
billion to the deficit. But that, again, cuts off arbitrarily in 2019.
Beyond that date, the bill adds enormously to the deficit, about $1.5
trillion in the second 10 years. In fact, if the health-reform bill were
treated like other entitlements, such as Social Security and Medicare, which
are required to have a 75-year actuarial forecast, its unfunded liabilities
would exceed $9.2 trillion.
Of course, the Senate Finance Bill is supposed to
be deficit-neutral. But that claim relies on other forms of budgetary
flimflam.
For example, the Senate bill relies on Medicare
"savings" that Congress keeps refusing to make. Specifically, Medicare has
long been ordered to cut 21 percent from what it pays health-care providers
-- yet, each year since 2003, for reasons both good and bad, Congress has
voted to defer the cuts.
Does anyone else really think that Congress is
simply going to slash payments to doctors and hospitals by 21 percent across
the board?
Of course, President Obama has long said we can cut
Medicare by $500 billion simply by eliminating fraud, waste and abuse. That
would be the same "fraud, waste and abuse" that the government has been
cutting since Ronald Reagan first used the term.
The truth is that health-care reform is going to
cost us a lot. And we're going to pay for it in higher taxes and more debt.
There is a little-noticed provision buried deep in
both the House and Senate health-care reform bills that is intended to save
billions of dollars—but instead will hurt millions of seniors, impose new
costs on taxpayers, and charge employers millions in new taxes.
As part of the Medicare Modernization Act in 2003,
Congress created a new drug benefit—called Medicare Part D—for retirees at a
cost of about $1,900 per recipient per year. Many private employers already
provided drug coverage for their retirees, and the administration and
Congress did not want to tempt employers into dropping their coverage.
Actuaries calculated that if the government provided a subsidy of at least
$800, employers would not stop covering retirees.
The legislation created a $600 tax-free benefit
(the equivalent of $800 cash for employers), and it worked. Employers
continued to cover about seven million retirees who might have otherwise
been dumped into Medicare Part D.
It was a good arrangement for all involved. An $800
subsidy is cheaper than the $1,900 cost of providing drug coverage. And
millions of seniors got to keep a drug benefit they were comfortable with
and that in many cases was better than the benefit offered by the
government.
But now that subsidy is coming in to be clipped.
This fall congressional staff, looking for a new revenue source to pay for
health reform, proposed eliminating the tax deductibility of the subsidy to
employers. The supposed savings were estimated by congressional staff to be
as much as $5 billion over the next decade.
It sounds smart—except that nobody asked how many
employers will drop retiree drug coverage. Clearly, many will. The result is
that, instead of saving money, the proposed revenue raiser will force
Medicare Part D costs to skyrocket as employers drop retirees into the
program.
The careful calculation that was made in 2003 to
minimize federal spending and maximize private coverage will go out the
window if this provision becomes law. Any short-term cost savings that
Congress gets by changing the tax provision will be overwhelmed by higher
costs in the long run.
Some members in the House want to mitigate the cost
of this provision by mandating that employers maintain existing levels of
retiree coverage despite the reduced subsidy. But it's not that simple. A
mandate would increase costs on businesses, which in turn would make it
harder for those businesses to hire new employees. The mandate would
effectively be a tax on employers that provide retiree benefits; this in
turn will simply induce some unknown number of employers to terminate their
retiree drug programs before the mandate kicks in.
In short, if the changes that are proposed for
employer subsidies in the current Medicare Part D program are enacted,
everyone will lose. Unions will lose as employers seek ways to drop retiree
drug coverage. Seniors will lose as employers drop them into Medicare Part
D. Medicare and taxpayers will lose as they face higher costs. And employers
will lose as they find it harder to provide benefits.
To make matters worse, accounting rules for
post-retirement benefits will require companies that keep their retiree
benefits to record the entire accrued present value of the new tax the day
the provision is signed into law. This would cause many employers to
immediately post billions in losses, which could significantly impact our
financial markets.
There are many reasons to pass health-care reform.
There is no reason to hurt seniors, employers and taxpayers in the process.
Businesses are struggling, and the Medicare trust funds have plenty of
problems as it is. It makes no sense to make these problems worse.
Mr. Scully was the administrator of the Centers for Medicare and
Medicaid Services from 2001-04 and was one of the designers of the Medicare
Part D benefit.
The Lie: President Obama and his wife have always been against
patient dumping by medical centers
One woman Michelle Obama will not mention
Yes, First Lady Michelle Obama is now aggressively crusading for her
husband’s health care takeover under the guise of championing woman who have
been “crushed” by the system . . . I blogged about Michelle Obama’s role in
creating a patient-dumping scheme for the University of Chicago Medical
Center back in
March. With her husband and the Democrats
unleashing
health care horror story anecdotesto gin up
public fear and build support for the beleaguered Obamacare plan, my
syndicated column today revisits the kind of “reform” the Obamas and their
Chicago cronies champion — and who benefits.Here’s a challenge to the ABC
News Obamacare
infomercialproducers. I dare you to ask
President Obama this question: What have you done for
Dontae Adams, lately?
One woman Mrs. Obama won’t be spotlighting? The mother of Dontae Adams. Michelle Malkin, September 18, 2009 ---
http://michellemalkin.com/2009/09/18/one-woman-michelle-obama-will-not-mention/
Fearful that they're losing ground on
immigration and health care, a group of House Democrats is pushing back
and arguing that any health care bill should extend to all legal
immigrants and allow illegal immigrants some access, The Washington
Times reported on Monday.
The Democrats, trying to stiffen their party's
spines on the contentious issue, say it's unfair to bar illegal
immigrants from paying their own way in a government-sponsored exchange.
Legal immigrants, they say, regardless of how long they've been in the
United States, should be able to get government-subsidized health care
if they meet the other eligibility requirements.
"Legal permanent residents should be able to
purchase their plans, and they should also be eligible for subsidies if
they need it. Undocumented, if they can afford it, should be able to buy
their own private plans. It keeps them out of the emergency room," said
Rep. Michael M. Honda, California Democrat and chairman of the
Congressional Asian Pacific American Caucus.
Honda was joined by more than 20 of his
colleagues in two letters laying out the demands.
Coverage for immigrants is one of the thorniest
issues in the health care debate, and one many Democratic leaders would
like to avoid. But immigrant rights groups and the Democrats who sent
the letters say they have to take a stand now.
Jensen Comment
The key absurdity here is the statement "pay their own way." If a foreigner
in need of a $50,000 eye implant surgeries sneak into the U.S. for the main
purpose of paying $100 in premiums for each $50,000 surgery and then return
to their home countries, these aliens have hardly "paid their own way."
They've taken on illegal alien status mainly for getting expensive health
care on the cheap.
The Lie: The big corporations (like Wal-Mart), the big
medical insurance companies, and the big pharmaceutical companies are
lobbying against Obamacare. "Big Business Goes Big for Health Care Reform: Why drug companies and
insurance providers are backing ObamaCare," by John Stossel, Reason
Magazine, August 13, 2009 ---
http://www.reason.com/news/show/135407.html
"What disturbs Americans of all ideological
persuasions is the fear that almost everything, not just government, is
fixed or manipulated by some powerful hidden hand," Frank Rich
wrote
in Sunday's New York Times.
That manipulation should disturb us. But contrary to Rich, it is not the
work of "corporatists" who have sprung up to attack progressive reforms
proposed by Obama and the Democratic majority. Manipulation is what we
got many years ago when we traded a more or less free market for the
"progressive" interventionist state. When government is big, the
well-connected always have an advantage over the rest of us in
influencing public policy.
Observe: Although President Obama and big-government activists demonize
health-insurance companies, the companies "are still mostly on board
with the president's effort to overhaul the U.S. health-care system,"
the Wall Street Journalreports;
and ...
Although the activists criticize Big Pharma, "The drug industry has
already contributed millions of dollars to advertising campaigns for the
health care overhaul through the advocacy groups like Healthy Economies
Now and Families USA. It has spent about $1 million on similar
advertisements under its own name," the Timesreports.
Big Pharma and Big Insurance want Obama-style
health-care reform?
It's not so hard to understand. "The drug makers stand to gain millions
of new customers," the Times said.
And from the
Journal: "If health legislation succeeds, the
[insurance] industry would likely get a fresh batch of new customers. In
particular, many young and healthy people who currently forgo coverage
would be forced to sign up." No wonder insurers are willing to stop
"discriminating" against sick people. (Forget that the essence of
insurance is discrimination according to risk.)
Not that Big Pharma and Big Insurance like every detail of the
Democratic plan. Drug companies don't want Medicare negotiating drug
prices—for good reason. If it forces drug prices down, research and
development will be discouraged. (Depending whom you believe, Obama may
or may not have agreed with the drug companies
on this point.)
As for the insurance companies, they
worry—legitimately—that a government insurance company—the so-called
public option"—would drive them out of business. This isn't alarmism.
It's economics. The public option would have no bottom line to worry
about and therefore could engage in "predatory pricing" against the
private insurers.
But despite these differences, the biggest companies in these two
industries are on board with "reform."
It illustrates economist Steven Horwitz's
First Law of
Political Economy: "No one hates capitalism
more than capitalists." In this case, big business wants to shape—and
profit from—what inevitably will be an interventionist health-care
reform. Can you think of the last time a major business supported a
truly free market in anything?
In light of all this, it's funny to watch Democrats and their activist
allies panic over the protests at congressional town meetings around the
country. Tools of the corporate interests! they cry. But anyone opposing
"socialized medicine" at the meeting can't be a mouthpiece for big
business because, as we've seen, big business supports government
control. Conservative groups may be encouraging people to vent their
anger at congressmen who pass burdensome legislation without even
bothering to read it, but that's no reason to insult the protestors as
pawns. What's wrong with organizations helping like-minded people to
voice their opinions? Why do Democrats, such as Speaker Nancy Pelosi,
dismiss
citizen participation as "AstroTurf"—not real
grassroots—only when citizens oppose the kind of big government they
favor?
They weren't so dismissive when George W. Bush was president and people
protested—appropriately—his accumulation of executive powers.
"When handfuls of Code Pink ladies disrupted congressional hearings or
speeches by Bush administration officials," Glenn Reynolds
writes,
"it was taken as evidence that the
administration's policies were unpopular, and that the thinking parts of
the populace were rising up in true democratic fashion. ... But when it
happens to Democrats, it's something different: A threat to democracy, a
sign of incipient fascism ... House Speaker Nancy Pelosi calls the 'Tea
Party' protesters Nazis. ... "
So when lefties do it, it's called "community organizing."
When conservatives and libertarians do it, it's "AstroTurf."
Give me a break.
John Stossel is co-anchor of ABC News'
20/20 and the author
of Myth, Lies, and Downright Stupidity. He has a new blog at
http://blogs.abcnews.com/johnstossel.
Jensen Comment So who's against Obamacare? I think of the little people who are tired
of being told that it's raining when hypocrites in Congress are peeing
on our shoes. I think it's the little people who know full well that
Obamacare will be neither less expensive nor less wasteful of
consumer/taxpayer dollars. I think of the little people who are tired of
spending deficits that are paving the road to Hell. I think it's the
little people who fear the hoards of foreigners sneaking across our
borders for free health care. I think it's the little people who wish
that genuine photo identification should be required for voting and
collection of benefits.
John Stossel's right. The great divide between big government and big
business is a myth. We're puppets on a string being exploited by the
people in glass towers who blow up our economic bubbles and pop our
balloons. Obamacare is just another way of justifying lousy health care
from overworked and underpaid healthcare providers. Obamacare's another
way to beat down small business and competition in America.
The Lie: How to lie with statistics These Democrats are all over the map on where
precisely Americans place in the life-expectancy rankings. We're 24th,
according to Vice President Joe Biden and Sen. Barbara Boxer; 42nd,
according to Pennsylvania Gov. Ed Rendell; 35th, according to Washington
Post columnist Eugene Robinson; and 47th, according to Rep. Dennis Kucinich.
So the U.S. may have less of a "life expectancy" problem than a "Democratic
math competency" problem. (Coulter mentions other widely varying
medical statistics reported in the media) Ann Coulter, "Would Your Company
Like to Sponsor the Next Installment of Liberal Lies on National Health
Care?" , Townhall, October 7, 2009 ---
Click Here
The Lie: That the
ten-year cost of the current H.R. 676/3200 is $1.5 trillion as estimated by the
non-partisan Congressional Budget Office. Even without the anticipated
massive fraud that's not factored into these estimates, there is an
accounting problem. Amidst the often emotional passions for passing
universal health (and social services) legislation, the accounting for it
will frontload revenues and defer costs
such that when President Obama finally admits his Obamacare will add to the
Federal deficit, the amounts to be added will be grossly underestimated.
This deception in accounting is what has Social
Security and Medicare entitlements in such deep, deep trouble as the cost
back loading is finally catching up with revenue shortfalls. President Roosevelt in 1935 promised a Trust Fund in which social security
revenues collected in early years would set aside for recipients in their
retirement years. Congress over the years decimated the Trust Fund for
social causes that, although very worthy, were not intended to be funded by
the Social Security Trust Fund.
But the recession has inflicted
horrific damage on the government’s accounts. Mr Elmendorf’s
Congressional Budget Office (CBO) predicts the deficit will be $1.8
trillion this year (2009). This is bearable given the scale of the
recession; the real problem is that it will decline only to $1.2
trillion by 2019 (without a health care hemorrhage
and Cap and Trade losses), still a
horrendous 5.5% of GDP. On July 21st Ben Bernanke, the Fed chairman,
suggested that a deficit of no more than 3% was sustainable—a figure
that would arrest the growth in debt as a share of GDP.
Most of the red ink results from the
enormous hole the recession has punched in GDP and consequently in tax
revenue, the cost of bailing out the financial system, and interest on
the mounting debt. Only a small part of it comes from America’s big and
growing entitlements, Medicare and Medicaid (health care for the elderly
and poor, respectively) and Social Security (public pensions), whose
worst fiscal problems lie beyond 2019. “Unless we demonstrate a strong
commitment to fiscal sustainability,” Mr Bernanke remarked, “we risk
having neither financial stability nor durable economic growth.”
Mr Obama knows all this: he promises
repeatedly not to leave the problem to his successors. Yet he has done
little to back up the rhetoric. His willingness to veto more F-22
spending is admirable, but the $1.75 billion at stake is immaterial. He
will release an updated budget outlook in mid-August, but it is unlikely
to contain any notable new initiatives. There is still no sign of a path
towards fiscal tightening over the medium term as the economy recovers.
Quite the opposite; Mr Obama has not wavered from his position that
taxes on those earning less than $250,000 will not go up. In fact,
they’ve been temporarily cut. He did say in an interview this week that
he might set up a commission that could look at ways of reducing
entitlements spending once the recession is over.
The president has promised that
health-care reform will be deficit-neutral, but this is a slippery
concept. A plan may be deficit-neutral over ten years, but add
significantly to it thereafter by front-loading revenue and backloading costs.
The CBO figures show that this is a big
problem with the House plan, whose shortfall will balloon beyond the
ten-year horizon.
Jim Cooper, one of the Democrats’ most
fiscally hawkish congressmen, fears that if push comes to shove, his
party will not long remain stalwart on deficit-neutrality. “Health care
has been such an impossible dream for so many decades that a lot of
today’s Congress would overlook the deficit problems. I hear it all the
time from colleagues in leadership: ‘We always find enough money for
defence. We’ll find enough for health care’.” Mr Galston, though, thinks
that the public’s worries about the deficit will reinforce Mr Obama’s
commitment that health reform should not boost the deficit over the
medium or long term. This could mean that he ends up with a plan that
covers fewer of the uninsured than many had hoped.
None of this deals with the
still-gaping hole in the budget. Indeed, a truly deficit-neutral
health-care plan may make it tougher to fill that hole: if the rich are
already being taxed more to pay for health reform, that makes it harder
to use them to address the wider deficit. There are other ways to reduce
the deficit, including getting rid of the mortgage-interest deduction,
raising the age of eligibility for Medicare and Social Security,
altering the inflation-indexation formula, or proposing some sort of tax
reform that raises additional revenue. These ideas need not be
implemented immediately; that would contradict the purposes of stimulus.
But the knowledge that they are in the works would help reassure the
public and investors that the federal debt—forecast on current policies
to explode from a net $5.8 trillion last year to a net $11.7 trillion in
2019—may be tamed.
The Lie: Business firms
will be able to carry on with their present health insurance providers. The
fact of the matter is that the present house bill explicitly puts death
conditions on Erisa-enabled self insurance plans used by millions of business firms.
The cost of switching to big insurance company coverage will be massive if
they are forced to pay for all the medical and social services mandated in
the current version of Obamacare legislation.
The Lie: The insurance industry abides by state
laws by not rescinding insurance coverage even when there is no fraud on the
part of the patient in information provided to the insurance company. This is actually a blatant lie that Bill Moyers documented quite well ---
Video:
http://www.pbs.org/moyers/journal/07312009/watch.html
The Lie: Obama's relationship with tort lawyers
is the real driver of Obamacare costs According to a 2007studyby McKinsey&Company, physician
compensation bumps up health care spending in America by $58 billion
annually,on average, because U.S. doctors make twice as much as their OECD
peers. And even the poorest inspecializationslike radiology and surgery
routinely rake in around $400,000 annually. Doctors—and many
Republicans—constantly carp about the costs of "defensive medicine" because
it forces providers to perform unnecessary procedures and tests to insulate
them from potential lawsuits. But excessive physician salaries contribute
nearly three times more to wasteful health care spending than the $20
billion or so that defensive medicine does. "While the U.S. malpractice
system is extraordinary," the study notes, "it is only a small contributor
to the higher cost of health care in the United States." Meanwhile, other
studies have found that doctors' salaries contribute more to soaring medical
costs than the
$40 billion or so
that the uninsured cost in uncompensated care--the president's bete noir. Shikha Dalmia, "The
Evil-Mongering of the American Medical Association: Obama's cozy
relationship with Big Medicine will hurt patients," Reason Magazine,
August 27, 2009 ---
http://www.reason.com/news/show/135682.html
The Lie: AARP endorsed
H.R. 3200 (Obama's Press Secretary belated admitted to the lie) "Gibbs: Obama misspoke about AARP,"
Fox News, August 12, 2009 ---
Click Here AARP = Armed and Really Pissed
The Lie: AARP
perpetuates a lie that government run insurance, like Medicare, is a good
deal for patients and taxpayers. To put the reader at ease the (AARP) article says
that government run health care can’t be so bad since, after all, Medicare
is government run health care and everybody loves it. The article omits the
fact that Medicare is $38 trillion in the red. Yes, trillion with a “tr”)
and by Obama’s own admission is overrun by $500 billion of waste, fraud and
abuse. Obama says Medicare and Medicaid are responsible for our deficits. So
what does he do? He proposes the vast expansion of the Medicare and Medicaid
programs to further balloon our deficits and our health care inflation. Herb Dennenberg, "AARP: The
Hype, The Lies, The Facts," The Bulletin (Philadelphia's oldest
newspaper), September 21, 2009 ---
Click Here
The AARP Bulletin (September
2009) has a front-page headline on Obamacare: “The Hype, the Lies,
the Facts: How to Tune Out the Fear-mongering and Misinformation and
Make Sense of the Health Care Reform.” I’d add only one amendment to
that AARP headline: “If you want to avoid the hype, the lies, and
get the facts on Obamacare, don’t read the biased one-sided
propaganda that AARP publishes in its Bulletin.”
The article is supposed to answer
the question of AARP readers, “How do I know what to believe?”
Anyone who reads the article critically or studies AARP history on
this matter, knows they are in the tank for Obamacare, and in the
guise of fair and balanced journalism they are presenting the
Obamacare party line.
The article starts out by quoting
Kathleen Hall Jamieson, director of he Annenberg Public Policy
Center at the University of Pennsylvania, who runs FactCheck.org, a
website that examines specious claims from all sides of the
political spectrum. She says that health care reform has “serious
consequences to people’s lives and it would be useful if as many
people as possible actually understood what the proposals are
about.” But, then she identifies the rise of the Internet and the
decline of the mainstream press as a prime source of information
which have put that prospect at risk.
Poor, pathetic Ms. Jamieson is
saying, in effect, that the public was only getting the truth when
they were relying on the biased, fraudulent, dishonest, and
ultra-liberal mainstream media. That poor, pathetic “expert” who is
“fact checking for the public” feels the truth is threatened now
that multiple points of view, some of which are the opposing point
of view, are presented by the Internet and now that the public is
slowly beginning to realize that you can’t trust the mainstream
media. (I would agree with Bernard Goldberg that the mainstream
media is no longer mainstream. Until a good alternative description
emerges, I’ll call it the biased, fraudulent, dishonest, and ultra
liberal mainstream media.)
So, the AARP article is doing its
readers a great public service by demonstrating that you can’t trust
the AARP, FactCheck.org, Ms. Jamieson, and the Annenberg Public
Policy Center at the University of Pennsylvania if you want fair and
balanced information about such matters as Obama and Obamacare.
The article goes on to perpetuate
every fraud and deceit that people like House Speaker Nancy Pelosi
and the leadership of the Democratic Party have put forth to
stigmatize and demonize dissent. For example, the article asks,
“Could rumor-mongering affect the outcome? Recent violent
interruptions at lawmakers’ town hall meetings suggest it might.”
So, the AARP, which is supposed to represent senior citizens, is
joining the chorus that sees those who oppose Obamacare and who
exercise their First Amendment Rights at Tea Parties as mobsters,
prone to violence, Nazis, Brown Shirts and all the rest. They are
proving that AARP, the Democratic leadership, and the mainstream
media believe in the First Amendment only for those in agreement
with its radical, far-left policies.
The AARP and its editors and
officers clearly have no conscience and no sense, as they would not
carry forward such blatant propagandizing for Obamacare and hurl
insults at their own membership. If they are in the business of
informing their diverse membership, they should provide both sides
of an issue, not just give the appearance of doing so while residing
in the pocket of the pro-Obamacare forces.
No wonder AARP been losing
membership by the tens of thousands. Sometime ago, it was estimated
at 60,000 members lost and that figure is probably much higher by
now. Their stance on this did not surprise me. I have already
reported in one column how they, along with AMA and others, have
sold out to Obama and Company to support his vision of health care
reform. I’ve also reported how the AARP is not in the business of
representing the interests of senior citizens, but is, in fact, a
phony membership organization in the business of selling its members
insurance, credit cards, mutual funds, and other services. In fact,
facing the first page of the propaganda piece in question is a
full-page ad for life insurance sold by AARP. The same issue carries
ads for AARP mobile home insurance, AARP Medicare insurance
supplements, and AARP auto insurance.
I want to be fair to AARP and its
article on health care reform. It did have four words of truth in
it. The inside headline reads, “The Assault on Truth.” Of course,
that was intended to characterize the critics of Obamacare. However,
it perfectly characterizes the article in question and AARP. Let me
give you a few examples involving the questions asked and answered
by the article:
Will The Government Take Over
Health Care So We End Up With Socialized Medicine?
The answer is the standard party
line: “No. Neither the president nor the congressional committees
have suggested anything remotely resembling a government takeover of
health care.”
This answer is based on the fact
that Mr. Obama says he doesn’t want the single-payer,
government-takeover system that is used in Canada. The article fails
to state that Obama has long been on record as favoring the
discredited single-payer system and has even said we will have to
get there gradually. But the article doesn’t explain that you can
have a government takeover without a single-payer system.
When you look at what some of
these proposals do, you will see they involve the federal government
deciding what kind of policies will be written, what kind of rates
will be charged, what kind of government insurance companies will be
established, what kind of end-of-life counseling will be provided
for senior citizens. What’s more, when you start setting up dozens
of new agencies and commissions to control the health care system
and to decide on what is the “best” medical practice, you don’t need
single-payer to bring about a government takeover. When you grant
insurance to 47 million “uninsured,” you assure a shortage of health
care providers that sets the stage for rationing. As Dick Morris
pointed out, contrary to the view of Obama press secretary Robert
Gibbs, “You don’t have to be a medical school graduate to figure
that out. That’s an elementary school problem.”
If that’s not quite enough to
convince you, when you populate the White House with radicals,
communists, socialists and advocates of such things as compulsory
abortion, compulsory sterilization, and providing medical care based
on quality of life years remaining, meaning seniors will be locked
out, you are setting the stage for something worse than
single-payer.
The article also tries to refute
the fact of government takeover by saying “socialized” medicine is
also off the table. The article says socialized medicine involves
government ownership of hospitals and employment of doctors, as in
the United Kingdom. It says that’s not contemplated. But, again,
when government and federal bureaucrats control virtually every
aspect of the health care system, you don’t need formal ownership.
Comprehensive control is the equivalent of government ownership, of
socialized medicine, and of the discredited systems of Canada and
the United Kingdom.
To put the reader at ease the
article says that government run health care can’t be so bad since,
after all, Medicare is government run health care and everybody
loves it. The article omits the fact that Medicare is $38 trillion
in the red. Yes, trillion with a “tr”) and by Obama’s own admission
is overrun by $500 billion of waste, fraud and abuse. Obama says
Medicare and Medicaid are responsible for our deficits. So what does
he do? He proposes the vast expansion of the Medicare and Medicaid
programs to further balloon our deficits and our health care
inflation.
Will Private Insurance Be Outlawed
Or Wither On The Vine?
Needless to say, the AARP article
answers, “No. Obama and the congressional committees say their
objective is to build on the current system – keeping
employer-sponsored group insurance and giving more consumer
protections to people who are employed by small businesses or buy
insurance as individuals.”
The AARP article argues that those
with employer-sponsored insurance are ineligible for the public
plan. But the article forgets that many employers would stop giving
coverage, as the penalty for not providing it is smaller than the
cost of providing it. Even the New York Times, a lap dog for Obama,
in an editorial dedicated to selling Obamacare, admitted that the
public option would likely be less costly than many alternatives.
The article also ignores the fact
that the public option, a government insurer, would be subject to
rules made by the government, so the umpire of the marketplace would
be on the side of the government insurer. That is not likely to
produce a level playing field for private insurers.
Finally, the article ignores the
ways proposed in Republican-sponsored bills that would encourage
competition. For example, opening up a nationwide market for health
insurance would be an obvious and easy way to increase competition.
Now, the consumer is limited to companies admitted to do business in
his state. The insurance exchanges, proposed in many bills, would
also make sense, as they would ratchet up competition.
Incidentally, it is important to
remember that with or without a public option or some variation of
it in the form of co-ops, Obamacare still involves a government
takeover. So, don’t think it is a big deal to delete the public
option. The bill spells catastrophe with or without that provision.
All the other questions asked in
the article also provide the wrong answers. For example, “Will
Medicare be eliminated or gutted to pay for reforms?” The article
answers, “No. It’s inconceivable that any lawmaker would commit
political suicide by proposing to get rid of Medicare.” But the AARP
article forgets that Obama has said that he would cut $500 billion
in waste, fraud, abuse, and inefficiency out of Medicare. We’ve
heard that line since the days of President Nixon, and we’re still
waiting for that waste, fraud, abuse, and inefficiency to be
eliminated. If Obama knows how to do it, what is he waiting for? Why
hasn’t he proceeded to cut that waste, fraud, abuse and inefficiency
out of the system to prove he knows what he’s doing and can give
more than campaign speeches? He’s been in office about seven months,
and yet he’s done nothing to solve this problem which he says is
bankrupting the country and is responsible for the deficits. When
you cut $500 billion out of Medicare and grant coverage to 47
million previously uninsured, you’re going to have to ration medical
care, and that means rationing medical care for senior citizens.
The biggest barrels of red ink
have been generated by Medicare and Medicaid to the tune of tens of
trillions of dollars. So what does Obama do? He proposes, in effect,
to vastly expand Medicare and Medicaid and to compound our problems.
The president and chief executive
officer of AARP, in an editorial accompanying the article in
question, endorse the lies, hype, and exaggeration in the article by
writing that there has been too much fear-mongering and
misinformation involved in the debate. They continue to give the
false impression that they are above the fray, but then echo the
party line coming from Obama and the Democratic leadership in
Congress. AARP and its leadership have continued to demonstrate they
are the ones getting in the way of a fair, balanced, and honest
debate on heath care reform.
Meanwhile, we have the case of
the Association for the Advancement of Retired Persons (AARP), and its
fanciful Medicare claims. The self-styled seniors lobby is using all its
money and influence to cheer on ObamaCare, even though polls show that
most retired persons oppose it. AARP has spent millions of dollars on
its TV ad campaign and bulletins and newsletters to its members,
including eight million direct-mail letters over Labor Day. The AARP Web
site claims that it is a "myth" that "health care reform will hurt
Medicare," while it is a "fact" that "none of the health care reform
proposals being considered by Congress will cut Medicare benefits or
increase your out-of-pocket costs."
"Medicare and Gag Orders Humana gets whacked for telling
the truth, AARP gets a pass for spreading falsehoods," The Wall
Street Journal, September 24, 2009 ---
Click Here
The Lie: H.R. 3200
proposed "Death Panels" to decide when decide when to refuse health
treatments.. False charges about Obamacare don't
help. Like the end-of-life tempest. Former Alaska Gov. Sarah Palin
popularized the term "death panels." She said: "The America I know and love
is not one in which my parents or my baby with Down syndrome will have to
stand in front of Obama's 'death panel' so his bureaucrats can decide, based
on a subjective judgment of their 'level of productivity in society,'
whether they are worthy of health care". . .
. The House bill does deal with the issue. (The
Senate Finance Committee bill did until the provision was removed the other
day.) Section 1233 amends the Medicare law to add "advance care planning
consultation" (counseling about living wills and the like) to the list of
reimbursable
services. The provision defines "consultation,"
but nowhere does it require Medicare beneficiaries to participate or
authorize death panels. (Grassley voted for a similar provision in 2003 when
his Republican-controlled Congress added
drug coverage
to Medicare.) John Stossel,
Townhall,
August 19, 2009 ---
http://townhall.com/columnists/JohnStossel/2009/08/19/obamacares_inevitable_logic Jensen Comment I agree that the "death panels" arguments were straw men. But then I do see
where the Obama was relying heavily on the cost savings attributable to
five-year health consultation plans with the aged. One has to wonder what
savings were lost with the Senate decided to drop the five-year
consultations? This seems prima facia to imply that quality of
care was intended to be reduced for the aged, including such things as hip
replacements and dialysis.
The chronically ill and those toward the end of
their lives are accounting for potentially 80 percent of the total health
care bill out here. President Barach Obama as quoted from a David Leonhardt interview
reported in The New York Times:
The Lie: Surgeons bill Medicare $50,000 for a foot amputation. American Academy of Orthopaedic Surgeons Responds to False Allegations of
President Obama "Orthopedic Surgeons respond to Obama on amputation comment," by Thomas
Lifson, The American Thinker, August 16, 2009 ---
Click Here
The American Academy of Orthopaedic
Surgeons (AAOS) is profoundly disappointed with President Obama's recent
comments regarding the value of surgery and blurring the realities of
physician reimbursements. The AAOS represents over 17,000 US board-certified
orthopaedic surgeons who provide essential services to patients every day.
As President Obama has said, "Where we do disagree, let's disagree over
things that are real, not these wild misrepresentations that bear no
resemblance to anything that's actually been proposed." In that spirit, we
would like to bring some clarity to his comments and underscore the value
that orthopaedic surgeons bring to Americans every day of every year.
First, surgeons are neither reimbursed by
Medicare, nor any provider for that matter, for foot amputations at rates
anywhere close to $50,000, $40,000 or even $30,000. Medicare reimbursements
to physicians for foot amputations range from approximately $700 to $1200
which includes the follow up care the surgeon provides to the patient up to
90 days after the operation. Moreover, orthopaedic surgeons are actively
involved in the preventive care he mentions. We are a specialty that focuses
on limb preservation whenever possible and when it is in the best interests
of the patient. Our approach to amputation follows the same careful,
thoughtful approach, always with the patients best interest as the primary
focus.
Continued in article
The Lie: The health insurance mandate is not a tax.
President Obama absolutely refuses
to acknowledge there is a huge middle-class tax in the Senate
Finance Committee's healthcare bill. The president flatly denies the
legislation that the White House supports contains a stiff penalty
tax that would hit uninsured middle-income people the hardest -- the
very folks he promised would never see their taxes rise under his
presidency.
Obama has repeatedly stated that
promise throughout the healthcare debate, despite evidence to the
contrary, and no one in the national news media has called him on
it. That is, until George Stephanopoulos raised the issue with him
Sunday on ABC's "This Week."
First, Stephanopoulos reminded the
president that in his campaign for the presidency he was "against
the individual mandate" that all Americans be required to buy health
insurance.
"Yes," Obama replied.
Then Stephanopoulos hit him with
the question no one apparently had asked him before. Pointing out
that the Finance Committee plan contained just such a mandate
whereby "the government is forcing people to spend money, fining you
if you don't," he asked, "How is that not a tax?"
Obama replied, "No, but ... but,
George, you ... can't just make up that language and decide that
that's called a tax increase."
"You reject that it's a tax
increase?" Stephanopoulos asked. Obama said, "I absolutely reject
that notion."
But if Obama looked on page 29 of
Senate Finance Committee Chairman Max Baucus' legislation -- the
bill he hopes will enact his healthcare plans into law -- he would
have read this line: "The consequence for not maintaining (health)
insurance would be an excise tax."
What part of those two words
doesn't he understand? The government imposes a raft of excise taxes
on all of us: the tires for our cars, alcoholic beverages, jewelry
and many other purchases. Now it wants to add health insurance to
the tax-revenue list as a penalty for those who do not purchase a
product the feds insist you must buy or else face fines up to $950
for an individual and up to $3,800 a year for a family.
Continued in article
The Lie: A huge portion
of Obamacare will be financed by further limiting what hospitals receive
from Medicare. This will be a lie because it just will not work. I think
this is a wrong because it creates age discrimination that should not
be allowed. If government medical insurance pays hospitals more for younger
patients than older patients it will be age discrimination. If all
government medical insurance payments to hospitals is so tight-fisted that
the hospitals lose money on every government-insured patient (which is why
the Massachusetts hospitals are suing the Mass. universal health care plan),
then hospitals will have to rely more and more on private insurance plans to
keep those hospitals in business. This, in turn, will drive up the cost of
private insurance to a point where many businesses, especially small
businesses, will shift almost entirely to part-time workers.
Democrats are now blaming the defection of
elderly voters from Obama care on the phony threats of euthanasia and
rationing of treatment of older people. But this is not the underlying cause
of the defection. The underlying cause is the genuine threat that government
health insurance will pay less for hospital and doctor care that what is
being paid for younger patients. President Obama needs to assure the elderly
that hospitals and doctors will receive just as much from older patients as
younger patients. Why don't Barack Obama, Nancy Pelosi, Chris Dodd, Keith
Olbermann and Chris Matthews ever assure us that there will be no age
discrimination in claims coverage?
In politics, knowing what your
opposition thinks and says about you and your team is critical. But
listening to what they’re saying about their own side can sometimes be
even more telling.
In the latest issue of Rolling Stone,
Michael Moore insists that Barack Obama’s ambitions are much farther
left than he lets on. Thus, the President has been deliberately lying to
us about everything from healthcare reform to the war on terror. But
contrary to the Bush years, when perceived presidential deceit evoked
liberal rage and a film to go with it, Moore adoringly approves of what
he now sees as a necessary “rope-a-dope strategy” to advance his side’s
cause.
The interview, part of a larger round
table discussion also including Paul Krugman and David Gergen, asks the
“three leading political observers” to analyze and discuss the first six
months of the Obama presidency. The most startling perspective Moore
provides is in regard to the current health care debate:
I take all of the things that make me
nervous about the decisions that Obama has made, and I look and them
through that lens – that it’s some kind of master plan. It’s like
his continued support of a government-run option for health care. If
a true public option is enacted – and Obama knows this – it will
eventually bring about a single-payer system, because the
profit-making insurance companies won’t be able to compete with a
government plan and make the profits they want to make. At some
point most of them will probably have to bow out of the business. Michael Moore
The Lie: Every Obamacare Critic is a Racist
Since my post below about Obama supporters who tar all
of the President’s critics as racists, Fidel Castro has weighed in. Reuters
reports that Castro says Obama is trying to make positive changes but is being
fought at every turn by right-wingers who hate him because he is black: “(T)he
extreme right hates him for being African-American… I don't have the slightest
doubt that the racist right will do everything possible to wear him down,
blocking his program to get him out of the game one way or another, at the least
political cost," (Castro) said. More than a thousand...
John Stossel, ABC News,
August 27, 2009 ---
http://blogs.abcnews.com/johnstossel/2009/08/every-critic-a-racist.html
The Lie: The House Bill
presently states that business firms can opt out of providing health
insurance coverage for employees by paying an 8% of
gross payroll good-deal penalty to the government.
This is bait and switch fraud at its worst!
By the time the government insurance option becomes viable this will
increase to X% at whatever it takes to keep most working full-time employees
out of the government health insurance option. The reason partly is due to
the fact that it will take decades before the government option can process
the claims for between virtually the entire population of the United States
plus all the illegal aliens who will sneak into the country for health
services. The reason also is that President Obama promised to keep private
health insurance viable such that he must eventually make it virtually
impossible for employers to opt out of private medical insurance plans at
lower costs.
Two weeks ago I warned about the "bait and switch fraud" in the
H.R. 3200
good news bait of an 8% of gross payroll penalty for employers who do not
provide health insurance coverage for employees. In a surprising move, Congress
is already switching the bait to 10% even before H.R. 3200 is passed. After
its passage I look for the bait to be switched to an even higher percentage,
maybe 50%, such that there is no way for employers to avoid an absolutely
massive expense for health care coverage under the new rules of virtually no
self insurance (policies will have to be purchased from large private insurance
companies). virtually all pre-existing health issues will have to be covered
instantly for each new person hired, part-time workers and illegal aliens will
have to receive health insurance, and an array of social services will have to
be covered including marriage counseling and family counseling.
The projected cost of employer-based health coverage is so huge that even a 10%
penalty would still be cheaper. But employers should count on the bait being
switched once again after Obamacare is legislated. The government medical
insurance plan just will not be able to insure 200 million to 300 million people
instantly if all employers opt out of health coverage by paying the X% penalty.
Irrespective of the bait, the switch is inevitable!
The only reason I can see for switching the bait before H.R. 3200 is passed is
to deceivingly make it look more deficit neutral and once again deceive the
public and dimwitted members of Congress.
Even many Democrats are revolting against Speaker Nancy
Pelosi’s 5.4% income surtax to finance ObamaCare, but another tax in her House
bill isn’t getting enough attention. To wit, the up to 10-percentage point
payroll tax increase on workers and businesses that don’t provide health
insurance. This should put to rest the illusion that no one making more than
$250,000 in income will pay higher taxes. "The Pelosi Jobs Tax: Workers will pay for the new health-care payroll
levy," The Wall Street Journal, July 30, 2009 --- http://online.wsj.com/article/SB10001424052970203609204574316183688201934.html#mod=djemEditorialPage
Because of the present health care system in the United
States is unjust and inefficient, I am in favor of a National Health Plan
modeled after the Canadian National Health Plan where Canadians are taxed
for a huge portion of their health services irrespective of their levels of
income. In Canada, about 40% of taxpayer's tax dollars go
for health services. Any system that does not make users of the system share
heavily in the cost of the services will be unjust, abused, and inefficient.
Also in Canada the National Health Plan greatly restricts the size of
malpractice lawsuit lotteries for lawyers ----
http://faculty.trinity.edu/rjensen/Health.htm#Canada
USA Today
reported on July 31, 2009, Page 10A, (using OECD data for 2008) that health
care costs in Canada were $3,505 per capita Before any Obamacare legislation
for health care the per capita cost of health care in the United States was
$6,567. In large measure this due to the cost physicians, nurses, ambulance
services, and hospitals must pay for malpractice insurance. Thousands of
gynecologists in the United States dropped the obstetrics part of their
practices because of the enormous price of malpractice insurance. Many
hospitals dropped obstetrics services for the same reason.
Why Medical Malpractice Is Off Limits in Terms of Health Care Reform The upshot is simple: A few thousand trial lawyers
are blocking reform that would benefit 300 million Americans. This is not
just your normal special-interest politics. It's a scandal—it is as if
international-trade policy was being crafted in order to get fees for
customs agents. Trial lawyers are agents, and their claims are only as valid
as those they represent. They argue, of course, that they are champions of
malpractice victims. As Anthony Tarricone, president of the trial lawyers
association (called the American Association of Justice) put it: "Trial
attorneys see first-hand the effects medical errors have on patients and
their families. We should keep those injured people in mind as the debate
moves forward." But under the current system, 54 cents of the malpractice
dollar goes to lawyers and administrative costs, according to a 2006 study
in the New England Journal of Medicine. And because the legal process is so
expensive, most injured patients without large claims can't even get a
lawyer. "It would be hard to design a more inefficient compensation system,"
says Michelle Mello, a professor of law and public health at Harvard, "or
one which skewed incentives more away from candor and good practices."
Philip K. Howard, "Why Medical
Malpractice Is Off Limits: A few thousand lawyers have a lock on
Democrats, who refuse any legal reform," The Wall Street Journal,
September 29, 2009 ---
http://online.wsj.com/article/SB10001424052970204488304574432853190155972.html?mod=djemEditorialPage
"Dean says Obamacare authors don't want to challenge trial lawyers,"
by: Mark Tapscott, Washington Examiner, August 26, 2009 ---
Click Here
Whatever else he said Wednesday
evening at the town hall hosted by Rep. Jim Moran, D-VA, former
Democratic National Committee chairman and presidential candidate Howard
Dean let something incredibly candid slip out about President Obama's
health-care reform bill in Congress.
Asked by an audience member why the
legislation does nothing to cap medical malpractice class-action
lawsuits against doctors and medical institutions (aka "Tort reform"),
Dean responded by saying: “The reason tort reform is not in the [health
care] bill is because the people who wrote it did not want to take on
the trial lawyers in addition to everybody else they were taking on. And
that’s the plain and simple truth,”
Dean is a former physician, so he
knows about skyrocketing medical malpractice insurance rates, and the
role of the trial lawyers in fueling the "defensive medicine" approach
among medical personnel who order too many tests and other sometimes
unneeded procedures "just to be sure" and to protect themselves against
litigation.
Texas Gov. Rick Perry recently
described in an Examiner oped the medical-malpractice caps enacted by
the state legislature at his urging that reversed a serious decline in
the number of physicians practicing in the Lone Star state and the
resulting loss of access to quality medical care available to Texas
residents. Mississippi Gov. Haley Barbor also shared some of his
successes in this area in a recent Examiner oped.
Credit goes to the American Tort
Reform Association's Darren McKinney for catching this momentary
outbreak of political honesty by Dean. McKinney has conveniently posted
an audio recording of Dean speaking here, so you can listen for
yourself. Mckinney has also offered more comment here, helpfully even
including a link to the Examiner's recent analysis of the degree to
which trial-lawyer political contributions go to Democrats in Congress.
Those contributions are why Dean knows
it would be a difficult task indeed for Obama to persuade congressional
Democrats to do anything that might offend the trial-lawyers lobby. The
Examiner's David Freddoso and Kevin Mooney did the reporting on this
link here.
Jensen Comment Reports are that the Texas cap on punitive damages has been quite
successful in restraining outrageous settlements of malpractice
lawsuits.
We evaluate the effect of tort reform on
employer-sponsored health insurance premiums by exploiting
state-level variation in the timing of reforms. Using a dataset
of healthplans representing over 10 million Americans annually
between 1998 and 2006, we find
that caps on non-economic damages,
collateral source reform, and joint and several liability reform
reduce premiums by 1 to 2 percent each.
These reductions are concentrated in PPOs
rather than HMOs, suggesting that can HMOs can reduce
“defensive” healthcare costs even absent tort reform.
The results are the first direct
evidence that tort
reform reduces healthcare costs in aggregate; prior research has
focused on particular medical conditions.
"The President's Tort Two-Step Special-interests and the health-care
status," by Kimberly Strassel, The Wall Street Journal, September 11,
2009 ---
Click Here
Tort reform is a policy
no-brainer. Experts on left and right agree that defensive
medicine—ordering tests and procedures solely to protect against Joe
Lawyer—adds enormously to health costs. The estimated dollar
benefits of reform range from a conservative $65 billion a year to
perhaps $200 billion. In context, Mr. Obama's plan would cost about
$100 billion annually. That the president won't embrace even modest
change that would do so much, so quickly, to lower costs, has left
Americans suspicious of his real ambitions.
It's also a political no-brainer.
Americans are on board. Polls routinely show that between 70% and
80% of Americans believe the country suffers from excess litigation.
The entire health community is on board. Republicans and swing-state
Democrats are on board. State and local governments, which have
struggled to clean up their own civil-justice systems, are on board.
In a debate defined by flash points, this is a rare area of
agreement.
The only folks not on board are a
handful of powerful trial lawyers, and a handful of politicians who
receive a generous cut of those lawyers' contingency fees. The legal
industry was the top contributor to the Democratic Party in the 2008
cycle, stumping up $47 million. The bill is now due, and Democrats
are dutifully making a health-care down payment.
During the markup of a bill in the
Senate Health Committee, Republicans offered 11 tort amendments that
varied in degree from mere pilot projects to measures to ensure more
rural obstetricians. On a party line vote, Democrats killed every
one. Rhode Island senator and lawyer Sheldon Whitehouse went so far
as to speechify on the virtues of his tort friends. He did not, of
course, mention the nearly $900,000 they have given him since 2005,
including campaign contributions from national tort powerhouses like
Baron & Budd and Motley Rice.
Even Senate Finance Chair Max
Baucus, of bipartisan bent, has bowed to legal powers. The past two
years, Mr. Baucus has teamed up with Wyoming Republican Mike Enzi to
offer legislation for modest health-care tort reform in states. That
Enzi-Baucus proposal had been part of the bipartisan health-care
talks. When Mr. Baucus released his draft health legislation this
weekend, he'd stripped out his own legal reforms. The Montanan is
already in the doghouse with party liberals, and decided not to
further irk leadership's Dick Durbin ($3.6 million in lawyer
contributions), the Senate's patron saint of the trial bar.
Over in the House the discussion
isn't about tort reform, but about tort opportunities. During the
House Ways & Means markup of a health bill, Texas Democrat Lloyd
Doggett ($1.5 million from lawyers) introduced language to allow
freelance lawyers to sue any outfit (say, McDonald's) that might
contribute to Medicare costs. Only after Blue Dogs freaked out did
the idea get dropped, though the trial bar has standing orders that
Democrats make another run at it in any House-Senate conference.
It says everything that Mr. Obama
wouldn't plump for reform as part of legislation. The president
knows the Senate would never have passed it in any event. Yet even
proposing it was too much for the White House's legal lobby. Mr.
Obama is instead directing his secretary of health and human
services to move forward on test projects. That would be Kathleen
Sebelius, who spent eight years as the head of the Kansas Trial
Lawyers Association.
The issue has assumed such
importance that even some Democrats acknowledge the harm. With
bracing honesty, former DNC chair Howard Dean recently acknowledged
his party "did not want to take on the trial lawyers." Former
Democratic Sen. Bill Bradley, in a New York Times piece, suggested a
"grand bipartisan compromise" in which Democrats got universal
coverage in return for offering legal reform. The White House
yawned, and moved on.
It isn't clear if Republicans
would or should take that deal, but we won't know since it won't be
offered. The tort-reform issue has instead clarified this
presidency. Namely, that the bipartisan president is in fact very
partisan, that the new-politics president still takes orders from
the old Democratic lobby.
The Lie: President Obama
promises that millions of small mom and pop businesses will be able to stay
profitable and offer private insurance coverage under Obamacare. Wal-Mart is
promoting Obamacare precisely for the reason that smaller competitors will
go out of business. Small and medium sized businesses will fail do to the
added costs of coverage mandated in Obamacare legislation such as instant
coverage of expensive pre-existing health conditions and the cost of
mandated social services such as marriage and family counseling and vastly
increased costs of mental health coverage. "What disturbs Americans of all
ideological persuasions is the fear that almost everything, not just
government, is fixed or manipulated by some powerful hidden hand," Frank
Rich wrote in Sunday's New York Times. That manipulation should disturb us.
But contrary to Rich, it is not the work of "corporatists" who have sprung
up to attack progressive reforms proposed by Obama and the Democratic
majority. Manipulation is what we got many years ago when we traded a more
or less free market for the "progressive" interventionist state. When
government is big, the well-connected always have an advantage over the rest
of us. "Big Business for Health-Care Reform," by John Stossel,
ABC News,
August 11, 2009 --- http://blogs.abcnews.com/johnstossel/2009/08/big-business-for-healthcare-reform.html
The Lie: President Obama
is promising that Obamacare will be so efficient that the cost of processing
government and private health claims will save billions of dollars each
year. The Congressional Budget Office is not buying his gross exaggerations
about such cost savings. It might be much more efficient if Obamacare were
equivalent to the Canada National Health Plan, but President Obama promises
to keep all the private health insurance companies in business at profitable
returns.
The Lie: President Obama
is promising that Obama care will be so efficient that it will not increase
the annual Federal spending deficit that that, without Obamacare, will in
2009 be about $2 trillion more outflow than inflow --- http://www.usdebtclock.org/ This is such a blatant lie it's almost laughable --- if it was not so
tragic! The interest cost on the National Debt will soon be about a million dollars
a second.
The Lie: President Obama is promising that there will
be no new taxes on 98% of Americans to pay for Obamacare. However, he does
not say anything about the huge increases in the prices everybody will have
to pay at Wal-Mart, Safeway, Citgo, Exxon, Sears, Penneys, Burger King, KFC,
GM, Chrysler, Toyota, Honda, Deere, Kubota, etc. to pay for the added health care
insurance costs forced on employers due to Obamacare mandates.
The Unmentionable: Probably the most disturbing to me is the
massively increased opportunity for fraud. This present House Bill is a
bonanza for community organizing groups from big cities to tiny villages.
ACORN (by whatever its series of deceitful name changes) and other
"organizing groups" will have an unbelievable cash cow for signing up real
and fictional people and providing home services to both real and fictional
people. For example, people who aren't really married will probably get a
lot of ACORN-reimbursable counseling where half goes to the fraudulent
client and half goes to an ACORN-like counseling firm manned by
professionals with phony diplomas. Real and fictional people swimming north
across the Rio Grande will get instant health coverage.
People who aren't really crippled will get a lot of scooters for their new
scooter street ball games. Many will get expensive elevators (lifts) and
ramps and medical beds installed in their houses. What we now call Medicare
fraud for home equipment and medications will be a drop in the bucket
compared to the fraud to come. And the multiple-trillion dollar cash cow
will be impossible to police given the cleverness of the fraudsters we
cannot now detect in the Medicare claims service. Pain killer pills on the
street will be a lot more plentiful.
ACORN could open Pandora's box In the wake of Fox News reporting on the unfolding
ACORN scandal, ACORN is now threatening to sue the network. Now that Fox is
actually breaking news on this story by showing new videos, ACORN might just
do it. Fox News should pray that ACORN does sue, because it would blow the
doors off this story, possibly destroying ACORN and erupting into a
political scandal in Washington. Ken Blackwell and Ken
Klukowski, Townhall, September 21, 2009 ---
http://townhall.com/columnists/KenBlackwell/2009/09/21/acorn_could_open_pandoras_box
The lie: President Obama contends that for the sake of equity,
medical and other insurance should retain the ability to make billionaires
out of tort lawyers such as in the endless asbestos and tobacco lawsuits.
This is not the case as evidenced by the Canadian National Health Plan that
greatly restricts punitive damages in class action lawsuits, as does recent
legislation in some states such as Texas (see the messaging below about what
has happened with obstetrics across the nation and especially in
Massachusetts).
The lie: Obamacare will be equitable since coverage is identical
irrespective of wealth and income. The fact of the matter is that that rich
Americans will simply move offshore for better medical treatments. Some may
move to places like Ireland to save on taxes and seek medical care in yet
another country. High quality medical services will boom in such places as
Sweden, France, India, Japan, China, and even Cuba where the elite get
outstanding health care but not the masses of Cubans (Michael Moore lied
about this in his movie Sicko). Canada may even commence to make
billions by having two grades of medical services --- Reserve Brand American
Export versus Average Canadian Brand where the export of Reserve Brand
medical services becomes second only to oil in Canada.
One of the ways Medicare fraud has been restrained in the past is that most
of the medical services apart from hospitals and limited home therapy have
been under the supervision of licensed physicians. The addition of social
services like marriage and family counseling often allows services from
professional groups that have much looser licensing oversight by state
governments relative to physician licensing on the basis of medical
specialty examinations. Community organizing groups like ACORN will be
forming counseling centers that must be reimbursed by both government and
private insurance plans. The short time we've had to live with ACORN (by any
name) has shown us that some pretty unsavory street-smart people frequently
get involved in such organizing groups. Without requiring that licensed
physicians do the counseling, Obamacare is an invitation for street people
to be both counselors and patients.
The Lie: Obamacare will not cut Medicare benefits. In fact
there is more than a $500 billion per year cut for current Medicare
recipients. In point of fact seniors will be forced to pay much more for
less coverage.
The Lie: Americans
only receive 55% of recommended care. This would be a frightening statistic, if it were
true. It is not. Yet it was presented as fact to the Senate Health and
Finance Committees, which are writing reform bills, in March 2009 by the
Agency for Healthcare Research and Quality (the federal body that sets
priorities to improve the nation's health care). The statistic comes from a
flawed study published in 2003 by the Rand Corporation. That study was
suppose to be based on telephone interviews with 13,000 Americans in 12
metropolitan areas followed up by a review of each person's medical records
and then matched against 439 indicators of quality health practices. But
two-thirds of the people contacted declined to participate, making the study
biased, by Rand's own admission. To make matters worse, Rand had incomplete
medical records on many of those who participated and could not accurately
document the care that these patients received. For example, Rand found that
only 15% of the patients had received a flu vaccine based on available
medical records. But when asked directly, 85% of the patients said that they
had been vaccinated. Most importantly, there were no data that indicated
whether following the best practices defined by Rand's experts made any
difference in the health of the patients. Jerome Groopman and
Pamela
Hartzband, "Sorting Fact From Fiction on Health Care: Current
congressional proposals would significantly change your relationship with
your doctor," The Wall Street Journal, August 30, 2009 ---
Click Here
The Lie: No government bureaucrat will come between you and your doctor.
"Sorting Fact From Fiction on Health Care: Current congressional
proposals would significantly change your relationship with your doctor,"
by Jerome Groopman and Pamela Hartzband, The Wall Street Journal,
August 30, 2009 ---
Click Here
The president has repeatedly stated this in
town-hall meetings. But his proposal to provide financial incentives to
"allow doctors to do the right thing" could undermine this promise. If
doctors and hospitals are rewarded for complying with government mandated
treatment measures or penalized if they do not comply, clearly federal
bureaucrats are directing health decisions.
Further, at the AMA convention in June 2009, the
president proposed linking protection for physicians from malpractice
lawsuits if they strictly adhered to government-sponsored treatment
guidelines. We need tort reform, but this is misconceived and again clearly
inserts the bureaucrat directly into clinical decision making. If doctors
are legally protected when they follow government mandates, the converse is
that doctors risk lawsuits if they deviate from federal guidelines—even if
they believe the government mandate is not in the patient's best interest.
With this kind of legislation, physicians might well pressure the patient to
comply with treatments even if the therapy clashes with the individual's
values and preferences.
The devil is in the regulations. Federal
legislation is written with general principles and imperatives. The current
House bill H.R. 3200 in title IV, part D has very broad language about
identifying and implementing best practices in the delivery of health care.
It rightly sets initial priorities around measures to protect patient
safety. But the bill does not set limits on what "best practices" federal
officials can implement. If it becomes law, bureaucrats could well write
regulations mandating treatment measures that violate patient autonomy.
Private insurers are already doing this, and both
physicians and patients are chafing at their arbitrary intervention. As
Congress works to extend coverage and contain costs, any legislation must
clearly codify the promise to preserve for Americans the principle of
control over their health-care decisions.
The Lie: Physicians are exploiting Medicare. American Academy of Orthopaedic Surgeons Responds to False Allegations of
President Obama "Orthopedic Surgeons respond to Obama on amputation comment," by Thomas
Lifson, The American Thinker, August 16, 2009 ---
Click Here
The American Academy of Orthopaedic
Surgeons (AAOS) is profoundly disappointed with President Obama's recent
comments regarding the value of surgery and blurring the realities of
physician reimbursements. The AAOS represents over 17,000 US
board-certified orthopaedic surgeons who provide essential services to
patients every day. As President Obama has said, "Where we do disagree,
let's disagree over things that are real, not these wild
misrepresentations that bear no resemblance to anything that's actually
been proposed." In that spirit, we would like to bring some clarity to
his comments and underscore the value that orthopaedic surgeons bring to
Americans every day of every year.
First, surgeons are neither reimbursed
by Medicare, nor any provider for that matter, for foot amputations at
rates anywhere close to $50,000, $40,000 or even $30,000. Medicare
reimbursements to physicians for foot amputations range from
approximately $700 to $1200 which includes the follow up care the
surgeon provides to the patient up to 90 days after the operation.
Moreover, orthopaedic surgeons are actively involved in the preventive
care he mentions. We are a specialty that focuses on limb preservation
whenever possible and when it is in the best interests of the patient.
Our approach to amputation follows the same careful, thoughtful
approach, always with the patients best interest as the primary focus.
Continued in article
Click here: Fred Thompson: Interviews Scroll down to Betsey MacCaughhey's audio (this is a bit too biased in tone
for my liking, but Betsey did take the time and trouble to read the July
2009 House Bill in detail.
President Barack Obama apparently came to believe
the myth of his messiahship and has accordingly abused and squandered his
good will and political capital and possibly self-sabotaged his socialized
medicine scheme. Of all the newsworthy aspects of this desperate "reform"
effort, none is more so than the robust democratic processes it has
reinvigorated in this nation. While Democrats insist the nationwide
grass-roots movement against his Draconian measure is contrived and
illusory, it is just the opposite. Nothing could be so real as the American
people, emboldened by their passion for liberty, standing up against a
callous, dishonest government trolling for its freedoms in exchange for
false promises. David Limbaugh, "Obama's Forfeited
Credibility Sabotaging Obamacare," Townhall, August 14, 2009 ---
http://townhall.com/columnists/DavidLimbaugh/2009/08/14/obamas_forfeited_credibility_sabotaging_obamacare Jensen Comment The public just isn't buying into the lie that it's possible to widen the
scope of coverage of each person's health insurance and add 50 million
uninsured to the insurance plans without increasing the Federal deficit
and/or driving small companies out of business with requirements to pay
greatly increased premiums. The public recognizes that this is a job killer
--- their jobs.
President Obama tried to sell his health care overhaul in
prime time, mangling some facts in the process. He also strained to make
the job sound easier to pay for than experts predict.
Obama promised once again that a
health care overhaul “will be paid for.” But congressional budget
experts say the bills they've seen so far would add hundreds of
billions of dollars to the deficit over the next decade.
He said the plan "that I put forward"
would cover at least 97 percent of all Americans. Actually, the plan
he campaigned on would cover far less than that, and only one of the
bills now being considered in Congress would do that.
He said the "average American family
is paying thousands" as part of their premiums to cover
uncompensated care for the uninsured, implying that expanded
coverage will slash insurance costs. But the nonpartisan Kaiser
Family Foundation puts the cost per family figure at $200.
Obama
claimed his budget "reduced federal spending over the next 10 years
by $2.2 trillion" compared with where it was headed before. Not
true. Even figures from his own budget experts don't support that.
The Congressional Budget Office projects a $2.7 trillion
increase,
not a $2.2 trillion cut.
The president said that the United
States spends $6,000 more on average than other countries on health
care. Actually, U.S. per capita spending is about $2,500 more than
the next highest-spending country. Obama's figure was a White
House-calculated per-family estimate.
Note:
This is a summary only. The full article with analysis, images and
citations may be viewed on the above Fact Check Websites.
December 31, 2020
Digital health startup
GoodRx is going public
The startup, which
provides telehealth and discount prescription services, filed
paperwork for
an initial public offering in August. It would trade on the NASDAQ under the
ticker "GDRX."
In an updated filing on
Monday, GoodRx noted that it is looking to price its public offering between
$24 and $28 per share. At $26, the midpoint of that range, GoodRx and its
investors stand to make $900 million.
The updated filing also
noted that private equity firm Silver Lake has agreed to purchase $100
million in stock coinciding with the IPO.
GoodRx now joins the
growing parade of companies in healthcare and technology that have filed to
go public in 2020, marking a banner year for public offerings as markets
continue to surpass all-time highs.
Digital health and
telehealth companies, in particular, have seen a surge in public market
activity as the coronavirus pandemic has ushered in what some are calling a
new era for the healthcare industry. Coronavirus-induced shutdowns have
driven wary patients from doctor's offices and waiting rooms in favor of
at-home care, spurring growth in an industry that had been previously
considered niche.
GoodRx is best known for
pulling together cash prices for medications at different pharmacies as a
price-comparison tool for people paying out-of-pocket, but recently added
virtual visits and other elements of telehealth to its services. It has also
been adding direct-to-consumer prescription services, like Lemonaid and Hims,
to its comparisons.
Over 85% of the non-home capital markets value is owned by the theTop 10%:
Why is this much more of a problem for Bernie Sanders and Elizabeth Warren than
if the Top 10% only owed 10% of the capital markets value instead of 85%+?
National Bureau of Economic Research
HOUSEHOLD WEALTH TRENDS IN THE UNITED STATES, 1962 TO 2016: HAS MIDDLE CLASS
WEALTH RECOVERED ---
The top 10 percent of
families as a group accounted for about 85 to 90 percent of stock shares,
bonds, trusts, and business equity, and over 80 percent of non-home real
estate. Moreover, despite the fact that
almost half of all households owned stock shares either directly or
indirectly through mutual funds, trusts, or various pension accounts,
the richest 10 percent of households controlled 84
percent of the total value of these stocks, though less than its
93 percent share of directly owned stocks and mutual funds.
Democratic socialists like AOC, Bernie Sanders, and Elizabeth
Warren want to spend over $20 trillion per year in cash
(perhaps only
$10 trillion annually before open borders are factored in) or green
initiatives (think solar panels and batteries everywhere), Medicare-for-All
(think cash for doctors, hospitals, and medications), College-for-All (think
tuition plus other aid), Housing-for-All (think of all the new homes required),
Guaranteed Annual Incomes, free meals for all the children of the USA, and all
else that is added on for open borders when tens of millions of unrestrained
immigrants pouring into USA ---
These democratic socialists want to raise as much as possible
from the Top 10% before taxing the middle and lower income citizens.
Here lies the problem: If the Top10% owned only 10% of capital markets value the
capital markets might survive when Sanders or Warren wipe out the Top 10% of the
wealthy.
But in reality wiping out the Top 10% will crash over 84%
of the capital markets value!
This alone will cause most of the USA private sector labor force
to become unemployed and force Sanders or Warren to make good on promises for
government to pay all pensions of those unemployed. They promise to take on all
pension liabilities even for business firms who have not paid anything into the
government's Pension Benefit Guarantee fund --- https://www.pbgc.gov/
In theory the economic crash of GM shares in 2008 should not
legally have forced GM into bankruptcy when share prices crashed, but the
economic reality is that if stock values crash companies like GM that have a lot
of debt will be forced into bankruptcy. That in turn could have resulted in
unemployment for over 500,000 employees of GM factories, dealers, suppliers, and
others impacted by GM closures. In addition the Federal government would've had
to pick up the pensions of most of those employees --- https://www.pbgc.gov/
Through the Troubled Asset Relief Program the
US Treasury invested $49.5 billion in General Motors and recovered $39
billion when it sold its shares on December 9, 2013 resulting in a loss of
$10.3 billion.
Jensen Comment
The good news is that the USA economic crash of 2008 did not wipe out anywhere
close to 85% of the value of the capital markets of the USA. The
government bailed out GM and some other other companies. The bailouts enticed
investors, especially the Top 10%, to put more cash into capital investments
like GM shares.
But commencing to take $20 trillion annually after 2023 will out wipe out over
over 85% of those capital markets in order to pay cash for all of the
initiatives of Bernie Sanders or Elizabeth Warren ---
https://berniesanders.com/issues/
The Top 10% will not have any cash left to put into hopeless capital markets.
The real problem is that the $20+ trillion initiatives of Sanders
or Warren requirecash. If the
government confiscated the wealth of the Top 10% and did not not need so much
cash it could keep the $20+trillion iinvested in stock shares, bonds,
trusts, and business equity, and non-home real estate. But having to covert all
that $20+ trillion in value into cash will
essentially wipe out the capital markets of the USA.
Sanders and Warren realize this and only propose taking a fraction of the wealth
of the Top 10% (although AOC, Omar, and Michael Moore want to take it all and
are totally unaware of the consequences). This is why Sanders and Warren know
they have to get most of the needed $20+ trillion annually from the middle and
lower income taxpayers.
But $20+ plus trillion per year is just too much for the USA to take on beyond
the roughly $4.5 trillion being spent currently by the Federal government.
Trying to take so much more cash out of wages and the USA capital markets will
totally destroy the USA economy with hyoer inflation. What can be worse than
living in socialist Venezuela in 2020 hyper inflation? What can be worse? The
answer is living in the democratic socialist world of Sanders or Warren in 2025
USA hyper inflation.
Inflation risk is exacerbated by having the Top 10% owning 85%+ of the capital
markets value in 2020 rather than a mere 10% rather than 85%+ --- such that
wiping out the Top 10% of investors for democratic socialist initiatives will
cause hyper inflation and destroy the USA economy.
It's no wonder that Barack Obama and the majority of the Democratic Party are
trying to prevent Bernie Sanders from winning the 2020 nomination. If they're
smart they will also stop other big spending, open-border advocates like
Elizabeth Warren from being nominated.
Please don't make us vote for Donald Trump just to block doomsday spenders lik
Bernie Sanders and Elizabeth Warren in 2020.
Jensen
Comment
It appears that the USA is not as restrictive when outlawing spending limits in
medical care relative to many other nations, although most nations may dispute
what is defined as an "essential service" or an "essential medication."
Experimental services and drugs may be declared as non-essential. Services for
the very ill may be curtailed in most nations. For example, should an insurance
company or government pay for new hips to a patient deemed to be dying from bone
cancer?
Libertarians might argue that insured customers wanting lower-cost coverage made
an informed choice if the spending limits were made absolutely clear when they
signed their insurance contract. It all boils down to having choices
regarding both coverage and costs. Progressives might argue that no choices
should be allowed when such things as medical insurance coverage and physical
safety are concerned, This of course raises the costs to somebody and limits
choice as to cost and quality of service.
Literally every health care insurance plan entails some service rationing and
often some sharing of costs. For example, Medicare requires patients to pay 20%,
and that can become quite expensive for long hospital stays. Also Medicare does
not pay long-term nursing costs when the patient is released from a hospital
into a nursing care facility for more than 100 days.
Always
keep in mind that insurance companies or national health care providers do not
ultimately pay for enormous medical bills. Those expenses are passed on into
rates paid by other customers or paid by taxpayers.
I
recall an instance where an insurance company was losing so much money annually
on seven mentally ill or disabled children in nursing care that it dropped
covering employees and families of the entire university. Some would argue that
a national health care plan would not have such an option. Cost of mental health
care is very high in the USA, especially long-term live-in institution costs ---
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4236908/
Former Princeton Nobel Economist and New York
Times Columnist Paul Krugman argues that Medicare-for-All replacement of
private sector coverage is feasible ---
A message for regular readers of this blog: unless
something big breaks later today, this will be my last day blogging AT THIS
(NYT) SITE. The Times is consolidating the
process, so future blog-like entries will show up at my regular
columnist page. This should broaden the
audience, a bit, maybe, and certainly make it easier for the Times to
feature relevant posts.
It will also, for technical reasons, make my life
simpler — you’d be surprised how many hoops I
have to go through to get these (NYT) things
posted. But that’s not the reason.
Anyway, I expect to be
doing the same sort of thing, mixing regular columns with stuff, usually
wonkish, that doesn’t belong in the regular paper. Old blog posts will
remain available
Paul Krugman
Jensen Comment
One of the things I don't like about Paul Krugman is his
inconsistency in bending his economics to fit his
political agenda.
The "social safety net" includes such things as free medical
care, free education, food stamps, housing subsidies, and welfare.
But now that Paul Krugman wants Elizabeth Warren or
Bernie Sanders to be President of the USA he changed his tune about a global
offer and promotes a honey pot of safety nets to
anybody who can sneak across the USA border, including
free medical care, free education, food stamps, housing subsidies, and
guaranteed annual income.
You can't have it both ways on global offers Paul.
On a state-by-state basis, the cost
differential for nursing home care is far steeper, ranging from $67,525 a year
on average for a private room in Oklahoma to $362,628 a year in Alaska
Senator Elizabeth Warren said she would fund her
version of Medicare for All with taxes on large corporations and the
wealthy, a tax evasion crackdown, a reduction in defense spending and by
putting newly legalized immigrants on the tax rolls.
Her advisers also lowered the estimate of Medicare for
All’s price-tag to $20.5 trillion over 10 years from the $34 trillion the
Urban Institute predicted, by using the new Medicare-for-All negotiating
power to slash administrative spending, drug prices and provider payments.
Jensen
Comment
She
also promises that there will be zero taxes on the middle class to pay
for Medicare-for-All, Free. Plus she did not factor in the additional trillions
for Green Initiatives, Free College, Guaranteed Annual Income, Reparations, and
on and on and on.
Her
promise of zero taxes on the middle class is misleading. Who does she think
ultimately pays for the taxes on large corporations (think Walmart, Amazon, and
Exxon)? Large corporations don't pay taxes.
They collect taxes in prices to their customers which in
most cases are the poor and the middle class customers. Warren will
even collect from transactions that are exempt from sales tax such as when the
Pentagon pays billions to Boeing for aircraft and Microsoft for cloud services.
And
what happens if you confiscate the wealth of Americans. They have to liquidate
their investments in stocks and real estate, thereby confiscating the pensions
and savings of the poor and middle class.
Warren
is banking on a $2.75 trillion revenue projection from Zucman and Saez to
fund a host of her priorities. In speeches,
she has laid
outthosebeneficiaries:
Universal child care for every child age 0 to 5.
Universal pre-K for every 3- and 4-year old.
Raise wages for all child care workers and preschool teachers “to the
professional levels that they deserve.”
Free tuition and fees for all public technical schools, 2-year colleges
and 4-year colleges.
$50 billion for historically black colleges and universities.
Forgive student loan debt for 95% of those with such debt.
$100 billion over 10 years to combat the opioid
crisis.
“Down
payments” on a Green New Deal and
Medicare for All.
The Warren campaign estimates the first three programs — dealing with child
care and universal pre-K — would cost about $700 billion over 10 years. And
the next three — free public college tuition, money for historically black
colleges and canceling most student loan debt — would cost about $1.25
trillion over 10 years. That would leave more than about $750 billion for
the Green New Deal and Medicare for All, the campaign says. That’s not
enough to fully fund either one, but Warren says it is enough for a “down
payment” on each.
How reliable is Warren’s $2.75 trillion revenue forecast?
Whether Warren’s plan would actually raise $2.75 trillion is a matter of
debate among economists.
The $2.75
trillion forecast comes
from Zucman and Saez. To estimate how much revenue the tax would generate on
wealth over $50 million, the economists used data from the Survey
of Consumer Finances from the Federal Reserve Board and theDistributional National
Accounts recently created by economist Thomas
Piketty,
Saez and Zucman. To estimate the revenue from the tax on billionaires, the
economists used the Forbes 400 list of the richest 400 Americans in 2018.
Zucman and Saez estimated that people would reduce their reported wealth by
15% “through a combination of tax evasion and tax avoidance.” The authors
wrote that “recent research shows that the extent of wealth tax
evasion/avoidance depends crucially on loopholes and enforcement. The
proposed wealth tax has a comprehensive base with no loopholes and is well
enforced through a combination of systematic third party reporting and
audits. Therefore, the avoidance/evasion response is likely to be small.”
But some economists think that assumption is too rosy.
While neither the Tax Policy Center nor the Tax Foundation has yet released
a full analysis of Warren’s plan, economists at both said there is reason to
believe Warren’s revenue estimate is too high.
Kyle Pomerleau,
chief economist and vice president of economic analysis at the nonprofit,
pro-business Tax Foundation, said that the assumption of 15% tax
evasion/avoidance is “actually the average avoidance for the entire U.S. tax
system, which is primarily the income tax and payroll tax. These taxes are,
in principle, much harder to avoid than a wealth tax because the transaction
(income) is hard to game or hide from the tax authorities. There is a good
record of how much you are being paid by your employer.”
“A wealth tax, on the other hand, is much harder to enforce,” Pomerleau
said. “For one, much of the wealth tax base doesn’t have a market price. For
example, we don’t really know how much a particular privately-held business
is worth because equity (stocks) in that company are not regularly traded on
the open market.”
Pomerleau also warned that because the wealth tax is a significant tax on
savings, it will discourage people from holding on to assets. “This effect
will reduce the potential tax base,” Pomerleau said, a trend that was not
accounted for in Warren’s estimate.
Howard Gleckman,
a senior fellow at the nonpartisan Tax Policy Center, has similar concerns.
“First, while her plan anticipates some tax avoidance, it will be very
difficult for the IRS to keep up with the tax planning that highly-paid
lawyers and accountants can devise,” Gleckman told us via email. “With so
much money at risk, the wealthy will have powerful incentives to hire smart
advisers to help avoid, or at least reduce, their tax liability.
“Second, a large share of wealth held by the high net worth taxpayers is in
the form of privately held businesses,” he said. “And these are notoriously
difficult to value. In effect, the IRS would have to prove that a taxpayer’s
valuation is unreasonably low.”
“I suspect she would collect less revenue than she predicts, but I cannot
say how much less,” Gleckman told us.
In an op-ed published
in the Washington Post on April 4,
Lawrence Summers, a Harvard University
professor who was treasury secretary from 1999 to 2001 and an economic
adviser to President Barack Obama in 2009 and 2010, and Natasha Sarin, an
assistant professor of law at the University of Pennsylvania Law School and
an assistant professor of finance at the Wharton School, took direct aim at
the $2.75 trillion estimate.
“Common-sense revenue estimates by economists who are not very deeply
steeped in revenue estimation tend to be overly optimistic,” Summers and
Sarin wrote.
The two looked at the U.S. experience with estate tax data and concluded
Warren’s wealth tax would only raise about 40% of the amount estimated by
Saez and Zucman. And that’s being “maximally optimistic about the wealth
tax’s revenue potential,” Summers and Sarin wrote.
“We suspect that to a great extent it reflects the myriad ways wealthy
people avoid paying estate taxes that in some form will be applicable in any
actually legislated wealth tax,” Summers and Sarin wrote. “These include
questionable appraisals; valuation discounts for illiquidity and lack of
control; establishment of trusts that enable division of assets among family
members with substantial founder control; planning devices that give some
income to charity while keeping the remainder for the donor and her
beneficiaries; tax-advantaged lending schemes; and other complex devices
known only to sophisticated investors. Except for reducing a naive
calculation by 15 percent, Saez and Zucman do not seem to take account of
these devices.”
“If our suspicion is correct, such a wealth tax will not yield the revenue
that its proponents hope for, and that when actual scorekeepers score actual
proposals, their estimates will disappoint advocates,” they concluded.
“In our view, the $2.75T is not realistic,” Sarin wrote to us in an email.
“The closest we get based on extrapolation from the estate tax (which seems
relevant because it involves a very similar population and thus many of the
same evasion incentives and possibilities) is around 40% of this estimate.”
In an email response to FactCheck.org, Saez challenged the Summers and Sarin
use of the estate tax to estimate the effects of Warren’s wealth tax
proposal.
“It is well known that the estate tax is very poorly enforced and that the
rich manage to largely avoid/evade it by giving to heirs before death,
spouses, and charity, using lots of trick to discount assets,” Saez wrote.
“We
have assumed an evasion rate of 15% based on the best literature on the
question (as we discuss in our letter and in more detailhere),”
Saez
added.
Saez said the Summers-Sarin estimate that the tax on those with assets worth
more than $50 million would bring in just $25 billion a year implicitly
assumes “that over 90% of the wealth will be hidden.” That’s not reasonable,
Saez said, because
“80% of the assets of the rich are publicly traded stocks, bonds, real
estate for which there are clear market values
Policymakers, including candidates in the 2020 presidential campaign and
members of Congress, have proposed a variety of options to address the
shortcomings of the current health care system. These range from
improvements to the Affordable Care Act to robust single-payer reform.
There are numerous challenging trade-offs when choosing an approach to
health care reform, including covering the uninsured, improving the
affordability of health care, and raising the government funding required to
implement them. The public and policymakers alike need more information
about the potential effects of various health reform proposals.
This study, funded by the Commonwealth Fund, analyzes eight health care
reforms and their potential effects on health insurance coverage and
spending. Each of the analyzed reform proposals makes health insurance
considerably more affordable by reducing people’s premiums and cost sharing.
Some reforms also reduce US health care costs, and all require additional
federal dollars.
Key findings:
·
Within the existing public-private health care system, near universal
coverage and improved affordability could be achieved with moderate
increases in national health spending. Under
one of the plans modeled in the report, which proposes a mix of private and
public health insurance, everyone in the US could be covered except for
undocumented immigrants. The plan would enable workers to opt for subsidized
nongroup coverage instead of their employer’s insurance plan. It would also
improve the ACA’s subsidies to help people afford coverage, cover people in
states that have not expanded Medicaid, require everyone to have insurance
with an auto-enrollment backup, offer a public insurance option, and cap
provider payment rates.
Coverage and costs:
This reform plan achieves universal coverage for people legally present in
the US, covering 25.6 million people who would otherwise be uninsured.
However, the plan leaves 6.6. million undocumented immigrants without
coverage. National spending on health care would decrease modestly, by $22.6
billion or 0.6 percent, compared with current law in 2020. Federal
government spending would increase by $122.1 billion in 2020, or $1.5
trillion over 10 years.
·
One single-payer approach would leave no one uninsured and largely eliminate
consumers’ out-of-pocket medical costs but would require much greater
federal spending to finance. The
modeled “enhanced” single-payer system would cover everyone, including
undocumented immigrants. The reform would include benefits more
comprehensive than Medicare’s—including adult dental, vision, hearing, and
long-term services and supports—with no premiums or cost sharing. All
current forms of insurance for acute care would be eliminated, including
private insurance, Medicaid, and Medicare, and everyone residing in the US
would be covered by a new public insurance program. Providers would be paid
rates closer to Medicare’s. Health spending by employers would be
eliminated, and household and state health spending would decline
considerably while federal spending would increase significantly.
Coverage and costs:
This reform option covers the entire US population. National spending on
health care would grow by about $720 billion in 2020. Federal government
spending would increase by $2.8 trillion in 2020, or $34.0 trillion over 10
years.
·
A second single-payer approach can be constructed with lower federal and
system-wide costs. In
addition to the enhanced single-payer plan above, researchers examined a
single-payer “lite” plan that is similar to the enhanced version but
includes cost sharing for out-of-pocket expenses based on income, adds fewer
new covered benefits, and only covers legally residing US residents.
Single-payer “lite” lowers total national health spending, decreasing health
spending by households, employers, and state governments and increasing
federal government spending by less than the enhanced single-payer reform.
Coverage and costs:
This reform plan achieves universal coverage for people legally present in
the US, covering 25.6 million people who were uninsured. However, the plan
leaves all 10.8 million undocumented immigrants without coverage (due to the
elimination of private insurance). National spending on health care would
decrease by $209.5 billion, or 6 percent, in 2020. Federal government
spending would increase by $1.5 trillion in 2020, or by $17.6 trillion over
10 years. The analysis demonstrates that there is more than one effective
approach to achieving universal health care coverage in the United States
and highlights the trade-offs of different reform strategies.
The analysis demonstrates that there is more than one effective approach to
achieving universal health care coverage in the United States and highlights
the trade-offs of different reform strategies.
The Urban Institute estimates that a single-payer plan
would require $32 trillion in new tax revenue over the coming decade.
How big a lift is it to raise $32 trillion? It’s
almost 50 percent more than the total revenue the CBO projects Washington
will collect from the personal income tax over the next decade (about $23.3
trillion). It’s more than double the amount the CBO projects Washington will
collect over the next decade from the payroll tax that funds Social Security
and part of Medicare (about $15.4 trillion).
Jensen
Comment
And the Medicare for All Spending initiative is a relatively small part of what
most 2020 Presidential Candidates (except for Biden) want to spend on social
programs. To the average $3.2 trillion annual cost of Medicare for All the
annual cost of their Green Initiatives,
free medications, student loan forgiveness followed by free college for
everybody, guaranteed annual income for 350+ USA residents, housing-for all,
reparations for African and Native Americans, and billions for new subsidized
housing on top of existing safety nets such as food stamps and welfare and
housing.
Add to
this the free medical care, free college, housing, and food advertising for poor
people all over the world in cross-over-the-border invitations and you're easily
talking over $20 trillion per year. Whereas President Obama deported over a
million undocumented immigrants, the 2020 candidates are inviting people to
cross over the USA borders.
The
most misleading statement in the October 15, 2019 debates was Elizabeth Warren's
comment that she will not promote any "spending program that taxes the middle
class." But notice that she says nothing about destruction of the middle class
pensions dependent upon stock market prices (think CREF and CalPERS). She's
probably right about middle income retirees not paying more taxes. We won't have
any incomes left to tax if you destroy the stock markets.
And
when the stock markets are destroyed unemployment will soar because business
firms will lose the ability to raise capital necessary for operating businesses.
Businesses can turn to government for capital, but the cupboard will be bare due
to all the social programs draining $20 trillion from the economy.
Jensen Comment
It's not yet clear to me whether Walmart is going to provide primary care
doctors who will also make hospital rounds when you're hospitalized.
There are considerable advantages to having doctor offices
attached to hospitals. One is the convenience for doctors to make hospital
rounds. Two is the convenience for patients to have medical lab, X-ray, and
other hospital services in the same building and on the same computer networks
as the hospital itself --- that's what happens with my primary care doctor. It's
also convenient to have other primary care clinics in the same hospital cover
for my doctor's partnership when they're out of town for one reason or another.
Our local hospital has more than one primary care clinic apart from Critical
Care and Emergency Room divisions of the hospital. Conveniently under one roof
there are other offices for specialists in ophthalmology, obstetrics,
dermatology, orthopedics, cardiology, etc.
The rents provided by doctor offices in the hospital also help
our hospital cover losses from charity medicine and limited insurance that does
not cover full costs (think Medicaid). I think medical clinics in Walmart, CVS,
etc. in some ways make it more difficult for local hospitals to avoid red ink
--- especially when Walmart and CVS pass along all their charity patients to the
local hospital. Walmart's standalone primary care clinics will skim off the easy
profits at the expense of our local hospitals who serve the charity patients.
Hospital funding is complicated and variable. None of my property
tax is currently diverted to our local hospital. However, when I lived in San
Antonio a goodly share of my property tax was diverted to the Bexar County
Hospital to cover some of that hospital's enormous losses from charity medicine.
Nate Silver: Medicare For All Isn’t That Popular — Even Among
Democrats
https://fivethirtyeight.com/features/medicare-for-all-isnt-that-popular-even-among-democrats/ Jensen Comment
Having a government medical insurance option is not so unpopular, but contrary
to Bernie Sanders ranting it turns out employees really don't want to lose their
employer-funded private health insurance.
Bernie
Sanders: "You’re Damn Right We’re Going to Destroy Private Health Insurance" ---
Click Here
Bernie Sanders: "You’re Damn Right We’re Going to Destroy Private Health
Insurance" ---
Click Here
And he will limit the number of doctors by regulating what they're allowed to
earn.
There is a huge
contradiction at the heart of Bernie Sanders' Medicare for All plan.
On the
one hand, Sanders not only wants to expand government-provided coverage to
everyone in the country, he wants that coverage to be significantly more
generous than Medicare, private insurance, or comparable government-run
systems in other countries. On the other hand, he wants to drastically cut
payments to hospitals, many of which lose money on Medicare right now,
making up for the program's relatively low payments by charging much higher
prices to private insurers.
What
Sanders is proposing, in other words, is that the government finance a
significant increase in government services while also radically reducing
the amount it pays for those services. Even making generous assumptions,
it's almost impossible to see how his plan could work.
Let's
start with the promises Sanders makes about Medicare for All. No networks,
premiums, deductibles, or copayments. Under his plan, essentially all
non-cosmetic services would be free at the point of care for everyone.
Sanders calls this
Medicare for All, but what he's describing isn't Medicare as we now know it.
As The New York Times noted
earlier this year upon the release of a Sanders-inspired Medicare for All
bill in the House, the new program would "drastically reshape Medicare
itself," changing both what it pays for and how. In many ways, it would be a
completely different program. Medicare for All, in other words, isn't really
Medicare.
And that
program would be far more expansive and expensive than nearly any other
comparable system. It would cover more, and require less direct financial
outlays (not including taxes), than either today's Medicare or typical
private insurance plans in the U.S.
It would also be substantially more generous
than the national health systems set up in other countries. Sanders likes to
unfavorably contrast America's mixed public-private health care system with
foreign systems where the government is more directly involved. When he
announced the 2017 version of his Medicare for All plan, for example, he
bemoaned
the state of affairs in the United States "a time when every other major
country on earth guarantees health care to every man, woman, and child."
Discussions about health care policy on social media often include some
variant of the question, "If every other country with a developed economy
can do it, why can't the United States?"
The problem with this line of questioning is
that what Sanders is proposing isn't what other
countries do. Canada, for example, has a
single-payer system, but it doesn't cover dental care, vision, drugs, or any
number of other services. A majority of Canadians carry private insurance in
order to cover those services. In Britain, which offers a fully socialized
medical system where health care providers are government employees, many
resident still buy private coverage. Sanders, on the other hand, would
effectively wipe out
private coverage in the space of just four
years.
There are
similar limitations on coverage in other countries, like the Netherlands.
It's also true in Australia, where patients typically pay a percentage of
the cost of specialty services. It's true that in these countries,
government plays a more central role in health care financing. But their
systems have also reckoned with costs and tradeoffs in a way that Sanders,
after so many years, has not.
Indeed,
the main trade-off that Sanders seems willing to discuss is the elimination
of insurance companies, which he portrays as greedy middlemen driving up the
cost of health care. Wiping out the industry in one fell swoop, as Sanders
has proposed, would be a unprecedented and disruptive move that would have
significant economic repercussions, including the probable loss of thousands
of insurance industry jobs. But it still wouldn't do much to bring down the
cost of health care, because so much money in the nation's health care
system is tied up in provider payments, especially hospitals.
And
therein lies the
(first)
contradiction.
Most
people probably think of hospitals as places where you go to get health care
services. Politically and economically, however, they also fulfill another
role: They are hubs for stable middle-class jobs, paying reasonably good
wages to thousands of highly trained workers, most of whom are not doctors
or specialists earning stratospheric salaries.
To
acquire the revenue to pay for all these jobs, hospitals rely on a mix of
private and public payments. Public payments make up a somewhat larger share
of total hospital budgets, but private payers are typically charged much
higher prices.
Hospitals
like to argue that Medicare and Medicaid payments are too low to cover their
costs, and that as a result, higher private payments effectively subsidize
public health coverage. Critics (with some evidence) often respond that
hospitals either overstate or don't really understand their own costs, and
that this is just a ploy to extract more money from government health
programs and private payers.
But when
considering Medicare for All, the particulars of this debate are largely
beside the point, because there is simply no question that eliminating
private insurance and payment for all services would drastically reduce the
amount of revenue for hospitals.
Yet that
is exactly what Sanders wants to do. His plan calls for paying for health
care services at Medicare rates, which means that, practically overnight,
hospitals would end up with far, far less revenue. Exactly how much is
unclear, but one estimate indicated that payments could drop by as much as
40 percent.
That would leave hospitals with a couple of
difficult choices. They could eliminate services. They could try to force
some employees to take pay cuts. They could fire large numbers of workers.
Or they could simply shut down. As a recent New York Timesreport
on how Medicare for All would affect hospitals noted, rural hospitals—many
of which are already struggling to stay afloat—would be particularly at risk
of closing.
Whatever
ended up happening, there is simply no way most hospitals would or could
continue operating as they do now under the payment regime that Sanders
envisions. Lots of middle class jobs would disappear. Services would be
eliminated or cut back.
Yet Sanders not only imagines that hospitals
would continue to operate as they do now, but that they would expand their
services to
even more people, since more people would have coverage. And since he
also imagines a system with no deductibles or copays, those people would
almost certainly end up dramatically increasing utilization of hospital
services.
Studies of health insurance have consistently
shown
that expansions of health insurance result in increased demand for (and use
of) health care services; more people with coverage means more people lining
up to get care. (Relatedly, introducing even very small copays—on the order
of just a few dollars—can reduce the number of visits to doctors and
hospitals.) Greater utilization of health care services does not necessarily
translate into
measurably better
physical health outcomes. But it does
increase the strain on the health care delivery system—which is to say, it
puts a huge amount of pressure on hospitals.
Continued in article
Jensen Comment
Another contradiction is that to pay for Medicare-for-All program Bernie Sanders
wants to tax most of what high-income workers earn, and the highest income
professionals in the USA on average are physicians. There is currently a
shortage of physicians. This shortage will become critical as medical care
becomes virtually free and often overused as a free service by hundreds of
million residents of the USA.
Here's the second contraction
Taxing physician income at 70% or more will discourage students from becoming
physicians and will give existing physicians incentives to retire early or work
at leisurely part-time doctoring. Far better work two days per week and pay a
30% income tax rate than to be a 60--hour week highly stressed, and overworked
physician being taxed at 70% of every extra dollar earned.
Vox: The Bernie Sanders national medical plan has
lots of details about what single-payer would cover. It has less information on
how to pay for it (well over $3 trillion per year and growing for more generous
coverage than all other national health plans) ---
https://www.vox.com/2019/4/10/18304448/bernie-sanders-medicare-for-all
. . .
Medicare, employer coverage, and these other countries show that nearly every
insurance scheme we’re familiar with covers a smaller set of benefits with
more out-of-pocket spending on the part of citizens.
Private insurance plans often spring up to fill these gaps (in Canada, for
example, vision and dental insurance is often sponsored by employers, much
like in the United States).
The reason they went this way is clear: It’s cheaper to run a health plan
with fewer benefits. The plan Sanders proposes has no analog among the
single-payer systems that currently exist. By covering a more comprehensive
set of benefits and asking no cost sharing of enrollees, it is likely to
cost the government significantly more than programs other countries have
adopted
. . .
But who pays how
much more is a key question this Sanders bill doesn’t answer yet. Until
there is a version that does, we can’t know whether the health system the
Vermont senator envisions could actually become reality.
Jensen Comment
The Sanders plan eliminates all private-sector medical insurance companies and
eliminates Medicare and Medicaid.
The good news for us retired folks is that long-term care insurance that is
not covered presently under Medicare will cover us retired folks. Hooray for
Bernie! I can eat, drink, and be merry on my long-term care savings.
Two things Bernie does not like to discuss is the impact on doctors and
hospitals. At present many (most?) of the top physicians and hospitals refuse
Medicaid patients because of caps placed on fees. Many also reject Medicare
patients, but more of them are covered because of supplemental private insurance
benefits that can be added to Medicare insurance. Presently Erica and I pay over
$1,200 for supplemental benefits that will not be allowed under the Sanders'
plan.
I think Sanders does not like to discuss caps that will be placed on
physician billings and hospital rates because the medical profession would
otherwise crank up an huge lobbying effort against his plan. The medical
profession has only begun to fight.
Also Sanders does not like to discuss the shortage of physicians and hospital
services that will arise when bringing tens of millions of people into his plan
(think nearly 20 million undocumented residents that will be covered in rural
areas already underserved with doctors and hospitals).
Also Sanders does not like to discuss the transition costs in creating the
vast government bureaucracy that does not exist for processing medical insurance
claims. At present Medicare and Medicaid outsource
claims processing to the private sector. Bernie plans to kill that outsourcing
sector.
Bernie Sanders: "You’re Damn Right We’re Going to Destroy Private Health
Insurance" ---
Click Here
And he will limit the number of doctors by regulating what they're allowed to
earn.
And Bernie plans on taxing high income
earners in the USA by taking away 70% or more of what they now earn. What will
be the incentive for spending years of misery to become a physician good at a
craft that will be taxed to death rather than rewarded after all those years of
misery?
The problem with becoming a physician is not just the cost of medical school.
The problem is the ordeal --- those years of education and training needed to
become masters of their crafts. The time needed varies with specialties, but you
don't become a neurosurgeon without years of ordeal in training before you can
bill your first paying patient. And there's a lot of blood, sweat, and tears in
those training years. Even worse is that there's a lot of weekly tension and
risk of burn out in the years of practice that follow. Tell that to the
advocates of Medicare-for-All combined with soaring taxes!
Why did Cuba
abandon its socialist/communist dream of equality for everybody? The Guardian: This was the
egalitarian dream of Cuba in the 1960s: For years in Cuba, jobs as varied as
farm workers and doctors only had a difference in their wages of the equivalent
of a few US dollars a month.
https://www.theguardian.com/world/2008/jun/12/cuba
Jensen Comment
Only now is Cuba backtracking from its egalitarian dream by uncapping wages and
legalizing profits while liberals in the USA want to return again to the 1960s
Cuban dream.
But is Denmark socialist? …Denmark doesn’t at
all fit the classic definition of socialism, which involves government ownership
of the means of production. It is, instead, social-democratic: a market economy
where the downsides of capitalism are mitigated by government action, including
a very strong social safety net. …The simple fact is that there is far more
misery in America than there needs to be. Every other advanced country has
universal health care and a much stronger social safety net than we do.
Paul Krugman
https://www.nytimes.com/2015/10/19/opinion/something-not-rotten-in-denmark.html
Jensen Comment
What Krugman does not mention is that Denmark is mostly a homogeneous (white)
nation of less than 6 million people. It's much more difficult and expensive to
afford and maintain a similar safety net with over 300 million highly diverse
people located on top of a very porous border with thousands trying to sneak in
daily to enjoy the safety nets.
Ending Jensen Comment
But don't get me wrong! Erika and I will vote for Bernie Sanders since
our possible expensive long-term health care not funded by Medicare will soon be
free. To hell with the future economic engine of the USA. Bring on the Bernie
Sanders' socialism since I'm too old to witness the chaos and economic
destruction that follows in its path. Since Democrats are promising free
everything why shouldn't Erika and I get in on the free everything?
"But (American) virtuous
feelings have been played on by some facts with more fiction; they have been the
dupes of artful maneuvers, and made for a moment to be willing instruments in
forging chains for themselves.” Thomas Jefferson
William J. Watkins, Jr., Winter 1999,
“The Kentucky and Virginia Resolutions: Guideposts of Limited Government,”
The Independent Review,
Vol. III, No. 3, pp. 406-407.
Jensen Comment
This article is a great example of how statistical reports can be misleading if
they only focus on mean averages without added information about standard
deviations and skewness and missing variables. For example, consider
neurosurgery. My wife's spine surgeon in Boston is what he calls a "big-back"
surgeon. He performs spinal surgeries that 95+% of the back surgeons in the USA
refuse to perform. He actually broke Erika's spine into three pieces and then
attached four rods from her hips to her neck. Afterwards, however, she can still
pick up a tissue off of the floor when bending her spine. Needless to say his
rates, sometimes exceeding tens of thousands of dollars per surgery, are greater
than the rates of "little-back" surgeons who also work out his office. By the
way, he's not on the faculty of the Harvard Medical School. However, every time
I've spoken with him he was followed by two or three Harvard Medical School
neurosurgery residency physicians who were what I called his "puppies."
By the way, it might be interesting to study details of his malpractice
insurance premiums and lawsuits. He's amazing because he has the guts to be a
"last-chance" neurosurgeon in spite of the circling lawyers. By last chance I
mean when patients can no longer find a neurosurgeon who will operate on their
spines he's their "last chance." Erika had over a dozen spine surgeries before
she at last found this "big-back" surgeon in Boston.
There are also many other troubles with the above article. For example,
malpractice insurance is very high priced in the USA relative to all other
nations. And malpractice insurance costs vary greatly with specialties such as
being very high for obstetrics (lawyers sue for every bad baby) versus
neurosurgery versus psychiatry versus primary care physicians.
Let's consider an example. According to the study the average pay for a
neurosurgeon is $617,000. But that does not account for differences in whether
that salary is net of malpractice insurance premiums. Such netting out is
complicated because many neurosurgeons make this much or much more without
having to pay malpractice insurance premiums. My wife's spine surgeon who
installed her morphine pump is an employee of the Dartmouth Hitchcock
Medical Center that pays malpractice insurance for virtually all employees and
medical school faculty. However, many neurosurgeons who operate in that same
medical center are not employees and must pay their own malpractice insurance.
Similarly, there's a nearby Veterans Hospital where VA neurosurgeons do not have
to pay their own malpractice insurance. But if the VA has to outsource a
particular type of surgery that surgeon's bill to the VA will include
malpractice insurance.
Incomes of many specialists vary when they must pay for their own staff
versus have no expenses for staff. For example, the Dartmouth Hitchcock Medical
Center pays for all staff such as receptionists, nurses, technicians,
accountants, etc. It even pays for lawyers when needed. The
private-practice physicians who may also perform surgeries at this medical
center must pay for their own office space and staff. How do you compare a
salaried employee of that medical center with the profits of a private-practice
physician?
I might point out a political problem related to all of this. There's an old
saying: "Show me a bad doctor, and I'll show you a rich professional." The
point is that even at the lowest end of the income distribution medical doctors
in the USA are well paid.
The Democratic candidates for the 2020 presidential nomination have created a
paradox.
Most, not all, students are drawn to medical school in anticipation of
relatively high after-tax incomes. The
politicians advocating Medicare-for-All want to fund this $30+ trillion cost
with greatly increased taxes (think 70% of a physician's income). At the same
time more than twice as many physicians will be needed to staff
Medicare-for-All, especially with 76,000 new patients crossing the border each
month at current rates estimated by the NYT ---
https://www.nytimes.com/2019/03/05/us/border-crossing-increase.html
Eventually, the progressives will also legislate free medical school education.
But how many students will flock to medical schools even if they are free? My
guess is very few if you are gong to tax or regulate away 70% of their income
when they at long last begin to practice medicine.
The problem with becoming a physician is not just the cost of
medical school. The problem is the ordeal --- those years of education and
training needed to become masters of their crafts. The time needed varies with
specialties, but you don't become a neurosurgeon without years of ordeal in
training before you can bill your first paying patient. And there's a lot of
blood, sweat, and tears in those training years. Even worse is that there's a
lot of weekly tension and risk of burn out in the years of practice that follow.
Tell that to the advocates of Medicare-for-All combined with soaring taxes!
If you want to double the number of physicians in the USA you not only have
to make medical school free; You have to let them be the highest paid
professionals on averageafter taxes.
PS
You can read more about Erika's ordeal with pain and surgeries at
http://www.cs.trinity.edu/rjensen/Tidbits/ErikaBob/ErikaPain/Set01/Set01.htm
I might add that the electronic pain stimulator installed eventually proved to
be worthless. The same surgeon who installed it removed it and replaced it with
a morphine pump. The pump is no magic bullet, but its more effective than the
electronic wiring up and down her spine.
March 21, 2019
Hi Elliot,,
You must also realize that when the wealthy people fund the new
ventures they are also taking on highe financial risks. For some the payout is
more wealth. For others there are huge losses. Bill Gates and Warren Buffet and
other billionaires lost big time in Theranos. But Theranos and other more
successful ventures got a chance that they would never get in Europe due to all
the regulations and red tape entanglements and high taxes.
How many innovative ventures that succeeded and failed have been
funded by European nations like the Nordic nations? And in China and Russia
these new ventures probably could not get started without having the best ideas
stolen/hacked from the USA.
You raised the question: "At what point do most
people take Sen. Warren or Rep. AOC more seriously and consider
their solutions
as reasonable instead of fringe?"
Do you really think Warren and AOC have thought out "their
solutions" even to the satisfaction of their own party?
Most Democrats consider AOC and Warren economics fringe and worry
that at adding $100+ trillion in social spending might destroy the USA economic
engine.
If the nation were building a health-care system from scratch, single-payer
might be the rational choice. Even now, with many Americans reasonably satisfied
with their employer-sponsored coverage, politicians can make an argument that
they’d be better off in a different system. But
they should not make that argument by exaggerating the benefits or lowballing
the costs of single-payer, as Medicare-for-all advocates so often do.
Any system will demand tradeoffs and constraints.
Canada
should not ignore the wage gap, as a sudden shortage of certain specialists
in the States could trigger a drain from here, said Dr. John Haggie,
president of the Canadian Medical Association. Canada saw a net loss of
doctors to the U.S. in the 1990s, as provinces instituted doctor pay caps
and tried to rein-in fee increases as a way to corral health costs.
But
Dr. Haggie voiced no particular envy Tuesday at the statistics just
published in the journal
Health Affairs
Jensen Comment
I read where there are 72,000+ physicians employed in the Canadian health system
having 86,000 physicians. The population of Canada is 37+ million residents
spread over nearly 4 million square miles.
In the USA
Patients experience long waits (months) for doctor appointments largely due to
the shortage of Canadian physicians. Delays for elective procedures such as knee
and hip replacements are so long that many Canadians use their own savings to
get such surgeries performed in the USA.
In the USA there are over 950,000+ physicians who, on average, are the
highest paid professionals in the USA..
https://en.wikipedia.org/wiki/Physicians_in_the_United_States#Demographics
The population of the USA is nearly 10 times that if Canada if you include the
undocumented immigrants. USA residents are spread over roughly the same number
of square miles as Canada, although the distribution is not as skewed as that of
Canada is skewed toward the south.
Bernie Sanders: "You’re Damn Right We’re Going to Destroy Private Health
Insurance" ---
Click Here
And he will limit the number of doctors by regulating what they can earn.
Related to the above problem is will be the shortage
of physicians and hospitals to serve the expected increase in services expected
by wider coverage and the attraction of hordes undocumented immigrants primarily
coming to the USA for needed medical services like dialysis and transplants.
How do you attract
more students to become physicians (especially in rural USA) when you plan to
cut back on what physicians earn with caps on billings and higher taxes on the
earnings of physicians.
With physicians the problem is huge because of the
long ordeal it takes to become a licensed specialist and the likelihood of early
burnout.
I'm especially aware of this problem because one of our top regional
hospital general surgeons, frightfully overworked, in these mountains just
flamed out before reaching the age of 50.
Support for Medicare-for-All will evaporate once voters become aware that
confiscating the wealthy and high earners will only pay a
tiny fraction for the cost and that, when combined with other progressive
programs like the green initiative, guaranteed income, student loan forgiveness,
housing subsidies, free college, cash reparations to African and Native
Americans, etc. the price tags aggregate way over
$100 trillion on top of the existing $100+ trillion in contracted entitlements
for Medicaid, Medicare, Veterans Benefits, Social Security, Disability Payments,
unfunded pensions, etc.
How to Mislead With Statistics
Three reasons why people fall for politicians’ lies about statistics ---
https://theconversation.com/3-reasons-why-people-fall-for-politicians-lies-about-statistics-110014
Jensen Comment
A reason for being misled (related to letting emotions rule) is hoping that the
politician will become powerful enough to make the lie come true. For example,
many people are falling for statistics cited and the promises made by promises
of guaranteed income for everybody in the USA (think AOC and Kamela Harris).
Nancy Pelosi warns of the hazards of believing those lies.
The Democratic Party is Split
“You have to make decisions that you’re going to reach certain goals, and some
of our goals we think are
achievable” Nancy Pelosi (when criticizing Alexandria's Green New Deal and
Basic (Guaranteed) Income Medicare-for-All)
Click Here
Added Jensen Comment
I suspect
progressives will eventually make medical schools much cheaper. However, this
will not solve the problem since these same progressives also want to tax what
physicians make at 70+% and put severe caps on what they can charge for medical
services (makes me think of rent control disasters). It's like making
physicians pay their own fees
https://www.businessinsider.com/highest-paying-job-in-every-us-state-2019-2
What
progressives can't do much about is to take what discourages medical students
the most --- the years of ordeal it takes to
master their crafts.
One almost
certain solution for the USA will be what my biologist colleague calls the
"French solution" --- which Jagdish tells us is also the "Indian solution."
Physicians commence medical school within one year out of high school (or in
some instances zero years after high school). Medical students don't have
"waste" 3-5 years as undergraduates. Johns Hopkins has a small experimental
program something like the French solution.
Another
possible help to physicians that progressives are divided over is malpractice
insurance and lawsuit pots of gold. The Canadians virtually cut the lawyers out
of the equation (except in outlier instances) that makes malpractice insurance
in Canada almost nothing compared to the USA. Medical boards in Canada pay
victims for damages but no punitive damage awards.
Amazingly,
however, the State of Texas passed a constitutional amendment severely capping
punitive damages. The NYT reported that almost immediately medical school
graduates started seeking jobs in Texas.
What will make
malpractice insurance relief difficult is that most of our USA federal and state
legislators are lawyers. It amazed me that the lawyers in Texas let the
punitive-damage pot of gold slip through their fingers in the Lone Star State.
The WSJ reports
that progressive support for eliminating private sector medical insurance
companies is waning due to the massive cost of replacing it with a government
bureaucracy.
Physicians and hospitals have barely had a chance to fight but will fight tooth
and nail if Medicare-for-All ever becomes a threat to them.
The real test
is Bernie Sanders.
He still favors eliminating the private sector in medical insurance and ignores
the fact that even Medicare and Medicaid outsource insurance claims to the
private sector that's currently geared up
with the trained employees and software to process such claims.
It's not so
much that Bernie Sanders is a threat as the threat that hordes of socialists are
also elected to the House and Senate if Bernie becomes wildly popular. The
reason progressives like Bernie are currently vague about funding
Medicare-for-All is that they know that they
will lose millennial support once it's
revealed that middle income and maybe even poor people will be taxed for their
medical coverage or copays will be charged (as they are in many other nations
like Canada).
Or some nations
like Germany greatly limit what's covered in the national plan, thereby forcing
those who can afford it to buy secondary medical insurance from the private
sector to pay for better services (like not having to wait years for a knee or
hip replacement).
Kaiser Family Foundation: People love
Medicare-for-All until they're told it'll raise their taxes to the $30+
trillion cost: Then support nosedives ---
https://www.businessinsider.com/ap-poll-support-for-medicare-for-all-fluctuates-with-details-2019-1
Jensen Comment
Virtually all nations with national health plans raise the funds needed with
taxation at all levels of income. Estimates of USA's cost run $30+ trillion over
ten years, but a lot depends upon who is covered
(severely ill or disabled immigrants crossing the border illegally for dialysis
or other expensive health care), what is covered
(think long-term nursing care). and capital costs
(will government build hospitals and medical centers?).
Even if wildly successful Senator Warren's wealth
tax would only pay $2.75 trillion of the $30+ trillion cost ten-year cost of
Medicare-for-All
Elizabeth Warren's proposed wealth tax would raise $2.75 trillion over a
ten-year period from about 75,000 families, or less than 0.1 percent of U.S.
households ---
https://www.cnbc.com/2019/01/24/elizabeth-warren-to-propose-new-wealth-tax-economic-advisor.html
Jensen Comment
This could have all sorts of economic consequences. One is that most of those
75,000 wealthy USA families have their wealth tied up in long-term investments
like real estate (think of Trump hotels, Ted Turner's ranches in Australia,
Amazon's many shares owned by Jeff Bezos), etc. Warren's Wealth tax could
force liquidation of these long-term investments to pay the $2.75 trillion
wealth tax. If you want your top millionaires and billionaires to move out of
the USA this is a sure-fire way to wave bye bye to them
and the $2.75 trillion that becomes uncollectable.
Wealthy taxpayers are probably not worried
with a conservative Supreme Court. Arguably her
proposal requires an amendment to the USA Constitution because her wealth tax
proposal is extremely disproportional.---
https://en.wikipedia.org/wiki/Wealth_tax#United_States
You can read more about wealth taxes at
https://en.wikipedia.org/wiki/Thomas_Piketty Why did liberal Sweden axe its wealth tax while at the same time lowering its
top income tax rate from 87% (1979) to 65% (1990) to 56% (2002)? ? --- http://ftp.iza.org/dp11475.pdf Elizabeth Warren would probably prefer that you do not
study experiences of all disastrous Scandinavian wealth taxes and very high
marginal income tax rates that were later greatly reduced to stimulate the
economy (called supply side (Laffer Curve) economics) ---
http://www.econlib.org/library/Enc/MarginalTaxRates.html
PS
Those 75,000 wealthy taxpayers now invest in hundreds of billions in tax-exempt
bonds (called municipal bonds) that underlie the building of most schools and
municipal buildings in the USA. The muni bond market would nosedive if most of
those 75,000 people sold their tax-exempt bonds and moved these hundreds of
billions in investments off shore on their way out of the USA. That's not a cost
that the naive Elizabeth Warren factored into her proposed wealth. What's the
incentive for a billionaire who moved to Switzerland to continue to invest
hundreds of millions of dollars in the USA muni market?
I suspect that Elizabeth Warren knows that her wealth tax would be an
economic disaster. I think she's just trying to get
votes from financially-ignorant voters. It's all politics and no
sense other than she's trying to fend off the radical anti-capitalist "young"
left wing of the Democratic Party.
Care would
not be free
in a single-payer system—it would be paid for differently.
Instead of paying insurance premiums, people would pay taxes,
which would be
collected by a government agency
and used to pay for health care
on behalf of the population.
Some in higher tax brackets might pay more under a single-payer system than
under the current system, while others might pay less.
Many
single-payer proposals, including Sen.
Bernie Sanders' “Medicare for All” proposal,
cover a comprehensive range of services with no or very low co-pays and
deductibles. While common
in many proposals (PDF),
a single-payer system would not necessarily eliminate all out-of-pocket
expenses. In fact, the current Medicare program, which some consider a form
of single payer,
has deductibles and co-pays.
Misconception 2: Health care spending would dramatically increase (or
decrease).
A single-payer
system
could push health spending up or down,
or not have much effect. Spending could increase if a national single-payer
system expanded coverage to more people, leading to higher use of health
services. If the single-payer plan cuts deductibles and co-pays, currently
insured people would also
use more services.
But a single-payer system might also reduce or eliminate administrative expenses,
such as insurer marketing, billing and claims processing, which would push
spending down. A single-payer plan could also cut spending by negotiating
lower prices with providers and drug companies.
Two recent
studies estimated that in a single-payer system, total spending could
decline by a few percentage points.
Two recent
studies, a national-level analysis by the Mercatus Center
and
RAND's analysis
of a single-payer proposal for New York state, estimated that total spending
could decline by a few percentage points. Regardless of whether total
spending goes up or down, federal spending would almost surely increase,
because the government would be responsible for paying the bills.
Misconception 3: People with employer insurance would have fewer benefits
covered.
If the United
States adopted a single-payer plan, employer-sponsored insurance would
become less relevant because people would have an alternative source of
coverage. As a result, many
employers would drop health insurance coverage (PDF).
However,
workers would not lose access to insurance—they would have coverage through
the single-payer plan. Many single-payer plans, including Sanders' “Medicare
for All” proposal, cover more than most current employer insurance plans,
which have an average deductible of $1,573
for single coverage.
Some
single-payer proposals
explicitly prohibit employers and private insurers
from offering health insurance coverage, to avoid a two-tiered system in
which wealthier people have access to more services and providers. Other
proposals would allow private insurance to offer
coverage for services not included in the single-payer plan
(such as elective surgeries), or to provide faster or improved services for
those who wish to supplement their benefits.
For example,
in Australia (and Germany), all residents are
eligible for
basic health services
provided through a single payer, but those with higher income are encouraged
to buy additional, private coverage that provides access to
private providers and hospitals.
Misconception 4: Doctors would become government employees.
Misconception 4: People would lose access to their doctors.
Enrollees
generally would be able to choose among providers participating in the
program, and—if all providers participated—there would be no need to worry
about out-of-network charges. However, changes in payment rates under a
single-payer system could affect
doctors' willingness to supply services,
and could make it more difficult to get appointments.
We see this
effect in our current system—in 2015, only 45 percent of primary care physicians
accepted Medicaid patients,
due in part to Medicaid's relatively low payment rates. In contrast, 72
percent of primary care physicians accepted new Medicare patients and 80
percent accepted new commercial patients.
Even if overall provider payment levels were reduced, payments to each
individual provider would depend on their existing mix of patients. Payment
might go up for some providers, such as those who see Medicaid patients, and
could be about the same for those who see Medicare patients.
Jodi L. Liu is
an associate policy researcher at the nonprofit, nonpartisan RAND
Corporation. Christine Eibner is the Paul O'Neill-Alcoa chair in policy
analysis at RAND and a professor at the Pardee RAND Graduate School.
This
commentary originally appeared on USA Today on October 26, 2018.
Commentary gives RAND researchers a platform to convey insights based on
their professional expertise and often on their peer-reviewed research and
analysis.
Jensen Comment
Many (most?) people in the USA are not aware that current Medicare and Medicaid
government insurance claims are processed in the private sector rather than by
government agencies. This is important, since there will be an enormous cost for
a new government bureaucracy in the USA to be formed to process medical
insurance claims if the government does not outsource Medicare-for-All claims
processing. I don't think researchers to date have confronted the issue of the
huge startup cost of having the government process Medicare-for-All claims.
There also is the issue of the many places in the USA where medical care is
substandard due to lack of physicians and hospitals and other providers.
Everybody keeps saying the government will not have to build hospitals in these
places and provide a sufficient number of providers to run these hospitals.
Don't count on that when the lawyers start suing over unequal quality of medical
care across the USA. Eventually the Federal government will have to finance new
hospitals and provide health care providers in those hospitals.
Many (most?) people in the USA are not aware that they might lose their
employer-provided medical insurance under Medicare-for-All insurance. Medical
insurance would no longer be a fringe benefit provided by employers.
Medicare patients currently must pay 20% of their medical bills or pay for
supplemental private insurance to pay part of this 20%. Costs of such
supplemental insurance vary with the degree of coverage desired. For Erika and
me the supplemental insurance is over $1,200 per month for our premium
supplemental plans plus we have to pay over $200 per month for our Medicare
Insurance itself. Even though we were taxed for Medicare since 1965 until we
retired at 65 years of age, Medicare is not free in our retirement years. Most
people in the USA think that Medicare coverage is free after retirement.
That is a serious misconception.
Of course there are variations of the Medicare-for-All plan. 2020
Presidential Candidate
Kamela
Harris proposed eliminating all private medical insurance contracts and then
quickly reversed herself when learning how many of the 177 million insured
people in the USA were happy with their private sector insurance companies. She
then proposed that public sector insurance contracts only be made available as
an option in competition with private sector plans that
often give more choices in choosing doctors and hospitals.
Physicians and hospitals do not have to
accept Medicare Patients, Medicaid patients, Obamacare patients, or any patients
wanting to pay with insurance. Medicaid and Obamacare patients are likely to
have a tougher time finding physicians and hospitals than Medicare patients due
primarily to severe fee restrictions on for Medicaid and Obamacare patients.
Many hospitals complain that they lose money for every Medicaid patient and
Obamacare patient.
Some of Chicago’s largest hospitals said they will not be part of any Cook
County Affordable Care Act marketplace plans in 2017.
University of Chicago Medical Center and Rush University Medical Center both
said they don’t plan to be in network for any Obamacare marketplace plans
next year.
The change means patients with doctors at those hospitals will either need
to find a plan off the marketplace, and lose Obamacare subsides, or find a
new doctor.
Northwestern Memorial Hospital said it will also be out of the marketplace,
but will have exceptions for some of its partner hospitals.
Continued in article
Personally, I think Medicare-for-All will significantly increase what is paid
for medical services in the USA. Primarily this is because there is a $2+
trillion underground economy where workers are paid unreported cash for services
that are not subjected to payroll taxes or income taxes. Much of this is for
part-time work (think house cleaners and unregistered day care providers)
although there are many full-time workers whose services are not reported to the
government. I lived in San Antonio for 24 years where there are various street
corners where employers meet with workers taken to jobs day-after-day such
as roofing jobs, construction jobs, landscaping jobs, etc. Such workers save
(illegally) on paying income and payroll taxes but also
receive no benefits such as medical insurance, unemployment insurance, and
Social Security contributions. This begs the question of why law
enforcement does not move in to end this enormous illegal practice. The
suspected reason is that closing it down those street corner opportunities will
hurt millions of families with children across the USA who are vitally dependent
upon such cash-payment jobs. Many of those workers, certainly not all, are
undocumented immigrants who find it harder to find traditional jobs with
benefits or expose themselves to ICE deportations.
Presumably millions of workers in the $2+ trillion underground economy who do
not presently have health insurance would be covered under Medicare-for-All.
Unreliable stimates of the undocumented immigrants in the USA are reported to be
around 11 million, but realistic estimates run much higher than that. Certainly
many undocumented workers do not depend upon the underground economy for jobs,
but a huge proportion rely upon that underground economy.
What is not clear is whether physicians and hospitals could refuse
Medicare-for-All patients. Health care providers are allowed pick and choose
what insurance they will accept at the moment, and many refuse Medicaid and
Obamacare patients. When we lived in San Antonio we had
an outstanding dermatologist that did not accept any insurance plans.
Patients paid their own bills and then were on their own when appealing for
reimbursements from their insurance plans.
What nobody, including the Rand study above, seems to want to discuss is the
wide range of cost possibilities for Medicare-for-All coverage. For example, the
800-lb gorilla lurking in the shadows is the cost of long-term-nursing care.
Currently Medicare does not cover long-term nursing care claims. Medicaid does
cover long-term nursing care but severely limits what will be paid for each day
of care. As a result many Medicaid patients must accept
pretty lousy nursing homes or pretty lousy home-care providers. Medicare-for-All
costs will explode exponentially if long-term care is provided in quality
nursing homes. Presently long-term nursing care insurance plans are
very expensive luxuries.
One of the big worries is the magnetic attraction Medicare-for-All will have
on very expensive long-term treatment patients. For example, one can imagine the
many dialysis patients around the world who will seek to cross the USA borders
just for free free kidney dialysis treatments for the rest of their lives. One
can imagine all the people in the world who cannot get organ transplants or
brain surgeries without crossing into the USA.
Schultz (think Starbucks) was always viewed as a liberal
Democrat. But now he's scaring Democrats by threatening to use his billions to
run for President as an independent. One of the major
reasons he gave for possibly running is the math of Medicare-for-All. He views
Medicare-for-All as an economic disaster for the USA along with other
wild spending schemes now contemplated by Maxine Waters like trillions for
reparations for blacks and native Americans, free college education for all,
massive spending on subsidized housing, zero-carbon regulations, open borders,
etc. etc.
All these are good causes, but those politicians
advocating those causes understand the math the least.
In my opinion, Schultz does not want to run for President.
He just wants to scare the Democratic Party to come to its senses on the math.
I think he Shultz will threaten to run until the
Democratic platform becomes more math sensible.
The bottom line is that the USA needs some taxpayer funded medical coverage
across the USA. The worry is that, like climate change proposals, that we will
become committed to programs that end up being self-defeating. It's like the
family that keeps borrowing and borrowing for the big house, expensive cars,
luxury cruises, etc. etc. until the day comes when they find themselves in
bankruptcy court.
Obamacare funneled a significant amount of money to hospitals and
insurers, while a single-payer system like the one proposed by Sen. Bernie
Sanders (I-V.T.) would cut provider payments and largely put private health
insurers out of business ---
http://reason.com/blog/2018/12/12/even-democrats-are-divided-over-medicare
The US
military budget is such a bloated monstrosity that it contains accounting
errors that could finance two-thirds of the cost of a government-run
single-payer health insurance system. All Americans could visit an unlimited
array of doctors at no out of pocket cost. At least that’s a notion
spreading on left-wing Twitter and endorsed and amplified by newly elected
Rep. Alexandria Ocasio-Cortez,
one of Democrats’ biggest
2018 sensations
and an undeniable master at the fine art of staying in the public
eye.
Unfortunately, it’s not true.
The idea
spread like a game of telephone from a Nation article
to the US Congress while losing a crucial point of detail: The Pentagon’s
accounting errors are genuinely enormous, but they’re also just accounting
errors — they don’t represent actual money that can be spent on something
else.
Proponents of this vision have the political wind at their backs and
continue to deploy the idea effectively to win intra-party arguments without
really making any headway on the core obstacles to writing a
Medicare-for-all bill that could become law. That said, to the extent that
political power rather than concrete legislation is the goal, that’s
probably for the best.
Misunderstandings fly around on Twitter all the time, and
AOC’s level of policy knowledge is pretty typical for a member of Congress.
But this particular flub is telling about progressive frustration over the
double standard on military versus non-military spending, and also the
fraught state of play regarding the push for a Medicare-for-all program.
The Pentagon’s mystery $21 trillion, explained
The underlying article by Dave Lindorff in the Nation
that kicked this off is an investigative report into the
Defense Department’s accounting practices.
Lindorff reveals that Pentagon accounting is quite weak, that the department
keeps flunking outside audits, that funds are shifted between accounts
without proper oversight, and that overall documentation of what’s actually
happening with the Pentagon’s vast budget is extremely poor.
Lindorff goes beyond these observations to allege that what’s happening
amounts to deliberate fraud, the purpose of which is to persuade Congress to
increase appropriations levels beyond what would otherwise be approved.
Continued in article
Jensen Comment
We really cannot compare proposed Medicare-for-All plan without more specific
definitions of "Medicare-for-All" and the "cared for population." For example,
Medicare currently does not pay for the enormous cost of long-term nursing care.
Medicare only pays 80% of most of the things it does cover like hospital and
doctor care.
Also Medicare has built up trust funds over the 50 years using payroll
deductions from individuals and employers. The trust funds are not sustainable
at predicted usage rates, but it's not like the existing Medicare program did
not accumulate any finds for the elderly and disabled. A
Medicare-for-All plan does not have 50 years of payroll deductions to help pay
for an abrupt shock to the system.
Advocates of Medicare-for-All never mention that Medicare for all is mostly a
private sector program where claims are serviced in the private sector along
with private sector doctor, nursing, and medicine delivery of goods and
services. Medicare is not like the U.K. system where most services are delivered
by government employees.
The Nation's analysis of the Defense Department's expenses ignores the fact
that even if we entirely eliminated the current Army, Navy, and Air Force the
government's obligations to retired and disabled former military personnel would
carry on for hundreds of billions of dollars into the indefinite future. And how
long would the USA and its Medicare-for-All program survive without any Army,
Navy, and Air Force?
The Nation's analysis is an example of totally irresponsible and misleading
statistics.
“Medicare for all…would mean allowing individuals and employers to buy into
Medicare – basically a big public option.” Who says? Well Paul Krugman and
many others. This is not simply a debate about labels. This is a debate
about fundamental policy. Are we going to accept the status quo with the
tweak of a public option, or are we going to address the fundamental defects
in our system that have driven up costs, perpetuated mediocrity, and left
tens of millions vulnerable with impaired access to health care with all of
its consequences and often with intolerable financial hardship?
This
is similar to the debate that took place within the Democratic Party just
before Hillary Clinton and Barack Obama began jockeying for the 2008
presidential nomination. The Democratic Party machine was in complete
control of the policy debate on health care reform. The neoliberal party
elite had decided that we were going to “build on what works” –
employer-sponsored and union-supported plans – and reject single payer based
on their concepts of what was politically feasible. Those of us advocating
for the expanded and improved Medicare for all single payer approach were
ejected from the conversations (often rudely so – they were in charge!).
Similarly, with the contest for the 2016 Democratic presidential nomination,
the debate at the platform committee confirmed that the battle had not
changed. The neoliberal leadership, represented by Neera Tanden, was
successful in rejecting the single payer Medicare for all plank.
Tanden,
of the Center of American Progress, has continued the fight for control of
the policy debate by releasing their new proposal, “Medicare Extra For All.”
Although some of the tweaks proposed seem beneficial, it basically continues
the current dysfunctional, fragmented financing system, but with one
important political change. They have stolen the “Medicare for all” label!
This has contributed to the ubiquitous deception that the public option is
Medicare for all. When the current candidates campaign on Medicare for all
but behind the scenes are supporting an option to buy into Medicare while
accepting campaign funds from the insurance and pharmaceutical industries,
we need to call them on their deception.
It is
no wonder the public is confused, even if they do not realize it. When Nobel
laureate Paul Krugman jumps in and says Medicare for all is allowing
individuals and employers to buy into Medicare as a public option, then we
know that the political campaigns are corrupted with deceptions. How can we
get the public to understand that a well designed, single payer national
health program – a bona fide Improved Medicare for All – is the reform that
they crave?
How to mislead with statistics The median cost of a private nursing home room has reached $100,375 per year,---
https://www.cnbc.com/2018/10/19/this-retirement-expense-has-hit-100000-annually-and-its-continuing-to-rise.html
Actuarial models of long-term care insurance providers greatly underestimated
the rapid rise in costs and recently had to more than double the monthly rates
for such insurance. The "median cost" of $100,375 is misleading in that this
cost has a wide overall variance and a median that differs substantially between
the 50 USA states. In fairness the article touches on this point slightly
(such as pointing the high cost of nursing homes in Alaska). There's also
extreme variability in terms of quality of care. This, in part, is due to the
high worker turnover in nursing homes and the tendency for many to hire
unskilled workers at minimum wage. My point is that comparing nursing homes is a
lot like comparing sweet cherries with sour lemons.
Sadly, parents that made the most sacrifices for their adult
children often are the least-supported in their own times of needs years later.
The good news is that with professional guidance more than five
years in advance, heirs can legally confiscate Grandma's estate so that she's
eligible later on for Medicaid-provided long-term nursing care. The bad news is
that the quality of many nursing homes that accept Medicaid patients is often
the worst in the USA. Maybe we should be more like the Germans who sometimes
ship their gaga grandmas and grandpas to to relatively good lower-priced nursing
homes in Poland.
Nursing Home and Hospital Elderly-Care Fraud Elderly residents given intensive therapy in the last weeks of life jumped 65
percent, a study shows, raising questions about financial incentives. ---
NY Times: ‘Don’t Get Too Excited’ About
Medicare for All ---
https://www.nytimes.com/2018/10/19/opinion/sunday/medicare-single-payer-health-care.html?fb=1&recb=published-assets-bq.thompson_sampling&recid=1Bq8s0acvT5uUy8yUSJ8MCz16wy&mi_u=10527319
Jensen Comment
There are just too many uncertainties about its coverage and cost. People
advocating Medicare don't understand it. For example, Medicare claims and
services are administered by the private sector, not
the public sector. It might take more than a decade and cost over a trillion
to prepare the public sector to take on the administrative chores plus increase
the capacity of physicians, hospitals, and support staff. Secondly, there's
tremendous uncertainty about coverage. Currently Medicare does not cover the
tremendously expensive cost of long-term care either at home or in nursing
homes.
All nations that have nationalized health care are much smaller and do not
have the millions of undocumented immigrants that we have in the USA. Bringing
them on board will be immensely costly and, worse, will be a magnet for
virtually all the sick people to enter the USA illegally. Nations that have
nationalized health care do a much better job at policing their borders and do
not have sanctuary cities to protect undocumented immigrants from being
deported.
Jensen Comment
Unlike Medicaid, Medicare does not provide long-term care benefits. |
However some benefits may change for the good for some Medicare patients.
From the
CFO Journal's Morning Ledger on August 7, 2018
Good morning. General
Motors Co. is
upending the traditional benefits set up by striking a deal with
Detroit-based Henry Ford
Health System
to offer a new coverage option to employees in an attempt to lower costs and
improve care, reports
the WSJ's Anna Wilde Matthews.
Cutting out
the middle man:
GM's new approach is a departure from the typical health-benefits
arrangement in which companies hire insurers for access to a broader network
of health-care providers. In those cases, insurers negotiate the prices with
hospitals, doctors and other providers, and the employers rarely have access
to the terms that govern their medical costs.
Lofty savings:
The plan would cost employees $300 to $900 less in annual payroll
contributions than GM's current cheapest plan and would require them to get
all their health care, including surgeries, through Henry Ford Health
System, or pay expensive out-of-network rates, reportsthe Detroit Free Press.
Let's make a deal:
Other employers, such as Walmart Inc., have crafted limited direct
deals with hospital systems to perform particular procedures, such as back
surgeries. A smaller number of companies, including Walt Disney Co.,
Boeing Co. and Intel Corp., have taken the more-ambitious
approach of having the health-care provider manage nearly all of the care of
enrolled employees. And Amazon.com Inc., JPMorgan & Chase Co.
and Berkshire Hathaway Inc. have joined forces
to launch a venture aimed at lowering their employees health-care costs.
More to come: 11%
of employers said they plan to do such broad deals with health-care
providers next year, according to a survey of 170 large employers to be
released Tuesday by the National Business Group on Health. That's up from 3%
in last year’s poll, the group said.
WASHINGTON — Congress and the Trump administration are revamping Medicare to
provide extra benefits to people with multiple chronic illnesses, a
significant departure from the program’s traditional focus that aims to
create a new model of care for millions of older Americans.
The changes — reflected in a new law and in official guidance from the
Department of Health and Human Services — tackle a vexing and costly problem
in American health care: how to deal with long-term illnesses that can build
on one another, and the social factors outside the reach of traditional
medicine that can contribute to them, like nutrition, transportation and
housing.
To that end, the additional benefits can include social and medical
services, home improvements like wheelchair ramps, transportation to
doctor’s offices and home delivery of hot meals.
The new law is a rare instance of bipartisan cooperation on a major policy
initiative, embraced by members of Congress from both parties. The changes
are also supported by Medicare officials and insurance companies that
operate the fast-growing Medicare Advantage plans serving one-third of the
60 million Medicare beneficiaries.
“This is a way to update and strengthen Medicare,” said Senator Ron Wyden,
Democrat of Oregon and an architect of the law, the Chronic Care Act, which
was included in budget legislation signed recently by President Trump. “It
begins a transformational change in the way Medicare works for seniors who
suffer from chronic conditions. More of them will be able to receive care at
home, so they can stay independent and out of the hospital.”
Half of Medicare patients are treated for five or more chronic conditions
each year, and they account for three-fourths of Medicare spending,
according to Kenneth E. Thorpe, the chairman of the health policy department
at Emory University.
Under the new law and Trump administration policy, most of the new benefits
will be reserved for Medicare Advantage plans, which will be able to offer
additional benefits tailored to the needs of people with conditions like
diabetes, Alzheimer’s, Parkinson’s disease, heart failure, rheumatoid
arthritis and some types of cancer.
“This is a big win for patients,” said Seema Verma, the administrator of the
Centers for Medicare and Medicaid Services.
Officials hope that combining social and medical services will produce
better outcomes for patients and save money for Medicare.
Continued
in article
An ER patient can be charged thousands of dollars in “trauma fees” — even
if they weren’t treated for trauma ---
https://www.vox.com/2018/6/28/17506232/emergency-room-bill-fees-health-insurance-baby
Jensen Comment
Another questionable practice, common in small hospitals, is to support the
overhead of Intensive Care Units (ICUs) with admissions that really are
questionable in terms of the need for ICU services (when a regular hospital room
would be sufficient). ER doctors and surgeons are sometimes guilty of supporting
the hospital's revenues with such admissions that sock it to Medicare and other
insurance providers. My neighbor, a retired cardiologist from Boston, tells me
this is common practice among physicians.
Harvard: The costs of health care are now the greatest financial
concern for most Americans—more than the costs for housing, food or retirement
---
https://hms.harvard.edu/news/hidden-savings
The
HHS Office of Inspector General (OIG) has found that, by exploiting Obamacare’s
expansion of the program, California has enrolled hundreds of thousands of
ineligible adults in Medicaid. Consequently, the state has bilked the federal
government out of more than $1 billion in funding to which the state was not
entitled.
https://spectator.org/california-commits-massive-medicaid-fraud/
In 2015, state governments across the country spent a combined $605 billion
on health care, or about $1,880 per resident.
The physical and mental well-being of the population is the single largest
financial obligation of state governments, and comprises well over
one-quarter of total state direct spending. As is the case with most
expenditures, health spending varies at the state level dramatically, from
just over $1,000 per capita to well over $3,000 per person.
The major categories of health spending at the state level include Medicaid
coverage, state-run hospitals and medical schools, and finally other health
expenses and programs addressing needs such as community wellness, substance
abuse, health inspection, and pollution control.
Among these three categories, it is Medicaid
spending that accounts for the largest portion of total state expenditure,
at about 80% of annual state health costs.
24/7 Wall St. reviewed health spending in all 50 states, ranked from lowest
total combined state health expenditure per capita to highest. This measure
includes only direct state spending, which excludes local and federal
spending.
Generally,
states spent more if they had more expansive Medicaid eligibility and
benefits.
This was particularly the case for those states that opted to expand
Medicaid coverage under the Affordable Care Act. Only one of the states
spending the most per capita on health care, Mississippi, did not opt to
expand Medicaid. Of the 20 states that spent the least on health care, 12
have not expanded Medicaid.
Those states with more poor, disabled, and elderly residents, also often
spent more per capita. Disabled people and those over 65 are the ones who
most commonly need health care and receive state Medicaid spending. In all,
nearly 25% of Medicaid recipients are 65 or older, institutionalized, or
disabled
50. South Dakota > 2015 state health spending:
$1,022 per capita ($877 million) > State government spending, all programs:
$5,448 per capita (11th lowest) > Population 65 and over:
15.9% (23rd highest) > Population with a disability:
12.2% (19th lowest) > Population with health insurance:
91.3% (21st lowest)
49. Nebraska > 2015 state health spending:
$1,186 per capita ($2.2 billion) > State government spending, all programs:
$5,511 per capita (12th lowest) > Population 65 and over:
14.9% (13th lowest) > Population with a disability:
11.9% (16th lowest) > Population with health insurance:
91.4% (22nd lowest)
. . .
2. New York > 2015 state health spending:
$2,911 per capita ($57.6 billion) > State government spending, all programs:
$9,376 per capita (7th highest) > Population 65 and over:
15.3% (22nd lowest) > Population with a disability:
11.5% (11th lowest) > Population with health insurance:
93.9% (17th highest)
1. New Mexico > 2015 state health spending:
$3,225 per capita ($6.7 billion) > State government spending, all programs:
$9,613 per capita (5th highest) > Population 65 and over:
16.5% (13th highest) > Population with a disability:
15.1% (11th highest) > Population with health insurance:
90.8% (14th lowest)
The Atlantic: The top 5 percent of Americans who spend the most on
health care account for 50.3 percent of all health care expenditures in the USA .This critical five percent of the U.S. population is key to solving the
nation's health care spending crisis. ---
https://www.theatlantic.com/projects/the-five-percent/ This article is not free
On November 22, 2009 CBS Sixty Minutes aired a video featuring experts
(including physicians) explaining how the single largest drain on the Medicare
insurance fund is keeping dying people hopelessly alive who could otherwise be
allowed to die quicker and painlessly without artificially prolonging life on
ICU machines.
"The
Cost of Dying,"CBS
Sixty Minutes Video, November 22, 2009 ---
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
National health care plans such as those in Canada, Denmark, Germany, and the
U.K. spend a lot less (proportionately) on keeping dying patients alive.
This
is a serious concern for people who buy insurance on the individual market,
because as
Congress debates how to repeal and replace the ACA,
just about every policy scenario assumes that the individual markets will
continue to exist through 2018. And although the markets were already in
trouble in some places, the White House’s decision not to take actions that
could stabilize them could continue to scare off insurers, resulting in more
states facing a situation like Iowa’s.
People who don’t get health insurance from an employer or qualify for a
public insurance program such as Medicaid or Medicare have long turned to
the individual market to buy plans. Obamacare set up open marketplaces where
these people could receive subsidies to buy insurance if they qualified
based on income. But many insurers also sold individual plans outside of the
ACA marketplace to people who didn’t qualify for subsidies.
After the
House voted last week to repeal and replace ObamaCare, Democrats quickly
launched a barrage of false attacks. Minority Leader Nancy Pelosi asserted
that the bill would “gut” protections for patients with pre-existing
conditions. Never one to shy away from melodrama, she added: “This is
deadly. This is deadly.”
Apparently
the GOP proposal is the second health-care bill Mrs. Pelosi didn’t read. The
legislation makes clear: “Nothing in this Act shall be construed as
permitting health insurance issuers to limit access to health coverage for
individuals with preexisting conditions.”
On Fox News
Sunday, the MIT economist Jonathan Gruber came from a different angle,
alleging it was dangerous to grant states waivers from some ObamaCare
requirements. He suggested insurers could now “literally say, just because
the genes you were born with, you’re going to pay more for health
insurance.”
Apparently
Mr. Gruber is also averse to reading. States may seek waivers from some
ObamaCare provisions, but the law explicitly prohibits waivers on
pre-existing-condition protections. To receive a waiver insurers must prove
it would lower or stabilize premiums, increase coverage, or expand the
choice of health plans.
People in
waiver states who never had insurance or let their policies lapse would be
guaranteed coverage, but to keep them from gaming the system, insurers could
take their health into account when determining premiums. After one year,
premiums would drop to the standard rate. This rare occurrence is a long way
from Mr. Gruber’s charge that people would pay “many, many multiples more.”
The
bill also includes $8 billion over five years to help states with waivers
set up high-risk pools to cover people with expensive illnesses. Mr. Gruber
dismissed this as “trivial.” Yet the
Kaiser Family Foundation found in 2011—before ObamaCare
kicked in—that 35 states had high-risk pools covering 226,000 people with
$2.6 billion in claims. Some $1.4 billion was covered by the premiums these
patients paid, and the states had to toss in only $1.2 billion. That’s $400
million less than would be available each year under the GOP bill. Even the
New York Times
reported that if states tapped all the bill’s available money for high-risk
pools, it would total
$138 billion.
And who thinks 35 states will seek waivers?
This hardly
exhausts Democratic complaints. Rep. Richard Neal (D., Mass.) said last week
that Republicans had voted to impose an “age tax,” because the bill would
allow premiums for older ObamaCare policyholders to be five times those of
younger people. (Now insurers can charge older people only three times as
much.) Yet the older age group’s health expenses are, on average, nearly
five times as high. Today everyone under 50 on ObamaCare is paying higher
premiums to subsidize the policies of those above 50.
So in
reality, Republicans are repealing the “age tax” Democrats placed on the
younger 80% of ObamaCare policyholders to subsidize the older 20%. This
despite that older ObamaCare policyholders are in their prime earning years
and likely have higher incomes, greater wealth and lower child-rearing
expenses.
There is also
Mr. Gruber’s startling claim that the Republican bill will cause 24 million
people to lose their insurance. How can 24 million people lose ObamaCare
coverage when only 11 million people bought the policies? The claim is a
distortion of the Congressional Budget Office’s estimate that abolishing
ObamaCare’s individual mandate would lead 24 million people to forgo
purchasing insurance in the future. Freed of ObamaCare’s penalty—a 3% tax on
their income—people may decide to do something else with their money.
The CBO is notoriously bad at estimating the benefits, such as lower prices,
that come from a consumer-driven system. The Republican bill would enable
more competition, expand health savings accounts and promote inexpensive
catastrophic coverage.
Mr. Gruber was
similarly misleading in claiming “the House bill cuts Medicaid by $880
billion over the next 10 years,” hinting the program would wither away.
Federal Medicaid spending this fiscal year is $389 billion. Under the GOP
bill, it will be $469 billion in fiscal year 2027. The bill restrains future
Medicaid growth. It doesn’t reduce spending.
From his academic bubble, Mr. Gruber said last year that ObamaCare is
“working as designed” and “there’s no sense in which it needs to be fixed.”
Yet since its passage, Americans have lost plans and doctors and watched as
their premiums and deductibles skyrocketed.
When states
adopted their budgets for the 2017 fiscal year, their share of Medicaid
spending was expected to grow by 4.4 percent on average,
according to an April reportfrom the Kaiser
Family Foundation. The increase was expected in large part because of the
decrease in federal funding for Medicaid expansion.
While
4.4 percent might not sound like an overwhelming increase, Medicaid spending
is a massive portion of states’ budgets. Medicaid spending across all states
totaled $509 billion in the 2015 fiscal year,
according to the Kaiser Family Foundation. States paid 38 percent of the costs,
with the federal government picking up the rest.
That means
states spent about $193.4 billion on Medicaid in 2015. That dwarfs state
higher education appropriations,
which totaledabout $83.6 billion across the
country in 2016-17.
State legislators
are essentially locked into spending on Medicaid. So when costs in that
program rise, lawmakers have to either raise revenue through taxes and fees
or find money in their discretionary budgets to reallocate. Higher education
represents one of the few big-ticket discretionary items from which they can
draw.
“They’re going to
get the money somewhere,” Pernsteiner said. “Where they make the cuts is
higher ed.”
Within individual
states that expanded Medicaid, projections show costs mounting in coming
years. Kentucky’s expenditures for Medicaid expansion are projected at
$77.2 million for the 2016-17 fiscal year -- a year in which the federal
match rate only falls below 100 percent for six months. The expenditures
under current law are expected to rise to $180.1 million in 2018,
$224 million in 2019 and $306.3 million in 2020, according to state
projections.
Kentucky is
dealing with other budget pressures as well. By
some estimates,
the state has the worst-funded pension system of any state in the country --
even worse than Illinois and New Jersey. Many believe dealing with that
issue will be a major drain on state coffers.
The state’s
Republican governor, Matt Bevin, has already shown a willingness to take
funding that would have gone to higher education and put it toward pensions,
said Robert L. King, president of the Kentucky Council on Postsecondary
Education. Budget pressures add up, including from Medicaid, King said.
“Because it’s a
mandated expenditure, it gets paid,” King said. “So our universities have
been taking cuts consistently for the last decade. I can’t tell you that
they are directly caused by Medicaid, but it certainly is a contributing
factor.”
King has been
watching trends between Medicaid funding and higher education funding since
he was chancellor of the State University of New York System in the early
2000s.
“I remember reading
studies at the time that showed that there was a pretty straight-line
correlation between the growth in Medicaid costs and the reduction in state
support for higher education,” he said.
A
2003 Brookings report
found every new dollar in state Medicaid spending was related to a decline
in higher education appropriations of about 6 cents to 7 cents.
In West Virginia,
which also expanded Medicaid eligibility under the Affordable Care Act,
health-care costs were wrapped up in a long budget standoff that left
leaders worried about higher education funding. State revenue has been
declining with energy markets, causing stress on the budget and a possible
pinch on higher education funding, according to a spokesman for West
Virginia University.
Continued in article
Jensen Comment
Actually two non-discretionary spending burdens are overwhelming state budgets.
The first is Medicaid whether or not a state expanded coverage under the ACA.
The second is unfunded pensions for public employees, baby boomers that are now
retiring in droves.
Gov. Jerry Brown and Democratic legislators have
caused a stir with their plan, which passed the legislature on Thursday, to
increase taxes to pay for the state's unquestionably decrepit infrastructure
of roads and bridges. Instead of thinking of this as a new transportation
tax, however, Californians should see it as a pension tax, given the extra
money plugs a hole caused by growing retirement payments to public
employees.
Consider this
sobering news from the CalMatters' Judy Lin in
January: "New projections show the state's annual bill for retirement
obligations is expected to reach $11 billion by the time Brown leaves office
in January 2019—nearly double what it was eight years earlier." That's the
state's "annual bill," i.e., the direct costs taken from the general-fund
budget. That number doesn't even include those "unfunded" pension
liabilities that according to some estimates top $1 trillion.
In the United Kingdom, the National
Institute for Health and Care Excellence (NICE) determines
the cost effectiveness, or value, of newly approved drugs based on their
impact on quality-adjusted life years. These determinations inform the
National Health System’s (NHS) treatment-coverage decisions. In contrast,
the FDA is prohibited from considering cost or value in its decision making,
and there is no U.S. governmental equivalent of NICE.
The Institute
for Clinical and Economic Review (ICER),
a small Boston-based nonprofit, has taken a step towards value-based pricing
by creating a NICE-like model. Development of a NICE or ICER-like
post-approval value review, incorporating appropriate oversight and
accountability, would help ensure coverage decisions remain fair and
cost-effective, but it won’t be enough. The NHS is likely to impose care
rationing because of escalating health and pharmaceutical costs. Any
successful plan to manage rising drug costs must address multiple aspects of
the problem, including value-based pricing, transparency, drug
re-importation, and the reform of the Orphan Drug Act, to name a few.
The FDA and other federal payers, including
Medicare, must be empowered to consider drug costs and outcomes, and this
process should factor in federal investment in drug discovery. (Ionis
and Cold Spring Harbor received federal grant funding
to support the early development of nusinersen.)
Federal government payers should also be allowed to
negotiate price discounts and re-import drugs (with provisions for adequate
quality control). In a disappointing move, President Trump, who had promised
to let Medicare
negotiate bulk pricing discounts for prescription drugs, abandoned
this pledge
after meeting with pharmaceutical industry
lobbyists and executives.
Pharmaceutical companies must be required to
disclose and justify development costs, particularly those seeking the
substantial benefits under the ODA. There are numerous examples of pharmaceutical
companies taking advantage of ODA provisions to
repurpose inexpensive medications for rare diseases, often at extraordinary,
unjustified costs. Marathon proposed a price of $89,000 for deflazacort,
which is already available in Europe and Canada for $1,000 to $2,000, a
6,000% price increase. (After several members
of Congress complained, the
launch of the drug was delayed.)
Senator Chuck Grassley, chairman of the Senate Judiciary Committee, is
rightly leading an inquiry
into this practice and other ODA abuses.
A health care system’s goal should be to
provide the best patient-centered care. Coverage decisions and resource
allocations must prioritize value to patients — not insurers’ or pharma
companies’ profits. If we are committed as a society to curing diseases such
as SMA, dangling treatments like nusinersen just out of patients’ reach is
cruel. Collectively, government, pharma, insurers, hospital systems and
physicians all have a role to play in providing access to the right care at
justifiable cost.
Jensen Question
Is there a study of where national health care plans like those in Canada and
Finland are drawing the line on paying for very costly medications such as a
cancer drug costing over $100,000 per year?
Bernie estimates a cost of $1.38 trillion per year for covering doctors,
hospitals, ambulances, and medications of roughly 350 million people give or
take depending upon the coverage of undocumented residents.
But since Medicare and Medicaid currently costs $1.14 trillion per year
Bernie must have left out all the people currently covered by Medicare and
Medicaid. Adding $1.38 trillion to $1.14 trillion brings the total cost to $2.52
trillion. However, since currently Medicare only does not pay 20% of the
expenses we need to add another $228 billion bringing the total estimated cost
to $2.52+$0.23 = $2.75 trillion per year.
Dividing $2.75 trillion by 350 million means the estimated cost is nearly
$8,000 cost per person ignoring medical expense inflation. For a family of four
this would be $32,000 in average outlays per year. There are also uncertainties
regarding how much of mental health, home nursing care, and nursing home care
would be covered. Plus Medicare D only covers a portion of medication costs per
person such that it is not unrealistic to assume that the Bernie Sanders
proposal would start out costing about $10,000 on average for every man, woman,
and child in the United States plus the added costs of nursing home care and
long-term mental health coverage.Plus Bernie did not add in the hundre of
billions paid for malpractice insurance and claims that are paid by hospitals,
doctors, and liability insurance companies.
Of course my estimates are subject to a huge margin of error. However, the
bottom line is that the funding proposal proposed by Bernie Sanders would only
pay for a small portion of the cost extending Medicare coverage to every man,
woman, and child in the USA.
On top of that the USA medical system does not have the capacity to provide
anything but lowest quality care on average to 350 million people. Hospitals
currently lose a considerable amount serving ACA and Medicaid patients --- which
is why so many doctors and hospitals refuse to serve ACA and Medicaid patients
Harvard: Where Both the ACA and AHCA Fall Short, and What the Health
Insurance Market Really Needs ---
Some of Chicago’s largest hospitals said they will not be part of any Cook
County Affordable Care Act marketplace plans in 2017.
University of Chicago Medical Center and Rush University Medical Center both
said they don’t plan to be in network for any Obamacare marketplace plans
next year.
The change means patients with doctors at those hospitals will either need
to find a plan off the marketplace, and lose Obamacare subsides, or find a
new doctor.
Northwestern Memorial Hospital said it will also be out of the marketplace,
but will have exceptions for some of its partner hospitals.
Continued in article
According to emergency room physicians Obamacare made it much worse for
emergency rooms.
American College of Emergency Room Physicians The Uninsured: Access to Medical Care Fact Sheet ---
http://newsroom.acep.org/fact_sheets?item=30032
The Congressional Budget Office is out with
its analysis of the House Republicans’ ObamaCare replacement, the American
Health Care Act (AHCA). The CBO’s report includes an implicit but powerful
indictment of Medicaid, America’s second-largest health care entitlement.
Medicaid has been around since 1965; it was
a core part of LBJ’s Great Society entitlement expansion. The program’s
idiosyncratic design requires states to chip in around 40% of the program’s
funding, while only getting to control about 5% of how the program is run.
The federal Medicaid law—Title XIX of the Social Security Act—mandates a
laundry list of benefits that states must provide through Medicaid, and bars
states from charging premiums. Copays and deductibles cannot exceed a token
amount.
Medicaid is the largest or
second-largest line item in nearly every state budget. But for all practical
purposes, the main tool states have to control costs is to pay doctors and
hospitals less than private insurers pay for the same care. As a result,
fewer doctors accept Medicaid patients, making it very hard for Medicaid
enrollees to get access to care when they need it. Poor access, in turn,
means that Medicaid enrollees—remarkably—have no better health outcomes than
those with no insurance at all.
That brings us back to the AHCA. According
to the CBO, able-bodied adults on Medicaid receive about $6,000 a year in
government health-insurance benefits. They pay no premiums and minimal
copays. You’d think that eligible individuals would need no prodding to sign
up for such a benefit.
And yet, according to its analysis of the
GOP ObamaCare replacement, the CBO believes that there are five million
Americans who wouldn’t sign up for Medicaid if it weren’t for ObamaCare’s
individual mandate. You read that right: Five million people need the threat
of a $695 fine to sign up for a free program that offers them $6,000 worth
of subsidized health insurance. That’s more than 1 in 5 of the 24 million
people the CBO (dubiously) claims would end up uninsured if the AHCA
supplanted ObamaCare.
On its face, there’s reason to doubt the
CBO’s view. The mandate is enforced through the income-tax system, and
enforcement of the mandate has been spotty for those in low tax brackets.
Many of those eligible for Medicaid don’t work or file returns. Under rules
established by the Obama administration, those who do can leave the “I have
insurance” box blank and face no penalty.
Still, it’s remarkable that the CBO believes
people need to be fined into signing up for Medicaid. That tells us
something about the CBO’s assessment of Medicaid’s value to those
individuals—and it buttresses the GOP’s case that Medicaid needs substantial
reform.
Not coincidentally, the AHCA represents the
most significant Medicaid reform since 1965, and thereby the most
significant entitlement reform in American history. The 1996 welfare reform
law is hailed by many conservatives as the most important domestic policy
achievement of the past 25 years. Fiscally speaking, the AHCA is 10 times as
significant.
The AHCA would put Medicaid on a budget,
increasing Medicaid spending per beneficiary at the same rate as the medical
component of the Consumer Price Index. This isn’t a far-right concept;
President Clinton first proposed reforming Medicaid this way in 1995, as an
alternative to the GOP idea of block grants. The 1996 law ended up including
neither provision.
Combined with administrative reforms that
may come from the Department of Health and Human Services, the bill would
give states more flexibility to manage Medicaid’s costs in ways that could
increase access to doctors and other providers, while reducing Medicaid
spending by hundreds of billions in its first decade and trillions
thereafter.
Ultimately, Medicaid for able-bodied
low-income adults should be merged into the system of tax credits that the
AHCA proposes for those above the poverty line. In that way, all Americans,
rich and poor, would have the ability to choose the health coverage and care
that reflects their needs, and build nest eggs in health savings accounts
that could be passed on to their heirs.
Chuck Schumer upbraided his
own party Tuesday for pushing the Affordable Care Act through Congress in
2010.
While Schumer emphasized
during a speech at the National Press Club that he supports the law and that
its policies "are and will continue to be positive changes," he argued that
the Democrats acted wrongly in using their new mandate after the 2008
election to focus on the issue rather than the economy at the height of a
terrible recession.
"After passing the stimulus,
Democrats should have continued to propose middle-class-oriented programs
and built on the partial success of the stimulus, but unfortunately
Democrats blew the opportunity the American people gave them," Schumer said.
"We took their mandate and put all of our focus on the wrong problem—health
care reform."
The third-ranking Senate
Democrat noted that just about 5 percent of registered voters in the United
States lacked health insurance before the implementation of the law, arguing
that to focus on a problem affecting such "a small percentage of the
electoral made no political sense."
The larger problem,
affecting most Americans, he said, was a poor economy resulting from the
recession. "When Democrats focused on health care, the average middle-class
person thought, 'The Democrats aren't paying enough attention to me,' "
Schumer said.
Despite the enduring
unpopularity of Obamacare, Congressional Democrats have up to now stood by
their health care law, allowing that “it’s not perfect” but that they are
proud of their votes to pass it. That all changed on Tuesday, when the
Senate’s third-highest-ranking Democrat—New York’s Chuck Schumer—declared
that “we took [the public’s] mandate and put all our focus on the wrong
problem—health care reform…When Democrats focused on health care, the
average middle-class person thought, ‘The Democrats aren’t paying enough
attention to me.’”
Sen. Schumer
made his
remarks at the National Press Club in Washington.
“Democrats blew the opportunity the American people gave them…Now, the
plight of uninsured Americans and the hardships caused by unfair insurance
company practices certainly needed to be addressed,” Schumer maintained.
“But it wasn’t the change we were hired to make. Americans were crying out
for the end to the recession, for better wages and more jobs—not changes in
health care.”
“This makes sense,” Schumer
continued, “considering 85 percent of all Americans got their health care
from either the government, Medicare, Medicaid, or their employer. And if
health care costs were going up, it really did not affect them. The
Affordable Care Act was aimed at the 36 million Americans who were not
covered. It has been reported that only a third of the uninsured are even
registered to vote…it made no political sense.”
The response from Obama
Democrats was swift. Many, like Obama speechwriters Jon Lovett and Jon
Favreau and NSC spokesman Tommy Vietor, took to Twitter. “Shorter Chuck
Schumer,” said Vietor, “I wish Obama cared more about helping Democrats than
sick people.”
WHAT is the best part of
House Republicans’ proposed reform of Obamacare? There isn’t one, if you
believe much of this week’s commentary. The bill will benefit the young and
healthy, by bringing their premiums down, but only at the cost of the old
and sickly. But most writers are overlooking the help the bill would offer
to one group that has clearly suffered unfairly under Obamacare. So long as
Paul Ryan’s reform does not send the market into a death spiral—which is not
a sure thing
(see
article)—this
group will get some needed financial assistance under the Republican plan.
I'm talking about people
who buy health insurance for themselves, rather than through an employer,
and who do not get the subsidies which shield those on low incomes from
Obamacare’s high premiums. It is easy to overlook this group, because the
vast majority of the 10m people who buy insurance through Obamacare’s
websites (or "exchanges") receive subsidies. For example, here is Jared
Bernstein, Vice-President Joe Biden's former chief economist, in theWashington Post:
Of course, there’s the
infamous, headline-generating 2017 premium increases in the non-group
market. After growing 2 and 7 percent in 2015 and 2016, insurers in the
state-based exchanges raised the cost of the benchmark plan by an average of
25 percent. To Obamacare critics, this was proof of the program’s
unsustainability. But because 85 percent of participants in this market
(state exchanges) receive premium tax credits to offset the cost of
coverage, they do not face the full shock.
What Mr Bernstein does not mention is that another 8m
Americans buy coverage directly from insurers, without going through the
exchanges. These buyers get no subsidies. But they must pay the same prices
as those who do, because the law forces everybody in the individual
marketplace—on or off the exchanges—into the same “risk-pool”.
In total, there are 9m
unsubsidised buyers for whom criticisms of Obamacare resonate strongly. Most
of these people are not rich: a family-of-four stops receiving subsidies at
an income of just under $100,000. Obamacare forced such buyers onto the same
plans as a lot of people with pre-existing medical conditions who could not
previously afford insurance. That pushed their premiums and deductibles
up—and they have risen further over time. Here’s an example from
a
piece
I wrote last September:
Before the law, Brian Anderson, a 30-something
orthodontist from Nashville, paid $80 a month for insurance that came
with a $5,000 deductible. In 2014 his insurer cancelled the plan, as it
did not now comply with the law. His new plan, from healthcare.gov,
provides, in his view, essentially the same coverage—the deductible is
in fact higher—but costs fully $201 per month. Mr Anderson says he is
glad many more people now have insurance. But the estimated 2.6m others
whose plans were cancelled that year may not all be as understanding.
Since I wrote that, Mr Anderson’s insurer has dropped out of
his local marketplace, and he has had to switch to a plan costing over $400
a month. You can understand why someone who has seen their premium go up by
over 300% would be disillusioned with the law.
Does this matter? A family-of-four earning $100,000 is
clearly not poor. However, they face very high prices for health insurance.
In much of Arizona, for instance, they would have to pay over $22,000 per
year—almost a quarter of their pre-tax income—for “silver” coverage,
according to the Kaiser Family Foundation’s Obamacare calculator. And that
is before you count their out-of-pocket medical costs. When Donald Trump
says that Obamacare is a “disaster”, such a family would look at their
health insurance options and agree.
The House Republican plan offers this group some help.
Individuals earning less than $75,000, and couples earning less than
$150,000, will get a big tax credit to help them with their premiums.
(Minnesota has already passed “premium relief” for such buyers).
Is that a good thing? Obamacare explicitly tries to spread
the costs of health insurance around, in order to increase coverage.
Unfortunately, it does so only in the individual market. The 155m Americans
who get health insurance through their employers need not foot the bill for
unhealthy people on the exchanges. Not only that, but this coddled group
also gets a tax break on their coverage. People in the individual market
have a right to feel hard done by. The best thing about Mr Ryan’s tax credit
is that it begins to redress the imbalance.
I am not suggesting that
helping this group justifies removing means-tested subsidies for the poor.
But I am pushing back on the idea that Obamacare's redistribution only hurt
the "rich". Here is Matthew Yglesias at Vox (emphasis
added):
Policy-minded conservatives have serious criticisms of
President Obama’s health care law. They think it taxes rich people
too much, and coddles Americans with excessively generous,
excessively subsidized health insurance plans. They want a world of
lower taxes on millionaires while millions of Americans put “skin in the
game” in the form of higher deductibles and copayments. Exactly the
opposite, in other words, of what Republican politicians have been
promising.
Mr
Yglesias portrays Obamacare's redistribution as flowing primarily from rich
to poor. But hischart shows
something else: that it hurts middle-income groups most. That is consistent
with the experience of millions of Americans in the individual market who
have seen their premiums soar while they have received no help from the
government. They are treated unfairly by the system as it stands, and should
not be ignored when thinking about health care reform.
Wharton: Will the USA
Face a Shortage of Nursing Homes for Baby Boomers?
http://knowledge.wharton.upenn.edu/article/will-u-s-face-shortage-nursing-homes-baby-boomers/
Capacity of nursing homes is on the decline (think of a changing regulatory
climate that causes costs to soar) in the face of demand building up like flood
water behind a dam that eventually overflow with gaga old folks.
Jensen Comment
It would seem that some national healthcare plans that fund nursing home care
might have more capacity to handle increases in the aging population. However,
there are some reports that in nations like Canada and the U.K. the rise in
demand for funding long-term nursing care is reaching crisis levels ahead
of the USA ---
https://www.canadian-nurse.com/en/articles/issues/2016/october-2016/canadas-long-term-care-funding-crisis
Bernie estimates a cost of $1.38 trillion per year for covering doctors,
hospitals, ambulances, and medications of roughly 350 million people give or
take depending upon the coverage of undocumented residents.
But since Medicare and Medicaid currently costs $1.14 trillion per year
Bernie must have left out all the people currently covered by Medicare and
Medicaid. Adding $1.38 trillion to $1.14 trillion brings the total cost to $2.52
trillion. However, since currently Medicare only does not pay 20% of the
expenses we need to add another $228 billion bringing the total estimated cost
to $2.52+$0.23 = $2.75 trillion per year.
Dividing $2.75 trillion by 350 million means the estimated cost is nearly
$8,000 cost per person ignoring medical expense inflation. For a family of four
this would be $32,000 in average outlays per year. There are also uncertainties
regarding how much of mental health, home nursing care, and nursing home care
would be covered. Plus Medicare D only covers a portion of medication costs per
person such that it is not unrealistic to assume that the Bernie Sanders
proposal would start out costing about $10,000 on average for every man, woman,
and child in the United States plus the added costs of nursing home care and
long-term mental health coverage.Plus Bernie did not add in the hundre of
billions paid for malpractice insurance and claims that are paid by hospitals,
doctors, and liability insurance companies.
Of course my estimates are subject to a huge margin of error. However, the
bottom line is that the funding proposal proposed by Bernie Sanders would only
pay for a small portion of the cost extending Medicare coverage to every man,
woman, and child in the USA.
On top of that the USA medical system does not have the capacity to provide
anything but lowest quality care on average to 350 million people. Hospitals
currently lose a considerable amount serving ACA and Medicaid patients --- which
is why so many doctors and hospitals refuse to serve ACA and Medicaid patients
The Congressional Budget Office is out with
its analysis of the House Republicans’ ObamaCare replacement, the American
Health Care Act (AHCA). The CBO’s report includes an implicit but powerful
indictment of Medicaid, America’s second-largest health care entitlement.
Medicaid has been around since 1965; it was
a core part of LBJ’s Great Society entitlement expansion. The program’s
idiosyncratic design requires states to chip in around 40% of the program’s
funding, while only getting to control about 5% of how the program is run.
The federal Medicaid law—Title XIX of the Social Security Act—mandates a
laundry list of benefits that states must provide through Medicaid, and bars
states from charging premiums. Copays and deductibles cannot exceed a token
amount.
Medicaid is the largest or
second-largest line item in nearly every state budget. But for all practical
purposes, the main tool states have to control costs is to pay doctors and
hospitals less than private insurers pay for the same care. As a result,
fewer doctors accept Medicaid patients, making it very hard for Medicaid
enrollees to get access to care when they need it. Poor access, in turn,
means that Medicaid enrollees—remarkably—have no better health outcomes than
those with no insurance at all.
That brings us back to the AHCA. According
to the CBO, able-bodied adults on Medicaid receive about $6,000 a year in
government health-insurance benefits. They pay no premiums and minimal
copays. You’d think that eligible individuals would need no prodding to sign
up for such a benefit.
And yet, according to its analysis of the
GOP ObamaCare replacement, the CBO believes that there are five million
Americans who wouldn’t sign up for Medicaid if it weren’t for ObamaCare’s
individual mandate. You read that right: Five million people need the threat
of a $695 fine to sign up for a free program that offers them $6,000 worth
of subsidized health insurance. That’s more than 1 in 5 of the 24 million
people the CBO (dubiously) claims would end up uninsured if the AHCA
supplanted ObamaCare.
On its face, there’s reason to doubt the
CBO’s view. The mandate is enforced through the income-tax system, and
enforcement of the mandate has been spotty for those in low tax brackets.
Many of those eligible for Medicaid don’t work or file returns. Under rules
established by the Obama administration, those who do can leave the “I have
insurance” box blank and face no penalty.
Still, it’s remarkable that the CBO believes
people need to be fined into signing up for Medicaid. That tells us
something about the CBO’s assessment of Medicaid’s value to those
individuals—and it buttresses the GOP’s case that Medicaid needs substantial
reform.
Not coincidentally, the AHCA represents the
most significant Medicaid reform since 1965, and thereby the most
significant entitlement reform in American history. The 1996 welfare reform
law is hailed by many conservatives as the most important domestic policy
achievement of the past 25 years. Fiscally speaking, the AHCA is 10 times as
significant.
The AHCA would put Medicaid on a budget,
increasing Medicaid spending per beneficiary at the same rate as the medical
component of the Consumer Price Index. This isn’t a far-right concept;
President Clinton first proposed reforming Medicaid this way in 1995, as an
alternative to the GOP idea of block grants. The 1996 law ended up including
neither provision.
Combined with administrative reforms that
may come from the Department of Health and Human Services, the bill would
give states more flexibility to manage Medicaid’s costs in ways that could
increase access to doctors and other providers, while reducing Medicaid
spending by hundreds of billions in its first decade and trillions
thereafter.
Ultimately, Medicaid for able-bodied
low-income adults should be merged into the system of tax credits that the
AHCA proposes for those above the poverty line. In that way, all Americans,
rich and poor, would have the ability to choose the health coverage and care
that reflects their needs, and build nest eggs in health savings accounts
that could be passed on to their heirs
Chuck Schumer upbraided his
own party Tuesday for pushing the Affordable Care Act through Congress in
2010.
While Schumer emphasized
during a speech at the National Press Club that he supports the law and that
its policies "are and will continue to be positive changes," he argued that
the Democrats acted wrongly in using their new mandate after the 2008
election to focus on the issue rather than the economy at the height of a
terrible recession.
"After passing the stimulus,
Democrats should have continued to propose middle-class-oriented programs
and built on the partial success of the stimulus, but unfortunately
Democrats blew the opportunity the American people gave them," Schumer said.
"We took their mandate and put all of our focus on the wrong problem—health
care reform."
The third-ranking Senate
Democrat noted that just about 5 percent of registered voters in the United
States lacked health insurance before the implementation of the law, arguing
that to focus on a problem affecting such "a small percentage of the
electoral made no political sense."
The larger problem,
affecting most Americans, he said, was a poor economy resulting from the
recession. "When Democrats focused on health care, the average middle-class
person thought, 'The Democrats aren't paying enough attention to me,' "
Schumer said.
Despite the enduring
unpopularity of Obamacare, Congressional Democrats have up to now stood by
their health care law, allowing that “it’s not perfect” but that they are
proud of their votes to pass it. That all changed on Tuesday, when the
Senate’s third-highest-ranking Democrat—New York’s Chuck Schumer—declared
that “we took [the public’s] mandate and put all our focus on the wrong
problem—health care reform…When Democrats focused on health care, the
average middle-class person thought, ‘The Democrats aren’t paying enough
attention to me.’”
Sen. Schumer
made his
remarks at the National Press Club in Washington.
“Democrats blew the opportunity the American people gave them…Now, the
plight of uninsured Americans and the hardships caused by unfair insurance
company practices certainly needed to be addressed,” Schumer maintained.
“But it wasn’t the change we were hired to make. Americans were crying out
for the end to the recession, for better wages and more jobs—not changes in
health care.”
“This makes sense,” Schumer
continued, “considering 85 percent of all Americans got their health care
from either the government, Medicare, Medicaid, or their employer. And if
health care costs were going up, it really did not affect them. The
Affordable Care Act was aimed at the 36 million Americans who were not
covered. It has been reported that only a third of the uninsured are even
registered to vote…it made no political sense.”
The response from Obama
Democrats was swift. Many, like Obama speechwriters Jon Lovett and Jon
Favreau and NSC spokesman Tommy Vietor, took to Twitter. “Shorter Chuck
Schumer,” said Vietor, “I wish Obama cared more about helping Democrats than
sick people.
WHAT is the best part of
House Republicans’ proposed reform of Obamacare? There isn’t one, if you
believe much of this week’s commentary. The bill will benefit the young and
healthy, by bringing their premiums down, but only at the cost of the old
and sickly. But most writers are overlooking the help the bill would offer
to one group that has clearly suffered unfairly under Obamacare. So long as
Paul Ryan’s reform does not send the market into a death spiral—which is not
a sure thing
(see
article)—this
group will get some needed financial assistance under the Republican plan.
I'm talking about people
who buy health insurance for themselves, rather than through an employer,
and who do not get the subsidies which shield those on low incomes from
Obamacare’s high premiums. It is easy to overlook this group, because the
vast majority of the 10m people who buy insurance through Obamacare’s
websites (or "exchanges") receive subsidies. For example, here is Jared
Bernstein, Vice-President Joe Biden's former chief economist, in theWashington Post:
Of course, there’s the
infamous, headline-generating 2017 premium increases in the non-group
market. After growing 2 and 7 percent in 2015 and 2016, insurers in the
state-based exchanges raised the cost of the benchmark plan by an average of
25 percent. To Obamacare critics, this was proof of the program’s
unsustainability. But because 85 percent of participants in this market
(state exchanges) receive premium tax credits to offset the cost of
coverage, they do not face the full shock.
What Mr Bernstein does not mention is that another 8m
Americans buy coverage directly from insurers, without going through the
exchanges. These buyers get no subsidies. But they must pay the same prices
as those who do, because the law forces everybody in the individual
marketplace—on or off the exchanges—into the same “risk-pool”.
In total, there are 9m
unsubsidised buyers for whom criticisms of Obamacare resonate strongly. Most
of these people are not rich: a family-of-four stops receiving subsidies at
an income of just under $100,000. Obamacare forced such buyers onto the same
plans as a lot of people with pre-existing medical conditions who could not
previously afford insurance. That pushed their premiums and deductibles
up—and they have risen further over time. Here’s an example from
a
piece
I wrote last September:
Before the law, Brian Anderson, a 30-something orthodontist
from Nashville, paid $80 a month for insurance that came with a $5,000
deductible. In 2014 his insurer cancelled the plan, as it did not now comply
with the law. His new plan, from healthcare.gov, provides, in his view,
essentially the same coverage—the deductible is in fact higher—but costs
fully $201 per month. Mr Anderson says he is glad many more people now have
insurance. But the estimated 2.6m others whose plans were cancelled that
year may not all be as understanding.
Since I wrote that, Mr Anderson’s insurer has dropped out of
his local marketplace, and he has had to switch to a plan costing over $400
a month. You can understand why someone who has seen their premium go up by
over 300% would be disillusioned with the law.
Does this matter? A family-of-four earning $100,000 is
clearly not poor. However, they face very high prices for health insurance.
In much of Arizona, for instance, they would have to pay over $22,000 per
year—almost a quarter of their pre-tax income—for “silver” coverage,
according to the Kaiser Family Foundation’s Obamacare calculator. And that
is before you count their out-of-pocket medical costs. When Donald Trump
says that Obamacare is a “disaster”, such a family would look at their
health insurance options and agree.
The House Republican plan offers this group some help.
Individuals earning less than $75,000, and couples earning less than
$150,000, will get a big tax credit to help them with their premiums.
(Minnesota has already passed “premium relief” for such buyers).
Is that a good thing? Obamacare explicitly tries to spread
the costs of health insurance around, in order to increase coverage.
Unfortunately, it does so only in the individual market. The 155m Americans
who get health insurance through their employers need not foot the bill for
unhealthy people on the exchanges. Not only that, but this coddled group
also gets a tax break on their coverage. People in the individual market
have a right to feel hard done by. The best thing about Mr Ryan’s tax credit
is that it begins to redress the imbalance.
I am not suggesting that
helping this group justifies removing means-tested subsidies for the poor.
But I am pushing back on the idea that Obamacare's redistribution only hurt
the "rich". Here is Matthew Yglesias at Vox (emphasis
added):
Policy-minded conservatives have serious criticisms of
President Obama’s health care law. They think it taxes rich people too
much, and coddles Americans with excessively generous, excessively
subsidized health insurance plans. They want a world of lower taxes on
millionaires while millions of Americans put “skin in the game” in the form
of higher deductibles and copayments. Exactly the opposite, in other words,
of what Republican politicians have been promising.
Mr
Yglesias portrays Obamacare's redistribution as flowing primarily from rich
to poor. But hischart shows
something else: that it hurts middle-income groups most. That is consistent
with the experience of millions of Americans in the individual market who
have seen their premiums soar while they have received no help from the
government. They are treated unfairly by the system as it stands, and should
not be ignored when thinking about health care reform.
The white smoke rose Monday afternoon from the
Congressional Budget Office as the fiscal forecasters published their
cost-and-coverage estimates of the GOP health-care reform bill. Awaiting
such predictions—and then investing them with supposed clairvoyance—are
Beltway rituals. The coverage numbers weren’t great for Republicans, but
they shouldn’t allow an outfit that historically underestimates the benefits
of market forces to drive policy.
The good news is that CBO estimates that the
American Health Care Act would cut the budget deficit by $337 billion over
10 years as the bill replaces ObamaCare’s subsidies with tax credits,
rationalizes its Medicaid expansion and repeals its tax increases. The bill
would cut taxes by nearly $900 billion while cutting spending by $1.2
trillion.
The bad news is that CBO thinks 14 million people
on net would be uninsured in 2018 relative to the ObamaCare status quo. How
many people may “lose coverage” is the debate progressives want to have, as
if that’s the only relevant question in U.S. health care.
The CBO attributes “most” of this initial coverage
plunge to “repealing the penalties associated with the individual mandate.”
If people aren’t subject to government coercion to buy insurance or else pay
a fine, some “would choose not to have insurance because they chose to be
covered by insurance under current law only to avoid paying the penalties,
and some people would forgo insurance in response to higher premiums.”
What this finding says about the value Americans
attach to ObamaCare-compliant health insurance is damning. If CBO is right,
some 14 million people would rather spend their money on something else,
despite the subsidies.
But CBO also has too much faith in the mandate as
an effective policy tool. In ObamaCare practice, the mandate isn’t pulling
“free riders” into the insurance markets. The IRS reports that in 2015 some
12.7 million taxpayers claimed one or more exemptions from the mandate, such
as “hardship,” while merely 6.5 million paid the fine.
The GOP wager is that the stability of the
individual insurance market would improve with better incentives and if
people want to participate. Deregulation would free up insurers to offer
more options at many price points that meet different needs. Instead of
brute force, Republicans think more people would join the market because if
it offers alternatives worth the cost.
CBO’s budget gnomes don’t share these assumptions
and they don’t get built into their models. CBO models are not a writ carved
in stone by a finger of light, but merely an educated economic guess about
how consumers and businesses will behave differently in response to new
health-care policies.
Thus this cost estimate should be part of the
larger debate, not taken as gospel. Last year the more market-friendly
Center for Health and Economy scored the House GOP’s “Better Way” health
plan, which this bill closely resembles. The center model was designed by
the University of Minnesota’s Stephen Parente, the leading expert in
modeling premium support-style health reforms.
The center estimated that the individual market
would grow by about a million on net compared to current law in 2018 and by
13 million in 2026. Tax credits and deregulation may well be more powerful
than mandates in practice.
The center did find that per-capita Medicaid block
grants would cause about four million fewer insured individuals in total by
2026, which is more modest than CBO. Over time, according to CBO, coverage
losses would rise to 21 million in 2020 and then to 24 million in 2026 as
states rolled back ObamaCare’s Medicaid expansion.
But there are more than a few reasons to doubt CBO’s
fortune-telling, especially in health care. Precisely because its models
give too much weight to government coercion and too little to free markets,
its projections have often missed the mark.
In February 2013, CBO predicted that ObamaCare
enrollment in the individual market would be 13 million in 2015, 24 million
in 2016 and 26 million in 2017. The actual enrollment for those years were,
respectively, 11 million, 12 million and 10 million. As recently as March
2016, CBO was projecting an enrollment boom of 15 million for this year.
CBO also failed to predict how many people would
game ObamaCare’s insurance rules and mandates, signing up for coverage just
before they need expensive procedures like knee replacements then dropping
coverage. On paper they shouldn’t behave that way, but the real world works
differently than CBO’s models.
CBO was also badly wrong about the 2003 Medicare
prescription drug benefit, which unlike ObamaCare used incentives, markets
and private competition to control public costs. The drug benefit cost about
40% less over its first decade than CBO projected.
Democrats in 2009-2010 wasted months gaming the CBO
scoring process to hide the enormous true costs of ObamaCare with budget
gimmicks, which is a spectacle the GOP ought to avoid. Opponents in Congress
weren’t any more convinced than the public, and the delays crowded out other
priorities. If Republicans try to juke the coverage estimates, they’ll be
making the same mistake.
Continued in article
From the CFO Journal's Morning Ledger on May 3, 2017
Aetna to pull back further from health exchanges Health
insurer Aetna Inc. plans to scale back its presence in the Affordable
Care Act exchanges from 2018 onward. It also said it expects losses on the
business this year, even though enrollment on individual plans fell.
Jensen Comment
Nearly all of Obama's startup insurance companies for
the health exchanges have dropped out of the market. This left only the large
established companies in the exchange markets. The one to watch is Blue Cross
Anthem that is now the only insurer left in many of the exchange markets. Anthem
is also threatening to pull out if Obamacare rates are not increased to cover
losses. The media tends to play down this enormous problem that plagued
Obamacare from get go. Low insurance rates in turn led to low reimbursement
rates for providers --- which is why so many doctors and hospitals (think nearly
all of Chicago) will not serve patients insured by Obamacare
Jensen Comment
Add to this another $10 trillion for free college education for all and you've
got a monumental obligation to be paid by government. But there's really no
sweat since the Fed has already proven that printing money is the best way to
pay government bills to avoid taxation and debt.
Among the law’s few popular features, even among
Republicans, is the mandate to cover adult children through age 26 on the
insurance plans of their parents. This benediction is sold as a gratuity,
but somebody must ultimately pay, and new research suggests the hidden
costs—in the form of lower take-home pay—are far higher than advertised.
In a working paper, Gopi Shah Goda and Jay
Bhattacharya of Stanford and Monica Farid of Harvard exploit the fact that
some 37 states had extended dependent-coverage mandates of varying rigor and
comprehensiveness before the Affordable Care Act. They explore these
differences to estimate the results of the uniform national mandate that was
imposed in 2010.
“We find evidence that employees who were most
affected by the mandate, namely employees at large firms, saw wage
reductions of approximately $1,200 per year,” the researchers observe. As a
wave of young adults hit the employer-based insurance rolls, the cost of
coverage inevitably climbed and businesses were obliged to dial back cash
wages as a share of overall compensation to accommodate the influx. Large
businesses were a particular casualty because before ObamaCare they were
largely exempt from state-level mandates.
The study also found that the costs of the
adult-kid mandate weren’t “only borne by parents of eligible children or
parents more generally.” They’re spread over all workers including other
young people, the childless and late middle-aged.
No study is definitive, though the authors are
careful about their methods and assumptions. The eternal lessons are that no
alleged government benefit is free and people should be allowed to make the
trade-offs for themselves. Another is that the next President has plenty of
running room to improve the American economy, if he cares to make better
decisions.
Data USA (community demographics, such as Medicare reimbursements by county)
--- https://datausa.io/
Deloitte played a major role in developing this database on poverty, health, and
many other data categories
Historical NHE
(National Health Expenditures), 2015:
·
NHE grew 5.8% to $3.2 trillion in 2015, or $9,990 per person,
and accounted for 17.8% of Gross Domestic Product (GDP).
·
Medicare spending grew 4.5% to $646.2 billion in 2015, or 20
percent of total NHE.
·
Medicaid spending grew 9.7% to $545.1 billion in 2015, or 17
percent of total NHE.
·
Private health insurance spending grew 7.2% to $1,072.1
billion in 2015, or 33 percent of total NHE.
·
Out of pocket spending grew 2.6% to $338.1 billion in 2015,
or 11 percent of total NHE.
·
Hospital expenditures grew 5.6% to $1,036.1 billion in 2015,
faster than the 4.6% growth in 2014.
·
Physician and clinical services expenditures grew 6.3% to
$634.9 billion in 2015, a faster growth than the 4.8% in 2014.
·
Prescription drug spending increased 9.0% to $324.6 billion
in 2015, slower than the 12.4% growth in 2014.
·
The largest shares of total health spending were sponsored by
the federal government (28.7 percent) and the households (27.7 percent).
The private business share of health spending accounted for 19.9 percent of
total health care spending, state and local governments accounted for 17.1
percent, and other private revenues accounted for 6.7 percent.
·
For further detail see NHE Tables in downloads below.
Projected NHE,
2016-2025:
·
National health spending is projected to grow at an average
rate of 5.6 percent per year for 2016-25, and 4.7 percent per year on a per
capita basis.
o
Health spending is projected to grow 1.2 percentage points
faster than Gross Domestic Product (GDP) per year over the 2016-25 period;
as a result, the health share of GDP is expected to rise from 17.8 percent
in 2015 to 19.9 percent by 2025.
o
Throughout the 2016-25 projection period, growth in national
health expenditures is driven by projected faster growth in medical prices
(from historically low growth in 2015 of 0.8 percent to nearly 3 percent by
2025). This faster expected growth in prices is partially offset by
projected slowing growth in the use and intensity of medical goods and
services.
·
Although the largest health insurance coverage impacts from
the Affordable Care Act’s expansions have already been observed in 2014-15,
the insured share of the population is projected to increase from 90.9
percent in 2015 to 91.5 percent in 2025.
o
This expectation is mainly a result of continued anticipated
growth in private health insurance enrollment, in particular for
employer-sponsored insurance, during the first half of the decade in
response to faster projected economic growth.
·
Health spending growth by federal and state & local
governments is projected to outpace growth by private businesses,
households, and other private payers over the projection period (5.9 percent
compared to 5.4 percent, respectively) in part due to ongoing strong
enrollment growth in Medicare by the baby boomer generation coupled with
continued government funding dedicated to subsidizing premiums for lower
income Marketplace enrollees.
·
National health spending growth is projected to have
decelerated from 5.8 percent in 2015 to 4.8 percent in 2016 as the initial
impacts associated with the Affordable Care Act’s major coverage expansions
fade. Medicaid spending growth is projected to have decelerated sharply from
9.7 percent in 2015 to 3.7 percent in 2016 as enrollment growth in the
program slowed significantly. Similarly, private health insurance spending
growth is projected to have slowed from 7.2 percent in 2015 to 5.9 percent
in 2016 (also largely attributable to slowing expected growth in
enrollment).
·
Health spending is projected to grow 5.4 percent in 2017
related to faster growth in Medicare and private health insurance spending.
·
Health expenditures are projected to grow at an average rate
of 5.9 percent for 2018-19, the fastest of the sub-periods examined, as
projected spending growth in Medicare and Medicaid accelerates.
·
Through the second half of the projection (2020-25),
increasing medical prices are offset by projected decelerations in growth in
the use and intensity of medical goods and services, leading to average
growth of 5.8 percent per year for national health expenditures.
For further detail see
NHE projections 2016-2025 in downloads below.
NHE by Age Group and
Gender, Selected Years 2002, 2004, 2006, 2008, 2010, and 2012:
·
Per person personal health care spending for the 65 and older
population was $18,988 in 2012, over 5 times higher than spending per child
($3,552) and approximately 3 times the spending per working-age person
($6,632).
·
In 2012, children accounted for approximately 25 percent of
the population and slightly less than 12 percent of all PHC spending.
·
The working-age group comprised the majority of spending and
population in 2012, almost 54 percent and over 61 percent respectively.
·
The elderly were the smallest population group, nearly 14
percent of the population, and accounted for approximately 34 percent of all
spending in 2012.
·
Per person spending for females ($8,315) was 22 percent more
than males ($6,788) in 2012.
·
In 2012, per person spending for male children (0-18) was 9
percent more than females. However, for the working age and elderly groups,
per person spending for females was 28 and 7 percent more than for males.
For further detail see
health expenditures by age in downloads below.
NHE by State of
Residence, 1991-2014:
·
In 2014, per capita personal health care spending ranged from
$5,982 in Utah to $11,064 in Alaska. Per capita spending in Alaska was 38
percent higher than the national average ($8,045) while spending in Utah was
about 26 percent lower; they have been the lowest and highest, respectively,
since 2012.
·
Health care spending by region continued to exhibit
considerable variation. In 2014, the New England and Mideast regions had the
highest levels of total per capita personal health care spending ($10,119
and $9,370, respectively), or 26 and 16 percent higher than the national
average. In contrast, the Rocky Mountain and Southwest regions had the
lowest levels of total personal health care spending per capita ($6,814 and
$6,978, respectively) with average spending roughly 15 percent lower than
the national average.
·
For 2010-14, average growth in per capita personal health
care spending was highest in Alaska at 4.8 percent per year and lowest in
Arizona at 1.9 percent per year (compared with average growth of 3.1 percent
nationally).
·
The spread between the highest and the lowest per capita
personal health spending across the states has remained relatively stable
over 2009-14. Accordingly, the highest per capita spending levels were 80 to
90 percent higher per year than the lowest per capita spending levels during
the period.
·
Medicare expenditures per beneficiary were highest in New
Jersey ($12,614) and lowest in Montana ($8,238) in 2014.
·
Medicaid expenditures per enrollee were highest in North
Dakota ($12,413) and lowest in Illinois ($4,959) in 2014.
For further detail,
see health expenditures by state of residence in downloads below.
NHE by State of
Provider, 1980-2014:
·
Between 2009 and 2014, U.S. personal health care spending
grew, on average, 3.9 percent per year, with spending in North Dakota
growing the fastest (6.7 percent) and spending in Rhode Island growing the
slowest (2.5 percent).
·
In 2014, California’s personal health care spending was
highest in the nation ($295.0 billion), representing 11.5 percent of total
U.S. personal health care spending. Comparing historical state rankings
through 2014, California consistently had the highest level of total
personal health care spending, together with the highest total population in
the nation. Other large states, New York, Texas, Florida, and Pennsylvania,
also were among the states with the highest total personal health care
spending.
·
Wyoming’s personal health care spending was lowest in the
nation (as has been the case historically), representing just 0.2 percent of
total U.S. personal health care spending in 2014. Vermont, Alaska, North
Dakota, and South Dakota were also among the states with the lowest personal
health care spending in both 2014 and historically. All these states have
smaller populations.
·
Gross Domestic Product (GDP) by state measures the value of
goods and services produced in each state. Health spending as a share of a
state’s GDP shows the importance of the health care sector in a state’s
economy. As a share of GDP, Maine ranked the highest (22.3 percent) and
Wyoming ranked the lowest (9.3 percent) in 2014.
For further detail,
see health expenditures by state of provider in downloads below.
As a Doctor, I’m Sick of All The Health Care Freeloaders
---
https://www.texasobserver.org/chip-doctor-texas-kids/
Jensen Comment
Many hospitals will not serve Medicaid patients or patients insured by Obamacare
exchanges due to losing so much money on those patients. Those medical clinics
that do serve such patients may be cutting costs by making those patients be
served by physicians assistants who are not doctors. This is not ipso facto a
bad thing for screening patients, but it becomes questionable when medications
and other treatments are being given to patients without seeing more qualified
medical service providers.
Some of Chicago’s largest hospitals said they will not be part of any Cook
County Affordable Care Act marketplace plans in 2017.
University of Chicago Medical Center and Rush University Medical Center both
said they don’t plan to be in network for any Obamacare marketplace plans
next year.
The change means patients with doctors at those hospitals will either need
to find a plan off the marketplace, and lose Obamacare subsides, or find a
new doctor.
Northwestern Memorial Hospital said it will also be out of the marketplace,
but will have exceptions for some of its partner hospitals.
Continued in article
According to emergency room physicians Obamacare made it much worse for
emergency rooms.
American College of Emergency Room Physicians The Uninsured: Access to Medical Care Fact Sheet ---
http://newsroom.acep.org/fact_sheets?item=30032
Optima — a Virginia-based health insurer — will exit a
slew of Obamacare exchanges in the state for 2018, the company announced
Wednesday.
The insurer said it would leave many rural areas of the
state, following the exits of large insurers like Anthem from the same
areas. The company cited the other insurer exits as well as "uncertainty in
Washington" as reasons for the exit.
"The decisions we made were challenging ones given the
recent changes and ambiguities in the marketplace," Optima CEO Michael
Dudley said in
a statement. "Our most recent filing with the state reflects these
dynamic changes, as would be expected in these circumstances."
According to The Kaiser Family Foundation, a nonpartisan health policy
think tank, the exit will leave 63 counties in the state with no insurer.
Just over 70,000 people enrolled in Obamacare exchange plans in 2017 in
these counties, per Kaiser, leaving them at risk of having no coverage next
year.
The possibility of counties going
without an insurer has long been one of the biggest potential setbacks for
the Obamacare exchanges, since there is no back up option for individuals in
areas without an insurer.
Jensen Comment
This is an example of how to mislead with statistics. The main problem is that
there are such variable alternatives for long-term care costs in any state, and
the pricing may or may not vary greatly.
https://www.genworth.com/about-us/industry-expertise/cost-of-care.html
Even more variable than pricing is quality of care. Rural nursing centers often
rely on minimum-wage workers who are at the bottom of the barrel in terms of
skills and attitude. Many can't get local jobs anywhere else. Nursing homes are
often booked to capacity such that it's necessary to travel to other towns to
find an available bed. My mother had short stays in three different small Iowa
town nursing centers. The fees were roughly the same for greatly (I mean
GREATLY) differing quality of care. Some minimum wage workers are very caring
and terrific nursing home workers. Others are lousy. Interestingly, the locals
seem to know which centers to avoid but you have to dig to get those locals to
reveal what they know. One problem is that often patients cannot reveal quality
of care issues unless you look for their bruises and sniff for their body odors.
They typically just don't know where they're living. My mother was quite bruised
before we got her out of one facility. In many ways it was a relief that she
passed on after only six months in nursing homes. At the time my father had to
deal with troublesome issues since I was living in Texas at the time.
Fortunately he himself never had to live in one of those places.
From the CFO Journal's Morning Ledger on December 2, 2016
Obamacare’s bright spots and drawbacks
Here’s the good news: Thanks to the Affordable Care
Act, or Obamacare, more Americans have access to health care than ever
before, Leemore Dafny and Dr. Thomas Lee write for Harvard Business Review.
The bad news? The care itself hasn’t improved much. Despite the hard work of
dedicated providers, our health-care system remains chaotic, unreliable,
inefficient and crushingly expensive.
Some of Chicago’s largest hospitals said they will not be part of any Cook
County Affordable Care Act marketplace plans in 2017.
University of Chicago Medical Center and Rush University Medical Center both
said they don’t plan to be in network for any Obamacare marketplace plans
next year.
The change means patients with doctors at those hospitals will either need
to find a plan off the marketplace, and lose Obamacare subsides, or find a
new doctor.
Northwestern Memorial Hospital said it will also be out of the marketplace,
but will have exceptions for some of its partner hospitals.
Continued in article
According to emergency room physicians Obamacare made it much worse for
emergency rooms.
American College of Emergency Room Physicians The Uninsured: Access to Medical Care Fact Sheet --- http://newsroom.acep.org/fact_sheets?item=30032
Despite the enduring
unpopularity of Obamacare, Congressional Democrats have up to now stood by
their health care law, allowing that “it’s not perfect” but that they are
proud of their votes to pass it. That all changed on Tuesday, when the
Senate’s third-highest-ranking Democrat—New York’s Chuck Schumer—declared
that “we took [the public’s] mandate and put all our focus on the wrong
problem—health care reform…When Democrats focused on health care, the
average middle-class person thought, ‘The Democrats aren’t paying enough
attention to me.’”
Sen. Schumer made his
remarksat the National Press Club in
Washington. “Democrats blew the opportunity the American people gave
them…Now, the plight of uninsured Americans and the hardships caused by
unfair insurance company practices certainly needed to be addressed,”
Schumer maintained. “But it wasn’t the change we were hired to make.
Americans were crying out for the end to the recession, for better wages and
more jobs—not changes in health care.”
“This
makes sense,” Schumer continued, “considering 85 percent of all Americans
got their health care from either the government, Medicare, Medicaid, or
their employer. And if health care costs were going up, it really did not
affect them. The Affordable Care Act was aimed at the 36 million Americans
who were not covered. It has been reported that only a third of the
uninsured are even registered to vote…it made no political sense.”
The
response from Obama Democrats was swift. Many, like Obama speechwriters Jon
Lovett and Jon Favreau and NSC spokesman Tommy Vietor, took to Twitter.
“Shorter Chuck Schumer,” said Vietor, “I wish Obama cared more about helping
Democrats than sick people.
On Donald
Trump’s victory Republicans in Congress are primed for an ambitious agenda,
and not a moment too soon. One immediate problem is ObamaCare’s expansion of
Medicaid, which has seen enrollment at least twice as high as advertised.
Most of the
insurance coverage gains from the law come from opening Medicaid eligibility
beyond its original goal of helping the poor and disabled to include
prime-age, able-bodied, childless adults. The Supreme Court made this
expansion optional in 2012, and Governors claimed not joining would leave
“free money” on the table because the feds would pick up 100% of the costs
of new beneficiaries.
In a new
report this week for the Foundation for Government Accountability, Jonathan
Ingram and Nicholas Horton tracked down the original enrollment projections
by actuaries in 24 states that expanded and have since disclosed at least a
year of data on the results. Some 11.5 million people now belong to
ObamaCare’s new class of able-bodied enrollees, or 110% higher than the
projections.
Analysts in
California expected only 910,000 people to sign up, but instead 3.84 million
have, 322% off the projections. The situation is nearly as dire in New York,
where enrollment is 276% higher than expected, and Illinois, which is up
90%. This liberal state triumvirate is particularly notable because they
already ran generous welfare states long before ObamaCare.
Continued in article
Jensen Comment
President Obama baited the hook by claiming the Federal Government would pay for
Medicaid expansion. But the states that took the bait are now on the hook.
Medicaid is not the largest single expense item in most states, and the expense
that will go completely out of control (heavily due to fraud) will be the cost
of caring for older people where medical expenses are greatest, especially since
Medicaid foots sometimes years of all nursing home and medication costs.
Many doctors won’t take the insurance, and the care
patients do receive is inferior. Here’s a solution.
The two principal expenditures of the Affordable
Care Act so far include $850 billion for insurance subsidies and a similar
outlay for a massive Medicaid expansion. The truth is that Medicaid—a
program costing $500 billion a year that rises to $890 billion in
2024—funnels low-income families into substandard coverage. Instead of
providing a pathway to excellent health care for poor Americans, ObamaCare’s
Medicaid expansion doubles down on their second-class health-care status.
Already 55% of doctors in major metropolitan areas
refuse new Medicaid patients, according to the 2014 Merritt Hawkins annual
survey. Even of those providers signed up with Medicaid, 56% of primary-care
doctors and 43% of specialists are not available to new patients. Moreover,
numerous studies have found that the quality of medical care is inferior
under Medicaid, compared with private insurance. Lower quality means more
in-hospital deaths, more complications from surgery, shorter survival after
treatment, and longer hospital stays than similar patients with private
insurance.
The two principal expenditures of the Affordable
Care Act so far include $850 billion for insurance subsidies and a similar
outlay for a massive Medicaid expansion. The truth is that Medicaid—a
program costing $500 billion a year that rises to $890 billion in
2024—funnels low-income families into substandard coverage. Instead of
providing a pathway to excellent health care for poor Americans, ObamaCare’s
Medicaid expansion doubles down on their second-class health-care status.
Already 55% of doctors in major metropolitan areas
refuse new Medicaid patients, according to the 2014 Merritt Hawkins annual
survey. Even of those providers signed up with Medicaid, 56% of primary-care
doctors and 43% of specialists are not available to new patients. Moreover,
numerous studies have found that the quality of medical care is inferior
under Medicaid, compared with private insurance. Lower quality means more
in-hospital deaths, more complications from surgery, shorter survival after
treatment, and longer hospital stays than similar patients with private
insurance.
.
Legislation signed by President Bill Clinton in 1996 transformed the federal
welfare program into a pathway to self-sufficiency. In the same way,
Medicaid should be redesigned as a bridge toward affordable private
insurance. First, the new Medicaid should include a private-insurance option
with catastrophic coverage but few coverage mandates for all enrollees.
Second, new Medicaid should establish and put
initial funds into health savings accounts using part of the current federal
dollars already going into Medicaid. This will empower beneficiaries and
give them incentives to follow healthy lifestyles to protect those new
assets. With these reforms, doctors and hospitals would receive payments
from the same insurance as from non-Medicaid patients. Because health
providers receive the same payments whether they treat Medicaid or
non-Medicaid patients, the limited access and substandard treatment options
under Medicaid would be eliminated.
To ensure availability of the same coverage to both
Medicaid and non-Medicaid beneficiaries, federal funding would go only to
eligible people in states that offer these same coverage choices to the
entire state population. Federal money will be contingent on states meeting
thresholds for the number of Medicaid enrollees moved into private coverage.
Federal funds would go directly into beneficiary HSAs or to premium
payments, rather than into state bureaucracies. States should want this new
program because it will reduce the administrative costs of running a
separate insurance program and, most important, provide access to quality
health care for their residents.
Ultimately, traditional Medicaid would be
eliminated as new enrollees move into private coverage. These reforms would
change the purpose and culture of Medicaid agency offices from running
government-administered plans to establishing HSAs and finding private
insurance for beneficiaries.
Why focus on lower-cost, high-deductible health
insurance coupled with HSAs? Published studies have shown that pairing HSAs
with high-deductible coverage reduces health-care costs. Patient spending
averages 15% lower in high-deductible plans, with even more savings when
paired with HSAs—without any consequent increases in emergency visits or
hospitalizations and without a harmful impact on low-income families.
Secondarily, wellness programs that HSA holders more commonly use improve
chronic illnesses, reduce health claims and save money.
The flaws in existing long term care insurance policies are many. One common
gripe is that premiums are too high relative to benefits. But Tonetti’s
model shows that demand for long-term care insurance isn’t very sensitive to
price — increasing premiums by 30% over the actuarially fair price had
little effect on purchases.
The bigger deterrent, surely, is that the policies one can buy today don’t
actually eliminate risk. “Those earlier studies basically assumed we all
have access to a state-contingent asset and choose not to buy it,” Tonetti
says. “But these aren’t state-contingent assets at all. They work on a
reimbursement model. You pay for the care yourself and then hope to get your
money back.”
Stories abound of insurance companies denying claims or dragging out the
process. “It can get adversarial,” Tonetti says, “and you might be in no
shape to fight back or might be dying and have a short horizon.”
Short stays in a facility, the most common case, are not covered because of
deductibles. Long stays, often needed for patients with cognitive decline —
the most expensive case — are not covered because benefits end after one to
five years. Within those bounds, there are limits on the services paid for
and where they can be delivered. And, oh, your premiums might be raised at
any time; fail to pay and you lose your coverage.
Future Potential
Tonetti says those flaws don’t entirely explain the under-insurance puzzle.
When the better policy was explained to test subjects, not all those
predicted to want it said they’d actually buy it. But that gap arose mainly
among the wealthiest individuals, who can rely on their own resources.
For the majority of elderly Americans, the introduction of an improved form
of long-term care insurance would offer a tremendous increase in quality of
life, not to mention peace of mind. And by lightening the load on Medicaid,
it would be a relief for state and federal finances as well.
That’s not to say it would be easy. These papers don’t analyze why the
market appears to be failing, but fears of “adverse selection” are likely a
factor; that’s when coverage is purchased mainly by people who expect to
cash in on the benefits, making it unprofitable. But Tonetti and his
colleagues have convincingly demonstrated that there’s an unmet demand for
long-term care insurance — a big opportunity for any insurer who can figure
it out.
Jensen Comment
One thing the article does not mention is a tactic taken by many, many folks
approaching possible long-term care (usually in nursing homes but sometimes at
home). The tactic is to plan ahead and push all the assets to the heirs before
long-term care is needed. Then the heirs support the old folks until if and when
those "impoverished" old folks now qualify for Medicaid to pay all the long-term
care bills. Their Medicare will not pay for long-term care but their Medicaid
will pay for all long-term care. A friend of mine insists this tactic is
perfectly legal. But if it's legal (I'm not entirely convinced) its certainly
not ethical to shield the savings of older folks from the expenses of their
long-term care.
Younger folks such as severely disabled young adults generally can be turned
over to states to pay for their long-term care. This is all perfectly legal. And
in my opinion it's ethical since these unfortunates generally do not have their
own savings for such purposes. Decades ago parents usually had to pay for the
long-term care of their disabled children, and some still do contribute to their
long-term care. But this is less and less common.
In other nations like Canada and the United Kingdom long-term care expenses
created crises in funding.
Back
home, though, Canadians seem far more critical of the system. If you follow
the internal Canadian debate, you’ll hear the
word “crisis.” In fact, many Canadian healthcare economists warn that their
system is headed for a major collapse. The aging population has continued to
stress an already fragile system. This is the same system that many
proponents of the Affordable Care Act, or Obamacare, pointed to as a model.
Another model of national health care cited by fans of the ACA is the UK’s
National Health Service (NHS). Like the Canadian system, there seems to be
one attitude for export and another for domestic consumption. You may recall
the odd tribute to the UK’s National Health Service (NHS) in the opening
ceremony of the 2012 Olympics. The NHS was portrayed as a sea of Mary
Poppins bliss. At home, though, Brits had reason to complain. The UK was
rated as having the worst patient care and lowest cancer survival rates in
the Western World.
The
NHS is in even worse shape now, and complaints are growing louder.
According to the committee that represents UK hospitals, the
NHS is on the verge of collapse. The former health minister Paul Burstow warned of this outcome two years ago.
At the time, increases in the NIH budget were limited to the rate of
inflation. But that did not allow for the increased cost of a growing
elderly population. The NIH effort to find £30 billion in “efficiency
savings” was already putting enormous strains on the system.
So it shouldn’t be surprising that the Affordable Care Act, which was
inspired by the Canadian and British systems, is in deep trouble.
Though I predicted it, it is worrisome when the act’s biggest supporters,
including
The New York Times,
admit the program’s flaws.
The growing aged population is a huge financial burden
Obamacare doesn’t deal with the real source of rising healthcare costs: the
increase in age-related diseases due to a growing elderly population. It is
mathematically impossible to cut societal medical costs while at the same
time providing adequate healthcare to a growing and increasingly expensive
older population.
This is not just a problem with health care. Social Security and pension
funds are running deficits, which will also worsen. Alan Greenspan, former
chairman of the Federal Reserve, recently said that he has lost the optimism
that he has long been known for. The reason
is that “we have a 9 percent annual rate of increase in entitlements, which
is mandated by law. It has got nothing to do with the economy. It has got
to do with age and health and the like.”
Greenspan points out that politicians refuse to deal with the “third rail”
of entitlements. I agree, but I think there’s a solution. Politicians claim
that voters won’t accept delayed retirement. But the evidence shows that
most people would like to work longer and save more to pay their own way.
Zoya Financial reports that almost two thirds of Americans have to retire
earlier than planned, largely due to problems with their own health or a
spouse’s.
Anti-aging biotechnologies are in labs right now that could lengthen health
spans and working careers. This would allow us to save our entitlement
systems. But economists and politicians still have no clue about the
biotechnological progress that has marked the start of the 21st
century. This will change because it must… but I hope it happens soon
Like health-care systems around the world, the National Health Service (NHS)
is struggling to provide good care at low cost for patients such as Mrs
Evans (not her real name). Its business model has not kept up with the
changing burden of disease. For as more people enter and live longer in
their dotage, demand increases for two costly types of care. The first is
looking after the dying.
About 25% of all hospital
inpatient spending during a person’s lifetime occurs in the final three
months. The second is caring for those with more than one chronic
condition. About 70% of NHS spending goes on long-term illnesses. More than
half of over-70s have at least two and a quarter have at least three. In
south Somerset 50% of health and social-care funding is spent on 4% of
people.
. . .
If one fallacy about the NHS is that it is the envy
of the world, as its devotees claim, another is that it is a single
organisation. In fact it is a series of interlocking systems. Public health,
hospitals, general practitioners (or GPs, the family doctors who provide
basic care outside hospitals) and mental-health services all have separate
funding and incentives. Social care, which includes old-folks’ homes and the
like, is run by local councils, not the NHS
. . .
So the NHS must do more with what it already
spends. A sign of inefficiency is the 6,000 patients in English hospitals
who are ready to go home but not yet discharged, up from 4,000 in 2013. They
cost the service hundreds of millions of pounds per year and obstruct others
from treatment. The bed-blockers themselves are harmed, too. Elderly
patients lose up to 5% of muscle strength for every day they are laid up in
hospital. Some delays are the result of council cuts: about 400,000 fewer
old people receive social care than in 2010, meaning that hospitals are
sometimes used as expensive alternatives to care homes. But most are due to
how hospitals are run.
. . .
On average, the framework made GPs some of the
highest-paid family doctors in the world when it was introduced in 2004. But
since then it has become less generous. GPs’ real-terms income has fallen by
one-fifth. This, and poor planning, has led to a shortage of them. England
needs 5,000 more in the next five years. The NHS is mulling a deal with
Apollo, whereby the Indian health-care firm supplies enough doctors to fill
the gap.
. . .
The move from “volume to value”—that is, from
paying providers for the procedures they carry out to paying them for the
outcomes they achieve—has helped to stem the cost of Medicare, the American
health system for pensioners. The expansion of ACOs as part of Obamacare led
to reduced mortality rates and savings for providers of about 1-2%. But Dan
Northam Jones, a visiting fellow at Harvard,
warns that the potential for savings is greater in systems like Medicare,
where there is no cap on spending.
And yet ACOs reflect a growing belief that if you
want radically to improve health care you have to change how you pay for it.
They will not solve all the problems of the NHS, some of which are inherent
in its taxpayer-funded model. But perhaps its business model may yet catch
up with how illness is changing. The NHS should forget being the envy of the
world, and instead learn from it.
On November 22, 2009 CBS Sixty Minutes aired a video featuring experts
(including physicians) explaining how the single largest drain on the Medicare
insurance fund is keeping dying people hopelessly alive who could otherwise be
allowed to die quicker and painlessly without artificially prolonging life on
ICU machines.
"The Cost of Dying,"CBS Sixty Minutes Video, November 22, 2009
---
Rarely has the Atlantic seemed as wide as
when America's health-care debate provoked a near unanimous response from
British politicians boasting of the superiority of their country's National
Health Service. Prime Minister Gordon Brown used Twitter to tell the world
that the NHS can mean the difference between life and death. His wife added,
"we love the NHS." Opposition leader David Cameron tweeted back that his
plans to outspend Labour showed the Conservatives were more committed to the
NHS than Labour.
This outbreak of NHS jingoism was brought
to an abrupt halt by the Patients Association, an independent charity. In a
report, the association presented a catalogue of end-of-life cases that
demonstrated, in its words, "a consistent pattern of shocking standards of
care." It provided details of what it described as "appalling treatment,"
which could be found across the NHS.
A few days later, a group of senior
doctors and health-care experts wrote to a national newspaper expressing
their concern about the Liverpool Care Pathway, a palliative program being
rolled out across the NHS involving the withdrawal of fluids and nourishment
for patients thought to be dying. Noting that in 2007-08, 16.5% of deaths in
the U.K. came after "terminal sedation," their letter concluded with the
chilling observation that experienced doctors know that sometimes "when all
but essential drugs are stopped, 'dying' patients get better" if they are
allowed to.
The usual justification for socialized
health care is to provide access to quality health care for the poor and
disadvantaged. But this function can be more efficiently performed through
the benefits system and the payment of refundable tax credits.
The real justification for socialized
medicine is left unstated: Because health-care resources are assumed to be
fixed, those resources should be prioritized for those who can benefit most
from medical treatment. Thus the NHS acts as Britain's national triage
service, deciding who is most likely to respond best to treatment and
allocating health care accordingly.
It should therefore come as no surprise
that the NHS is institutionally ageist. The elderly have fewer years left to
them; why then should they get health-care resources that would benefit a
younger person more? An analysis by a senior U.K.-based health-care expert
earlier this decade found that in the U.S. health-care spending per capita
goes up steeply for the elderly, while the U.K. didn't show the same
pattern. The U.K.'s pattern of health-care spending by age had more in
common with the former Soviet bloc.
A scarcity assumption similar to the
British mentality underlies President Barack Obama's proposed health-care
overhaul. "We spend one-and-a-half times more per person on health care than
any other country, but we aren't any healthier for it," Mr. Obama claimed in
his address to Congress last Wednesday, a situation that, he said,
threatened America's economic competitiveness.
This assertion is seldom challenged. Yet
what makes health care different from spending on, say, information
technology—or any category of consumer service—such that spending on health
care is uniquely bad for the American economy? Distortions like malpractice
suits that lead to higher costs or the absence of consumer price
consciousness do result in a misallocation of resources. That should be an
argument for tackling those distortions. But if high health-care spending
otherwise reflects the preferences of millions of consumers, why the fuss?
The case for ObamaCare, as with the NHS,
rests on what might be termed the "lump of health care" fallacy. But in a
market-based system triggering one person's contractual rights to health
care does not invalidate someone else's health policy. Instead, increased
demand for health care incentivizes new drugs, new therapies and better ways
of delivering health care. Government-administered systems are so slow and
clumsy that they turn the lump of health-care fallacy into a reality.
According to the 2002 Wanless report, used
by Tony Blair's government to justify a large tax hike to fund the higher
spending, the NHS is late to adopt and slow to diffuse new technology.
Still, NHS spending more than doubled to £103 billion in 2009-10 from £40
billion in 1999-2000, equivalent to an average growth rate of over 7% a year
after inflation.
In 1965, economist (and future Nobel
laureate) James Buchanan observed of the 17-year old NHS that "hospital
facilities are overcrowded, and long delays in securing treatment, save for
strictly emergency cases, are universally noted." Forty-four years later,
matters are little improved. The Wanless report found that of the five
countries it looked at, the U.S. was the only one to be both an early
adopter and rapid diffuser of new medical techniques. It is the world's
principal engine driving medical advance. If the U.S. gets health-care
reform wrong, the rest of the world will suffer too.
Mr. Darwall, a London-based strategist, is
currently writing a book on the history of global warming, to be published
by Quartet Books in Spring 2010.
Jensen Plea If and when I become gaga please
sedate me to the max (meaning euthanize me)! I fear my wife, who is quite
religious, will not allow that to happen.
From the CFO Journal's Morning Ledger on December 2, 2016
Obamacare’s bright spots and drawbacks
Here’s the good news: Thanks to the Affordable Care
Act, or Obamacare, more Americans have access to health care than ever
before, Leemore Dafny and Dr. Thomas Lee write for Harvard Business Review.
The bad news? The care itself hasn’t improved much. Despite the hard work of
dedicated providers, our health-care system remains chaotic, unreliable,
inefficient and crushingly expensive.
On Donald
Trump’s victory Republicans in Congress are primed for an ambitious agenda,
and not a moment too soon. One immediate problem is ObamaCare’s expansion of
Medicaid, which has seen enrollment at least twice as high as advertised.
Most of the
insurance coverage gains from the law come from opening Medicaid eligibility
beyond its original goal of helping the poor and disabled to include
prime-age, able-bodied, childless adults. The Supreme Court made this
expansion optional in 2012, and Governors claimed not joining would leave
“free money” on the table because the feds would pick up 100% of the costs
of new beneficiaries.
In a new
report this week for the Foundation for Government Accountability, Jonathan
Ingram and Nicholas Horton tracked down the original enrollment projections
by actuaries in 24 states that expanded and have since disclosed at least a
year of data on the results. Some 11.5 million people now belong to
ObamaCare’s new class of able-bodied enrollees, or 110% higher than the
projections.
Analysts in
California expected only 910,000 people to sign up, but instead 3.84 million
have, 322% off the projections. The situation is nearly as dire in New York,
where enrollment is 276% higher than expected, and Illinois, which is up
90%. This liberal state triumvirate is particularly notable because they
already ran generous welfare states long before ObamaCare.
Continued in article
Jensen Comment
President Obama baited the hook by claiming the Federal Government would pay for
Medicaid expansion. But the states that took the bait are now on the hook.
Medicaid is not the largest single expense item in most states, and the expense
that will go completely out of control (heavily due to fraud) will be the cost
of caring for older people where medical expenses are greatest, especially since
Medicaid foots sometimes years of all nursing home and medication costs.
ObamaCare has suddenly been injected back into the
2016 election debate, on the news of the law’s 25%-plus average premium
increase for 2017. Even Donald Trump is talking about it. With only two
weeks to go, this is a moment for voters to hold accountable the Democrats
who imposed this debacle on the country over voter objections.
Next year’s enormous price increases are merely the
latest expression of ObamaCare’s underlying problems, and the dysfunction is
undermining the health security of Americans who lack employer coverage. A
wave of major insurers have quit the exchanges, and those that are left have
raised deductibles and copays and restricted choices of doctors and
hospitals. The public is witnessing—and the unlucky are experiencing—the
collapse of one progressive promise after another.
At every stage of the ObamaCare saga, liberals said
not to worry. Sure, the law was unpopular when Democrats rammed it through
Congress on a partisan vote in 2009-10, but voters would learn to love it
once the subsidies started rolling. That didn’t happen, and in 2014
President Obama tried to buck up Democrats by saying that “five years from
now” people will look back on the law as “a monumental achievement.” Two
years later it’s worse.
Nothing
could shake the liberal faith in their supposed landmark: Not the
Healthcare.gov website fiasco of 2013, or the millions of individual health
plans that were cancelled despite President Obama’s promise about keeping
them. The left kept the faith as the entitlement subtracted from economic
growth, hurt incomes and killed jobs. MIT economist Jonathan Gruber called
the critics stupid, and Mr. Obama denigrates anyone who disagrees with him
as illegitimate or politically motivated.
Now
reality is confirming what the critics predicted. ObamaCare’s regulatory
mix—benefit mandates, requiring insurers to sell coverage to all comers, and
narrow ratings bands that limit how much premiums can vary by health
status—was tried by several states in the 1980s and ’90s. Every one saw the
same results that are now unspooling nationally: high and rising costs, low
and declining enrollment, and less insurer and provider competition.
The
Affordable Care Act was supposed to solve these predictable disruptions with
subsidies and a mandate to buy insurance or pay a penalty. But most people
don’t think ObamaCare plans provide value for the money, especially if they
are non-subsidized.
So
now the liberal line is that ObamaCare has a few problems, but don’t worry:
The same geniuses who wrote the law know how to fix it. The Bernie
Sanders-Elizabeth Warren left wants a new “public option,” higher subsidies,
more price controls and even more intrusive regulatory control.
Hillary Clinton
has endorsed all of this.
“The
Affordable Care Act has done what it was designed to do,” Mr. Obama declared
last week in Miami, apparently meaning that the law has reduced the number
of uninsured. But most of the coverage gains have come from dumping patients
into Medicaid, a failing program that provides substandard care. Nominally
private exchange plans increasingly resemble Medicaid too.
Mrs.
Clinton may be horse-whispering Ms. Warren now, but ObamaCare’s failures
aren’t likely to bring the U.S. closer to their single-payer nirvana any
time soon. ObamaCare was the best Democrats could do when they had a 60-vote
Senate supermajority and bought off interest groups like the insurers,
hospitals, drug makers and American Medical Association.
The only
way to break the ObamaCare status quo is if the public returns a Republican
Congress to Washington. If Republicans can hold the Senate amid a Clinton
victory, they’d be in a better position to negotiate solutions along the
lines of the House GOP “Better Way” blueprint that would start to repair the
individual market and create incentives for more choice and competition.
Take
Wisconsin, where Democrat Russ Feingold cast the deciding 60th vote for
ObamaCare and voters fired him for it in 2010. He’s back hoping voters
forget. Evan Bayh, who also cast the deciding vote before retiring to become
a superlobbyist, is back facing Indiana voters and Hoosiers can deliver a
verdict.
In
Arizona, premiums will rise a mind-boggling 116%, only two insurers are
still selling plans, and John McCain
has made ObamaCare a major theme. His opponent, Congresswoman Ann
Kirkpatrick, calls ObamaCare her “proudest vote.” Katie McGinty likes to say
Pennsylvanians should be “proud of ObamaCare,” though the commonwealth is
slated for a 53% increase. A memo about ObamaCare pride month must have gone
out from Democratic HQ.
Mr. Trump
has missed a chance by not prosecuting a consistent case against ObamaCare,
despite Mrs. Clinton’s past as the chief architect of its HillaryCare
prototype in the 1990s. As that episode shows, the longstanding progressive
goal has been to centralize political control over American health care.
Now
voters are finally seeing what happens when the planners try to design a
single health-care solution for a large and diverse country. Mr. Obama
called ObamaCare “a starter home” in Miami. Republicans ought to campaign as
the bulldozer.
“You’ve got this crazy (Obamacare) system where all of a sudden 25 million more
people have health care and then the people are out there busting it, sometimes
60 hours a week, wind up with their premiums doubled and their coverage cut in
half,” Mr. Clinton told voters. “It’s the craziest thing in the world.”For years
I've been a proponent of a national healthcare plan supplemented with
discretionary private insurance much like the system in Germany.
Some other national healthcare plans are falling apart
Bill Clinton (former President of the USA)
http://www.washingtontimes.com/news/2016/oct/3/bill-clinton-bashes-obamacare-as-crazy-system-whil/?mod=djemBestOfTheWeb
Jensen Comment
All these years I've advocated the German combination of national healthcare
with private insurance discretionary supplements.
I think Bill Clinton is copping my stuff at
http://faculty.trinity.edu/rjensen/Health.htm
Read the Introduction
Back
home, though, Canadians seem far more critical of the system. If you follow
the internal Canadian debate, you’ll hear the
word “crisis.” In fact, many Canadian healthcare economists warn that their
system is headed for a major collapse. The aging population has continued to
stress an already fragile system. This is the same system that many
proponents of the Affordable Care Act, or Obamacare, pointed to as a model.
Another model of national health care cited by fans of the ACA is the UK’s
National Health Service (NHS). Like the Canadian system, there seems to be
one attitude for export and another for domestic consumption. You may recall
the odd tribute to the UK’s National Health Service (NHS) in the opening
ceremony of the 2012 Olympics. The NHS was portrayed as a sea of Mary
Poppins bliss. At home, though, Brits had reason to complain. The UK was
rated as having the worst patient care and lowest cancer survival rates in
the Western World.
The
NHS is in even worse shape now, and complaints are growing louder.
According to the committee that represents UK hospitals, the
NHS is on the verge of collapse. The former health minister Paul Burstow warned of this outcome two years ago.
At the time, increases in the NIH budget were limited to the rate of
inflation. But that did not allow for the increased cost of a growing
elderly population. The NIH effort to find £30 billion in “efficiency
savings” was already putting enormous strains on the system.
So it shouldn’t be surprising that the Affordable Care Act, which was
inspired by the Canadian and British systems, is in deep trouble. Though I predicted it,
it is worrisome when the act’s biggest supporters,
including The New York Times,
admit the program’s flaws.
The growing aged population is a huge financial burden
Obamacare doesn’t deal with the real source of rising healthcare costs: the
increase in age-related diseases due to a growing elderly population. It is
mathematically impossible to cut societal medical costs while at the same
time providing adequate healthcare to a growing and increasingly expensive
older population.
This is not just a problem with health care. Social Security and pension
funds are running deficits, which will also worsen. Alan Greenspan, former
chairman of the Federal Reserve, recently said that he has lost the optimism
that he has long been known for. The reason
is that “we have a 9 percent annual rate of increase in entitlements, which
is mandated by law. It has got nothing to do with the economy. It has got
to do with age and health and the like.”
Greenspan points out that politicians refuse to deal with the “third rail”
of entitlements. I agree, but I think there’s a solution. Politicians claim
that voters won’t accept delayed retirement. But the evidence shows that
most people would like to work longer and save more to pay their own way.
Zoya Financial reports that almost two thirds of Americans have to retire
earlier than planned, largely due to problems with their own health or a
spouse’s.
Anti-aging biotechnologies are in labs right now that could lengthen health
spans and working careers. This would allow us to save our entitlement
systems. But economists and politicians still have no clue about the
biotechnological progress that has marked the start of the 21st
century. This will change because it must… but I hope it happens soon
Continued in
article
ACA insurance companies are offering over-priced policies with enormous
deductibles that discourage patients from having medial treatments except in
emergencies. It sounds great in election campaigns to say that nearly all
Americans are now insured due to the ACA. It does not sound as great to admit
that most of the new insured cannot afford to use the insurance they're now
paying for unless they've been added to free health care coverage on Medicaid.
But that's not much help for the middle class.
PwC Study Maligned by Liberals in 2009 is Vindicated by Events
of 2016
In October 2009, analysts at PricewaterhouseCoopers published
a report estimating that by 2016, the Senate Finance Committee bill would
increase individual-market health insurance premiums by 47 percent. Today,
we would describe that figure as a lowball estimate. In fact, cumulatively,
median premiums for "silver plans" have nearly doubled in the ACA’s first
four plan years (49 percent in 2014, 7 percent in 2015, 11 percent in 2016,
and a projected 10 percent in 2017).
But in 2009, the ACA’s cheerleaders described it in much
different terms.
"We couldn’t stop intellectual saboteurs from introducing new
lies into the debate," wrote Cohn. "But I think we were able to expose those
lies just a little more quickly." Cohn and others slammed the PwC report as
the work of corrupt health insurance lobbyists seeking to sink reform — as
an example of"the
insurance industry declaring war."
In the Washington Post, Ezra Klein, who went on to found Vox.com,
compared
the PwC report to lies promulgated by the tobacco and oil industries.
What was
remarkable about all this controversy is that
PricewaterhouseCoopers' findings were quite
reasonable. The ACA’s insurance market regulations were going to drive up
the underlying cost of individually purchased insurance.
For example, forcing insurers to charge their youngest
customers no less than one-third of their oldest customers meant that
premiums for young people would double, because on average, 19-year-olds
consume one-sixth as much health care as 64-year-olds. Mandating that
insurers cover a federally-prescribed suite of health care services,
regardless of whether enrollees need coverage for those services, meant that
premiums would go up. Requiring that insurers charge the same prices to the
healthy and the sick meant that healthy people in particular would pay more.
By contrast, the law’s individual mandate, forcing consumers
to buy that costlier insurance, was going to be phased in over time. As a
result, premiums would spike and enrollment would suffer.
But Obamacare’s cheerleaders, fearing that this information
might sink the bill’s fate in Congress, decided to shoot the messenger. They
brought in Jonathan Gruber, the MIT economist, to
assure everyone that "what we
know for sure the bill will do is that it will lower the [underlying] cost
of buying non-group health insurance" — that is, the cost before any
subsidies.
As a political matter, the aggressive critiques of PwC
worked. "Within hours of [the report’s] publication," Cohn recounted,
"several blogs, including this one, had published critiques … [they]
circulated in Washington and provoked a backlash against the insurers.
Wavering Democrats said they were offended by the effort at political
sabotage; the Finance Committee went on the pass the bill, as it had
originally planned."
The exchanges punish middle-income Americans
But as a matter of policy, PwC was right and the cheerleaders
and Democratic policymakers were wrong. The ACA’s exchanges were
designed poorly, and premiums did become unaffordable for millions.
It is true that many people with incomes near the poverty line, whose
premiums were nearly fully subsidized by other taxpayers, gained coverage
through the law, many through the deeply flawed Medicaid program, whose
health outcomes are no better than those of
people without health insurance.
But millions
of uninsured, taxpaying Americans don’t qualify for Medicaid or the ACA’s
exchange subsidies. Still others —typically those with incomes between 250 and 400 percent of the federal
poverty level— qualify for partial subsidies that don’t make up for the
fact that ACA exchange insurance costs so much more. As
Bill Clinton put it, "You’ve
got this crazy system where … people that are out there busting it
—sometimes 60 hours a week — wind up with their premiums doubled and their
coverage cut in half." That’s why ACA exchange enrollment has fallen 9
million short of initial estimates.
The people who implemented the markets were ignorant and
arrogant, too
And Obamacare didn’t suffer only from a flawed blueprint. It
was also implemented by people with poor knowledge of how health insurance
markets worked.
Continued in article
PwC Study Maligned by Liberals in 2009 is Vindicated in 2016
PricewaterhouseCoopers (PwC) has found itself at
the center of a controversy over its estimates of cost increases in private
health insurance premiums if certain provisions of the heath care reform
bill passed by the Senate Finance Committee become law. PwC was engaged to
conduct the study, "Potential
Impact of Health Reform on the Cost of Private Health Insurance Coverage,"
by the American Health Insurance Plans (AHIP).
Critics have questioned the methodology used by PwC, saying it does not take
into consideration some of the cost containment measures in the bill and
potential behavioral responses that could affect premium increases.
AHIP president and CEO Karen Ignagni told ABC News,
"One of the most important things that should be done is for
PricewaterhouseCoopers, a world class firm, to speak for itself about
methodology."
PwC defends its analysis and conclusions in a
statement provided to AccountingWEB, citing the specific parameters of the
study, saying that "America's Health Insurance Plans engaged
PricewaterhouseCoopers to prepare a report that focused on four components
of the Senate Finance Committee proposal:
* Insurance market reforms and consumer protections
that would raise health insurance premiums for individuals and families if
the reforms are not coupled with an effective coverage requirement.
* An excise tax on employer-sponsored high value health plans.
* Cuts in payment rates in public programs that could increase cost shifting
to private sector businesses and consumers.
* New taxes on health sector entities.
The study concluded that collectively the four
provisions would raise premiums for private health insurance coverage. As
the report itself acknowledges, other provisions that are part of health
reform proposals were not included in the PwC analysis."
By 2019, the study says, after analysis of these
four provisions, the cost of single coverage is expected to increase by
$1,500 more than it would under the current system and the cost of family
coverage is expected to increase by $4,000 more than it would under the
current system. This amounts to an additional 18 percent increase in
premiums by 2019. The overall 18 percent increase is a composite of
increases by market segment as follows:
* 49% increase for the non-group (individual)
market;
* 28% increase for small employers (those firms with fewer than 50
employees);
* 11% increase for large employers with insured coverage; and,
* 9% increase for self-insured employers.
The highest increase would be for individuals
covered by private insurance.
In its discussion of a "Strong Workable Coverage
Requirement," the study acknowledges it methodology as it does elsewhere in
the report. "The reform packages under consideration have other provisions
that we have not included in this analysis. We have not estimated the
impact of the new subsidies on the net insurance cost to households. Also,
if other provisions in health care reform are successful in lowering costs
over the long term, those improvements would offset some of the impacts we
have estimated." The analysis of the coverage requirement shows the
potential impact on premiums for individuals without a broad coverage
requirement."
PwC says that impacts identified in the study
assume payment of tax on high-value plans, cost-shifting of cuts to public
programs, and full pass-through of industry taxes.
The PwC study also states that it factored in the
excise tax but not any anticipated behavioral changes: "We have estimated
the potential impact of the tax on premiums," the study says. "Although we
expect employers to respond to the tax by restructuring their benefits to
avoid it, we demonstrate the impact assuming it is applied."
In an earlier study based on AHIP data, PwC
estimated that structural reforms, such as improved wellness and prevention,
disease management, value based payment reform, improvements in health
information technology, comparative effectiveness, and malpractice reform,
could mitigate growth in healthcare costs by between 0.5 and 1.0 percent per
year after an initial investment period. See PricewaterhouseCoopers "A
Review of AHIP Savings Estimates" in Appendix to AHIP, "A Shared
Responsibility," 2008.
Despite the enduring
unpopularity of Obamacare, Congressional Democrats have up to now stood by
their health care law, allowing that “it’s not perfect” but that they are
proud of their votes to pass it. That all changed on Tuesday, when the
Senate’s third-highest-ranking Democrat—New York’s Chuck Schumer—declared
that “we took [the public’s] mandate and put all our focus on the wrong
problem—health care reform…When Democrats focused on health care, the
average middle-class person thought, ‘The Democrats aren’t paying enough
attention to me.’”
Sen. Schumer made his
remarksat the National Press Club in
Washington. “Democrats blew the opportunity the American people gave
them…Now, the plight of uninsured Americans and the hardships caused by
unfair insurance company practices certainly needed to be addressed,”
Schumer maintained. “But it wasn’t the change we were hired to make.
Americans were crying out for the end to the recession, for better wages and
more jobs—not changes in health care.”
“This
makes sense,” Schumer continued, “considering 85 percent of all Americans
got their health care from either the government, Medicare, Medicaid, or
their employer. And if health care costs were going up, it really did not
affect them. The Affordable Care Act was aimed at the 36 million Americans
who were not covered. It has been reported that only a third of the
uninsured are even registered to vote…it made no political sense.”
The
response from Obama Democrats was swift. Many, like Obama speechwriters Jon
Lovett and Jon Favreau and NSC spokesman Tommy Vietor, took to Twitter.
“Shorter Chuck Schumer,” said Vietor, “I wish Obama cared more about helping
Democrats than sick people.
Based on that chart, only a small handful of states
will have the supposed 'good fortune' of experiencing single-digit hikes.
The vast majority will experience cost surges in the double-digits, with
roughly half of all states getting slammed with increases of at least 20
percent. Time magazine reviews the eight states where consumes will suffer
the most next year, where regulators have imposed rate jumps of at least 30
percent. The piece's opening sentence says it all: "The Affordable Care Act
is getting a lot less affordable for many Americans." Meanwhile, many
Arizonans find themselves in Obamacare's crosshairs, getting rocked by
the double-whammy of soaring costs and dwindling-to-nonexistent choices:
Jensen Comment
In addition to the dire predictions of PwC in 2009, some respected
leftist-leaning media were warning against the lousy numbers of the Obama-Controlled
House Budget Committee. I mean warnings from one of my favorite statistician
named John Cassidy who writes for The New Yorker. Robert Pear also voiced
warnings in The New York Times.
Does Santa Claus live after all? According to the
C.B.O., between now and 2019 the net cost of insuring new enrollees in
Medicaid and private insurance plans will be $788 billion,
but other provisions in the legislation will generate
revenues and cost savings of $933 billion. Subtract the first figure from
the second and—voila!—you get $143 billion in deficit reduction.
The first objection to these figures is that the
great bulk of the cost savings—more than $450 billion—comes from cuts in
Medicare payments to doctors and other health-care providers. If you are
vaguely familiar with Washington politics and the letters A.A.R.P. you might
suspect that at least some of these cuts will fail to materialize. Unlike
some hardened skeptics, I don’t think none of them will happen. One part of
the reform involves reducing excessive payments that the Bush Administration
agreed to when it set up the Medicare Advantage program in 2003. If Congress
remains under Democratic control—a big if, admittedly—it will probably enact
these changes. But that still leaves another $300 billion of Medicare
savings to be found.
The second problem is accounting gimmickry. Acting
in accordance with standard Washington practices, the C.B.O. counts as
revenues more than $50 million in Social Security taxes and $70 billion in
payments towards a new home-care program, which will eventually prove very
costly, and it doesn’t count some $50 billion in discretionary spending.
After excluding these pieces of trickery and the questionable Medicare cuts,
Douglas Holtz-Eakin, a former head of the C.B.O., has calculated that the
reform will actually raise the deficit by $562 billion in the first ten
years. “The budget office is required to take written legislation at face
value and not second-guess the plausibility of what it is handed,” he wrote
in the Times. “So fantasy in, fantasy out.”
Holtz-Eakin advised John McCain in 2008, and he has
a reputation as a straight shooter. I think the problems with the C.B.O.’s
projections go even further than he suggests. If Holtz-Eakin’s figures
turned out to be spot on, and over the next ten years health-care reform
reduced the number of uninsured by thirty million at an annual cost of $56
billion, I would still regard it as a great success. In a $15 trillion
economy—and, barring another recession, the U.S. economy should be that
large in 2014—fifty or sixty billion dollars is a relatively small sum—about
four tenths of one per cent of G.D.P., or about eight per cent of the 2011
Pentagon budget.
My two big worries about the reform are that it
won’t capture nearly as many uninsured people as the official projections
suggest, and that many businesses, once they realize the size of the
handouts being offered for individual coverage, will wind down their group
plans, shifting workers (and costs) onto the new government-subsidized
plans. The legislation includes features designed to prevent both these
things from happening, but I don’t think they will be effective.
Consider the so-called “individual mandate.” As a
strict matter of law, all non-elderly Americans who earn more than the
poverty line will be obliged to obtain some form of health coverage. If they
don’t, in 2016 and beyond, they could face a fine of about $700 or 2.5 per
cent of their income—whichever is the most. Two issues immediately arise.
Even if the fines are vigorously enforced, many
people may choose to pay them and stay uninsured. Consider a healthy single
man of thirty-five who earns $35,000 a year. Under the new system, he would
have a choice of enrolling in a subsidized plan at an annual cost of $2,700
or paying a fine of $875. It may well make sense for him to pay the fine,
take his chances, and report to the local emergency room if he gets really
sick. (E.R.s will still be legally obliged to treat all comers.) If this
sort of thing happens often, as well it could, the new insurance exchanges
will be deprived of exactly the sort of healthy young people they need in
order to bring down prices. (Healthy people improve the risk pool.)
If the rules aren’t properly enforced, the problem
will be even worse. And that is precisely what is likely to happen. The
I.R.S. will have the administrative responsibility of imposing penalties on
people who can’t demonstrate that they have coverage, but it won’t have the
legal authority to force people to pay the fines. “What happens if you don’t
buy insurance and you don’t pay the penalty?” Ezra Klein, the Washington
Post’s industrious and well-informed blogger, asks. “Well, not much. The law
specifically says that no criminal action or liens can be imposed on people
who don’t pay the fine.”
So, the individual mandate is a bit of a sham.
Generous subsidies will be available for sick people and families with
children who really need medical care to buy individual coverage, but
healthy single people between the ages of twenty-six and forty, say, will
still have a financial incentive to remain outside the system until they get
ill, at which point they can sign up for coverage. Consequently, the number
of uninsured won’t fall as much as expected, and neither will prices.
Without a proper individual mandate, the idea of universality goes out the
window, and so does much of the economic reasoning behind the bill.
The question of what impact the reforms will have
on existing insurance plans has received even less analysis. According to
President Obama, if you have coverage you like you can keep it, and that’s
that. For the majority of workers, this will undoubtedly be true, at least
in the short term, but in some parts of the economy, particularly industries
that pay low and moderate wages, the presence of such generous subsidies for
individual coverage is bound to affect behavior eventually. To suggest this
won’t happen is to say economic incentives don’t matter.
Take a medium-sized firm that employs a hundred
people earning $40,000 each—a private security firm based in Atlanta,
say—and currently offers them health-care insurance worth $10,000 a year, of
which the employees pay $2,500. This employer’s annual health-care costs are
$750,000 (a hundred times $7,500). In the reformed system, the firm’s
workers, if they didn’t have insurance, would be eligible for generous
subsidies to buy private insurance. For example, a married forty-year-old
security guard whose wife stayed home to raise two kids could enroll in a
non-group plan for less than $1,400 a year, according to the Kaiser Health
Reform Subsidy Calculator. (The subsidy from the government would be
$8,058.)
In a situation like this, the firm has a strong
financial incentive to junk its group coverage and dump its workers onto the
taxpayer-subsidized plan. Under the new law, firms with more than fifty
workers that don’t offer coverage would have to pay an annual fine of $2,000
for every worker they employ, excepting the first thirty. In this case, the
security firm would incur a fine of $140,000 (seventy times two), but it
would save $610,000 a year on health-care costs. If you owned this firm,
what would you do? Unless you are unusually public spirited, you would take
advantage of the free money that the government is giving out. Since your
employees would see their own health-care contributions fall by more than
$1,100 a year, or almost half, they would be unlikely to complain. And even
if they did, you would be saving so much money you afford to buy their
agreement with a pay raise of, say, $2,000 a year, and still come out well
ahead.
Even if the government tried to impose additional
sanctions on such firms, I doubt it would work. The dollar sums involved are
so large that firms would try to game the system, by, for example, shutting
down, reincorporating under a different name, and hiring back their
employees without coverage. They might not even need to go to such lengths.
Firms that pay modest wages have high rates of turnover. By simply refusing
to offer coverage to new employees, they could pretty quickly convert most
of their employees into non-covered workers.
The designers of health-care reform and the C.B.O.
are aware of this problem, but, in my view, they have greatly underestimated
it. According to the C.B.O., somewhere between eight and nine million
workers will lose their group coverage as a result of their employers
refusing to offer it. That isn’t a trifling number. But the C.B.O. says it
will be largely offset by an opposite effect in which employers that don’t
currently provide health insurance begin to offer it in response to higher
demand from their workers as a result of the individual mandate. In this
way, some six to seven million people will obtain new group coverage, the
C.B.O. says, so the overall impact of the changes will be minor.
Continued in article
"Senate Bill Sets a Plan to Regulate Premiums," by Robert Pear, The New York
Times, April 20,
2010 --- http://www.nytimes.com/2010/04/21/health/policy/21healt
. . .
Grace-Marie Turner, president of the Galen
Institute, a research center that advocates free-market health policies,
said the Democrats’ proposal was unlikely to succeed in lowering insurance
costs.
“Capping premiums without recognizing the forces
that are driving up costs would be like tightening the lid on a pressure
cooker while the heat is being turned up,” Mrs. Turner said.
Mrs. Feinstein said her bill would close what she
described as “an enormous loophole” in the new law. And she said health
insurance should be regulated like a public utility.
“Water and power are essential for life,” Mrs.
Feinstein said. “So they are heavily regulated, and rate increases must be
approved. Health insurance is also vital for life. It too should be strictly
regulated so that people can afford this basic need.”
What the reviewers failed to mention is that the
book is also chock-a-block with misinformation and outright falsehoods about
the law Gruber helped construct — many of which Gruber himself exposed later
on. Among the most glaring:
• Gruber claims that for individuals and small
firms qualifying for a tax credit, "this bill will lower your health care
costs." But Gruber would later go on to tell several states the opposite.
One of them was Wisconsin, where he said fewer than 6% would see lower
premiums, and 41% would get hit with hikes of 50% or more. Meanwhile,
millions learned that Gruber's claim was a fantasy last year, when they
confronted
ObamaCare's sky-high premiums after seeing their
existing plans canceled.
• Gruber declares that the law doesn't raise taxes
on anyone "with incomes below $200,000 per year." Yet several of the dozens
of tax hikes stuffed into the bill hit the middle class, or soon will.
Americans for Tax Reform counted seven big ones.
• In the section on the Cadillac tax, which depicts
Gruber tooling around in a Caddy, he claims this tax would apply "only to
the top few percent of health insurance plans" and would hit more only if
premiums climb faster than inflation.
But in videotaped comments, Gruber explains that
the tax was purposely designed to start small and then eventually hit all
employer plans, "essentially getting rid of the exclusion for
employer-sponsored plans."
• Gruber emphatically declares that ObamaCare will
cut the federal deficit by $1 trillion over its second decade because "the
deficit-reducing effects of this legislation grow over time."
But all the Congressional Budget Office said was
that a "rough outlook" for ObamaCare's second decade resulted in deficit
cuts "in a broad range of around one-half percent of GDP." And that assumed
the law was enacted exactly as written, and worked exactly as predicted,
both of which have already failed to come true.
When the Government Accountability Office ran the
numbers using more realistic scenarios, it found ObamaCare adding
significantly to the long-term deficit. The CBO, meanwhile, has given up
making even short-term forecasts of ObamaCare's impact on the deficit.
• Throughout the book, Gruber cites CBO projections
of ObamaCare's effects on premiums and coverage, calling it "the best
independent source for evaluating bills like the ACA." What he doesn't
mention is that when the CBO developed its health care forecasting model in
2007, Gruber had a role in creating it. It even credits
Gruber for his "helpful comments and feedback ...
throughout the model's development."
And in a 2011 paper, Gruber himself said that his
own health care
model "mirrors
the CBO approach to modeling health reform."
• Gruber says that if the law's many cost-control
measures work as expected, "the ACA will end up solving our cost problem in
the U.S." But earlier this year Gruber told the Washington Post that it was
"misleading" to say ObamaCare will save money. "The law isn't designed to
save money," he said. "It's designed to improve health, and that's going to
cost money."
Emergency departments
have many of the best doctors in the USA. It's common to outsource those doctors
to ER practicing partnerships. In the USA ERs,
especially urban trauma centers, in hospitals are being stressed to the point of
breaking. Much, albeit certainly not all, of the blame falls on the
Affordable Care Act.
Jensen Comment
Here are a few tidbits in the above report.:
Emergency care is the safety net of the nation’s health care system, caring for
everyone, regardless of ability to pay.
Emergency physicians provide the most uncompensated care for uninsured and
underinsured patients of all physicians.
America’s emergency departments are under severe stress, facing soaring demands.
They are essential to every community and must have adequate resources.
Having health insurance does not mean you have access to medical care.
. . .
The federal government estimates that the number of uninsured in the United
States has declined by about 15 million since 2013[iii].
In the first three months of 2015, 29 million people were uninsured. That was
seven million fewer than in 2014. While the uninsured are expected to drop to
about 23 million by 2023 as a result of the ACA, according to the Centers for
Medicare & Medicaid Services, many American will still not be able to afford
their healthcare needs.[iv]
24.3 percent of the uninsured are Hispanic
15.9 percent are black
9.8 percent are white
9.8 percent of children younger than 19 in poverty
7 percent of children under 19 who are not in poverty
. . .
Hospitals and physicians shoulder the financial burden for the uninsured by
incurring billions of dollars in bad debt or “uncompensated care” each year.
Hospitals provided over $50 billion in uncompensated care in 2013.
In the past, hospitals shifted uncompensated care costs to insured patients
to make up the difference. However, cost shifting no longer is a viable
option because managed care and other health plans have instituted strict
price controls, leaving little margin to shift costs. More than one-third of
emergency physicians lose an average of $138,300 each year from EMTALA-related
bad debt, according to a May 2003 American Medical Association study.]
. . .
With projections that health care costs will double the nation is faced with
how it will continue to provide care for all Americans, not just the
disadvantaged. Emergency departments provide an essential community service,
similar to fire departments, police departments, and public utilities. The
nation cannot afford to allow the emergency care system to collapse because
of a lack of funding. It is too high a price to pay in terms of public
health effects and human suffering.
Medicaid patients are having Analysis of hospital financial reporting and
member surveys from hospital associations indicates that, through 2014,
payer mix is shifting in ways that will likely reduce hospital uncompensated
care costs, according to the Dept. of Health and Human Services (HHS).
Moreover, a projection model developed by ASPE suggests that the large
observed declines in the uninsured and increases in Medicaid coverage have
led to substantial declines in hospital uncompensated care in 2014.
Medicaid expansion states account for $5 billion of the estimated $7.4
billion reduction in uncompensated care costs attributed to ACA coverage
expansions.
. . .
Most undocumented immigrants are unable to obtain health insurance and this
means many are
unable to pay – contributing to uncompensated care, especially in Border
States, such as California,
Texas and Arizona. Billions of dollars of uncompensated care has resulted in
the closure of hundreds
of emergency departments in America, which is reducing capacity and
threatening everyone’s access
to lifesaving care.
. . .
People who cannot afford physicians’ fees and who do not have health
insurance are often turned away from private offices and urgent care
clinics. With no other options, they turn to emergency departments, which
serve as a vital part of America’s health care safety net. Emergency
departments are mandated by law to medically evaluate and provide
stabilizing treatment of emergency conditions for everyone. Language and
economic barriers also often limit undocumented immigrants’ access to health
care. Furthermore, many undocumented immigrants become migrant farm workers
and their transient living arrangements jeopardize residency requirements
for some community health clinics. In addition, fear of detection by
immigration authorities may account for why as few as one-fourth of them use
other health services. ACEP opposes initiatives to require physicians or
health care facilities to report suspected, undocumented persons to
immigration authorities.
. . .
See the reference links at the end of the article
Jensen Comment
The above report judiciously avoids mentioning that one of the major stresses on
ER departments and their doctors is the high cost of malpractice insurance now
being heavily funded by the middle class. You need only watch the constant
stream of advertisements on television of law firms seeking medical punitive
damages to know that some law firms are totally depend on punitive damages
settlements, except in Texas. Early on the many lawyers in the USA Congress
warned that the Affordable Healthcare Act would never pass if the ACA messed
with the law firm gravy train of punitive damages. National healthcare plans
such as those in Canada and Scandinavia limit malpractice settlements to actual
damages. This greatly reduces the cost of malpractice insurance in those
national plans. But this will never happen in the USA (except for Texas where
punitive damages unbelievably are limited by a constitutional amendment) --- http://www.nytimes.com/2007/10/05/us/05doctors.htm
Four
years after Texas voters approved a constitutional amendment limiting awards
in medical malpractice lawsuits, doctors are responding as supporters
predicted, arriving from all parts of the country to swell the ranks of
specialists at Texas hospitals and bring professional health care to some
long-underserved rural areas. “It was hard to believe at first; we thought
it was a spike,” said Dr. Donald W. Patrick, executive director of the
medical board and a neurosurgeon and lawyer. But Dr. Patrick said the trend
— licenses up 18 percent since 2003, when the damage caps were enacted — has
held, with an even sharper jump of 30 percent in the last fiscal year,
compared with the year before. Ralph Blumenthal, "More Doctors in Texas
After Malpractice Caps," The New York Times, October 5, 2007.
Canadian Malpractice Insurance Takes
Profit Out Of Coverage," by Jane Akre, Injury Board,
July 28, 2009 --- Click Here
TheSt. Petersburg Timestakes a look at the cost of insurance in Canada for health care
providers.
A
neurosurgeon in Miami pays about $237,000 for medical malpractice insurance.
The same professional in Toronto pays about $29,200, reports Susan Taylor
Martin.
A
Canadian orthopedic surgeon pays just over $10,000 for coverage that costs a
Miami physician $140,000. An obstetrician in Canada pays $36,353 for
insurance, while a Tampa Bay obstetrician pays $98,000 for medical
malpractice insurance.
President Obama's
End Run on the Separation of Powers: Attempts to Spend Billions Not
Appropriated by the Congress The Administration will do anything to rescue its
flailing Affordable Care (Obamacare) Act, and nothing so meager as the law will
interfere. This damage to the separation of powers, not a health-care bill, will
be President Obama’s abiding legacy---
http://www.wsj.com/articles/an-illegal-bailout-for-obamacare-1475276262?mod=djemMER
Tennessee is ground zero for ObamaCare’s nationwide implosion. Late last
month the state insurance commissioner, Julie Mix McPeak,
approved premium increases of up to 62% in a bid to save the exchange set up
under the Affordable Care Act. “I would characterize the exchange market in
Tennessee as very near collapse,” she said.
Then
last week BlueCross BlueShield of Tennessee announced it would leave three
of the state’s largest exchange markets—Nashville, Memphis and Knoxville.
“We have experienced losses approaching $500 million over the course of
three years on ACA plans,” the company said,
“which is unsustainable.” As a result, more than 100,000 Tennesseans will be
forced to seek out new coverage for 2017.
BlueCross is only the latest insurer to head for the exits. Community Health
Alliance, the insurance co-op established under ObamaCare, is winding down
due to financial failure, leaving 30,000 people without coverage.
UnitedHealthcare said in April it is departing Tennessee’s exchange after
significant losses. That’s another 41,000 people needing new plans.
All
told, more than 60% of our state’s ObamaCare consumers will lose their
coverage heading into 2017. When they go in search of a replacement plan,
they will confront two unfortunate realities: a dearth of options and
skyrocketing costs.
Seventy-three out of Tennessee’s 95 counties will have only one insurer on
the exchange, meaning no meaningful competition whatsoever. In regions where
BlueCross BlueShield is pulling out, there will be two remaining major
carriers, CignaCI-0.80%and Humana.HUM0.33%The only large metro area with more options will be Chattanooga.
Then
there are the premiums. State regulators have already approved the highest
annual rise in the nation, a weighted average of nearly 56%,
according to data at ACASignups.net. The rate increases authorized in late
August include an average of 62% for BlueCross BlueShield, 46% for Cigna and
44% for Humana. The latter two companies could ask to revise their rates
upward depending on how many former BlueCross consumers they pick up.
The
bottom line is that Tennesseans on ObamaCare must choose from fewer, and
increasingly unaffordable, options. Some exchange buyers, those covered by
subsidies, will bear only part of this additional cost. For the roughly
30,000 Tennesseans who are ineligible for subsidies, the higher price will
come completely out of their own pockets. Not to mention that all ObamaCare
consumers face rising deductibles, which aren’t covered by subsidies and can
range up to $6,850 for the most “affordable” family plans.
It’s
easy to imagine Commissioner McPeak’s fear of an outright exchange collapse
coming true in the near future. The more unaffordable plans become, the
angrier consumers will get. BlueCross BlueShield’s $500 million losses won’t
disappear when the company leaves the market. Instead, the red ink will flow
toward the remaining insurers as they pick up those customers. Cigna and
Humana have not publicly said whether their exchange plans have turned a
profit.
Naturally, this chain of events has Tennessee lawmakers clamoring
for change. One of the loudest demands—coming from Democrats like
Nashville’s U.S. Rep. Jim Cooper—is that the state double down on ObamaCare by expanding Medicaid. But
this is a cure worse than the disease, since it would force many Tennesseans
into a second-class health-care system while jeopardizing state finances for
years to come.
More
important, ObamaCare’s unraveling shows the danger of a one-size-fits-all
federal program. What’s happening in Tennessee is only a nationwide
harbinger. Every single neighboring state will have less competition on its
ObamaCare exchanges next year. The entire state of Alabama will have only
one insurer. Almost all are facing double-digit premium increases: in
Mississippi a weighted average of 16%; in Kentucky 25%; in Georgia 33%.
Continued in article
From the CFO
Journal's Morning Ledger on September 29, 2016
Why the
$600 EpiPen costs $69 in Britain The EpiPen allergy shot costs less than its
leather case in Britain, Bloomberg reports. The price of an EpiPen two-pack
has surged to more than $600 in the U.S., sparking a political outcry. While
the manufacturer, Mylan NV, says it takes home about $274, in the
U.K. a similar pair of injectors costs the state-funded National Health
Service $69. The numbers highlight the stark differences in the way drugs
are priced in the U.S. and Britain, where the government negotiates with
pharmaceutical companies to limit costs.
Jensen Comment
Such pricing would never work worldwide because somebody has to pay for
Mylan's corporate jets and conferences in Ritz hotels around the world.
"Cost Plus" pricing all depends upon what outlays are included in what you
call "cost." Accountants are notoriously creative when it comes to
"measuring" cost.
From The Wall
Street Journal on September 27, 2016
"Mylan Clarifies EpiPen's Profit"
. . .
Testifying before a congressional committee last week, CEO Heather Bresch
said Mylan's profit was $100 for a two-pack of injectors, despite a $608
price in the USA
(versus $69 in the U.K.)
Continued in
article
Jensen Comment
As usual USA prices include all the allocations of corporate jets, conferences
in luxury hotels, factory depreciation, equipment depreciation, R&D, etc.
Screwing USA customers and third parties (think Aetna, Blue Cross, Medicare, and
Medicaid) is the name of the game in the USA.
Healthcare Kickbacks
From the CFO Journal's Morning Ledger on October 4, 2016
Tenet
agrees to kickbacks fines Tenet Healthcare Corp. said
it would pay states and the federal government
$514 million to settle allegations that its hospitals in Georgia and South
Carolina paid kickbacks for obstetric
referrals of low-income patients. Under the settlement, which must be
approved by a court, two Tenet subsidiaries will plead guilty to one count
of conspiracy to violate federal kickback laws, the company said. The
agreement settles a criminal investigation and civil litigation.
September 30, 2016
From the CFO Journal's Morning Ledger on September 15, 2016
Health-care costs no joke The average
cost of health coverage offered by employers pushed above $18,000 for a
family plan this year, though the growth was slowed by the accelerating
shift into high-deductible plans, according to a major survey. Annual
premium cost rose 3% to $18,142 for an employer family plan in 2016,
according to the annual poll of employers performed by the nonprofit Kaiser
Family Foundation along with the Health Research & Educational Trust
Our undercover testing for the 2016 coverage year found that the eligibility
determination and enrollment processes of the federal and state marketplaces
we reviewed remain vulnerable to fraud, as we previously reported for the
2014 and 2015 coverage years. For each of our 15 fictitious
applications, the marketplaces approved coverage, including for 6 fictitious
applicants who had previously obtained subsidized coverage but did not file
the required federal income-tax returns. Although IRS provides information
to marketplaces on whether health-care applicants have filed required
returns, the federal Marketplace and our selected state marketplace allowed
applicants to instead attest that they had filed returns, saying the IRS
information was not sufficiently current. The marketplaces we reviewed
also relaxed documentation standards or extended deadlines for filing
required documentation. After initial approval, all but one of our
fictitious enrollees maintained subsidized coverage, even though we sent
fictitious documents, or no documents, to resolve application
inconsistencies.
For each of our 15 fictitious applications, the
federal or state-based marketplaces approved coverage at time of
application—specifically, 14 applications for qualified health plans, and 1
application for Medicaid. Each of the 14 applications for qualified
health plans was also approved for APTC subsidies.
These subsidies totaled about $5,000 on a monthly
basis, or about $60,000 annually.
These 14 qualified-health-plan applications also each
obtained CSR subsidies, putting the applicants in a position to further
benefit if they used medical services.
Obamacare: More and more limited access to doctors and hospitals From the CFO Journal's Morning Ledger on September 1, 2016
Why put off until January what you can do today? Under
intense pressure to curb costs that have led to losses on the Affordable
Care Act exchanges, insurers
are accelerating their move toward
plans that offer limited choices of doctors and hospitals. A new McKinsey &
Co. analysis of regulatory filings for 18 states and the District of
Columbia found that 75% of the offerings on their exchanges in 2017 will
likely be health-maintenance organizations or a similar plan design known as
an exclusive provider organization, or EPO. Both typically require consumers
to use an often-narrow network of health-care providers – in some cases,
just one large hospital system and its affiliated facilities and doctors.
Only a quarter of the exchange plans next year would still be broader
designs such as preferred-provider organizations, or PPOs, which generally
offer larger selections of doctors and hospitals and include out-of-network
coverage, the McKinsey analysis found. Across the states McKinsey examined,
about 15% of exchange-eligible consumers are expected to have no PPOs to
choose from. A spokesman for the Department of Health and Human Services
said that many surveys have shown that exchange enrollees are satisfied with
the array of health-care providers in their plans, and insurers are
adjusting their offerings based on consumer demand. Offering a smaller
selection of health-care providers holds down costs, in part because
hospitals and specialists with the highest reimbursement rates can be cut
out.
Jensen Comment
One of the big selling points for Obamacare legislation was that Obamacare would
ease the long-lines at emergency rooms.
From the CFO Journal's Morning Ledger on August 17, 2016
Health care a sticky
wicket
Many companies are cutting
jobs in response to rising health-care costs spurred by the Affordable Care
Act, according to a new survey by the Federal Reserve Bank of New York.
Roughly one-fifth of service sector and manufacturing company executives
said they are reducing the number of workers in response to provisions in
the health-care law, Vipal Monga reports. The results add to a bevy of bad
news related to the Obama administration’s signature health-care law.
The government is offering some
ideas to try to fix the Affordable Care Act, the healthcare law known as
Obamacare, amid a series of missteps that have befallen President Barack
Obama's signature legislative achievement.
CMS, the division of the US
Department of Health and Human Services that oversees the exchanges,
proposed tweaks that would make it less risky for insurers in the
marketplace to take on sick patients.
Two of the biggest problems for
the exchanges have been a lack of young people, who help offset higher-cost
patients, signing up for insurance and generally sicker-than-expected people
getting coverage through the exchanges, leading to huge losses for some
insurers.
A few of the 14 total proposals
include:
Using some of the fees from
the federally funded marketplace for outreach to get more young people
to sign up.
Strengthening rules for
signing up for insurance outside the open-enrollment period to ensure
that people are not waiting until they are sick to get coverage.
Take prescription-drug use
into account when evaluating the risk profile of potential patients.
Previously, this had not been taken into account, and insurers argued
that it prevented them from getting a full picture of possible patients'
health status.
Creating more flexibility
for insurers in their bronze plan offerings to reduce cost burdens.
Kevin Counihan, the insurance
marketplace CEO at the CMS, said the proposed changes would fix numerous
issues with the exchanges.
"These proposed actions
and others we have taken over the last six months would help to: support
issuers with high-cost enrollees, while updating risk adjustment; strengthen
the risk pool; promote additional enrollment; and support issuers in
entering the Marketplace or growing their Marketplace business," Counihan
wrote
in a post summarizing the
proposals.
Like health-care systems around the world, the National Health Service (NHS)
is struggling to provide good care at low cost for patients such as Mrs
Evans (not her real name). Its business model has not kept up with the
changing burden of disease. For as more people enter and live longer in
their dotage, demand increases for two costly types of care. The first is
looking after the dying. About 25% of all hospital
inpatient spending during a person’s lifetime occurs in the final three
months. The second is caring for those with more than one chronic
condition. About 70% of NHS spending goes on long-term illnesses. More than
half of over-70s have at least two and a quarter have at least three. In
south Somerset 50% of health and social-care funding is spent on 4% of
people.
. . .
If one fallacy about the NHS is that it is the envy
of the world, as its devotees claim, another is that it is a single
organisation. In fact it is a series of interlocking systems. Public health,
hospitals, general practitioners (or GPs, the family doctors who provide
basic care outside hospitals) and mental-health services all have separate
funding and incentives. Social care, which includes old-folks’ homes and the
like, is run by local councils, not the NHS
. . .
So the NHS must do more with what it already
spends. A sign of inefficiency is the 6,000 patients in English hospitals
who are ready to go home but not yet discharged, up from 4,000 in 2013. They
cost the service hundreds of millions of pounds per year and obstruct others
from treatment. The bed-blockers themselves are harmed, too. Elderly
patients lose up to 5% of muscle strength for every day they are laid up in
hospital. Some delays are the result of council cuts: about 400,000 fewer
old people receive social care than in 2010, meaning that hospitals are
sometimes used as expensive alternatives to care homes. But most are due to
how hospitals are run.
. . .
On average, the framework made GPs some of the
highest-paid family doctors in the world when it was introduced in 2004. But
since then it has become less generous. GPs’ real-terms income has fallen by
one-fifth. This, and poor planning, has led to a shortage of them. England
needs 5,000 more in the next five years. The NHS is mulling a deal with
Apollo, whereby the Indian health-care firm supplies enough doctors to fill
the gap.
. . .
The move from “volume to value”—that is, from
paying providers for the procedures they carry out to paying them for the
outcomes they achieve—has helped to stem the cost of Medicare, the American
health system for pensioners. The expansion of ACOs as part of Obamacare led
to reduced mortality rates and savings for providers of about 1-2%. But Dan
Northam Jones, a visiting fellow at Harvard,
warns that the potential for savings is greater in systems like Medicare,
where there is no cap on spending.
And yet ACOs reflect a growing belief that if you
want radically to improve health care you have to change how you pay for it.
They will not solve all the problems of the NHS, some of which are inherent
in its taxpayer-funded model. But perhaps its business model may yet catch
up with how illness is changing. The NHS should forget being the envy of the
world, and instead learn from it.
From the CFO Journal's Morning Ledger on August 16, 2016
Aetna bails on many
Obamacare exchanges Aetna Inc. will withdraw from 11 of the
15 states where it currently offers plans through the Affordable Care Act
exchanges, becoming the latest of the major national health insurers to pull
back sharply from the law’s signature marketplaces after steep financial
losses. Aetna’s move will sharpen concerns about competitive options in the
exchanges—and it puts at least one county at risk of having no insurers
offering exchange plans in 2017.
Yeah Right! As if There's Much Competition Without
the Health Insurer Mergers
From the CFO Journal's Morning Ledger on July
2, 2016
The Justice Department is suing to put the kibosh on
two health-insurance megamergers, in what will be a high-stakes legal. The
DOJ on Thursday
filed a pair of lawsuits in a
Washington, D.C., federal court challenging Anthem Inc.’s
proposed acquisition of Cigna Corp. and Aetna Inc.’s planned
combination with Humana Inc., alleging the mergers would harm
consumers, employers and health-care providers with an unacceptable
reduction in competition.
“If these mergers were to take place, the competition among these insurers
that has pushed them to provide lower premiums, higher quality care and
better benefits would be eliminated,” Attorney General Loretta Lynch said.
The lawsuits counter aggressive efforts by the health insurers to
consolidate. The deals would have turned the top five national health
insurers into three giant companies, each with revenue of more than $100
billion a year.
The Big Medical Insurance Companies are Pushing Out
Obamacare's Smaller ACA Plans
From the CFO Journal's Morning Ledger on July
20, 2016
ACA dings UnitedHealth UnitedHealth Group Inc.on
Tuesday posted a strong earnings beat as
revenue continued to surge in its pharmacy-services business, and it lifted
the low end of its profit guidance for the year. It also raised the low end
of its earnings guidance. But amid the positive news, the company included
one ongoing dark spot:
Affordable Care Act
plans, which it will almost completely stop selling next year.
The insurer booked another $200 million in full-year ACA-plan losses in the
second quarter, but more than that, costs mounted because enrollees were
even sicker than projected, with more chronic conditions than last year.
This makes me wonder why some of the states (Arkansas, Alabama, Kentucky,
Tennesee, Maine, and Missouri) have the highest percentages of people declared
permanently disabled and on Social Security and Medicare benefits for the rest
of their lives? I can possibly understand West Virginia due to black lung and
other mining ailments.
Florida, I think, has the worst reputation for fraud in this regard due to a
higher concentration of doctors and lawyers who will commit fraud for
disability-declaration fees. A close friend's chronically unemployable adult son
(40 years old) was denied his bid for SS disability benefits in Kansas. So he
went to Florida and found a Cuban refugee doctor and a lawyer who eventually got
him declared disabled for spinal cord pain. I have to chuckle to myself when I
see him shoveling snow in the driveway of his parents. I don't think he's really
permanently disabled.
Jensen Comment
Percentages range from 2.8% in Hawaii to 8.9% in West Virginia.
My wife started receiving SS disability benefits and Medicare when she was
approximately 53 years old --- when she went off worker compensation benefits
for a spine injury on the job. I can personally vouch for that her disability is
genuine. Medicare now has invested way over a million dollars in 12 of her 16
spine surgeries.
I have another relative whose mental illness SS disability payments may be
more controversial. Mental illness according to what I read is not necessarily
permanently disabling with newer treatments and medications. Personally I think
she could go back to work given her personal activities these days. But she
cannot go back to work for risk of losing her lifetime SS and Medicare benefits.
That's a shame because I think she would be more happy back in her job.
My point is that SS permanent disability and
Medicare benefits may be dysfunctional to people who would be happier back on
the job.
June 30, 2016
A recently published deposition from a top tax official
provides more evidence that the Obama administration not only acted illegally
when deciding to pay Obamacare subsidies to insurers—but that they did so
knowing full well that the move was not justified . . . The administration’s
argument in this case is essentially that even though Congress rejected its
request for an appropriation, and even though the health law does not provide
them with any clear and discrete appropriate for its cost-sharing subsidies,
they can nevertheless cobble together a hazy justification under which it is
somehow “appropriate” to do so. The administration’s argument for its actions,
in other words, is all but an admission that what it is doing is not legal or
justifiable—and that when it comes to Obamacare, it simply doesn’t care. Peter Suderman
https://reason.com/blog/2016/06/01/the-irs-warned-the-obama-administration
Jensen Comment
This begs the question of the need for such high premium increases for low-cost
Obamacare plans that insured people don't use much due to the extremely high
deductibles if they go to a doctor.
The deductibles on low-cost Obamacare plans are so huge (40% to 60%) that
insured people put off getting medical care until absolutely necessary ---
thereby greatly reducing the number of claims to be processed and paid.
Freedom Partners Chamber of Commerce, where I work,
has analyzed all publicly available information for health-insurance
premiums from healthcare.gov and state insurance departments. It then
calculated the weighted averages for all health-insurance plans available on
the Affordable Care Act’s exchanges. The weighted average gives a more
accurate view of overall premium increases, because it takes into account
each insurance plan’s market share.
The findings: Nationally, premiums for individual
health plans increased on average between 2015 and 2016 by 14.9%.
Consumers in every state except Mississippi faced
increased premiums, and in no fewer than 29 states the average increases
were in the double digits. For a third of states, the average premiums rose
20% or more.
Health-insurance premiums rose by more than 30% in
Alaska and Hawaii; Oregon’s average rate increase was 23.2%. California’s
premiums on average rose by a modest 1.5%.
Consumers in Kansas, Missouri, Iowa and Illinois
faced increases exceeding 20% on average. The East Coast north of Maryland
was the least hard hit (New York’s average premium increase was 6%),
although Pennsylvania and New Jersey consumers faced premium increases of
14.6% and 13.1% respectively.
In 11 of the 16 states defined as southern by the
U.S. Census Bureau, premiums rose by more than 10%. Premiums rose on average
by 13.9%, and by more than 20% in Maryland, Delaware, West Virginia,
Alabama, North Carolina and Oklahoma. In Texas, where data was only
available for 98.5% of individual-market health-care plans, premiums rose by
14.1%.
Average premiums in Tennessee rose 35.2%—mostly
because of the state’s largest individual-market insurer, BlueCross
BlueShield of Tennessee, which sold 82% of all exchange plans in 2015. After
losing $141 million on these plans last year, the company had little choice
but to request average premium increases of 36.3%. The state insurance
commission approved this request, lest the company leave the exchange
altogether and leave 231,000 Tennesseans in the lurch.
Minnesota holds the dubious honor of having the
highest year-over-year premium increases, 47.7%. Why? Because that state’s
BlueCross BlueShield, the largest insurer, with over 90% of the market, lost
tens of millions of dollars during the Affordable Care Act’s first two
years. The company requested an average 49% rate increase, which was
approved by state regulators.
Remember: These premium increases are only one
piece of the health-care cost puzzle. Deductibles are also rising under the
Affordable Care Act. Silver plans—the most popular on the exchanges—had
average deductibles of nearly $3,000 in 2016, according to the Robert Wood
Johnson Foundation. This represents an 8% increase over last year.
Millions of Americans are coming to believe that
the Affordable Care Act’s costs far outweigh its benefits. In 2014, the
latest year for which data is available, roughly 7.5 million Americans paid
the IRS penalty rather than purchase the law’s insurance. This penalty is
rising to an average $969 per household in 2016 in an attempt to force
people onto the exchanges. Yet even a $1,000 fine is cheap compared to
thousands—and sometimes tens of thousands—of dollars for an Affordable Care
Act-compliant plan.
Nevertheless, Mrs. Clinton refuses to acknowledge
the law’s widespread problems. At the Dec. 19 Democratic presidential
debate, she responded to a question about rising premiums and deductibles by
calling them “glitches,” and a month later she was claiming credit for the
health-care law altogether. But if ObamaCare is HillaryCare by a different
name, shouldn’t voters hold her responsible?
A couple of years ago,
the leaders of Vanderbilt University faced a difficult decision: Their
academic medical center was successful, a hub of research and life-saving
treatment. But the health industry was in turmoil, and the changes presented
new risks to the university, whose vast medical operation approached
four-fifths of Vanderbilt’s entire budget. And that number was projected to
grow.
The Affordable Care
Act, passed in 2010, was accelerating changes already underway. Research
financing was tight. Mergers were rampant among hospitals, insurers, and
drug companies. The vast sums of clinical income that prestigious university
hospitals had used to buttress themselves — and often the university’s other
missions — seemed likely to dry up. Everything was up for reinvention. Did
Vanderbilt open itself up to such risks?
No, the leaders
decided. And so last month Vanderbilt University Medical Center completed
its separation from its parent. The hospital is still located on the campus
and is tightly affiliated with the medical school, but now the university’s
trustees will have to spend less time studying the intricacies of, say,
disproportionate-share hospital payments, or lobbying the state legislature
to expand Medicaid access.
Continued in article
Jensen Comment
One of the problems is third party on pricing, especially Obamacare, Medicaid
and Medicare pricing limits that are driving patients under these plans to be
losing propositions. In New Hampshire nearly half the hospitals turn away
patients on Obamacare insurance plans except in dire emergencies. University
hospitals for a variety of reasons usually must accept those patients and eat
the losses.
There are, of course, some ways university hospitals try to limit these
losses. For example the Dartmouth Hitchcock Medical Center will only accept
patients referred by doctors, usually family physicians. You cannot get an
appointment for brain surgery or dermatology treatments at the DHMC without a
referral except in dire emergencies.
Before Obamacare there was Romneycare (Mittcare) in Massachusetts. Because of
price controls some hospitals in Massachusetts dropped losers. The biggest loser
in most hospitals is obstetrics due to the high cost of malpractice insurance
for obstetrics. Parents tend to sue for defective babies even when the hospital
did nothing wrong. Another loser may be emergency room services. Some
Boston-area hospitals that once had emergency services dropped their emergency
rooms where patients tend to go when they have no insurance or price-controlled
insurance plans like Medicaid and Medicare.
My long-time ophthalmologist with offices in our regional hospital now turns
me away because I have Medicare insurance.
University hospitals face larger hurdles when dropping medical services
having financial losses. Apart from the public relations disaster arising from
dropped services there are other problems such as need to provide those services
for educational purposes. For example, most obstetrics students in a
university's medical school need somewhere to learn obstetrics first hand.
Time and time again history shows that price controls have adverse effects on
supply. Either quality deteriorates (such as having medical services from a
provider less than a licensed physician) or the service disappears entirely
(such as not serving Obamacare, Medicaid, or Medicare patients). Drug
manufacturers will sometimes sell a drug at below variable cost if the loss can
be absorbed by other products the company sells. However, if the losses become
huge the company might stop making an unprofitable medication. This is a growing
problem with certain specialized cancer medications that are extremely expensive
to manufacture and are also extremely unprofitable at prices paid by Medicaid
and Medicare.
And thus university hospitals that were once cash cows for medical schools
have become cash hemorrhages.
Forget about retiring
on Social Security. Health care costs alone will devour the entire lifetime
benefits—and then some—of a 45-year-old couple when they retire, according
to projections released Wednesday by HealthView Services, a Danvers, Mass.-
based company that provides retirement health care cost data and tools to
financial advisers.
Social Security
payments will stretch farther for current retirees, but the numbers are
still stark: In 2016, the average 66-year-old couple will require 57% of
their lifetime, pre-tax Social Security benefits to pay for health care
costs, according to HealthView Services. The average 45-year-old couple, by
contrast, will need 116% of lifetime Social Security payments to cover
health care costs.
Total retirement health care expenses for that 45-year-old couple planning
to retire at age 65 will come to $592,275 in today’s dollars and $1.6
million in future dollars, HealthView Services projects. The projection
assumes the male member of the couple will live to 87 and the female to 89.
The total tab includes premiums for Medicare Part B, which covers doctors’
visits, Part D, which covers drugs, and Part F, which is the most
comprehensive supplemental insurance. It also includes expenses not covered
by Medicare, such as dental work and hearing aids. Notably, it does not
include long-term care costs. Medicare does not pay for long-term stays in
nursing homes, or for assisted living facilities.
Of course, these averages won’t reflect everyone’s experience. People’s
individual health status will influence how much they pay. What’s more, not
everyone will choose to buy a Part F Medigap policy. It’s a popular but
expensive choice, with monthly premiums that vary widely by region but
average around $200.
While expensive, Part F plans eliminate a lot of the uncertainty of medical
expenses. Premiums are predictable and cover most of beneficiaries’
out-of-pocket expenses. Without a supplemental plan, beneficiaries could be
on the hook for even more if they have a big medical episode, such as a
stroke, or a serious diagnosis like cancer.
On Plan F, “if you never have a problem and drop dead at 110, you’ll have
wasted a lot of money,” said Ron Mastrogiovanni, founder and CEO of
HealthView Services. A more likely scenario, he said, is that, “We’re not
going to stay healthy throughout retirement.”
46 - Maine
47 - Maryland
48 - Michigan
49 - Delaware
50 - West Virginia
Jensen Comment
I think this ranking is probably more misleading than helpful. Physicians,
especially the most successful physicians, typically are in private business
where they have their own billings and staff. They may own their own office
buildings or rent office space from others such as medical clinics. The point
here is that they are on not on salary.
ER physicians are often in partnerships where hospitals contract with the
partnerships to cover the ER services. Billings may vary with demand for those
ER services. Partners in turn share the profits.
Like other salary rankings such as ranking of professor compensation by
university, the rankings are meaningless unless other things are factored in
such as the cost of housing. For example, we can hardly compare the salaries at
Stanford University (read that Silicon Valley) with the salaries at Dartmouth or
the University of New Hampshire where housing is expensive within the State of
New Hampshire but hardly comparable with Silicon Valley housing costs. Also
other things must be factored in such as housing subsidies and fringe benefits.
Having said this it did surprise me that states not having large cities (like
the top five states ranked above) came out higher than states having large
cities like California, New York, Texas, and Ohio.
The Obama administration will tell any lie and break any law to prevent the
president's signature health program from collapsing. Insurance companies,
such as UnitedHealthcare and Aetna, are losing billions trying to sell
Obamacare plans, and the risk is they'll drop out at the end of 2016. No
insurance companies means no Obamacare. In 2014, the White House tried to
avert that disaster by promising insurers a bailout funded with taxpayer
dollars, but public outrage and quick action by Senator Marco Rubio put a
stop to it. Now the administration is at it again.
Desperate to keep insurers on board, the administration scrambled to find
another source of money. Unfortunately, a big part of that money pot belongs
to the public. Disregarding that fact, the administration announced on Feb.
12 that the money will be handed out to insurers — a whopping $7.7 billion
this year alone. That huge handout to the insurance industry violates the
law.
This is money you and everyone else who already has insurance is forced to
pay, called a reinsurance fee. You pay the fee whether you buy your own plan
or get covered at work, even if your employer self-insures. You may be
clueless about it, but the fee is buried in your premium or taken out of
your compensation.
The language of section 1341 of the Affordable Care Act,
which details what this money can be used for, is clear as a bell. Some of
these annual fees — adding up to billions a year — belong to the public, not
the insurance companies.
The law states a fixed share "shall be deposited into the general fund of
the Treasury of the United States and may not be used" to offset insurance
companies' losses. But the administration gave all of it to the insurance
companies last year, and got away with that heist. So they're trying it
again.
Anyone in the corporate world who misused funds that way would be headed to
prison. This rogue administration is going to any length — including running
afoul of the law — to keep insurers hooked into Obamacare.
In the words of University of Houston law professor Seth Chandler, who tried
to call attention to the crime several months ago, this is an illegal
"diversion of funds to enrich insurers." Last year alone, Cross Blue Shield
of Texas got $549 million of these reinsurance funds, while Anthem Blue
Cross of California got $401 million.
How did this fly under the radar last year? Because no one — especially
members of Congress — has read the law. Insurance companies weren't about to
object to getting more money than the law allows. Plus, the announcements of
these payments were buried in mind-numbing federal agency releases. The
latest such disclosure came late on the Friday of a holiday weekend. The
business press reported the announcement but didn't go back to read section
1341 of the law and find that the payouts are illegal.
Last week, a few health scholars took notice, including Doug Badger, senior
fellow at the Galen Institute. He says the illegal maneuver is "designed to
keep a sinking ship from hitting rock bottom."
Congress should step in immediately and exercise its oversight duties to
stop this looting. The next payments to insurers are promised for March. No
time to waste.
Obamacare was sold on lies: You can keep your health plan if you like it.
And you can keep your doctor if you like your doctor. Then, once it was
passed, the administration resorted to a long string of lawless executive
actions to keep an unworkable scheme going, despite the damage being done to
employers, doctors and consumers.
The administration's diversion of public funds to its insurance company
cronies is just the latest defiance of the law. The president has illegally
delayed the employer mandate repeatedly. He's handing out free Obamacare
plans to illegal immigrants. Statutory deadlines are routinely ignored, and
funds are slyly shifted from one program to another — the law be damned.
Many doctors won’t take the insurance, and the care
patients do receive is inferior. Here’s a solution.
The two principal expenditures of the Affordable
Care Act so far include $850 billion for insurance subsidies and a similar
outlay for a massive Medicaid expansion. The truth is that Medicaid—a
program costing $500 billion a year that rises to $890 billion in
2024—funnels low-income families into substandard coverage. Instead of
providing a pathway to excellent health care for poor Americans, ObamaCare’s
Medicaid expansion doubles down on their second-class health-care status.
Already 55% of doctors in major metropolitan areas
refuse new Medicaid patients, according to the 2014 Merritt Hawkins annual
survey. Even of those providers signed up with Medicaid, 56% of primary-care
doctors and 43% of specialists are not available to new patients. Moreover,
numerous studies have found that the quality of medical care is inferior
under Medicaid, compared with private insurance. Lower quality means more
in-hospital deaths, more complications from surgery, shorter survival after
treatment, and longer hospital stays than similar patients with private
insurance.
The two principal expenditures of the Affordable
Care Act so far include $850 billion for insurance subsidies and a similar
outlay for a massive Medicaid expansion. The truth is that Medicaid—a
program costing $500 billion a year that rises to $890 billion in
2024—funnels low-income families into substandard coverage. Instead of
providing a pathway to excellent health care for poor Americans, ObamaCare’s
Medicaid expansion doubles down on their second-class health-care status.
Already 55% of doctors in major metropolitan areas
refuse new Medicaid patients, according to the 2014 Merritt Hawkins annual
survey. Even of those providers signed up with Medicaid, 56% of primary-care
doctors and 43% of specialists are not available to new patients. Moreover,
numerous studies have found that the quality of medical care is inferior
under Medicaid, compared with private insurance. Lower quality means more
in-hospital deaths, more complications from surgery, shorter survival after
treatment, and longer hospital stays than similar patients with private
insurance.
.
Legislation signed by President Bill Clinton in 1996 transformed the federal
welfare program into a pathway to self-sufficiency. In the same way,
Medicaid should be redesigned as a bridge toward affordable private
insurance. First, the new Medicaid should include a private-insurance option
with catastrophic coverage but few coverage mandates for all enrollees.
Second, new Medicaid should establish and put
initial funds into health savings accounts using part of the current federal
dollars already going into Medicaid. This will empower beneficiaries and
give them incentives to follow healthy lifestyles to protect those new
assets. With these reforms, doctors and hospitals would receive payments
from the same insurance as from non-Medicaid patients. Because health
providers receive the same payments whether they treat Medicaid or
non-Medicaid patients, the limited access and substandard treatment options
under Medicaid would be eliminated.
To ensure availability of the same coverage to both
Medicaid and non-Medicaid beneficiaries, federal funding would go only to
eligible people in states that offer these same coverage choices to the
entire state population. Federal money will be contingent on states meeting
thresholds for the number of Medicaid enrollees moved into private coverage.
Federal funds would go directly into beneficiary HSAs or to premium
payments, rather than into state bureaucracies. States should want this new
program because it will reduce the administrative costs of running a
separate insurance program and, most important, provide access to quality
health care for their residents.
Ultimately, traditional Medicaid would be
eliminated as new enrollees move into private coverage. These reforms would
change the purpose and culture of Medicaid agency offices from running
government-administered plans to establishing HSAs and finding private
insurance for beneficiaries.
Why focus on lower-cost, high-deductible health
insurance coupled with HSAs? Published studies have shown that pairing HSAs
with high-deductible coverage reduces health-care costs. Patient spending
averages 15% lower in high-deductible plans, with even more savings when
paired with HSAs—without any consequent increases in emergency visits or
hospitalizations and without a harmful impact on low-income families.
Secondarily, wellness programs that HSA holders more commonly use improve
chronic illnesses, reduce health claims and save money.
Continued in article
Inspector General's report warns that billions in federal loans might not be
repaid.
"Obamacare’s Government-Backed Nonprofit Health Plans Are a Disaster—and
Could Cost Taxpayers Billions," by Peter Suderman, Reason Magazine,
July 31, 2015 ---
http://reason.com/blog/2015/07/31/obamacares-government-backed-nonprofit-h
The federal government shelled out $2.4 billion in
loans to a series of non-profit health plans under Obamacare, but now
they’re struggling to stay alive.
The plans, dubbed CO-OPs (Consumer Operated and
Oriented Plans) were intended to
increase competition in the insurance market and
serve as a check on private insurers by providing an alternative that wasn’t
focused on profit. They were a
compromise measure intended to satisfy liberals
who wanted the law to set up a fully government-run health insurance
option.
As it turns out, Obamacare’s CO-OPs weren’t focused
on profit—or, it seems, financial viability of any kind.
The CO-OPs have struggled to meet enrollment
targets, with 13 of the 23 non-profit plans showing “considerably lower”
enrollment than projected, according to a
report by the Health and Human Services Inspector General.
Finances were shaky all around with 21 of 23 plans
incurring losses through the end of 2014, the report says.
This isn’t just a problem for the CO-OPs. It’s a
problem for the taxpayers. The $2.4 billion in loans given to these startup
plans were supposed to be repaid to the government with interest. Loans
given to start the plans were supposed to be repaid in five years;
“solvency” loans were supposed to be repaid in 15 years.
Freedom Partners Chamber of Commerce, where I work,
has analyzed all publicly available information for health-insurance
premiums from healthcare.gov and state insurance departments. It then
calculated the weighted averages for all health-insurance plans available on
the Affordable Care Act’s exchanges. The weighted average gives a more
accurate view of overall premium increases, because it takes into account
each insurance plan’s market share.
The findings: Nationally, premiums for individual
health plans increased on average between 2015 and 2016 by 14.9%.
Consumers in every state except Mississippi faced
increased premiums, and in no fewer than 29 states the average increases
were in the double digits. For a third of states, the average premiums rose
20% or more.
Health-insurance premiums rose by more than 30% in
Alaska and Hawaii; Oregon’s average rate increase was 23.2%. California’s
premiums on average rose by a modest 1.5%.
Consumers in Kansas, Missouri, Iowa and Illinois
faced increases exceeding 20% on average. The East Coast north of Maryland
was the least hard hit (New York’s average premium increase was 6%),
although Pennsylvania and New Jersey consumers faced premium increases of
14.6% and 13.1% respectively.
In 11 of the 16 states defined as southern by the
U.S. Census Bureau, premiums rose by more than 10%. Premiums rose on average
by 13.9%, and by more than 20% in Maryland, Delaware, West Virginia,
Alabama, North Carolina and Oklahoma. In Texas, where data was only
available for 98.5% of individual-market health-care plans, premiums rose by
14.1%.
Average premiums in Tennessee rose 35.2%—mostly
because of the state’s largest individual-market insurer, BlueCross
BlueShield of Tennessee, which sold 82% of all exchange plans in 2015. After
losing $141 million on these plans last year, the company had little choice
but to request average premium increases of 36.3%. The state insurance
commission approved this request, lest the company leave the exchange
altogether and leave 231,000 Tennesseans in the lurch.
Minnesota holds the dubious honor of having the
highest year-over-year premium increases, 47.7%. Why? Because that state’s
BlueCross BlueShield, the largest insurer, with over 90% of the market, lost
tens of millions of dollars during the Affordable Care Act’s first two
years. The company requested an average 49% rate increase, which was
approved by state regulators.
Remember: These premium increases are only one
piece of the health-care cost puzzle. Deductibles are also rising under the
Affordable Care Act. Silver plans—the most popular on the exchanges—had
average deductibles of nearly $3,000 in 2016, according to the Robert Wood
Johnson Foundation. This represents an 8% increase over last year.
Millions of Americans are coming to believe that
the Affordable Care Act’s costs far outweigh its benefits. In 2014, the
latest year for which data is available, roughly 7.5 million Americans paid
the IRS penalty rather than purchase the law’s insurance. This penalty is
rising to an average $969 per household in 2016 in an attempt to force
people onto the exchanges. Yet even a $1,000 fine is cheap compared to
thousands—and sometimes tens of thousands—of dollars for an Affordable Care
Act-compliant plan.
Nevertheless, Mrs. Clinton refuses to acknowledge
the law’s widespread problems. At the Dec. 19 Democratic presidential
debate, she responded to a question about rising premiums and deductibles by
calling them “glitches,” and a month later she was claiming credit for the
health-care law altogether. But if ObamaCare is HillaryCare by a different
name, shouldn’t voters hold her responsible?
Jensen Comment
Add to this another $10 trillion for free college education for all and you've
got a monumental obligation to be paid by government. But there's really no
sweat since the Fed has already proven that printing money is the best way to
pay government bills to avoid taxation and debt.
Among the law’s few popular features, even among
Republicans, is the mandate to cover adult children through age 26 on the
insurance plans of their parents. This benediction is sold as a gratuity,
but somebody must ultimately pay, and new research suggests the hidden
costs—in the form of lower take-home pay—are far higher than advertised.
In a working paper, Gopi Shah Goda and Jay
Bhattacharya of Stanford and Monica Farid of Harvard exploit the fact that
some 37 states had extended dependent-coverage mandates of varying rigor and
comprehensiveness before the Affordable Care Act. They explore these
differences to estimate the results of the uniform national mandate that was
imposed in 2010.
“We find evidence that employees who were most
affected by the mandate, namely employees at large firms, saw wage
reductions of approximately $1,200 per year,” the researchers observe. As a
wave of young adults hit the employer-based insurance rolls, the cost of
coverage inevitably climbed and businesses were obliged to dial back cash
wages as a share of overall compensation to accommodate the influx. Large
businesses were a particular casualty because before ObamaCare they were
largely exempt from state-level mandates.
The study also found that the costs of the
adult-kid mandate weren’t “only borne by parents of eligible children or
parents more generally.” They’re spread over all workers including other
young people, the childless and late middle-aged.
No study is definitive, though the authors are
careful about their methods and assumptions. The eternal lessons are that no
alleged government benefit is free and people should be allowed to make the
trade-offs for themselves. Another is that the next President has plenty of
running room to improve the American economy, if he cares to make better
decisions.
Clint Murphy let the deadline for getting health insurance by the new year
pass without a second thought.
Mr. Murphy, an engineer in Sulphur Springs, Tex.,
estimates that under the
Affordable Care Act,
he will face a fine of $1,800 for going uninsured in 2016. But in his view,
paying that penalty is worth it if he can avoid buying an insurance policy
that costs $2,900 or more. All he has to do is stay healthy.
“I
don’t see the logic behind that, and I’m just not going to do it,” said Mr.
Murphy, 45, who became uninsured in April after leaving a job with health
benefits to pursue contract work. “The fine is still going to be cheaper.”
Two
years after the Affordable Care Act began requiring most Americans to have
health insurance, 10.5 million who are eligible to buy coverage through the
law’s new insurance exchanges were still uninsured this fall, according to
the Obama administration.
That number appears to be shrinking: Administration
officials said last month that about 2.5 million new customers had bought
insurance through
HealthCare.gov,
the federal exchange serving 38 states, since open enrollment began on Nov.
1. The number of new enrollees is 29 percent higher than last year at this
time, suggesting that the threat of a larger penalty may be motivating more
people to get covered.
Continued in
article
Jensen Comment
Emergency room is free to low income people, and insurance companies now cannot
refuse applicants for pre-existing conditions. This means that if expensive
medical problems when not covered by insurance arise people can quickly sign up
for health insurance to pay future billings after the pre-existing condition is
discovered.
Jensen Comment
Hillary Clinton wants to greatly expand the subsidies for people well above
poverty lines whereas Bernie Sanders wants a more efficient governmental
single-payer system like that of Canada and European health care plans that are
almost entirely taxpayer funded. I prefer the Sanders single-payer
alternative that cuts out the private sector for the taxpayer-funded basic
health plan.
However, I also prefer the German plan
that allows the private sector to fund premium insurance that does such things
as speed up elective procedures (think new knees and hips) that are typically
long-delayed in most single-payer basic insurance plans ---
http://faculty.trinity.edu/rjensen/Health.htm
The German plan is a lot like the USA
Medicare plan in that supplements can be purchased from the private sector (I
purchase my supplements from Blue Cross Anthem for about $1,200 per month for
Erika and me. However, when folks over 64 years of age go on Medicare they
must pay a monthly premium above and beyond what taxpayers pay for their
Medicare coverage. Medicare, unlike Medicaid, does not have free coverage even
for the base plan.
Both the German plan supplements and
the Medicare supplements make it possible to use physicians and hospitals that
would otherwise not serve patients only covered by the single-payer base plan.
One of the problems with Obamacare is that unless the Cadillac tax is paid a
great many doctors and hospitals refuse to serve patients only having Obamacare
coverage. Nearly half the hospitals in New Hampshire and many of the best
doctors will not serve Obamacare patients. Medicaid is especially problematic
for hospitals across the USA since the payments for patient care cover less than
half of the cost.
From the CFO Journal's Morning Ledger on September 2, 2015
Employers
across the U.S are rushing to calculate just how hard they will be hit by
the forthcoming “Cadillac tax” on generous employee health plans. The
Affordable Care Act levy starts in 2018. As CFO Journal’s Maxwell Murphy and Emily Chasan
report, both public and private
employers will have to pay a tax of 40% on the amount by which the cost of
their health-care plans exceed $10,200 for individuals and $27,500 for
families.
The Congressional Budget Office predicts a Cadillac tax bill in excess of $3
billion in its first year. But, with health-care costs likely to grow faster
than inflation, it expects the burden on employers to rise, doubling to $6
billion in 2019. Such predictions have set finance chiefs to work on
reducing employee health-care costs below government-set thresholds.
Boston’s tax bill would be around $6 million in 2018, if no changes to its
health plans were made. The city of Washington’s total payments could be at
or below $10 million through 2021. In San Antonio, the Cadillac tax will
cost $71 million between 2018 and 2024 unless the city makes changes.
More than a quarter
of U.S. companies are likely to face the Cadillac tax on at least one of
their health plans if they don’t make sweeping benefits changes, and 42%
will be hit by the tax a decade later, according to a report last week from
the Kaiser Family Foundation, a nonprofit health-policy think tank.
Last year the Senate Finance Committee asked
investigators at the Government Accountability Office, or GAO, to test the
Affordable Care Act’s internal eligibility and enrollment controls. So they
created a dozen fictitious identities and applied for insurance
subsidies—and 11 fake claimants got them.
The GAO didn’t know ObamaCare’s verification
protocols in advance, so they weren’t trying to exploit some known security
hole. Online or over the phone, they simply supplied invalid Social Security
numbers, doctored citizenship status or misstated their income on tax
documents.
The federal exchanges paid some $2,500 a month or
$30,000 per year to each John Doe. When it came time to re-enroll at the end
of 2014, the 11 fake applicants were able to extend their plans and, in some
cases, even received more generous subsidies without providing additional
documentation.
The exchanges are supposed to verify income and
identity because the dollar value of subsidies is tied to those data. If
people can burn taxpayers for money they don’t qualify for, ObamaCare will
be far more expensive than it has already become.
Yet the GAO notes with its dry wit that “we
circumvented the initial identity-proofing control,” though the exchanges
are “required to seek post-approval documentation in the case of certain
application ‘inconsistencies.’” The GAO also reports that the follow-up was
often unclear or inaccurate and didn’t turn off the subsidies. The GAO even
includes transcripts of their sleuths bluffing the clueless customer service
reps.
Continued in article
Jensen Comment
What big government program is not a giant piñata for tens of millions of
fraudsters?
The federal government shelled out $2.4 billion in
loans to a series of non-profit health plans under Obamacare, but now
they’re struggling to stay alive.
The plans, dubbed CO-OPs (Consumer Operated and
Oriented Plans) were intended to
increase competition in the insurance market and
serve as a check on private insurers by providing an alternative that wasn’t
focused on profit. They were a
compromise measure intended to satisfy liberals
who wanted the law to set up a fully government-run health insurance
option.
As it turns out, Obamacare’s CO-OPs weren’t focused
on profit—or, it seems, financial viability of any kind.
The CO-OPs have struggled to meet enrollment
targets, with 13 of the 23 non-profit plans showing “considerably lower”
enrollment than projected, according to a
report by the Health and Human Services Inspector General.
Finances were shaky all around with 21 of 23 plans
incurring losses through the end of 2014, the report says.
This isn’t just a problem for the CO-OPs. It’s a
problem for the taxpayers. The $2.4 billion in loans given to these startup
plans were supposed to be repaid to the government with interest. Loans
given to start the plans were supposed to be repaid in five years;
“solvency” loans were supposed to be repaid in 15 years.
The Affordable Care Act was supposed to make
insurance, well, more affordable. But now hard results are starting to
emerge: premium surges that often average 10% to 20% and spikes that
sometimes run as high as 50% or 60% or more from coast to coast. Welcome to
the new abnormal of ObamaCare.
This summer insurers must submit rates to state
regulators for approval on the ObamaCare exchanges in 2016—and even liberals
are shocked at the double-digit requests, or at least the honest liberals
are. Under ObamaCare, year-over-year premium increases above 10% must also
be justified to the Health and Human Services Department, and its data base
lists about 650 such cases so far.
In a study across 45 states, the research outfit
Health Pocket reports that mid-level Exclusive Provider Organization plans
are 20% more expensive in 2016 on average. HMOs are 19% more expensive, and
for all plan types the average is 14%.
President Obama dropped by Nashville last week to
claim Tennessee as a state where “the law has worked better than we
expected” and “actually ended up costing less than people expected,” so
let’s test the reality of those claims. As a baseline, in 2015 premium
increases for Tennessee plans ranged from 7.5% to 19.1%.
For 2016 BlueCross BlueShield of Tennessee—one of
the state’s two major insurers—is requesting a 36.3% increase. One product
line from Community Health Alliance Mutual is rising 32.8%, while another
from Time Insurance Co. hits 46.9%. Offerings from
Cigna,
Humanaand UnitedHealthcare range from 11% to 18%.
If this means ObamaCare is working better than the President expected, then
what, exactly, was he expecting?
St. Paul Public Schools employees are likely to see
their health benefits curtailed as the school district looks to avoid
financial penalties set to begin in 2018.
The Affordable Care Act's "Cadillac Tax" provision
will charge employers an excise tax on high-cost plans -- 40 percent on
every dollar over $10,200 on individual and $27,500 on family plans.
Jeni Simon, a consultant with Aon Hewitt, told
school board members Tuesday that companies already are redesigning their
health plans in order to avoid paying the tax. A survey found 92 percent of
U.S. employers expect their health plans to change by 2018, and 47 percent
said they'll be significantly different.
"This could be crippling financially for an
organization," Simon said.
The school district has generous health plans that
haven't changed in 10 years, Simon said. Among the options for getting under
the tax cap are eliminating spousal coverage or flexible savings accounts,
or charging higher co-pays or deductibles.
When healthcare.gov opened in late 2013, it was so
crippled by technical problems that critics questioned whether people would
be able to sign up for coverage. Now, it may actually be too easy to enroll.
That’s according to a new government audit,
presented in
testimony from the Government Accountability
Office, delivered at a Senate Finance Committee hearing on Thursday. When
federal auditors tried to apply for insurance coverage and tax credit
subsidies using fictitious applicants, they succeeded 11 out of 12
times. Here are some highlights from the GAO’s undercover investigation:
Fake applicants got through on the phone
The auditors couldn’t get coverage for fake
applicants just by going online, because the website couldn’t verify their
identities. But investigators successfully completed the fake applications
on the phone and got coverage for almost all of them. In the
one enrollment that didn’t succeed, the applicant declined to give a Social
Security Number, though other cases that had missing or invalid SSNs were
approved.
Continued in article
Jensen Comment
Millions of workers in the underground cash economy not only do not pay in
income taxes many of them most likely are also getting 100% subsidies for health
insurance or are fraudulently on Medicaid. Literally all big government programs
are big piñatas for fraudsters.
t was a coincidence hard to overlook: The
government released a new report on Tuesday projecting rising health care
costs for the coming decade while a major pharmaceutical company issued a
new earnings report showing extraordinary profits on the sale of new wonder
drugs.
While drug spending increased by a modest 2.5
percent in 2013, it surged by 12.6 percent last year according to estimates
in a
new report on trends
in health care costs by the Centers for Medicare and Medicaid Services.
“The Affordable Care Act (ACA), better known as
Obamacare, required that members of Congress and their staff enroll in
individual plans through the healthcare exchanges created by the law,” the
group said in a press release. “As open enrollment approached in 2014,
members and staff realized that by enrolling as individuals, they would no
longer receive generous taxpayer-funded contributions to help pay their
insurance premiums as they had for decades under the Federal Employees
Health Benefits Program. They would instead only qualify for subsidies if
their household income was less than 400 percent of the federal poverty
level, just like millions of other Americans that had to purchase insurance
in the individual market.”
The group notes that senators worked with the White
House and the Office of Personnel Management for guidance on how to enroll
in the Small Business Health Options Program in order to skirt any
obstacles.
On October 2, 2013, the Office of Personnel and
Management (OPM) used a federal regulation to deem Congress a small business
despite its having more than 12,000 employees and dependents.
Continued in article
Jensen Comment
Surely you don't believe our beloved senators could commit fraud.
"The New York Times notices that
ObamaCare is causing insurance rates to soar," by Robert Laurie, Canada
Free Press, July 6, 2015 ---
http://canadafreepress.com/article/73517
There have been plenty
of stories about the ways in which ObamaCare is driving up healthcare costs.
All across the country, we’ve seen double digit insurance rate hikes and
soaring premiums. It’s nothing new, and conservatives have been warning that
this would be the case since long before the unpopular law was rammed down
America’s throat.
However, acknowledgement of ObamaCare’s failure
usually comes from either right-leaning news sources, or insurance industry
watchdogs. We don’t often get it from the far-left paper of record, The New
York Times:
Health insurance companies around the country
are seeking rate increases of 20 percent to 40 percent or more, saying
their new customers under the
Affordable Care Act turned out to be sicker
than expected. Federal officials say they are determined to see that the
requests are scaled back.
Blue Cross and Blue Shield plans — market
leaders in many states — are seeking rate increases that average 23
percent in Illinois, 25 percent in North Carolina, 31 percent in
Oklahoma, 36 percent in Tennessee and 54 percent in Minnesota, according
to documents posted online by the federal government and state insurance
commissioners and interviews with insurance executives.
Huh. That’s weird. I thought ObamaCare was
supposed to lower rates across the board. Didn’t the President
promise that the average household would see their premiums decline by
something on the order of $2500.00? Certainly the New York Times must be
shocked to discover that these claims were bald-faced lies, and that
conservatives were right all along.
The urge to merge is
sweeping managed health care. Aetna announced Friday a $37 billion deal to
acquire Humana. Anthem and Cigna are in merger talks and could be next. The
national for-profit insurers are on an anxious mission to consolidate. These
combinations will sharply reduce competition and consumer choice, as five
big insurers shrink, probably, to three.
This trend is a direct
consequence of ObamaCare, reflecting the naïveté of its architects and the
fulfillment of their myopic vision. For Aetna, the deal is aimed at
expanding its footprint in Medicare Advantage, a business that has become
more financially attractive now that ObamaCare caps profits in the
individual and group insurance markets.
. . .
But now almost every co-op
is financially underwater, on the hook for federal loans that amount to more
than 100% of the total value of their capital and surplus. Some—like
Arizona’s Meritus Mutual Health Partners—are nearing 1,000%, according to
rating agency A.M. Best.
All but five co-ops had
negative cash flow heading into the end of last year, according to Standard
& Poor’s, and nine had medical-loss ratios above 100%, including Iowa’s
CoOportunity Health, which has declared bankruptcy. During the last half of
2014 the Health and Human Services Department had to bail out six co-ops
with $356 million in emergency funding.
Entitlements Actuarial Lies
A trillion lie here and a trillion lie there and pretty soon you're talking
about an unsustainable future covered up by lying in politics.
. . . Three billion dollars of hard earned tax
money you've been sending to subsidize other people's healthcare plans
1) went to the wrong people
2) was paid out in the wrong amounts.
An
Inspector General audit of the Department of Health and Human Services
revealed today that Obamacare subsidies handled by the
agency have been completely unorganized, disfunctional and misplaced. Why?
Because HHS never implemented a system to ensure the subsides would be
secure, distributed in the right amounts and sent to those who are eligible
to receive them. More from the
Washington Free Beacon:
"[The Centers for Medicare and Medicaid Services]
CMS's internal controls did not effectively ensure the accuracy of
nearly $2.8 billion in aggregate financial assistance payments made to
insurance companies under the Affordable Care Act during the first four
months that these payments were made," the OIG said.
"CMS's system of internal controls could not ensure that CMS made
correct financial assistance payments," they said.
The OIG reviewed subsidies paid to insurance companies between January
and April 2014. The audit found that CMS did not have a process to
"prevent or detect any possible substantial errors" in subsidy payments.
The OIG said the agency did not have a system to "ensure that financial
assistance payments were made on behalf of confirmed enrollees and in
the correct amounts."
In response to the audit, CMS said they issued a regulation to
change their accounting methods.“CMS
takes the stewardship of tax dollars seriously and implemented a series
of payment and process controls to assist in making manual financial
assistance payments accurately to issuers,” they said.
More directly from
the report about what was found:
We determined that CMS’s internal controls (i.e.,
processes put in place to prevent or detect any possible substantial
errors) for calculating and authorizing financial assistance payments
were not effective. Specifically, we found that CMS:
-relied on issuer attestations that
-did not ensure that advance CSR payment rates identified as outliers
were appropriate,
-did not have systems in place to ensure that financial assistance
payments were made on
behalf of confirmed enrollees and in the correct amounts,
-did not have systems in place for State marketplaces to submit enrollee
eligibility data for
fina
ncial assistance payments, and
-did not always follow its guidance for calculating advance CSR payments
and does not plan to perform a timely reconciliation of these payments.
The internal control deficiencies that we identified limited CMS’s
ability to make accurate payments to QHP issuers. On the basis of our
sample results, we concluded that CMS’s system of internal controls
could not ensure that CMS made correct financial assistance payments
during the period January through April 2014.
According to the Inspector General, the audit was
conducted "to determine whether CMS’s internal controls were effective to
ensure the accuracy of financial assistance payments to QHP issuers made
during the first 4 months that these payments were made."
The health law’s expansion of Medicaid in many
states hasn’t benefited nonprofit hospitals in those states as expected,
according to a new report by Moody’s Investors Service.
Hospitals in the mostly blue states that expanded
Medicaid were largely expected to benefit from fewer unpaid bills and more
paying customers, but that hasn’t generally translated into better operating
margins or cash flow, Moody’s found.
Performance improved across the board—including in
the mostly Republican-led states that opted out of the law’s Medicaid
expansion—as the economy gained steam last year and unemployment declined.
In expansion states, hospitals’ unpaid bills fell
13% on average last year compared with 2013, the report found. But, their
2014 operating margins didn’t increase any more than hospitals in the 22
states that have sat out the expansion, the report shows.
“Clearly, reducing bad debt is positive, but it is
not this silver bullet,” said Daniel Steingart, a Moody’s analyst and author
of the report. He said the findings call into question “a narrative out
there that Medicaid expansion has lowered bad debt and that is driving
[financial] improvements at hospitals.”
Continued in article
Jensen Comment
When I lived in San Antonio, over $1,000 of my property tax billing went to the
Bexar County Hospital to cover charity medicine and bad debts of people who were
treated but did not pay for the treatments. As a rule there's at least one
hospital in larger cities, usually the largest non-profit hospital, that
receives local tax dollars to contribute toward the hospital's bad debts.
Obamacare's promise of relieving the
burden of local taxpayers for charity medicine turned into another one of the
lies. Indeed there are fewer bad debts due to expanded Medicaid coverage such
that more Federal dollars are pouring into hospitals who accept Medicaid
patients. However, the bad news is that Medicaid only covers (according to the
article) about half the cost of treating Medicaid patients in hospitals. This
leaves hospitals with tow choices. Provide lower-cost care or ask for more
dollars from local taxpayers to cover the added losses of the expanded Medicaid
coverage.
It turns out that states who refused to
expand Medicaid coverage are better off for having refused.
Five years after the passage of ObamaCare, there is
one expense that’s still causing sticker shock across the healthcare
industry: overhead costs.
The administrative costs for healthcare plans are
expected to explode by more than a quarter of a trillion dollars over the
next decade, according to a new study published by the Health
Affairs blog.
The $270 billion in new costs, for both private
insurance companies and government programs, will be “over and above what
would have been expected had the law not been enacted,” one of the authors,
David Himmelstein, wrote Wednesday.
Those costs will be particularly high this year, when
overhead is expected to make up 45 percent of all federal spending related
to the Affordable Care Act. By 2022, that ratio will decrease to about 20
percent of federal spending related to the law.
The study is based on data from both the
government’s National Health Expenditure Projections and the Congressional
Budget Office. Both authors are members of Physicians for a National Health
Program, which advocates for a single-payer system.
"This number – 22.5 percent of all new spending
going into overheard – is shocking even to me, to be honest. It’s almost one
out of every four dollars is just going to bureaucracy," the study's other
author, Steffie Woolhandler, said Wednesday.
She said private insurers have been expanding their
administrative overhead despite some regulations from the Obama
administration to control those costs, such as the medical loss ratio, which
requires a certain amount of premium dollars to be spent directly on
healthcare. She argues that a better approach would be a type of
Medicare-for-all system.
The extra administrative costs amount to the
equivalent of $1,375 per newly insured person per year, the authors write.
From the CFO Journal's Morning
Ledger on May 26, 2015
Good morning. A provision of Obamacare set to take
effect in 2018 will slap a hefty tax bill on employee health plans that
exceed certain cost thresholds, and that has CFOs looking at a range of
alternatives, from scaling back current offerings to eliminating the plans
altogether,
CFO Journal’s Kimberly S. Johnson and Maxwell Murphy report.
“To me, it’s a penalty for giving our employees a
generous benefits package,” said Action Environmental Group
Chief Financial Officer Brian Giambagno. Action Environmental briefly
considered doing away with employee health coverage altogether to save
money. “I’d be lying if I said we haven’t had that discussion,” said Mr.
Giambagno.
The miraculous, efficient,
cost-saving, innovative 21st-century government-run "marketplaces" were
supposed to put the "affordable" in Obama's Affordable Care Act. Know-it-all
bureaucrats were going to show private companies how to set up better
websites (gigglesnort), implement better marketing and outreach (guffaw),
provide superior customer service (belly laugh), and eliminate waste, fraud
and abuse (LOLOLOL).
You will be shocked beyond
belief, I'm sure, to learn that Obamacare exchanges across the country are
instead bleeding money, seeking more taxpayer bailouts and turning
everything they touch to chicken poop.
Wait, that's not fair to
chicken poop, which can at least be composted.
"Almost half of Obamacare
exchanges face financial struggles in the future," The Washington Post
reported last week. The news comes despite $5 billion in federal taxpayer
subsidies for IT vendors, call centers and all the infrastructure and
manpower needed to prop up the showcase government health insurance
entities. Initially, the feds ran 34 state exchanges; 16 states and the
District of Columbia set up their own.
While private health
insurance exchanges have operated smoothly and satisfied customers for
decades, the Obamacare models are on life support. Oregon's exchange is six
feet under -- shuttered last year after government overseers squandered $300
million on their failed website and shady consultants who allegedly set up a
phony website to trick the feds. The FBI and the U.S. HHS inspector
general's office reportedly have been investigating the racket for more than
a year now.
In the People's
Republic of Hawaii, which has been a "trailblazer" of socialized medicine
for nearly four decades, the profligate state-run exchange demanded a nearly
$30 million cash infusion to remain financially viable after securing $205
million for startup costs. The Hawaii Health Connector accidentally
disconnected hundreds of poor patients' accounts and squandered an estimated
8,000 hours on technological glitches and failures. Enrollment projections
were severely overinflated like a reverse Tom Brady scandal. After failing
to secure a bailout, Hawaii announced this week that its exchange would be
shut down amid rising debt.
Report finds that
state misled federal officials about progress on the $135 million project.
When Obamacare’s health
insurance exchanges officially launched in October, 2013, one of the worst
performers was, somewhat ironically, located in the one state that already
had a functioning health insurance exchange: Massachusetts. The state had
been running its own online insurance portal for years as part of RomneyCare,
the coverage expansion that would become the model for Obamacare. But the
exchange the state already had in place, while functional, didn’t have all
of the features required by Obamacare. A total overhaul was required.
But when Obamacare’s
exchanges went live, the upgrade turned out to be a downgrade. Despite years
of administrative planning and development, funded largely by $135 million
federal grants, the Massachusetts Health Connector basically didn’t work at
all during the first open enrollment period. Repair efforts stalled, and
eventually the entire thing was scrapped so that the state could start all
over again on yet another new exchange. The original tech contractor, CGI
(which also worked on the botched federal exchange) was fired from the
project, and a new team was brought in to start over.
It’s been clear for a while
now that the project was massively mismanaged, but it now looks increasingly
as if development of the exchange may have involved illegality as well as
incompetence.
Not only did the
officials in charge of the exchange botch the job, they are now accused of
having intentionally misrepresented their progress (or lack thereof) to
federal officials. A
stinging report released yesterday by the Pioneer
Institute, based on official contemporaneous audit reports by an outside
consultant and unnamed “whistleblowers” who were interviewed by the report’s
author, Josh Archambault, alleges that state officials lied to federal
overseers about progress on the project and cheated on a key federal
connectivity test, employing what was essentially a dummy system in order to
cover for work that had not yet been completed.
The truth is (there’s that word again), over
one–third of Covered California policyholders dropped their insurance
altogether.
Attkisson contends this is one of the worst
retention rates in the nation. And for those poor souls who are still at the
mercy of Covered California, the situation doesn’t get any better, 84
percent of the policyholders will be paying increased premiums in 2015.
Continued in article
From the CFO Journal's Morning Ledger on April 27, 2015
Pharmaceutical companies buy rivals’ drugs, then jack up the prices
http://www.wsj.com/articles/pharmaceutical-companies-buy-rivals-drugs-then-jack-up-the-prices-1430096431?mod=djemCFO_h
More pharmaceutical companies are buying up drugs they
see as undervalued, and then raising their prices. The WSJ’s Jonathan D
Rockoff and Ed Silverman report that the trend is one of a number of tactics
being employed by pharmaceutical firms. Companies also regularly raise
prices of their own older medicines while demanding high fees for new
treatments, driving up the cost of drugs in the process. Since 2008,
branded-drug prices have increased 127%, compared with an 11% rise in the
consumer price index, according to drug-benefits manager Express Scripts
Holding Co.
Today’s frenzy of hospital mergers and physician
practice acquisitions is giving hospital systems even greater leverage to
inflate opaque “charge-master” medical bills that even hospitals are
sometimes unable to itemize sensibly. With no mechanism to allow free-market
forces to keep prices in check, this translates into higher health-insurance
deductibles and copays for insured Americans, and in the case of Medicare
and Medicaid, higher taxes.
When you’re the only game in town, you call the
shots. That is one reason California Attorney General Kamala Harris is
insisting on “strong conditions” before approving Prime Healthcare Services’
$843 million takeover of the six-hospital Daughters of Charity Health
System. Prime is a hospital management company operating 34 acute-care
hospitals in 10 states.
Ms. Harris required Prime to continue operating
four Daughters’ facilities as acute-care hospitals with emergency services
over the next 10 years. She also required that all six hospitals remain in
the state’s Medi-Cal program, maintain charity care benefits at their
historical levels, and continue providing essential health services such as
reproductive health care.
Those conditions only begin to address the concerns
surrounding such a merger. A San Bernardino, Calif., court recently held a
Prime hospital, Chino Valley Medical Center, in contempt for needlessly
admitting patients through the emergency room. On a national level,
physician groups bought by large hospital systems are often prodded to send
patients for ambulatory surgery and diagnostic procedures to the departments
of their parent hospital, which may charge more than other outpatient
centers the doctor might prefer.
A
study of more than 150 hospital-owned and
physician-owned organizations published last October in the Journal of the
American Medical Association found that patient costs are 19.8% higher for
physician groups in multi-hospital systems compared with physician-owned
organizations.
The Affordable Care Act did not repeal antitrust
laws. The Federal Trade Commission prevailed in three litigated hospital
mergers in the last three years, and in 2014 it won its first-ever litigated
case challenging a health-system acquisition of a physician group. But these
victories are few. The great majority of mergers occur with little if any
public debate about how they will effect prices or patients.
U.S. Oncology, for example, boasts more than 1,000
oncologists in its network and serves nearly 20% of all U.S. cancer
patients. In 2010 it was acquired by McKesson Corp., one of the largest U.S.
drug distributors, in what some called a savvy move to get cancer doctors
and the drugs they prescribe under the same roof. Specialty hospitals are
also sprouting around the country, even franchising, exemplified by the
rapid spread of the MD Anderson Cancer Center, which aims to have a center
within three hours of every American. But is it wise to have one corporation
in charge of cancer care for an entire state or region?
Advocates say such expansion brings standardized
care and clinical trials to more of the population, but it also results in
an undeniable homogenization that may limit options for patients. If
management decides that its doctors can only use one chemo drug for a
particular cancer, or if the central leadership elects to not adopt a new
surgical technology system-wide, will patients be told about the other
options?
As a busy surgeon, I have serious concerns about
the race to consolidate America’s hospitals because of the risk that very
large organizations may govern without valuing the wisdom of their
front-line employees. Already many doctors are frustrated by the electronic
medical records, strategic planning and hospital processes that they feel
have marginalized their medical insights into their own patients.
We can encourage the good work of hospitals to
create networks of coordinated care, while at the same time insist that
hospitals compete on price and quality outcomes. Achieving this balance in
the wake of the Affordable Care Act is critical to ensure that one-fifth of
the U.S. economy functions in a competitive and competent market.
Dr. Makary is a surgeon at Johns Hopkins Hospital and professor of
health policy at the Johns Hopkins Bloomberg School of Public Health. He is
the author of “Unaccountable: What Hospitals Won’t Tell You and How
Transparency Can Revolutionize Health Care“ (Bloomsbury Press, 2013).
Jensen Comment
The word "frenzy" probably overstates the case. In rural areas, however, local
hospitals already monopolize local markets in general care. What I see up here
is MDs pulling out of primary care practices either by refusing ACA-insured
patients or by returning to medical schools to further specialize. Our very best
general surgeon just took a year off to return to medical school to further
specialize. Chances of his returning to our hospital are zero.
What I see in primary care up
here is much wider use of physicians' assistants and osteopathic privary care
providers replacing the departing MD providers. ACA and Medicaid rates are
driving MDs out of primary care. The only way to make primary care profitable is
to make it more factory-like in efficiency in seeing patients.
It was lunchtime before my afternoon surgery
clinic, which meant that I was at my desk, eating a ham-and-cheese sandwich
and clicking through medical articles. Among those which caught my eye: a
British case report on the first 3-D-printed hip implanted in a human being,
a Canadian analysis of the rising volume of emergency-room visits by
children who have ingested magnets, and a Colorado study finding that the
percentage of fatal motor-vehicle accidents involving marijuana had doubled
since its commercial distribution became legal. The one that got me
thinking, however, was a study of more than a million Medicare patients. It
suggested that a huge proportion had received care that was simply a waste.
The researchers called it “low-value care.” But,
really, it was no-value care. They studied how often people received one of
twenty-six tests or treatments that scientific and professional
organizations have consistently determined to have no benefit or to be
outright harmful. Their list included doing an EEG for an uncomplicated
headache (EEGs are for diagnosing seizure disorders, not headaches), or
doing a CT or MRI scan for low-back pain in patients without any signs of a
neurological problem (studies consistently show that scanning such patients
adds nothing except cost), or putting a coronary-artery stent in patients
with stable cardiac disease (the likelihood of a heart attack or death after
five years is unaffected by the stent). In just a single year, the
researchers reported, twenty-five to forty-two per cent of Medicare patients
received at least one of the twenty-six useless tests and treatments.
Could pointless medical care really be that
widespread? Six years ago, I wrote an article for this magazine, titled “The
Cost Conundrum,” which explored the problem of unnecessary care in McAllen,
Texas, a community with some of the highest per-capita costs for Medicare in
the nation. But was McAllen an anomaly or did it represent an emerging norm?
In 2010, the Institute of Medicine issued a report stating that waste
accounted for thirty per cent of health-care spending, or some seven hundred
and fifty billion dollars a year, which was more than our nation’s entire
budget for K-12 education. The report found that higher prices,
administrative expenses, and fraud accounted for almost half of this waste.
Bigger than any of those, however, was the amount spent on unnecessary
health-care services. Now a far more detailed study confirmed that such
waste was pervasive.
I decided to do a crude check. I am a general
surgeon with a specialty in tumors of the thyroid and other endocrine
organs. In my clinic that afternoon, I saw eight new patients with records
complete enough that I could review their past medical history in detail.
One saw me about a hernia, one about a fatty lump growing in her arm, one
about a hormone-secreting mass in her chest, and five about thyroid cancer.
To my surprise, it appeared that seven of those
eight had received unnecessary care. Two of the patients had been given
high-cost diagnostic tests of no value. One was sent for an MRI after an
ultrasound and a biopsy of a neck lump proved suspicious for thyroid cancer.
(An MRI does not image thyroid cancer nearly as well as the ultrasound the
patient had already had.) The other received a new, expensive, and, in her
circumstances, irrelevant type of genetic testing. A third patient had
undergone surgery for a lump that was bothering him, but whatever the
surgeon removed it wasn’t the lump—the patient still had it after the
operation. Four patients had undergone inappropriate arthroscopic knee
surgery for chronic joint damage. (Arthroscopy can repair certain types of
acute tears to the cartilage of the knee. But years of research, including
randomized trials, have shown that the operation is of no help for chronic
arthritis- or age-related damage.)
Continued in a very long article
Jensen Comment
Twice my wife was sent from the ER to a night in intensive care when my own
suspicions were that she really did not have to spend one night in the hospital
let alone the very expensive ICU unit. I think that sometimes ER doctors in
small hospitals support the ICU units and the CAT Scan or MRI Scan units beyond
what is called for in the science of medicine. It might be argued that
such expensive prescriptions are shields against ambulance-chasing lawyers, but
I think in many cases the small hospitals just need more revenues to support
unused capacity investments.
Doctors have many tests and procedures to choose
from when treating you. But is it possible to have too much of a good thing?
It is. Overuse and waste in medical care—which
include ordering more tests and treatment than scientific evidence
supports—make up as much as 30% of health-care spending according to a 2013
Institute of Medicine report. That’s approximately $750 billion a year,
which we all pay for in premiums and taxes to support Medicare and other
insurance programs.
A massive new effort to eliminate wasteful spending
has begun. This year the Department of Health and Human Services
announced plans to pay doctors and hospitals more
for quality, not quantity. Private insurers are likely to follow suit.
We recently
published findings in
the Annals of Internal Medicine from a national survey of
hospitalists—physicians who primarily treat patients in the hospital
setting—that sheds some light on how medical tests and treatments are
overused, and how often.
We asked hospital doctors to imagine two common
patient scenarios—a cardiac evaluation before surgery and a patient who
suddenly loses consciousness—and asked what they thought most of their
colleagues in their hospital would do. Evidence-based guidelines exist for
both scenarios.
More often than not, the hospital doctors said that
their colleagues would choose the option that meant overuse of testing—not
because of a lack of awareness of the guidelines, but to reassure themselves
or their patients. This unwarranted testing and treatment can lead to
medical complications.
Continued in article
The Texas Model
Texas voters initiated a change in the constitution that caps punitive damages.
(In 2007) after Texas voters approved a
constitutional amendment limiting awards in
medical malpracticelawsuits, doctors are
responding as supporters predicted, arriving from all parts of the
country to swell the ranks of specialists at Texas
hospitalsand bring professional health
care to some long-underserved rural areas. “It was hard to believe at
first; we thought it was a spike,” said Dr. Donald W. Patrick, executive
director of the medical board and a neurosurgeon and lawyer. But Dr.
Patrick said the trend — licenses up 18 percent since 2003, when the
damage caps were enacted — has held, with an even sharper jump of 30
percent in the last fiscal year, compared with the year before.
Ralph Blumenthal, "More
Doctors in Texas After Malpractice Caps," The New York Times,
October 5, 2007 ---
http://www.nytimes.com/2007/10/05/us/05doctors.html
The
St. Petersburg Times takes a look at the cost of
insurance in Canada for health care providers.
A neurosurgeon in Miami pays about $237,000 for medical malpractice
insurance. The same professional in Toronto pays about $29,200, reports
Susan Taylor Martin.
A Canadian orthopedic surgeon pays just over $10,000 for coverage that
costs a Miami physician $140,000. An obstetrician in Canada pays $36,353 for
insurance, while a Tampa Bay obstetrician pays $98,000 for medical
malpractice insurance.
Why the difference?
In the U.S., private for-profit insurance companies extend medical
malpractice coverage to doctors.
In Canada, physicians are covered through
membership in a nonprofit. The
Canadian Medical Protective Association
offers substantially reduced fees for the same coverage, especially
considering that their payout is limited by caps in Canada just as in some
U.S. states.
In 1978, the Canadian Supreme Court limited pain
and suffering awards to just over $300,000, circumventing the opportunity
for a jury to decide on an award depending on the case before them.
Canadian Medical Protective Association
Here’s how it works.
Fees for membership vary depending on the region of the country in which
the doctor works and their specialty. All neurosurgeons in Ontario will pay
the same, for example. The number of claims they have faced for medical
malpractice does not figure into their premium
"We don't adjust our fees based on individual
experience; it's the experience of the group,'' says Dr. John Gray, the
executive director, "That's what the mutual approach is all about, and it
helps keep the fees down for everyone,” he tells the
St. Petersburg Times.
If a doctor is sued, the group pays the claim and
provides legal counsel.
In the U.S., the push has been on for limiting claims, no matter how
egregious the medical malpractice. President Obama was booed in June when,
before the American Medical Association, he said he would not limit a
malpractice jury award.
"We got a crazy situation where Obama is talking
about the cost of medicine but he said, 'I don't believe in caps,' "
complains Dr. Dennis Agliano, past president of the
Florida Medical Association. "If you don't have
caps, the sky's the limit and there's no way to curtail those costs.''
But the importance of limiting jury awards may not play into the big
picture on health care reform.
Malpractice lawsuits amount to
less than one percent of both the Canadian and the
U.S. healthcare system, meanwhile between 44,000 and 98,000 Americans die
each year due to medical errors in hospitals alone, while 16 times as many
suffer injuries without receiving any compensation, reports the group
Americans for Insurance Reform.
Major Difference
In Canada, an injured patient is often required to pay for the initial
investigation into his case. In the U.S. the contingency fee basis, usually
in the range of 30 percent, allows the injured party to proceed without a
financial downside.
In both the U.S. and Canada, the definition of medical negligence is that
a duty of care was owed to the patient by the physician, there was a breach
h of the standard of care and the patient suffered harm by the physician’s
failure to meet that standard of care.
A bad outcome in itself is not the basis of a lawsuit.
The Canadian Medical Protective Association insures virtually all of the
country’s 76,000 doctors, as opposed to the U.S. where private for-profit
insurance companies cover physicians for medical malpractice.
In Canada, the median damaged paid in 2007 was $91,999 and judgments
favored patients 25 times, doctors 70 times.
In the U.S., many physician groups are requiring
patients to waive their rights to a jury trial, even though malpractice
litigation accounts for just 0.6 percent of healthcare costs.
Public Citizen, the consumer group, charges that
the facts don’t warrant the “politically charged hysteria surrounding
medical malpractice litigation.”
For the third straight year,
medical malpractice payments were at record lows
finds the group in a study released this month. The decline, however, is
likely due to fewer injured patients receiving compensation, not improved
health safety.
2008 saw the lowest number of medical malpractice
payments since the federal government’s
National Practitioner Data Bank began compiling
malpractice statistics. In 2008, payments were 30.7 percent lower than
averages recorded in all previous years.
In the report titled,
The 0.6 Percent Bogeyman, the nonprofit watchdog
group states, “between three and seven Americans die from medical errors for
every 1 who receives a payment for any type of malpractice claim.”
Public Citizen previously reported that about
five percent of doctors are responsible for half
of the medical malpractice in the U.S. that can result in permanent injury
or death. #
Jensen Comment
I'm in favor of fully-funded health care reform that completely nationalizes
health insurance phased in reasonably with high tax pay-as-you-go restriction
and strict cost-saving caps on punitive damage lawsuits. I really favor former
Senator Bill Bradley's long-forgotten Canada-like proposal:
The bipartisan trade-off in a viable health care
bill is obvious: Combine universal coverage with malpractice tort reform in
health care. Universal coverage can be obtained in many ways — including the
so-called public option. Malpractice tort
reform can be something as commonsensical as the establishment of medical
courts — similar to bankruptcy or admiralty courts — with special judges to
make determinations in cases brought by parties claiming injury. Such a
bipartisan outcome would lower health care costs, reduce errors (doctors and
nurses often don’t report errors for fear of being sued) and guarantee all
Americans adequate health care. Whenever
Congress undertakes large-scale reform, there are times when disaster
appears certain — only to be averted at the last minute by the good sense of
its sometimes unfairly maligned members. What now appears in Washington as a
special-interest scrum could well become a triumph for the general interest.
But for that to happen, the two parties must strike a grand bargain on
universal coverage and malpractice tort reform. The August recess has given
each party and its constituencies a chance to reassess their respective
strategies. One result, let us hope, may be that Congress will surprise
everyone this fall.
Bill Bradley, "Tax Reform’s Lesson for Health Care Reform,"
The New York Times, August 30, 2009 ---
http://www.nytimes.com/2009/08/30/opinion/30bradley.html?_r=1
“Janice Riddle got a nasty surprise when she filled
out her tax return this year,”
CNN.com reports:
The Los Angeles
resident had applied for Obamacare in late 2013, when she was
unemployed. She qualified for a hefty subsidy of $470 a month, leaving
her with a
monthly premium of $1 for the cheapest plan available.
Riddle landed a
job in early 2014 at a life insurance agency, but since her new employer
didn’t offer health benefits, she kept her Obamacare plan. However, she
didn’t update her income with the California exchange, which she
acknowledges was her mistake.
Now, she has to
pay back the entire subsidy, which is forcing her to dip into her
savings.
“I was blindsided
that the subsidy has to be paid back,” said Riddle, adding she didn’t
even use the coverage, which she had until she qualified for Medicare in
October. “I’m in shock . . . but I have no choice. Do I want to argue
with the IRS or the Obama administration?”
CNN reports that “between 4.5 million and 7.5 million
taxpayers received subsidies,” and an
earlier CNN report
cites an H&R Block estimate that 3.4 million of them will end up owing the
IRS money on the deal. Of course taxpayers who overestimated their income
and thus underestimated their subsidies will be due a refund—but one
suspects those with an unanticipated income squeeze were likelier to drop
their insurance during the year, which means that in some cases they’ll owe
the mandate tax.
College professors and students keep suffering
unexpected costly ObamaCare side effects. First, colleges started rolling
back faculty hours to avoid the employer mandate, a development the American
Association of Association of University Professors called "reprehensible."
Then Harvard professors complained when the college
hiked their insurance costs because of "health care reform."
Now colleges are starting to dump their student
insurance plans because of ObamaCare.
An AP story notes that four of New Jersey's 11
state public colleges have done so, as have three of Washington state's six,
and that many more are likely to follow.
These colleges figure that, since students can get
coverage elsewhere, they can just wash their hands of the problem. Those
students who had been relying on their college insurance plans now must go
to an ObamaCare exchange or onto Medicaid to get coverage.
The problem, as University of Wisconsin, Madison,
student health insurance manager Richard Simpson notes, is that college
plans are usually a good deal for students, with lower deductibles and more
flexibility than cheap ObamaCare plans provide.
"Student plans provide gold or platinum level
coverage at a bronze price," Simpson told AP.
So students forced into an exchange are likely to
be worse off financially.
True, many of these students will qualify for
Medicaid because they earn little or no money. But while getting more
Americans dependent on government earlier in life might make the left happy,
cramming people who previously had good coverage onto the failing Medicaid
system is hardly a sign of progress.
Of course, the other option is for students to join
the ranks of the uninsured, which no doubt many will choose.
Jensen College
Even though Obamacare may take away one of the alternatives college students
have for healthcare (as described in the above article) for most of those
students their college's health insurance plan was probably a bad deal in the
first place. For those students who have little or no income to report to the
IRS because they are full-time students, the ACA exchange studies provide them
with virtually free health insurance which is obviously cheaper than what most
of them paid for medical insurance under a college student plan.
The taxpayers are getting hit for those subsidies, but the students
themselves have a sweeter deal unless they have enough taxable income to make
the ACA subsidies irrelevant.
Remember Occupy Wall Street, when thousands across
the country took to the streets, sleeping in tents to protest the ultra-rich
1 percent? The occupiers' frustration was real, but their ire was
misdirected. They should have launched an Occupy the AARP movement instead.
Government policies that transfer cash from the
relatively young and poor to the relatively old and wealthy are the real
scandal. In 1970, Social and Medicare accounted for 20 percent of federal
spending. They have since grown to 40 percent; by 2030, they will be more
than half. And these numbers understate the level of federal spending for
the elderly. According to the Centers for Medicare and Medicaid Services,
some 28 percent of spending on Medicaid, a program designed to offer health
care to families in poverty, goes to older Americans.
But these days, unlike in the era before Social
Security and Medicare were created, most seniors are doing just fine, with
various general indices of well-being all pointing to higher standards of
living for the elderly. When Social Security was born in 1935, the average
life expectancy was 65. Today, it's 78.8. In 1959, the U.S. Census Bureau
found more than 30 percent of Americans 65 and older living below the
poverty line. In 2013, the percentage had dropped to 9.5. According to a
report by the Federal Interagency Forum on Aging-Related Statistics, the
average net worth of Americans over the age of 65 increased by almost 80
percent between 1988 and 2008. Today's seniors are healthier, better
educated, and richer than their predecessors.
Of course some seniors remain poor. But as the
University of Chicago economist Bruce Meyer wrote in 2011, "Even over the
past 10 years, those 65 and older with the lowest income are now living in
bigger houses that are much more likely to be air conditioned and have
appliances like a dishwasher and clothes dryer." And seniors aren't just
doing well compared to previous generations; they're doing well relative to
their younger counterparts.
In short, a group that's better off than ever
before is receiving ever more generous benefits subsidized by younger,
poorer Americans.
Looking at both consumption and income data to
assess changes in living standards, Meyer and the Notre Dame economist James
Sullivan find that Americans 65 and older have much lower poverty rates than
most other demographic groups, and that these rates have fallen
significantly faster for them than for other groups, too.
According to the Pew Research Center, as of 2009
"the typical household headed by an adult 65 or older had $170,494 in net
worth, compared with just $3,662 for the typical household headed by an
adult younger than 35." This is to be expected, since people generally
accumulate assets and pay off debts as they grow older. But the authors were
surprised to find that the gap has actually been widening. In 1984, when the
Census Bureau began tracking these numbers, "the age-based wealth gap was
10:1. By 2009, it had ballooned to 47:1."
Sadly, this trend is not just a product of older
Americans getting wealthier. Younger Americans are getting poorer. According
to Pew, the net worth of households headed by people younger than 35 shrunk
by 68 percent even as the net worth of households headed by people 65 and
older grew by 42 percent. Meanwhile, a 2011 paper by Jeffrey Thompson of the
University of Massachusetts Amherst and Timothy Smeeding of the University
of Wisconsin–Madison shows that households whose head was under 34 were hit
much harder during the recession than households headed by people in other
age groups. Thompson and Smeeding also found that younger Americans
recovered much more slowly from the damage.
And the situation will get worse as spending on
Medicare and Social Security explodes. Without reforms today, vast tax
increases will be needed to pay for the unfunded promises made to a steadily
growing cohort of seniors.
Fortunately, numerous workable solutions are
available to lawmakers. Way back in 2003, Cato Institute scholars Chris
Edwards and Tad DeHaven listed several sensible reforms, including adding a
system of personal savings accounts to Social Security, liberalizing Medical
Savings Accounts, and making the latter permanent "to reduce health care
costs by increasing competition between providers and making consumers more
responsive to tradeoffs." These options are supposed to encourage families
to save more, but also to use their money more responsibly and in a manner
more consistent with their long-term needs. And since taxpayers remain in
control of their cash, they can also pass it along if they don't use it all
before they die—giving the next generation a head start when it comes to
building assets.
In the September 2012 issue of reason, Reason TV's
Nick Gillespie and I offered a more comprehensive option when we argued
against having separate programs for the elderly and the poor. Because the
important distinction is the inability to pay, not the age of the
beneficiary, we suggested that "the most obvious, effective, and just
approach is to end Social Security and Medicare and replace them with a true
safety net that would help poor Americans regardless of age. To the extent
that seniors qualify for income supplements, food stamps, and other transfer
programs, they should be added to those rolls.
They can also be added to Medicaid rolls (currently
about 9 million seniors are so-called double-dippers, receiving benefits
from both Medicaid and Medicare)."
Unfortunately, there is almost no appetite in
Congress for even mild reforms of Social Security and Medicare. Most
lawmakers won't touch entitlement programs, because older Americans vote.
Driven by a desire to get re-elected, politicians refuse to reform the
program at the core of our country's future fiscal woes.
Continued in article
Jensen Comment
In addition to paying seniors and the exploding population of people on Medicare
that are declared disabled, taxpayers are on the hook for providing free medical
services and medicines to the expanded (Obamancare) rolls of Medicaid.
MediCal is California's Version of
Medicaid free medical services for poor people. MedicCal also has a price-fixing
program that is preventing many doctors and hospitals from providing services to
patients insured by MediCal. This is an example of where price fixing either
results in either having no goods and services or inferiors goods and service.
Since California embraced the federal health care
overhaul, the state's Medicaid program for the poor has added more than 2.7
million people, a surprisingly high number that has left the state to
grapple with making sure there are enough doctors to care for all of them.
Medi-Cal, the $95 billion joint federal-state
program, covers 12 million people — nearly one in every three residents —
for their doctor visits, hospital care, pregnancy-related services, as well
as some nursing home care, making California the largest health care
purchaser in the state.
The figure accounts for 17 percent of the nation's
Medicaid enrollment, even though California has 12 percent of the U.S.
population.
Lawmakers and advocates say the safety net program
has grown so big, so fast that without major fixes, California won't be able
to provide quality health care for its poor.
"Medi-Cal is turning into an empty promise with an
insurance card," said Molly Weedn, a spokesman for We Care for California, a
coalition of doctors, hospitals, health plans and labor unions pushing for
higher payment rates. Democratic Sen. Ed Hernandez of La Puente and
Assemblyman Rob Bonta of Alameda plan to introduce legislation Wednesday to
raise rates.
Even though the federal government has injected
billions into California, doctors and hospitals say the state continues to
pay much less than private insurance or Medicare for medical services.
That's meant fewer primary care doctors and specialists are willing to treat
Medi-Cal patients.
According to the California HealthCare Foundation,
a health care philanthropy based in Oakland, 76 percent of primary
physicians accept new patients through private insurance, but only 57
percent accept new Medi-Cal patients.
The result is that more Medi-Cal patients are
ending up in emergency rooms, which is more expensive and doesn't provide
ongoing care for serious diseases and illnesses, according to We Care for
California.
Dr. Marc Futernick, who directs emergency services
at California Hospital in downtown Los Angeles, said one Medi-Cal patient
with advanced colon cancer came into his emergency room four times in five
weeks because he was unable to see an oncologist or get the chemotherapy
treatments he needed.
"It's much worse than just a couple years ago,"
Futernick said.
As Democratic legislative leaders look for ways to
spend more on social services, Gov. Jerry Brown and Republican lawmakers
fret about the state's ability to pay for its commitments. Medi-Cal costs
grew 4.3 percent from $17.8 billion last year to $18.6 billion this year, or
16 percent of the state's general fund. The program also faces spiraling
costs for seniors and specialty drugs.
While the federal government will pay 100 percent
of the costs for newly eligible Medi-Cal recipients until 2016, it will be
phasing down to a 90 percent share in 2020. The Brown administration
projects it will cost $1.7 billion more for the state to cover the 10
percent.
One way the Brown administration has proposed
controlling costs is to limit Medi-Cal enrollment to certain times of the
year, similar to open enrollment for private health plans.
Sen. Richard Pan, D-Sacramento, a doctor who has
called for Medi-Cal reform, said it would be shortsighted if the state
doesn't increase provider payments to save money in the long run. He said
the state needs to improve coordination of care, set and measure performance
standards for contracting health plans and better manage chronic illnesses
to reduce hospitalization rates.
"How can we not afford this?" he asked.
Chris Perrone, director of health reform at the
California HealthCare Foundation, said the state's enrollment success stems
from its decision to make it easier for low-income people to enroll. For
example, the state negotiated a waiver from the federal government to start
covering low-income childless adults in a transitional program as early as
2010.
The expansion has helped Richard Olivares, a
33-year-old homeless man in Sacramento. He gained access to a cardiologist
for heart spasms and a psychiatrist for schizophrenia, anxiety and anger
management issues. Medi-Cal also covered a recent jaw surgery from a fight.
"It's really been a blessing because I have a heart
problem and every time I get sick, I'm able to go and see a doctor," he
said.
When Medi-Cal expanded last year under President
Barack Obama's health reform plan, the state struggled to enroll people fast
enough and counties reported being hobbled by a new web-based enrollment
system that didn't always work. California's backlog reached as high as
900,000, prompting threats from the federal government and triggering a
lawsuit from patients and health care advocates.
Under the expansion, a person can make up to
$16,105 or 138 percent of the federal poverty level to qualify for Medi-Cal,
or $32,913 for a family of four.
The state Department of Health Care Services, which
oversees Medi-Cal, said the backlog has been "virtually cleared." The
department declined multiple interview requests to The Associated Press to
explain its plan for handling the caseload, which is expected to grow as
more immigrants in the country without documentation will be eligible for
state-funded health coverage under Obama's executive order not to seek
deportation.
Julie Moreno felt lucky to be among more than 2.7
million previously uninsured Californians to be added to Medi-Cal, the
state's health care program for the poor.
Until she needed cataract surgery.
For three months after her November 2013 diagnosis,
the 49-year-old Mountain View resident said, she tried to get an
appointment, but each time she called, no slots were available. Desperate
and worried, she finally borrowed $14,000 from her boyfriend's mother to
have the procedure done elsewhere last February.
One year into the explosive, health law-induced
growth of Medi-Cal, it appears one of the most alarming predictions of
critics is coming true: The supply of doctors hasn't kept up with demand.
One recent study suggests the number of primary care doctors in California
per Medi-Cal patient is woefully below federal guidelines.
"If you're pregnant, you get help," Moreno said.
"But if you're 49 and not pregnant, you have to wait for everything."
In fact, seven months after Moreno's surgery, her
original surgeon's office called just to say they still couldn't fit her in.
At least 1.2 million Californians have signed up
for a private insurance plan since enrollment began in October 2013 under
the Affordable Care Act, better known as Obamacare. But it's Medi-Cal that
has witnessed the largest growth -- 2.7 million since the controversial law
opened the program up to many more recipients in January 2014.
By mid-2016, more than 12.2 million people --
nearly a third of all Californians --
will be on Medi-Cal, state health officials say.
Those officials continue to insist that the current
delays to see a doctor and crowded emergency rooms are all part of
to-be-expected growing pains. But many experts say the problems are so
widespread they shouldn't be ignored.
"California did a good job of getting people signed
up, but they basically stuck their heads in the sand and assumed that
California physicians would just jump right on board and want to take more
Medi-Cal patients," said Dr. Del Morris, president of the California Academy
of Family Physicians, which represents many of the first-line doctors who
treat Medi-Cal patients. "It's unacceptable to say, 'We are not ready for
you yet, you'll just have to suffer with your disease.'"
Morris and other experts say the situation is about
to get worse, in part because of Medi-Cal's health care reimbursement rates.
For years, the rates paid by Medi-Cal -- called
Medicaid in the rest of the country -- have been among the nation's lowest.
A provision of Obamacare hiked the rates for primary care doctors to the
substantially higher Medicare rates for two years, but those increases ended
on Dec. 31. A second blow came last month when the state cut the Medi-Cal
reimbursement rate by another 10 percent, a reduction approved by California
lawmakers in 2011 but delayed in a court battle that doctors ultimately
lost.
Even before the latest cuts, Medi-Cal doctors --
particularly specialists -- in California's rural areas often seemed nearly
impossible to find. And the shortage of Medi-Cal physicians appears to be
causing spikes in the number of Medi-Cal patients being treated in hospital
emergency rooms around the state. Data from the Office of Statewide Health
Planning and Development show that in the first three quarters of 2014,
"treat and release" visits to emergency rooms by Medi-Cal patients jumped 30
percent from the same period the year before.
At least once a week at the MayView Community
Health Center in Mountain View, the clinic is so swamped that it is forced
to send Medi-Cal patients to hospital emergency rooms "because they cannot
go anywhere else," clinic operations director Harsha Mehta said.
Since January 2014, Axis Community Health in
Pleasanton has added about 1,700 new Medi-Cal patients to its five
facilities that serve the Tri-Valley area, bringing the total to about
14,000. While 700 of those patients were already being treated at Axis
before they enrolled in Medi-Cal, the overall jump in new patients is
forcing Dr. Divya Raj, Axis' medical director, to hire more hard-to-find
doctors.
A recent report by the California HealthCare
Foundation that tried to determine if the state has enough doctors to handle
the influx of Medi-Cal patients reinforces Raj's trepidation.
The report found the ratio of patients to full-time
primary care doctors participating in Medi-Cal -- including family medicine
physicians, general internists, pediatricians and ob/gyns -- was 35 to 49
physicians per 100,000 enrollees, well below the federal guidelines of 60 to
80.
"We had a shortage of primary care doctors before
this flood (of Medi-Cal enrollees) came about," said Dr. Steven Harrison, a
veteran primary care doctor who directs a residency program for such
physicians at Natividad Medical Center in Salinas. "Now we have a dire
shortage."
Bait and Switch for Primary Care "Doctors"
Nationwide there was an enormous shortage of primary care doctors before
Obamacare. Obamacare greatly increased the demand for such doctors, thereby,
making the shortage much worse. This has led to nationwide bait and switch
primary care that is similar to three of the medical clinics in Littleton, New
Hampshire. Each clinic has one MD and one or more added "physicians assistants"
who are not medical doctors but can examine patients and prescribe common
medications.
The bait and switch part is that patients in each clinic are not allowed to
see the MD at all or must wait much longer for an appointment to see the the MD.
In the meantime they are encouraged to be examined by only the physicians
assistant or to go to emergency rooms.
Another sad part of the bait and switch tactic is that many specialists such
as those at the Dartmouth medical center will only see patients referred by an
MD or osteopath. Without such referrals patients are not allowed to make
appointments with such specialists such as dermatologists, psychiatrists, and
surgeons.
One other clinic up here has a really lousy and uncaring foreign-trained MD and an osteopath. My
primary care doctor is the osteopath. He seems pretty good to me, but then my
medical needs are fairly simple and routine. Our Littleton Regional Hospital
does have an outstanding emergency room, although it's not a trauma center and
has to send a relatively large number of patients by helicopter to the Dartmouth
medical center about 50 miles away.
Of course patients with serious problems have discovered how to get
referrals. The go directly to emergency rooms and maybe wait the better part of
a day to be examined. But they eventually leave with a referral to see a
specialist provided that specialist will accept their insurance.
The huge problem in New Hampshire is that nearly half (slightly less this
year) of the hospitals and specialists will not accept ACA insurance.
The health insurance market is changing. And the
changes are not good. Even before there was Obamacare, most insurers most of
the time had perverse incentives to attract the healthy and avoid the sick.
But now that the Affordable Care Act has completely changed the nature of
the market, the perverse incentives are worse than ever.
Writing in Sunday’s New York Times
Elizabeth Rosenthal gives these examples:
When Karen Pineman of Manhattan sought
treatment for a broken ankle, her insurer told her that the nearest
in-network doctor was in Stamford, Connecticut – in another state.
Alison Chavez, a California breast cancer
patient, was almost on the operating table when her surgery had to be
cancelled because several of her doctors were leaving the insurer’s
network.
When the son of Alexis Gersten, a dentist in
East Quogue New York, needed an ear, nose and throat specialist, the
insurer told her the nearest one was in Albany – five hours away.
When Andrea Greenberg, a New York lawyer,
called an insurance company hotline with questions she found herself
speaking to someone reading off a script in the Philippines.
Aviva Starkman Williams, a California computer
engineer, tried to determine whether the pediatrician doing her son’s
2-year-old checkup was in-network, the practice’s office manager “said
he didn’t know because doctors came in and out of network all the time,
likening the situation to players’ switching teams in the National
Basketball Association.”
But aren’t these insurers worried that if they
mistreat their customers, their enrollees will move to some other plan?
Here’s the rarely told secret about health insurance in the Obamacare
exchanges: insurers don’t care if heavy users of medical care go to some
other plan. Getting rid of high-cost enrollees is actually good for the
bottom line.
To appreciate how different health insurance has
become, let’s compare it to the kind of casualty insurance people buy for
their home or their cars.
Dennis Haysbert is the actor I remember best for
playing the president of the United States in the Jack Bauer series, 24.
You probably know him better as the spokesman for Allstate. In one
commercial he is standing in front of a town that looks like it has been
demolished by a tornado. “It took only two minutes for this town to be
destroyed,” he says. And he ends by asking “Are you in good hands?”
The point of the commercial is self-evident.
Casualty insurers know you don’t care about insurance until something bad
happens. And the way they are pitching their products is: Once the bad thing
happens, we are going to take care of you.
Virtually all casualty insurance advertisements
carry this message, explicitly or implicitly. Nationwide used to run a
commercial in which all kinds of catastrophes were caused by a
Dennis-the-Menace type kid. In a State Farm ad, a baseball comes crashing
through a living room window. Nationwide’s “Life comes at you fast” series
features all kinds of misadventures. And of course, the Aflac commercials
are all about unexpected mishaps.
My favorite casualty
insurer print ad is sponsored by Chubb. It features a man fishing in a small
boat with his back turned to a catastrophe. He is about to go over what
looks like Niagara Falls. Here’s the cutline: “Who insures you doesn’t
matter. Until it does.”
Now let’s compare those messages
to what we see in the health insurance exchange. Federal employees have been
obtaining insurance in an exchange, similar to the Obamacare exchanges, for
several decades. Every fall, during “open enrollment,” they select from
among a dozen or so competing heath plans. In Washington, DC where the
market is huge, insurers try to attract customers by running commercials on
TV, in print and in other venues.
The Obama administration has announced plans to
accelerate a shift in how the U.S. pays its $2.9 trillion annual health-care
bill. Officials at Medicare, which covers one in six Americans, want to stop
paying doctors and hospitals by the number of tests and treatments they do.
Instead, the government wants to link payments to how well providers take
care of patients, not just how much care they provide.
This transition is already under way. Millions of
Americans are now covered in experimental programs created by the Affordable
Care Act designed to reduce unnecessary care and incentivize doctors to
focus on quality, not quantity. The administration wants to vastly expand
such programs to include half of all Medicare payments by the end of 2018.
Here’s what you need to know:
Growth has slowed in recent years. Since 2010, per
capita health spending has increased at about the same rate as the U.S.
economy, a historically low rate for American health spending. Even if that
holds steady, 17¢ of every dollar spent in the U.S. goes to health care, far
higher than in other countries that have health outcomes as good or better
than America’s.
The government’s starting to change how it pays
doctors and hospitals
After the Affordable Care Act was passed in 2010,
the federal government started experiments with doctors and hospitals
willing to try new payment models. One of the attempts to do this was a
program called Accountable Care Organizations (ACOs), which would let
medical providers share in the savings if they reduced the overall
health-care costs for their Medicare patients. Now more than 7.8 million of
Medicare’s 55 million beneficiaries get their care through such
arrangements, up from zero in 2011.
The Obama administration would like to speed this
up. Medicare wants 30 percent of all payments to go through models like ACOs
by the end of next year, and 50 percent by the end of 2018, up from about 20
percent now. Other incentives already in place, such as penalties for
hospitals when patients get readmitted, nudge providers to improve care,
even if they’re still getting paid in a traditional fee-for-service system.
The government wants 90 percent of all Medicare payments to include such
incentives by the end of 2018.
It still has a long way to go
It’s hard to say precisely how much of the total
$2.9 trillion in health spending flows through fee-for-service payments, but
a safe answer is: most of it. Even hospitals participating in Medicare’s new
payment experiments often get paid the old way by commercial insurers, for
example. Those contradictory incentives can make it hard for hospitals to
fully make the changes they need to care for patients more efficiently. “Can
you create a situation ultimately where you’re treating fewer people in the
hospital and doing fewer higher-reimbursement treatments? That’s a real
risk,” Moody’s health-care analyst Dan Steingart
told me this
month. “If your contracts only pay you on a pure fee-for-service basis,
you’re basically shooting yourself in the foot.”
This is the first time Medicare officials have
set clear targets for how much spending they want to flow through new
payment systems. The Obama administration said the goals should incentivize
more doctors and hospitals to join, and give them some certainty that
the switch to new payment methods is real. The government also wants
private-sector buyers of health care to make the shift. A council of
executives from the insurance and medical industries, as well as big
employers such as Boeing and Verizon, will try to expand alternative
payments.
We don’t know how well it will work
Medicare is trying a few experiments, including
ACOs and bundled payments (which try to put limits around how much hospitals
can charge for common procedures like knee and hip replacements). While
economists and medical providers largely agree that ending the
fee-for-service program is essential to containing health-care costs, the
evidence for the new models isn’t really in yet. Medicare officials
said they have no results on bundled payments yet. The early years of the
ACO program have shown
some savings, but a
majority of ACOs for which Medicare has
data have not
generated savings yet.
Teaching Case on ACA Health Care Tax Issues
From The Wall Street Journal Weekly Accounting Review on February 6, 2015
SUMMARY: Before firing off a 2014 income tax
return, taxpayers should take some time to master a few important, but
easily overlooked, deductions, credits and other breaks-including a few that
were revived at the end of last year. Even if a taxpayer considers him or
herself a tax wizard who loves studying the Internal Revenue Code, it's
increasingly easy to make costly bloopers. Also, taxpayers should watch out
for a few new wrinkles in 2015, notably those stemming from the Affordable
Care Act. The article offers some areas that deserve extra attention.
CLASSROOM APPLICATION: This article offers
insight on some areas of individual taxation, especially areas that have
experienced recent changes.
QUESTIONS:
1. (Advanced) What are the tax issues involving health insurance
for 2014 tax returns? Will the changes affect all taxpayers, some, or just a
few? Why is health insurance a part of tax returns?
2. (Introductory) What is the income ceiling for the Social
Security tax? How could this be a problem for people who have more than one
job?
3. (Advanced) How is income taxed if capital losses exceed capital
gains? How does that differ from when capital gains exceed capital losses?
How are gains and losses from a personal residence different from other
capital gains and losses?
4. (Advanced) What is the standard deduction? How many taxpayers
elect to claim it? What is the other alternative? Why do the majority of the
taxpayers choose the option they choose?
5. (Introductory) What taxpayers should choose to deduct sales
taxes? What is the other option?
6. (Introductory) What is the simplified calculation for the home
office deduction? Why did the IRS develop this calculation? What is the
other option?
Reviewed By: Linda Christiansen, Indiana University Southeast
The complexity and questions that arise from
the nation’s ever-changing tax laws are as certain as taxes themselves. So
we introduce a new column, written by Tom Herman, a former tax columnist for
The Wall Street Journal, that will look at developments affecting taxpayers
and individual investors. We welcome your thoughts and questions about tax
issues, big and small. Send them to
reports@wsj.com.
Early birds, be careful.
Before firing off your ... income tax return, take
some time to master a few important, but easily overlooked, deductions,
credits and other breaks—including a few that were revived at the end of
last year.
Even if you consider yourself a tax wizard who
loves studying the Internal Revenue Code, it’s increasingly easy to make
costly bloopers. Also, watch out for a few new wrinkles this year, notably
those stemming from the Affordable Care Act.
Here are some areas that deserve extra attention:
HEALTH INSURANCE Get ready for
some new lines on this year’s forms because of the Affordable Care Act. For
most, this should be fairly simple. “The majority of taxpayers—more than
three out of four—will simply need to check a box to verify they have
health-insurance coverage,” the IRS says. Others will face trickier issues.
Some may be eligible to claim an exemption from the coverage requirement.
But those who don’t have qualifying coverage or who don’t qualify for an
exemption will need to make “an individual shared responsibility payment.”
Others may qualify for a “premium tax credit.” See
irs.gov/aca
for details. For some “this will be very complicated,” warns Mark Luscombe,
principal federal tax analyst for Wolters Kluwer Tax & Accounting U.S.
SOCIAL SECURITY TAX Some people
who worked for two or more employers last year may have paid too much in
Social Security tax. The maximum amount that should have been withheld by
all your employers for 2014 was $7,254. (That’s 6.2% of $117,000, the
maximum amount of wages subject to the Social Security tax.) If you had too
much withheld, you typically can claim the excess as a credit. See IRS
Publication 17 for
details.
INVESTMENT LOSERS Did you lose
money on stocks, bonds and other investments you sold last year? Use your
capital losses to offset capital gains. But what if your losses exceeded
your gains? You can deduct as much as $3,000 a year ($1,500 for married
taxpayers filing separately) of net losses against your wages and other
ordinary income. Carry over excess losses into future years. Warning: You
can’t deduct a loss on the sale of your personal residence.
IRA CHARITABLE TRANSFERS Late last
year, lawmakers revived a provision that allowed many people age 70½ or
older to transfer as much as $100,000 directly from an IRA to charity,
tax-free, during 2014. The transfer counted toward the taxpayer’s required
minimum distribution. You’re supposed to report your “qualified charitable
distribution” on your return even if it’s tax-free. Just make sure you don’t
put it on the wrong line. For example, if you file Form 1040, report your
“QCD” on Line 15a. Don’t include any of that distribution on the line for
“taxable amount” (Line 15b). Instead, write “QCD” next to the line.
HIGHER STANDARD About two out of
every three returns typically claim the standard deduction. For 2014, the
basic standard deduction is $12,400 for those married and filing jointly, or
$6,200 if single or married and filing separately. There are additional
amounts for people who were 65 or older, or blind. Before taking the
standard deduction, check to see if you might be better off itemizing.
SALES TAXES Late last year,
Congress revived a law that gives taxpayers who itemize an important choice:
They can deduct either state and local income taxes paid in 2014—or their
state and local sales taxes. (But they can’t deduct both.) The sales-tax
option offers welcome relief for people in states with no income tax, such
as Texas and Florida. But taxpayers in other states may benefit from taking
the sales-tax deduction, says Mr. Luscombe, including those who paid large
amounts of sales tax on major purchases such as cars or boats or those who
reside in states with high sales-tax rates.
HOME OFFICE Many people who work
at home don’t bother deducting their home-office expenses because the rules
can be fiendishly complex and because of fears it would increase their
chances of getting audited. But if you qualify to deduct home-office
expenses, you may benefit from a simplified calculation method allowed by
the IRS. Multiply the square footage of the home used for your home office
(but not more than 300 square feet) by an IRS-approved rate of $5 a square
foot. Thus, the maximum deduction in this case would be $1,500.
Mr. Herman is a writer in New York City. He was formerly The Wall
Street Journal’s Tax Report columnist.
Are you thinking about tax day yet? Your friendly
neighborhood tax preparer is. IRS Commissioner John Koskinen declared this
tax season one of the most complicated ever, and tax preparers from coast to
coast are trying to get ready for the first year that the Affordable Care
Act will show up on your tax form.
Sue Ellen Smith manages an H&R Block office in San
Francisco, and she is expecting things to get busy soon.
“This year taxes and health care intersect in a
brand new way,” Smith says.
For most people, who get insurance through work,
the change will be simple: checking a box on the tax form that says, “yes, I
had health insurance all year.”
But it will be much more complex for an estimated
25 million to 30 million people who didn’t have health insurance or who
bought subsidized coverage through the exchanges. To get ready, Smith and
her team have been training for months, running through a range of
hypothetical scenarios. One features “Ray” and “Vicky,” a fictional couple
from an H&R Block flyer. Together they earn $65,000 a year, and neither has
health insurance.
“The biggest misconception I hear people say is,
‘Oh the penalty’s only $95, that’s easy,’” says Smith, but the Rays and
Vickys of the world are in for a surprise that will hit their refund. “In
this situation, it’s almost $450.”
That’s because the penalty for being uninsured in
2014 is $95 or 1 percent of income, whichever is greater. Next year, it’s 2
percent. Smith says the smartest move for people to avoid those penalties is
to sign up for insurance before Feb. 15, the end of the health law’s open
enrollment period.
But a lot of people may not think about this until
they file their taxes in April. For them, it will be too late to sign up for
health insurance and too late to do anything about next year’s penalty too,
says Mark Steber, chief tax officer for Jackson Hewitt Tax Services.
And Yet in New Hampshire and Other States Upwards of Half the Hospitals
are Refusing to Serve Patients with ACA insurance?
Why?
Answer One of the main reasons is that hospitals serving ACA patients get
stuck with having to serve deadbeats who are behind in paying their insurance
premiums. For 60 days doctors and lawyers must serve ACA patients that are
behind over 30 days in paying insurance premiums such that insurance companies
no longer have to pay their medical bills.
In the past people who defaulted on premiums became uninsured people who were
treated in special facilities such as county hospitals funded by taxpayers. Now
people who default on premiums get a 90-day grace period where insurance
companies pay their medical costs for 30 days and the doctors and hospitals have
to pay for their medical care for 60 days.
There's a 90-day grace period in the ACA where people who default on paying
premiums are still covered for the first 30-days by the insurance company and
the next 60 days by the doctors and hospitals providing the care is absolutely
absurd. The insurance companies will simply pass on these bad debt losses (which
may be enormous for surgeries and hospital confinements) into higher premiums
for the people who pay their medical insurance billings.
Rita Gorenflo’s 7-year-old son Nathaniel was in
severe pain from a sinus infection.
But since the boy was covered by Medicaid, she
couldn’t immediately find a specialist willing to see him. After days of
calling, she was finally able to get Nathaniel an appointment nearly a week
later near their South Florida home. That was in 2005.
Last month, ruling in a lawsuit brought by the
state’s pediatricians and patient advocacy groups, a federal district judge
in Miami determined Nathaniel’s wait was “unreasonable” and that Florida’s
Medicaid program was failing him and nearly 2 million other children by not
paying enough money to doctors and dentists to ensure the kids have adequate
access to care.
The Florida case is the latest effort to get
federal judges to force states to increase Medicaid provider payment rates
for the state and federal program that covers about 70 million low-income
Americans. In the past two decades, similar cases have been filed in
numerous states, including California, Illinois, Massachusetts, Oklahoma,
Texas and the District of Columbia– with many resulting in higher pay.
But while providers and patient advocates
nationwide hailed the Florida decision, they are deeply worried about a U.S.
Supreme Court case that they say could restrict their ability across the
country to seek judicial relief from low Medicaid reimbursement rates.
The high court on Jan. 20 will hear a case from
Idaho seeking to overturn a 2011 lower court order to increase payments to
providers serving Medicaid enrollees with development disabilities. In the
original case, five centers serving developmentally disabled adults and
children argued that Idaho was unfairly keeping Medicaid reimbursement rates
at 2006 levels despite studies showing that the cost of providing care had
risen.
Idaho officials argue only the state and federal
government should be able to set provider fees in Medicaid and all other
“private parties,” including patients and providers, should not be able to
use the court system to gain higher rates. Twenty-seven states and the Obama
administration are supporting Idaho’s appeal, along with the National
Governors Association.
Are you thinking about tax day yet? Your friendly
neighborhood tax preparer is. IRS Commissioner John Koskinen declared this
tax season one of the most complicated ever, and tax preparers from coast to
coast are trying to get ready for the first year that the Affordable Care
Act will show up on your tax form.
Sue Ellen Smith manages an H&R Block office in San
Francisco, and she is expecting things to get busy soon.
“This year taxes and health care intersect in a
brand new way,” Smith says.
For most people, who get insurance through work,
the change will be simple: checking a box on the tax form that says, “yes, I
had health insurance all year.”
But it will be much more complex for an estimated
25 million to 30 million people who didn’t have health insurance or who
bought subsidized coverage through the exchanges. To get ready, Smith and
her team have been training for months, running through a range of
hypothetical scenarios. One features “Ray” and “Vicky,” a fictional couple
from an H&R Block flyer. Together they earn $65,000 a year, and neither has
health insurance.
“The biggest misconception I hear people say is,
‘Oh the penalty’s only $95, that’s easy,’” says Smith, but the Rays and
Vickys of the world are in for a surprise that will hit their refund. “In
this situation, it’s almost $450.”
That’s because the penalty for being uninsured in
2014 is $95 or 1 percent of income, whichever is greater. Next year, it’s 2
percent. Smith says the smartest move for people to avoid those penalties is
to sign up for insurance before Feb. 15, the end of the health law’s open
enrollment period.
But a lot of people may not think about this until
they file their taxes in April. For them, it will be too late to sign up for
health insurance and too late to do anything about next year’s penalty too,
says Mark Steber, chief tax officer for Jackson Hewitt Tax Services.
On Sunday evening, CBS’ 60 Minutes did a
feature story on Steven Brill’s new book, America’s Bitter Pill, in
which Brill complains that Obamacare didn’t do enough to tackle the
exorbitantly high price of U.S. hospital care. “Obamacare does zero to
change any of that,” says Brill. That’s not exactly right. What Brill—and
CBS—don’t tell you—is that Obamacare is driving hospitals to charge you
more than they already do.
The U.S. hospital industry is crony
capitalism at its finest
Steven Brill, founder
of The American Lawyer and Court TV took a starring role
in the health care debate when he published the Time article
“Bitter
Pill,” describing how hospitals charge extreme
prices for ordinary care to the uninsured. For example, Sean Recchi, an
uninsured lymphoma patient, went to MD Anderson Cancer Center, a
world-renowned facility in Houston, to seek treatment. MD Anderson proceeded
to charge him $283 for a $20 chest X-ray. They charged him more than $15,000
for blood tests costing a few hundred dollars. They charged him $13,702 for
a dose of Rituxan, a lymphoma drug, for which the average U.S. hospital
price is around $4,000. All told, Recchi’s course of treatment cost $83,900.
Whatever he couldn’t pay was called “uncompensated care.”
MD Anderson is not
struggling under the weight of bills unpaid by the uninsured. In 2010, MD
Anderson recorded revenue of $2.05 billion and operating profits of $531
million. Brill recounted several other patients at other hospitals with
similar stories.
This is a topic
we’ve covered extensively at The Apothecary, and elsewhere: the
U.S. hospital industry is the single largest
example of crony capitalism in the history of civilization. In 2013, I wrote
a piece for National Review called “An
Arm and a Leg” explaining the problem.
To summarize: the average
day spent in a U.S. hospital costs five times as much as it does in other
industrialized countries. That’s not because U.S. hospitals use higher
technology or better care. It’s because they charge more for the same
technology and the same care. Because they can get away with it.
Thanks to federal
intervention in the health care system—Medicare, Medicaid, and the employer
tax exclusion—hospitals have been able to charge whatever they want for
their services, knowing that the average consumer has no idea how much he’s
paying, because he’s paying mostly through taxes and other indirect means.
In 2013, U.S. government
entities—i.e., taxpayers—spent a half-trillion dollars subsidizing American
hospitals. By 2021, thanks in part to Obamacare, that will grow to $800
billion a year. That’s more than twice what the military spends subsidizing
the aerospace industry.
And here’s the thing. While
Brill rightly criticizes Obamacare for not doing anything to bring down the
cost of hospital care, he’s actually an ardent supporter of the law. And
this is the fundamental problem with Brill’s thesis. Obamacare doesn’t
merely not do anything to bring hospital costs down. It actively works to
drive hospital costs upward, by doubling down on the incentives hospitals
have to charge more to patients.
In every state, it’s the
hospital industry that has been the principal lobbyist in support of
Obamacare. Why? Because the law increases taxpayer subsidies of the hospital
industry by around $400 billion per decade. In other words, it takes the
currently high prices that U.S. hospitals charge and says “keep doing what
you’re doing.”
If Obamacare had never
passed, hospitals would have been under much more pressure to keep these
costs down, because no one would be bailing them out if hospital care became
increasingly unaffordable. The opposite, of course, has happened.
Obamacare encourages
hospitals to increase their market power
The next thing
Obamacare does is it encourages hospitals to merge, thereby giving hospitals
even more market power to charge even higher prices.
A
study by Jamie Robinson of the University of
California found that highly concentrated hospital markets–where one or two
hospitals controlled most of the patient volume—hospitals charged an average
of 41 percent more for common procedures than they did in more competitive
markets.
Simple lab work done during a few days in the
hospital can cost more than a car. A trip to the emergency room for chest
pains that turn out to be indigestion brings a bill that can exceed the
price of a semester at college. When we debate
health care
policy in America, we seem to jump right to the issue
of who should pay the bills, blowing past what should be the first question:
Why exactly are the bills so high?
Steven Brill spent seven months analyzing hundreds
of bill from
hospitals,
doctors, and drug companies and medical equipment
manufacturers to find out who is setting such high prices and pocketing the
biggest profits. What he discovered, outlined in detail in the
cover story of the new issue of TIME, will
radically change the way you think about our medical institutions:
· Hospitals arbitrarily set prices based on a
mysterious internal list known as the “chargemaster.” These prices vary from
hospital to hospital and are often ten times the actual cost of an item.
Insurance companies and Medicare pay discounted prices, but don’t have
enough leverage to bring fees down anywhere close to actual costs. While
other countries restrain drug prices, in the United States federal law
actually restricts the single biggest buyer—Medicare—from even trying to
negotiate the price of drugs.
· Tax-exempt “nonprofit” hospitals are the most
profitable businesses and largest employers in their regions, often presided
over by the most richly compensated executives.
·
Cancer
treatment—at some of the most renowned centers such as
Sloan-Kettering and M.D. Anderson—has some of the industry’s highest profit
margins. Cancer drugs in particular are hugely profitable. For example,
Sloan-Kettering charges $4615 for a immune-deficiency drug named Flebogamma.
Medicare cuts Sloan-Kettering’s charge to $2123, still way above what the
hospital paid for it, an estimated $1400.
· Patients can hire medical billing advocates who
help people read their bills and try to reduce them. “The hospitals all know
the bills are fiction, or at least only a place to start the discussion, so
you bargain with them,” says Katalin Goencz, a former appeals coordinator in
a hospital billing department who now works as an advocate in Stamford, CT.
Brill concludes:
The health care market is not
a market at all.
It’s a crapshoot. Everyone fares differently based on circumstances they
can neither control nor predict. They may have no insurance. They may
have insurance, but their employer chooses their insurance plan and it
may have a payout limit or not cover a drug or treatment they need. They
may or may not be old enough to be on Medicare or, given the different
standards of the 50 states, be poor enough to be on Medicaid. If they’re
not protected by Medicare or protected only partially by private
insurance with high co-pays, they have little visibility into pricing,
let alone control of it. They have little choice of hospitals or the
services they are billed for, even if they somehow knew the prices
before they got billed for the services. They have no idea what their
bills mean, and those who maintain the chargemasters couldn’t explain
them if they wanted to. How much of the bills they end up paying may
depend on the generosity of the hospital or on whether they happen to
get the help of a billing advocate. They have no choice of the drugs
that they have to buy or the lab tests or CT scans that they have to
get, and they would not know what to do if they did have a choice. They
are powerless buyers in a sellers’ market where the only consistent fact
is the profit of the sellers.
Without diminishing the epic scope of Steven
Brill's Time magazine piece about the U.S. health care system, he reiterates
in lengthy detail perversities that are already well known, without offering
a single useful insight on how it go that way, and even less on how to fix
it.
Yet Mr. Brill, founder of CourtTV and American
Lawyer magazine, author of books on terrorism and education, has written the
longest piece in Time's history—24,000 words—so attention must be paid.
That health-care costs are inflated compared to
what they would be in a reasonably transparent, competitive market (a point
Mr. Brill never clearly makes) won't be a revelation. That hospitals
allocate their costs to various items on their bills and price lists in ways
that are opaque and arbitrary is not a new discovery either.
He finds it shocking that a hospital charging
$1,791 a night won't throw in the generic Tylenol for free (instead charging
$1.50 each). But this is to commit the reification fallacy of thinking there
is some organic relationship between what a hospital charges for a
particular item and what that item costs in the first place.
He dwells on the irrationality of hospitals
charging their highest prices to their poorest customers, those without
insurance. But he's also aware that these customers often pay little or
nothing of what they are charged and hospitals reallocate the cost to the
bills of other patients. He even notes that a hospital might collect as
little as 18% of what it bills.
He vaguely gets that hospital price lists are memos
for the file, to be drawn out and waved as a reference in negotiations with
their real customers, the big health-care insurers, Medicaid, Medicare and
other large payers.
The deals hammered out with these customers tend
naturally to gravitate toward round numbers, leaving a hospital free to
allocate its costs and profits to specific items however it wants. Mr. Brill
may be offended that certain "non-profit" hospitals appear to be highly
profitable. He probably wouldn't be happier, though, if they diverted their
surplus revenues into even higher salaries and more gleamingly superfluous
facilities.
"What is so different about the medical ecosystem
that causes technology advances to drive bills up instead of down?" Mr.
Brill asks. But his question is rhetorical since he doesn't exhibit much
urge to understand why the system behaves as it does, treating its nature as
a given.
In fact, what he describes—big institutions
dictating care and assigning prices in ways that make no sense to an
outsider—is exactly what you get in a system that insulates consumers from
the cost of their health care.
Your time might be better spent reading Duke
University's Clark Havighurst in a brilliant 2002 article that describes the
regulatory, legal and tax subsidies that deprive consumers of both the
incentive and opportunity to demand value from medical providers. Americans
end up with a "Hobson's choice: either coverage for 'Cadillac' care or no
health coverage at all."
"The market failure most responsible for economic
inefficiency in the health-care sector is not consumers' ignorance about the
quality of care," Mr. Havighurst writes, "but rather their ignorance of the
cost of care, which ensures that neither the choices they make in the
marketplace nor the opinions they express in the political process reveal
their true preferences."
You might turn next to an equally fabulous 2001
article by Berkeley economist James C. Robinson, who shows how the
"pernicious" doctrine that health care is different—that consumers must shut
up, do as they're told and be prepared to write a blank check—is used to
"justify every inefficiency, idiosyncrasy, and interest-serving institution
in the health care industry."
Hospitals, insurers and other institutions involved
in health care may battle over available dollars, but they also share an
interest in increasing the nation's resources being diverted into health
care—which is exactly what happens when costs are hidden from those who pay
them.
Continued in article
Jensen Comment
Over a year ago Erika's Medicare-Anthem summary of charges for the month
included an $11,376 charge for out patient surgery that was mistakenly billed to
her account. We called our doctor who did the procedure in the hospital. Our
doctor responded not to bother her or the hospital --- since Medicare-Anthem
paid the entire bill it would not matter.
This bothered us since the woman (I assume it was a woman) may not have been
eligible for Medicare-Anthem. So I phoned Medicare. Medicare said not to bother
them and advised us to contact the hospital where the procedure took place. Any
corrections should be made by the hospital and the doctor.
So I called the hospital's accounting office. They asked that I send in a
copy of the Medicare-Anthem report. I hand-delivered the report to the the
hospital accounting office --- which is miles from the hospital.
Over the ensuing year we waited for a corrected Medicare-Anthem report.
Nothing! So I did a follow up visit to the hospital's accounting office. The
feedback was that since Medicare-Anthem paid the bill there was no need to
waste time correcting this item.
I keep thinking that some woman not eligible for Medicare got a windfall gain
here. Who cares if it was Medicare-Anthem that got screwed?
Erika and I changed to a doctor that we like better. But we cannot change
hospitals.
Moral of the Story
If the third party insurer gets billed mistakenly or pays too much nobody cares,
least of all the doctors and hospitals who got reimbursed.
Question
Who is telling a lie?
Steven Brill wrote a long cover story for Time Magazine, In that story
he describes having his team examine eight very complicated hospital bills from
different hospitals. In every case they found that the bills were laced with
errors and overcharges in favor of the hospital and possible frauds. Bitter Pill: Why Medical Bills Are Killing Us," Time Magazine
Cover Story, March 4, 2013, pp. 16-65 (a very long article) ---
http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/
The following week Stamford Hospital CEO Brian G. Grissler replied as shown,
in part, below. Steven Brill's reply to Grissler, Time Magazine, March
18, 2013, Page 2.
Brian G. Grissler
". . . Brill refused to share the patient's name or
the complete bill, so we are unable to answer those questions . . . "
Steven Brill Responds
"Stamford Hospital was shown the bill and never
disputed its authenticity. I made clear in the article the hospital settled
for cutting its bill entirely in half."
Jensen Comment
There are four possibilities behind this dispute:
Brian Grissler could be lying through his teeth.
Brian Grissler may not have thoroughly investigated the ultimate
resolution of this bill by his staff.
Steven Brill could be lying through his teeth.
Steven Brill and Brian Grissler may not be discussing the same bill
(although Brill claims he only picked one bill to examine from Stamford
Hospital).
My vote is that Answer 1 above is probably the correct answer, but we most
likely will never know.
And Yet in New Hampshire and Other States
Upwards of Half the Hospitals are Refusing to Serve Patients with ACA insurance?
Why?
Answer
One of the main reasons is that hospitals serving ACA patients get stuck with
having to serve deadbeats who are behind in paying their insurance premiums. For
60 days doctors and lawyers must serve ACA patients that are behind over 30 days
in paying insurance premiums such that insurance companies no longer have to pay
their medical bills.
In the past people who defaulted on premiums became
uninsured people who were treated in special facilities such as county hospitals
funded by taxpayers. Now people who default on premiums get a 90-day grace
period where insurance companies pay their medical costs for 30 days and the
doctors and hospitals have to pay for their medical care for 60 days.
There's a 90-day grace period in the ACA where
people who default on paying premiums are still covered for the first 30-days by
the insurance company and the next 60 days by the doctors and hospitals
providing the care is absolutely absurd. The insurance companies will simply
pass on these bad debt losses (which may be enormous for surgeries and hospital
confinements) into higher premiums for the people who pay their medical
insurance billings.
For years, Harvard’s experts on health economics
and policy have advised presidents and Congress on how to provide health
benefits to the nation at a reasonable cost. But those remedies will now be
applied to the Harvard faculty, and the professors are in an uproar.
Members of the Faculty of Arts and Sciences, the
heart of the 378-year-old university, voted overwhelmingly in November to
oppose changes that would require them and thousands of other Harvard
employees to pay more for health care. The university says the increases are
in part a result of the Obama administration’s Affordable Care Act, which
many Harvard professors championed. Continue reading the main story Related
Coverage
Roberto Villacreses of Sunshine Life and Health
Advisors with Darko Tomelic and Andrea Viteri recently at a Miami mall.
Health Insurance Enrollment Strongest in Federal MarketplaceDEC. 30, 2014
Agents from Sunshine Life and Health Advisors helped customers sign up for
health care in Miami this month. So Far, 6.4 Million Obtain Health Care
Coverage for 2015 in Federal MarketplaceDEC. 23, 2014 Obama Administration
to Investigate Insurers for Bias Against Costly ConditionsDEC. 22, 2014
The faculty vote came too late to stop the cost
increases from taking effect this month, and the anger on campus remains
focused on questions that are agitating many workplaces: How should the
burden of health costs be shared by employers and employees? If employees
have to bear more of the cost, will they skimp on medically necessary care,
curtail the use of less valuable services, or both?
“Harvard is a
microcosm of what’s happening in health care in the country,”
said David M. Cutler, a health economist at the university who was an
adviser to President Obama’s 2008 campaign. But only up to a point:
Professors at Harvard have until now generally avoided the higher expenses
that other employers have been passing on to employees. That makes the
outrage among the faculty remarkable, Mr. Cutler said, because “Harvard was
and remains a very generous employer.”
In Harvard’s health care enrollment guide for 2015,
the university said it “must respond to the national trend of rising health
care costs, including some driven by health care reform,” in the form of the
Affordable Care Act. The guide said that Harvard faced “added costs” because
of provisions in the health care law that extend coverage for children up to
age 26, offer free preventive services like mammograms and colonoscopies
and, starting in 2018, add a tax on high-cost insurance, known as the
Cadillac tax.
Richard F. Thomas, a Harvard professor of classics
and one of the world’s leading authorities on Virgil, called the changes
“deplorable, deeply regressive, a sign of the corporatization of the
university.”
Mary D. Lewis, a professor who specializes in the
history of modern France and has led opposition to the benefit changes, said
they were tantamount to a pay cut. “Moreover,” she said, “this pay cut will
be timed to come at precisely the moment when you are sick, stressed or
facing the challenges of being a new parent.”
The university is adopting standard features of
most employer-sponsored health plans: Employees will now pay deductibles and
a share of the costs, known as coinsurance, for hospitalization, surgery and
certain advanced diagnostic tests. The plan has an annual deductible of $250
per individual and $750 for a family. For a doctor’s office visit, the
charge is $20. For most other services, patients will pay 10 percent of the
cost until they reach the out-of-pocket limit of $1,500 for an individual
and $4,500 for a family.
Previously, Harvard employees paid a portion
of insurance premiums and had low out-of-pocket costs when they received
care.
Michael E. Chernew, a health economist and the
chairman of the university benefits committee, which recommended the new
approach, acknowledged that “with these changes, employees will often pay
more for care at the point of service.” In part, he said, “that is intended
because patient cost-sharing is proven to reduce overall spending.”
The president of Harvard, Drew Gilpin Faust,
acknowledged in a letter to the faculty that the changes in health benefits
— though based on recommendations from some of the university’s own health
policy experts — were “causing distress” and had “generated anxiety” on
campus. But she said the changes were necessary because Harvard’s health
benefit costs were growing faster than operating revenues or staff salaries
and were threatening the budget for other priorities like teaching, research
and student aid.
In response, Harvard professors, including
mathematicians and microeconomists, have dissected the university’s data and
question whether its health costs have been growing as fast as the
university says. Some created spreadsheets and contended that the
university’s arguments about the growth of employee health costs were
misleading. In recent years, national health spending has been growing at an
exceptionally slow rate.
In addition, some ideas that looked good to
academia in theory are now causing consternation. In 2009, while Congress
was considering the health care legislation, Dr. Alan M. Garber — then a
Stanford professor and now the provost of Harvard — led a group of
economists who sent an open letter to Mr. Obama endorsing cost-control
features of the bill. They praised the Cadillac tax as a way to rein in
health costs and premiums.
Dr. Garber, a physician and health economist, has
been at the center of the current Harvard debate. He approved the changes in
benefits, which were recommended by a committee that included university
administrators and experts on health policy.
In an interview, Dr. Garber acknowledged that
Harvard employees would face greater cost-sharing, but he defended the
changes. “Cost-sharing, if done appropriately, can slow the growth of health
spending,” he said. “We need to be prepared for the very real possibility
that health expenditure growth will take off again.”
But Jerry R. Green, a professor of economics and a
former provost who has been on the Harvard faculty for more than four
decades, said the new out-of-pocket costs could lead people to defer medical
care or diagnostic tests, causing more serious illnesses and costly
complications in the future.
“It’s equivalent to taxing the sick,” Professor
Green said. “I don’t think there’s any government in the world that would
tax the sick.”
Meredith B. Rosenthal, a professor of health
economics and policy at the Harvard School of Public Health, said she was
puzzled by the outcry. “The changes in Harvard faculty benefits are parallel
to changes that all Americans are seeing,” she said. “Indeed, they have come
to our front door much later than to others.”
But in her view, there are drawbacks to the Harvard
plan and others like it that require consumers to pay a share of health care
costs at the time of service. “Consumer cost-sharing is a blunt instrument,”
Professor Rosenthal said. “It will save money, but we have strong evidence
that when faced with high out-of-pocket costs, consumers make choices that
do not appear to be in their best interests in terms of health.”
Harvard’s new plan is far more generous than plans
sold on public insurance exchanges under the Affordable Care Act. Harvard
says its plan pays 91 percent of the cost of services for the covered
population, while the most popular plans on the exchanges, known as silver
plans, pay 70 percent, on average, reflecting their "actuarial value.”
"None of us who protested was motivated by our own
bottom line so much as by the principle,” Ms. Lewis said, expressing concern
about the impact of the changes on lower-paid employees.
In many states, consumers have complained about
health plans that limit their choice of doctors and hospitals. Some Harvard
employees have said they will gladly accept a narrower network of health
care providers if it lowers their costs. But Harvard’s ability to create
such networks is complicated by the fact that some of Boston’s best-known,
most expensive hospitals are affiliated with Harvard Medical School. To
create a network of high-value providers, Harvard would probably need to
exclude some of its own teaching hospitals, or discourage their use.
“Harvard employees want access to everything,” said
Dr. Barbara J. McNeil, the head of the health care policy department at
Harvard Medical School and a member of the benefits committee. “They don’t
want to be restricted in what institutions they can get care from.”
Although out-of-pocket costs over all for a typical
Harvard employee are to increase in 2015, administrators said premiums would
decline slightly. They noted that the university, which has an endowment
valued at more than $36 billion, had an unusual program to provide
protection against high out-of-pocket costs for employees earning $95,000 a
year or less. Still, professors said the protections did not offset the new
financial burdens that would fall on junior faculty and lower-paid staff
members.
Gov. Shumlin had missed two earlier financing
deadlines but finally released his proposal. But he immediately cast it as
“detrimental to Vermonters.” The model called for businesses to take on a
double-digit payroll tax, while individuals would face up to a 9.5 percent
premium assessment. Big businesses, in particular, didn’t want to pay for
Shumlin’s plan while maintaining their own employee health plans.
“These are simply not tax rates that I can
responsibly support or urge the Legislature to pass,” the governor said. “In
my judgment, the potential economic disruption and risks would be too great
to small businesses, working families and the state’s economy.”
And that was for a plan that would not be truly
single payer. Large companies with self-insured plans regulated by ERISA
would have been exempt. And Medicare also would have operated separately,
unless the state got a waiver, which was a long shot.
Shumlin added that federal funds available for the
transition were $150 million less than expected.
He also has a lot less political capital than
before November. Shumlin, chairman of the Democratic Governors Association,
still hasn’t even officially won his own reelection bid: The Legislature
will settle the outcome of the November race in January because Shumlin
failed to win more than 50 percent of the vote. He’s leading his Republican
challenger by just a few thousand ballots.
And the substance of the plan isn’t its only
politically problematic aspect. Gruber, now infamous for his blunt
assessments of the Affordable Care Act and his remarks about “stupid”
voters, was until recently a state consultant. Days after the election,
video emerged of him dismissing criticism of Vermont’s plan in 2011 by
asking, “Was this written by my adolescent children, by any chance?” State
officials said they would cut off his contract.
Advocates of a single-payer plan said Shumlin
should not be able to cast aside Act 48, the 2011 law that called for the
creation of Green Mountain Care, without repealing it. A group planned to
hold a rally in front of the statehouse on Thursday to protest his decision.
“The governor’s misguided decision was a completely
unnecessary result of a failed policy calculation that he pursued without
Democratic input,” the group Healthcare Is a Human Right Campaign said in a
statement.
One of
Vermont's many problems with health care is that physicians are leaving the
state due, in large measure, to Vermont's huge taxation of higher income
professionals. This has already forced Vermont to use the medical doctors,
clinics, and hospitals in bordering New Hampshire where there are no taxes on
earned incomes and sales.
Vermont is
also having a problem with loss of students in schools. Thus far efforts to
close nearly-empty schools have failed. Purportedly there are some Vermont
school districts that have more members on the school boards than children in
the schools.
Question
Does anybody find it shocking that hospitals and other medical service providers
overbill the third party insurance fraud pinata made up of Medicaid, Medicare,
and medical insurance companies?
What is sad is when powerful politicians stand in the way of legal
investigations for their big-donor friends.
When investigators suspected that Houston’s
Riverside General Hospital had filed Medicare claims for patients who
weren’t treated, they moved to block all payments to the facility. Then
politics intervened.
Rep. Sheila Jackson Lee, a Texas Democrat,
contacted the federal official who oversees Medicare, Marilyn Tavenner,
asking her to back down, according to documents reviewed by The Wall Street
Journal. In a June 2012 letter to Ms. Tavenner, Rep. Jackson Lee said
blocking payments had put the hospital at financial risk and “jeopardized”
patients needing Medicare.
Weeks later, Ms. Tavenner, administrator of the
Centers for Medicare and Medicaid Services, instructed deputies to restore
most payments to the hospital even as the agency was cooperating in a
criminal investigation of the facility, according to former investigators
and documents. “These changes are at the direction of the Administrator and
have the highest priority,” a Medicare official wrote to investigators.
About two months after that order, Riverside’s top
executive was indicted in a $158 million fraud scheme. The hospital was
barred from Medicare this May, and the CEO was convicted in October.
What happened at Riverside General Hospital shows
how political pressure from medical providers and elected officials can
collide with efforts to rein in waste and abuse in the nearly $600 billion,
taxpayer-funded Medicare system. More than a dozen former investigators and
CMS officials said in interviews that they faced questions from members of
Congress about policy changes or punitive action affecting providers or
individual doctors.
Ricky Sluder, a former senior investigator for a
Medicare contractor who oversaw part of the Riverside investigation, said
“it was extremely frustrating to stall an investigation to give some
explanation to a lawmaker. It’s providers’ way of using political power.”
In an emailed statement, Medicare administrator Ms.
Tavenner said the Riverside episode “reflected the tension between fraud
prevention and access to care.” She said she wasn’t aware of the pending
indictments and that her job required her to “balance two important policy
goals” — saving taxpayer money and protecting Medicare’s beneficiaries.
A spokesman for Rep. Jackson Lee declined to
comment.
Medicare has reported that during the 2013 fiscal
year, waste, fraud and abuse accounted for an estimated $34.6 billion in
improper payments to medical providers. CMS says it clawed back about $9
billion that year through audits and investigations.
Medicare hires contractors to enforce antifraud
rules and fight improper billing. The contractors can suspend payments to
doctors and hospitals and revoke billing privileges. They also can block
some payments to review claims — called “prepayment review.”
Such actions can squeeze medical providers and even
threaten to put them out of business. Medical providers sometimes seek help
from elected officials. Politicians have a stake in such disputes: Health
providers often provide jobs and valued services in their districts, and can
be campaign contributors.
Continued in article
Question
What is the main difference between errors in hospital bills (in over 90% of the
billings) and retail store scanned billings (in over 4% of the billings)?
Answer
Errors in hospital bills almost always favor the hospitals.
Retail store billing errors only favor the stores about half the time.
4.08%
of the prices picked up by retail-store scanners are wrong, about
twice the error rate considered acceptable by the U.S.
Federal Trade Commission, says a team led by David M. Hardesty of the
University of Kentucky that studied more than 231,000 products scanned
over 15 years in the state of Washington. Slightly less than
half the errors were overcharges. An intriguing finding: Error
rates are higher in affluent neighborhoods, suggesting
that stores may be more careful about mistakes in areas where shoppers
are more price-conscious, the researchers say.
Simple lab work done during a few days in the
hospital can cost more than a car. A trip to the emergency room for chest
pains that turn out to be indigestion brings a bill that can exceed the
price of a semester at college. When we debate
health care
policy in America, we seem to jump right to the issue
of who should pay the bills, blowing past what should be the first question:
Why exactly are the bills so high?
Steven Brill spent seven months analyzing hundreds
of bill from
hospitals,
doctors, and drug companies and medical equipment
manufacturers to find out who is setting such high prices and pocketing the
biggest profits. What he discovered, outlined in detail in the
cover story of the new issue of TIME, will
radically change the way you think about our medical institutions:
· Hospitals arbitrarily set prices based on a
mysterious internal list known as the “chargemaster.” These prices vary from
hospital to hospital and are often ten times the actual cost of an item.
Insurance companies and Medicare pay discounted prices, but don’t have
enough leverage to bring fees down anywhere close to actual costs. While
other countries restrain drug prices, in the United States federal law
actually restricts the single biggest buyer—Medicare—from even trying to
negotiate the price of drugs.
· Tax-exempt “nonprofit” hospitals are the most
profitable businesses and largest employers in their regions, often presided
over by the most richly compensated executives.
· Cancer
treatment—at some of the most renowned centers such as
Sloan-Kettering and M.D. Anderson—has some of the industry’s highest profit
margins. Cancer drugs in particular are hugely profitable. For example,
Sloan-Kettering charges $4615 for a immune-deficiency drug named Flebogamma.
Medicare cuts Sloan-Kettering’s charge to $2123, still way above what the
hospital paid for it, an estimated $1400.
· Patients can hire medical billing advocates who
help people read their bills and try to reduce them. “The hospitals all know
the bills are fiction, or at least only a place to start the discussion, so
you bargain with them,” says Katalin Goencz, a former appeals coordinator in
a hospital billing department who now works as an advocate in Stamford, CT.
Brill concludes:
The health care market is not
a market at all.
It’s a crapshoot. Everyone fares differently based on circumstances they
can neither control nor predict. They may have no insurance. They may
have insurance, but their employer chooses their insurance plan and it
may have a payout limit or not cover a drug or treatment they need. They
may or may not be old enough to be on Medicare or, given the different
standards of the 50 states, be poor enough to be on Medicaid. If they’re
not protected by Medicare or protected only partially by private
insurance with high co-pays, they have little visibility into pricing,
let alone control of it. They have little choice of hospitals or the
services they are billed for, even if they somehow knew the prices
before they got billed for the services. They have no idea what their
bills mean, and those who maintain the chargemasters couldn’t explain
them if they wanted to. How much of the bills they end up paying may
depend on the generosity of the hospital or on whether they happen to
get the help of a billing advocate. They have no choice of the drugs
that they have to buy or the lab tests or CT scans that they have to
get, and they would not know what to do if they did have a choice. They
are powerless buyers in a sellers’ market where the only consistent fact
is the profit of the sellers.
Without diminishing the epic scope of Steven
Brill's Time magazine piece about the U.S. health care system, he reiterates
in lengthy detail perversities that are already well known, without offering
a single useful insight on how it go that way, and even less on how to fix
it.
Yet Mr. Brill, founder of CourtTV and American
Lawyer magazine, author of books on terrorism and education, has written the
longest piece in Time's history—24,000 words—so attention must be paid.
That health-care costs are inflated compared to
what they would be in a reasonably transparent, competitive market (a point
Mr. Brill never clearly makes) won't be a revelation. That hospitals
allocate their costs to various items on their bills and price lists in ways
that are opaque and arbitrary is not a new discovery either.
He finds it shocking that a hospital charging
$1,791 a night won't throw in the generic Tylenol for free (instead charging
$1.50 each). But this is to commit the reification fallacy of thinking there
is some organic relationship between what a hospital charges for a
particular item and what that item costs in the first place.
He dwells on the irrationality of hospitals
charging their highest prices to their poorest customers, those without
insurance. But he's also aware that these customers often pay little or
nothing of what they are charged and hospitals reallocate the cost to the
bills of other patients. He even notes that a hospital might collect as
little as 18% of what it bills.
He vaguely gets that hospital price lists are memos
for the file, to be drawn out and waved as a reference in negotiations with
their real customers, the big health-care insurers, Medicaid, Medicare and
other large payers.
The deals hammered out with these customers tend
naturally to gravitate toward round numbers, leaving a hospital free to
allocate its costs and profits to specific items however it wants. Mr. Brill
may be offended that certain "non-profit" hospitals appear to be highly
profitable. He probably wouldn't be happier, though, if they diverted their
surplus revenues into even higher salaries and more gleamingly superfluous
facilities.
"What is so different about the medical ecosystem
that causes technology advances to drive bills up instead of down?" Mr.
Brill asks. But his question is rhetorical since he doesn't exhibit much
urge to understand why the system behaves as it does, treating its nature as
a given.
In fact, what he describes—big institutions
dictating care and assigning prices in ways that make no sense to an
outsider—is exactly what you get in a system that insulates consumers from
the cost of their health care.
Your time might be better spent reading Duke
University's Clark Havighurst in a brilliant 2002 article that describes the
regulatory, legal and tax subsidies that deprive consumers of both the
incentive and opportunity to demand value from medical providers. Americans
end up with a "Hobson's choice: either coverage for 'Cadillac' care or no
health coverage at all."
"The market failure most responsible for economic
inefficiency in the health-care sector is not consumers' ignorance about the
quality of care," Mr. Havighurst writes, "but rather their ignorance of the
cost of care, which ensures that neither the choices they make in the
marketplace nor the opinions they express in the political process reveal
their true preferences."
You might turn next to an equally fabulous 2001
article by Berkeley economist James C. Robinson, who shows how the
"pernicious" doctrine that health care is different—that consumers must shut
up, do as they're told and be prepared to write a blank check—is used to
"justify every inefficiency, idiosyncrasy, and interest-serving institution
in the health care industry."
Hospitals, insurers and other institutions involved
in health care may battle over available dollars, but they also share an
interest in increasing the nation's resources being diverted into health
care—which is exactly what happens when costs are hidden from those who pay
them.
Continued in article
Jensen Comment
Over a year ago Erika's Medicare-Anthem summary of charges for the month
included an $11,376 charge for out patient surgery that was mistakenly billed to
her account. We called our doctor who did the procedure in the hospital. Our
doctor responded not to bother her or the hospital --- since Medicare-Anthem
paid the entire bill it would not matter.
This bothered us since the woman (I assume it was a woman) may not have been
eligible for Medicare-Anthem. So I phoned Medicare. Medicare said not to bother
them and advised us to contact the hospital where the procedure took place. Any
corrections should be made by the hospital and the doctor.
So I called the hospital's accounting office. They asked that I send in a
copy of the Medicare-Anthem report. I hand-delivered the report to the the
hospital accounting office --- which is miles from the hospital.
Over the ensuing year we waited for a corrected Medicare-Anthem report.
Nothing! So I did a follow up visit to the hospital's accounting office. The
feedback was that since Medicare-Anthem paid the bill there was no need to
waste time correcting this item.
I keep thinking that some woman not eligible for Medicare got a windfall gain
here. Who cares if it was Medicare-Anthem that got screwed?
Erika and I changed to a doctor that we like better. But we cannot change
hospitals.
Moral of the Story
If the third party insurer gets billed mistakenly or pays too much nobody cares,
least of all the doctors and hospitals who got reimbursed.
Question
Who is telling a lie?
Steven Brill wrote a long cover story for Time Magazine, In that story
he describes having his team examine eight very complicated hospital bills from
different hospitals. In every case they found that the bills were laced with
errors and overcharges in favor of the hospital and possible frauds. Bitter Pill: Why Medical Bills Are Killing Us," Time Magazine
Cover Story, March 4, 2013, pp. 16-65 (a very long article) ---
http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/
The following week Stamford Hospital CEO Brian G. Grissler replied as shown,
in part, below. Steven Brill's reply to Grissler, Time Magazine, March
18, 2013, Page 2.
Brian G. Grissler
". . . Brill refused to share the patient's name or
the complete bill, so we are unable to answer those questions . . . "
Steven Brill Responds
"Stamford Hospital was shown the bill and never
disputed its authenticity. I made clear in the article the hospital settled
for cutting its bill entirely in half."
Jensen Comment
There are four possibilities behind this dispute:
Brian Grissler could be lying through his teeth.
Brian Grissler may not have thoroughly investigated the ultimate
resolution of this bill by his staff.
Steven Brill could be lying through his teeth.
Steven Brill and Brian Grissler may not be discussing the same bill
(although Brill claims he only picked one bill to examine from Stamford
Hospital).
My vote is that Answer 1 above is probably the correct answer, but we most
likely will never know.
Does Santa Claus live after all? According to the
C.B.O., between now and 2019 the net cost of insuring new enrollees in
Medicaid and private insurance plans will be $788 billion,
but other provisions in the legislation will generate
revenues and cost savings of $933 billion. Subtract the first figure from
the second and—voila!—you get $143 billion in deficit reduction.
The first objection to these figures is that the
great bulk of the cost savings—more than $450 billion—comes from cuts in
Medicare payments to doctors and other health-care providers. If you are
vaguely familiar with Washington politics and the letters A.A.R.P. you might
suspect that at least some of these cuts will fail to materialize. Unlike
some hardened skeptics, I don’t think none of them will happen. One part of
the reform involves reducing excessive payments that the Bush Administration
agreed to when it set up the Medicare Advantage program in 2003. If Congress
remains under Democratic control—a big if, admittedly—it will probably enact
these changes. But that still leaves another $300 billion of Medicare
savings to be found.
The second problem is accounting gimmickry. Acting
in accordance with standard Washington practices, the C.B.O. counts as
revenues more than $50 million in Social Security taxes and $70 billion in
payments towards a new home-care program, which will eventually prove very
costly, and it doesn’t count some $50 billion in discretionary spending.
After excluding these pieces of trickery and the questionable Medicare cuts,
Douglas Holtz-Eakin, a former head of the C.B.O., has calculated that the
reform will actually raise the deficit by $562 billion in the first ten
years. “The budget office is required to take written legislation at face
value and not second-guess the plausibility of what it is handed,” he wrote
in the Times. “So fantasy in, fantasy out.”
Holtz-Eakin advised John McCain in 2008, and he has
a reputation as a straight shooter. I think the problems with the C.B.O.’s
projections go even further than he suggests. If Holtz-Eakin’s figures
turned out to be spot on, and over the next ten years health-care reform
reduced the number of uninsured by thirty million at an annual cost of $56
billion, I would still regard it as a great success. In a $15 trillion
economy—and, barring another recession, the U.S. economy should be that
large in 2014—fifty or sixty billion dollars is a relatively small sum—about
four tenths of one per cent of G.D.P., or about eight per cent of the 2011
Pentagon budget.
My two big worries about the reform are that it
won’t capture nearly as many uninsured people as the official projections
suggest, and that many businesses, once they realize the size of the
handouts being offered for individual coverage, will wind down their group
plans, shifting workers (and costs) onto the new government-subsidized
plans. The legislation includes features designed to prevent both these
things from happening, but I don’t think they will be effective.
Consider the so-called “individual mandate.” As a
strict matter of law, all non-elderly Americans who earn more than the
poverty line will be obliged to obtain some form of health coverage. If they
don’t, in 2016 and beyond, they could face a fine of about $700 or 2.5 per
cent of their income—whichever is the most. Two issues immediately arise.
Even if the fines are vigorously enforced, many
people may choose to pay them and stay uninsured. Consider a healthy single
man of thirty-five who earns $35,000 a year. Under the new system, he would
have a choice of enrolling in a subsidized plan at an annual cost of $2,700
or paying a fine of $875. It may well make sense for him to pay the fine,
take his chances, and report to the local emergency room if he gets really
sick. (E.R.s will still be legally obliged to treat all comers.) If this
sort of thing happens often, as well it could, the new insurance exchanges
will be deprived of exactly the sort of healthy young people they need in
order to bring down prices. (Healthy people improve the risk pool.)
If the rules aren’t properly enforced, the problem
will be even worse. And that is precisely what is likely to happen. The
I.R.S. will have the administrative responsibility of imposing penalties on
people who can’t demonstrate that they have coverage, but it won’t have the
legal authority to force people to pay the fines. “What happens if you don’t
buy insurance and you don’t pay the penalty?” Ezra Klein, the Washington
Post’s industrious and well-informed blogger, asks. “Well, not much. The law
specifically says that no criminal action or liens can be imposed on people
who don’t pay the fine.”
So, the individual mandate is a bit of a sham.
Generous subsidies will be available for sick people and families with
children who really need medical care to buy individual coverage, but
healthy single people between the ages of twenty-six and forty, say, will
still have a financial incentive to remain outside the system until they get
ill, at which point they can sign up for coverage. Consequently, the number
of uninsured won’t fall as much as expected, and neither will prices.
Without a proper individual mandate, the idea of universality goes out the
window, and so does much of the economic reasoning behind the bill.
The question of what impact the reforms will have
on existing insurance plans has received even less analysis. According to
President Obama, if you have coverage you like you can keep it, and that’s
that. For the majority of workers, this will undoubtedly be true, at least
in the short term, but in some parts of the economy, particularly industries
that pay low and moderate wages, the presence of such generous subsidies for
individual coverage is bound to affect behavior eventually. To suggest this
won’t happen is to say economic incentives don’t matter.
Take a medium-sized firm that employs a hundred
people earning $40,000 each—a private security firm based in Atlanta,
say—and currently offers them health-care insurance worth $10,000 a year, of
which the employees pay $2,500. This employer’s annual health-care costs are
$750,000 (a hundred times $7,500). In the reformed system, the firm’s
workers, if they didn’t have insurance, would be eligible for generous
subsidies to buy private insurance. For example, a married forty-year-old
security guard whose wife stayed home to raise two kids could enroll in a
non-group plan for less than $1,400 a year, according to the Kaiser Health
Reform Subsidy Calculator. (The subsidy from the government would be
$8,058.)
In a situation like this, the firm has a strong
financial incentive to junk its group coverage and dump its workers onto the
taxpayer-subsidized plan. Under the new law, firms with more than fifty
workers that don’t offer coverage would have to pay an annual fine of $2,000
for every worker they employ, excepting the first thirty. In this case, the
security firm would incur a fine of $140,000 (seventy times two), but it
would save $610,000 a year on health-care costs. If you owned this firm,
what would you do? Unless you are unusually public spirited, you would take
advantage of the free money that the government is giving out. Since your
employees would see their own health-care contributions fall by more than
$1,100 a year, or almost half, they would be unlikely to complain. And even
if they did, you would be saving so much money you afford to buy their
agreement with a pay raise of, say, $2,000 a year, and still come out well
ahead.
Even if the government tried to impose additional
sanctions on such firms, I doubt it would work. The dollar sums involved are
so large that firms would try to game the system, by, for example, shutting
down, reincorporating under a different name, and hiring back their
employees without coverage. They might not even need to go to such lengths.
Firms that pay modest wages have high rates of turnover. By simply refusing
to offer coverage to new employees, they could pretty quickly convert most
of their employees into non-covered workers.
The designers of health-care reform and the C.B.O.
are aware of this problem, but, in my view, they have greatly underestimated
it. According to the C.B.O., somewhere between eight and nine million
workers will lose their group coverage as a result of their employers
refusing to offer it. That isn’t a trifling number. But the C.B.O. says it
will be largely offset by an opposite effect in which employers that don’t
currently provide health insurance begin to offer it in response to higher
demand from their workers as a result of the individual mandate. In this
way, some six to seven million people will obtain new group coverage, the
C.B.O. says, so the overall impact of the changes will be minor.
Continued in article
"Senate Bill Sets a Plan to Regulate Premiums," by Robert Pear, The New York
Times, April 20, 2010 --- http://www.nytimes.com/2010/04/21/health/policy/21healt
. . .
Grace-Marie Turner, president of the Galen
Institute, a research center that advocates free-market health policies,
said the Democrats’ proposal was unlikely to succeed in lowering insurance
costs.
“Capping premiums without recognizing the forces
that are driving up costs would be like tightening the lid on a pressure
cooker while the heat is being turned up,” Mrs. Turner said.
Mrs. Feinstein said her bill would close what she
described as “an enormous loophole” in the new law. And she said health
insurance should be regulated like a public utility.
“Water and power are essential for life,” Mrs.
Feinstein said. “So they are heavily regulated, and rate increases must be
approved. Health insurance is also vital for life. It too should be strictly
regulated so that people can afford this basic need.”
What the reviewers failed to mention is that the
book is also chock-a-block with misinformation and outright falsehoods about
the law Gruber helped construct — many of which Gruber himself exposed later
on. Among the most glaring:
• Gruber claims that for individuals and small
firms qualifying for a tax credit, "this bill will lower your health care
costs." But Gruber would later go on to tell several states the opposite.
One of them was Wisconsin, where he said fewer than 6% would see lower
premiums, and 41% would get hit with hikes of 50% or more. Meanwhile,
millions learned that Gruber's claim was a fantasy last year, when they
confronted
ObamaCare's sky-high premiums after seeing their
existing plans canceled.
• Gruber declares that the law doesn't raise taxes
on anyone "with incomes below $200,000 per year." Yet several of the dozens
of tax hikes stuffed into the bill hit the middle class, or soon will.
Americans for Tax Reform counted seven big ones.
• In the section on the Cadillac tax, which depicts
Gruber tooling around in a Caddy, he claims this tax would apply "only to
the top few percent of health insurance plans" and would hit more only if
premiums climb faster than inflation.
But in videotaped comments, Gruber explains that
the tax was purposely designed to start small and then eventually hit all
employer plans, "essentially getting rid of the exclusion for
employer-sponsored plans."
• Gruber emphatically declares that ObamaCare will
cut the federal deficit by $1 trillion over its second decade because "the
deficit-reducing effects of this legislation grow over time."
But all the Congressional Budget Office said was
that a "rough outlook" for ObamaCare's second decade resulted in deficit
cuts "in a broad range of around one-half percent of GDP." And that assumed
the law was enacted exactly as written, and worked exactly as predicted,
both of which have already failed to come true.
When the Government Accountability Office ran the
numbers using more realistic scenarios, it found ObamaCare adding
significantly to the long-term deficit. The CBO, meanwhile, has given up
making even short-term forecasts of ObamaCare's impact on the deficit.
• Throughout the book, Gruber cites CBO projections
of ObamaCare's effects on premiums and coverage, calling it "the best
independent source for evaluating bills like the ACA." What he doesn't
mention is that when the CBO developed its health care forecasting model in
2007, Gruber had a role in creating it. It even credits
Gruber for his "helpful comments and feedback ...
throughout the model's development."
And in a 2011 paper, Gruber himself said that his
own health care
model "mirrors
the CBO approach to modeling health reform."
• Gruber says that if the law's many cost-control
measures work as expected, "the ACA will end up solving our cost problem in
the U.S." But earlier this year Gruber told the Washington Post that it was
"misleading" to say ObamaCare will save money. "The law isn't designed to
save money," he said. "It's designed to improve health, and that's going to
cost money."
Chuck Schumer upbraided his
own party Tuesday for pushing the Affordable Care Act through Congress in
2010.
While Schumer emphasized
during a speech at the National Press Club that he supports the law and that
its policies "are and will continue to be positive changes," he argued that
the Democrats acted wrongly in using their new mandate after the 2008
election to focus on the issue rather than the economy at the height of a
terrible recession.
"After passing the stimulus,
Democrats should have continued to propose middle-class-oriented programs
and built on the partial success of the stimulus, but unfortunately
Democrats blew the opportunity the American people gave them," Schumer said.
"We took their mandate and put all of our focus on the wrong problem—health
care reform."
The third-ranking Senate
Democrat noted that just about 5 percent of registered voters in the United
States lacked health insurance before the implementation of the law, arguing
that to focus on a problem affecting such "a small percentage of the
electoral made no political sense."
The larger problem,
affecting most Americans, he said, was a poor economy resulting from the
recession. "When Democrats focused on health care, the average middle-class
person thought, 'The Democrats aren't paying enough attention to me,' "
Schumer said.
Despite the enduring
unpopularity of Obamacare, Congressional Democrats have up to now stood by
their health care law, allowing that “it’s not perfect” but that they are
proud of their votes to pass it. That all changed on Tuesday, when the
Senate’s third-highest-ranking Democrat—New York’s Chuck Schumer—declared
that “we took [the public’s] mandate and put all our focus on the wrong
problem—health care reform…When Democrats focused on health care, the
average middle-class person thought, ‘The Democrats aren’t paying enough
attention to me.’”
Sen. Schumer
made his
remarks at the National Press Club in Washington.
“Democrats blew the opportunity the American people gave them…Now, the
plight of uninsured Americans and the hardships caused by unfair insurance
company practices certainly needed to be addressed,” Schumer maintained.
“But it wasn’t the change we were hired to make. Americans were crying out
for the end to the recession, for better wages and more jobs—not changes in
health care.”
“This makes sense,” Schumer
continued, “considering 85 percent of all Americans got their health care
from either the government, Medicare, Medicaid, or their employer. And if
health care costs were going up, it really did not affect them. The
Affordable Care Act was aimed at the 36 million Americans who were not
covered. It has been reported that only a third of the uninsured are even
registered to vote…it made no political sense.”
The response from Obama
Democrats was swift. Many, like Obama speechwriters Jon Lovett and Jon
Favreau and NSC spokesman Tommy Vietor, took to Twitter. “Shorter Chuck
Schumer,” said Vietor, “I wish Obama cared more about helping Democrats than
sick people.”
Senator Charles Schumer, in a recent speech, stated
President Obama and Democratic majorities in Congress were elected in 2008
to get the economy working for middle class families. Consequently,
assigning extraordinary priority to passing the Affordable Care Act was a
mistake.
In 2008, most middle class families had private
insurance they liked; their incomes had been falling for about a decade.
The ACA was really part of Democrats’ agenda to
assist the working poor—raising the minimum wage, and expanding Medicaid,
food stamps, the earned-income tax credit, and higher education grants—while
cozying up to big business to finance Democratic campaigns.
Schumer wants Democrats to advocate big government
programs to cure middle class woes, and portray Republicans as servants of
big corporate interests. He still embraces the ACA as sound policy, even
though it made health care more expensive for many middle class families and
it enriches Democratic contributors among top executives and shareholders in
the health care industries.
That’s not surprising—Schumer championed the 2010
Dodd-Frank banking reforms.
Those made compliance with new mortgage and
business lending regulations so cumbersome that many regional banks sold out
to bigger banks—and lots of decently-paying jobs in smaller city banks were
lost. In turn, with more deposits to invest, the Wall Street banks keep
finding new scams—like rigging foreign currency markets and speculating in
commodities—to keep funding multi-million dollar bonuses for New York
executives and big campaign contributions to Democrats in the Senate and
House.
Cozying up to big business—while championing the
poor and offering lip service to the middle class—is what Democrats have
done best lately.
President Obama’s favorite fund raising venue is
the home of Comcast’s CEO, and his Administration has rewarded cable
providers with little effort to curb abusive rates, which rise faster than
inflation.
Now, the Treasury Department has decided telecom
companies may count the wires to homes as real estate and qualify for lower
corporate taxes—that’s the kind of special treatment Obama charges are the
primary focus of Republicans lawmakers.
. . .
Democrats have blocked petroleum exploration off
the Atlantic, Pacific and Eastern Gulf Coasts, Keystone and other pipeline
and infrastructure projects. These limit U.S. oil supplies, enrich big
multinational oil companies, and keep OPEC and Russian oil producers in
business. In turn, those deny Americans good paying jobs and finance
terrorism.
The new GOP congress should try to reverse those
abusive policies. But each step of the way, the Senator from Wall Street
will appear on Sunday talk shows to paint Republicans as servants of big
business.
Oh what a flimflam man—the Senator from Wall Street
wants to now present himself as champion of the middle class.
Peter Morici is an economist and business professor at the University
of Maryland, and a national columnist
Jensen Comment
So what's wrong with the ACA?
Firstly it expanded the piñata for fraud --- Medicaid. Half the people on
Medicaid in Illinois were found not to be eligible for Medicaid. It's bad
in most other states that just are paying for audits while the Federal
government is paying the tab.
Secondly it's a windfall for ACA insurance
companies since the Federal government guarantees their profits and promises
taxpayer money if they begin to fail. In capitalism, business firms are supposed
to take on financial risks.
Thirdly, the affordable policies have
40%-60% co-pays that essentially prevents insured people from going to doctors,
medical clinics, and hospitals unless they are really, really sick because of
what it costs them up front. Insurance companies love that, because they are
selling insurance that people don't use as much as they should be using that
insurance.
Fourthly, insurance companies love the ACA
because paying for medical services and medications for people behind on the
payments of their ACA premiums are passed on to doctors and hospitals after 30
days. Is it any surprise that so many doctors and hospitals are refusing to
accepted patients with ACA insurance?
And the list of complaints against the ACS
goes on and on --- See below!
Health Costs: Imagine a health reform plan that
gives a boost to big insurance companies while leaving patients less able to
pay their medical bills. Think progressives would cheer about it? They will
if it's called ObamaCare.
Once upon a time Democrats championed ObamaCare as
"taking on" big insurance while protecting families from big medical bills.
So how are those promises working out?
A Gallup survey released late last week found that
33% reported putting off medical treatments this year "because of the cost
you would have to pay."
That's higher than any time since Gallup starting
asking this question back in 2001, and three points higher than it was last
year — before ObamaCare's insurance regulations went into effect.
What's more, the share who put off treatment for a
serious condition because of cost hit 22% this year, up from 17% when
President Obama took office.
Even more interesting, the poll found that having
insurance apparently offered less financial protection. The share of those
with insurance who said they couldn't afford at least one medical procedure
jumped from 25% in 2013 to 34% in 2014.
Gallup suspects part of the reason is the fact that
ObamaCare plans deployed narrow networks and steep deductibles, which kept
premium costs down but exposed patients to big health bills.
At the other end of the spectrum, ObamaCare appears
to be a windfall for Big Insurance. Over the first three years the law was
in effect, the insurance market actually got more concentrated, according to
a new Government Accountability Office report.
Between 2010 and 2013, for example, the number of
states where the top three insurers controlled 80% of the individual
insurance market or more went from 30 to 38. The GAO data go only through
2013, and so don't fully account for changes in the market thanks to the
ObamaCare exchanges.
But it's not as though ObamaCare has so far made
any meaningful impact. A Kaiser Family Foundation study looked at seven
states and found that it was pretty much a wash this year — some were more
competitive, some less, others didn't change.
And a GAO report released earlier this year found
that the biggest insurers either held on to or increased their market share
in 40 states under ObamaCare. It also found that small insurers became
increasingly rare.
Yes, there are more insurance companies competing
for business in the exchanges in ObamaCare's second open enrollment season.
But so far, the overall impact of the law has been to direct billions of
taxpayer subsidies to insurance companies for benefits that don't seem to be
trickling down to patients.
Question
What is the main difference between errors in hospital bills (in over 90% of the
billings) and retail store scanned billings (in over 4% of the billings)?
Answer
Errors in hospital bills almost always favor the hospitals.
Retail store billing errors only favor the stores about half the time.
4.08%
of the prices picked up by retail-store scanners are wrong, about
twice the error rate considered acceptable by the U.S.
Federal Trade Commission, says a team led by David M. Hardesty of the
University of Kentucky that studied more than 231,000 products scanned
over 15 years in the state of Washington. Slightly less than
half the errors were overcharges. An intriguing finding: Error
rates are higher in affluent neighborhoods, suggesting
that stores may be more careful about mistakes in areas where shoppers
are more price-conscious, the researchers say.
Simple lab work done during a few days in the
hospital can cost more than a car. A trip to the emergency room for chest
pains that turn out to be indigestion brings a bill that can exceed the
price of a semester at college. When we debate
health care
policy in America, we seem to jump right to the issue
of who should pay the bills, blowing past what should be the first question:
Why exactly are the bills so high?
Steven Brill spent seven months analyzing hundreds
of bill from
hospitals,
doctors, and drug companies and medical equipment
manufacturers to find out who is setting such high prices and pocketing the
biggest profits. What he discovered, outlined in detail in the
cover story of the new issue of TIME, will
radically change the way you think about our medical institutions:
· Hospitals arbitrarily set prices based on a
mysterious internal list known as the “chargemaster.” These prices vary from
hospital to hospital and are often ten times the actual cost of an item.
Insurance companies and Medicare pay discounted prices, but don’t have
enough leverage to bring fees down anywhere close to actual costs. While
other countries restrain drug prices, in the United States federal law
actually restricts the single biggest buyer—Medicare—from even trying to
negotiate the price of drugs.
· Tax-exempt “nonprofit” hospitals are the most
profitable businesses and largest employers in their regions, often presided
over by the most richly compensated executives.
· Cancer
treatment—at some of the most renowned centers such as
Sloan-Kettering and M.D. Anderson—has some of the industry’s highest profit
margins. Cancer drugs in particular are hugely profitable. For example,
Sloan-Kettering charges $4615 for a immune-deficiency drug named Flebogamma.
Medicare cuts Sloan-Kettering’s charge to $2123, still way above what the
hospital paid for it, an estimated $1400.
· Patients can hire medical billing advocates who
help people read their bills and try to reduce them. “The hospitals all know
the bills are fiction, or at least only a place to start the discussion, so
you bargain with them,” says Katalin Goencz, a former appeals coordinator in
a hospital billing department who now works as an advocate in Stamford, CT.
Brill concludes:
The health care market is not
a market at all.
It’s a crapshoot. Everyone fares differently based on circumstances they
can neither control nor predict. They may have no insurance. They may
have insurance, but their employer chooses their insurance plan and it
may have a payout limit or not cover a drug or treatment they need. They
may or may not be old enough to be on Medicare or, given the different
standards of the 50 states, be poor enough to be on Medicaid. If they’re
not protected by Medicare or protected only partially by private
insurance with high co-pays, they have little visibility into pricing,
let alone control of it. They have little choice of hospitals or the
services they are billed for, even if they somehow knew the prices
before they got billed for the services. They have no idea what their
bills mean, and those who maintain the chargemasters couldn’t explain
them if they wanted to. How much of the bills they end up paying may
depend on the generosity of the hospital or on whether they happen to
get the help of a billing advocate. They have no choice of the drugs
that they have to buy or the lab tests or CT scans that they have to
get, and they would not know what to do if they did have a choice. They
are powerless buyers in a sellers’ market where the only consistent fact
is the profit of the sellers.
Without diminishing the epic scope of Steven
Brill's Time magazine piece about the U.S. health care system, he reiterates
in lengthy detail perversities that are already well known, without offering
a single useful insight on how it go that way, and even less on how to fix
it.
Yet Mr. Brill, founder of CourtTV and American
Lawyer magazine, author of books on terrorism and education, has written the
longest piece in Time's history—24,000 words—so attention must be paid.
That health-care costs are inflated compared to
what they would be in a reasonably transparent, competitive market (a point
Mr. Brill never clearly makes) won't be a revelation. That hospitals
allocate their costs to various items on their bills and price lists in ways
that are opaque and arbitrary is not a new discovery either.
He finds it shocking that a hospital charging
$1,791 a night won't throw in the generic Tylenol for free (instead charging
$1.50 each). But this is to commit the reification fallacy of thinking there
is some organic relationship between what a hospital charges for a
particular item and what that item costs in the first place.
He dwells on the irrationality of hospitals
charging their highest prices to their poorest customers, those without
insurance. But he's also aware that these customers often pay little or
nothing of what they are charged and hospitals reallocate the cost to the
bills of other patients. He even notes that a hospital might collect as
little as 18% of what it bills.
He vaguely gets that hospital price lists are memos
for the file, to be drawn out and waved as a reference in negotiations with
their real customers, the big health-care insurers, Medicaid, Medicare and
other large payers.
The deals hammered out with these customers tend
naturally to gravitate toward round numbers, leaving a hospital free to
allocate its costs and profits to specific items however it wants. Mr. Brill
may be offended that certain "non-profit" hospitals appear to be highly
profitable. He probably wouldn't be happier, though, if they diverted their
surplus revenues into even higher salaries and more gleamingly superfluous
facilities.
"What is so different about the medical ecosystem
that causes technology advances to drive bills up instead of down?" Mr.
Brill asks. But his question is rhetorical since he doesn't exhibit much
urge to understand why the system behaves as it does, treating its nature as
a given.
In fact, what he describes—big institutions
dictating care and assigning prices in ways that make no sense to an
outsider—is exactly what you get in a system that insulates consumers from
the cost of their health care.
Your time might be better spent reading Duke
University's Clark Havighurst in a brilliant 2002 article that describes the
regulatory, legal and tax subsidies that deprive consumers of both the
incentive and opportunity to demand value from medical providers. Americans
end up with a "Hobson's choice: either coverage for 'Cadillac' care or no
health coverage at all."
"The market failure most responsible for economic
inefficiency in the health-care sector is not consumers' ignorance about the
quality of care," Mr. Havighurst writes, "but rather their ignorance of the
cost of care, which ensures that neither the choices they make in the
marketplace nor the opinions they express in the political process reveal
their true preferences."
You might turn next to an equally fabulous 2001
article by Berkeley economist James C. Robinson, who shows how the
"pernicious" doctrine that health care is different—that consumers must shut
up, do as they're told and be prepared to write a blank check—is used to
"justify every inefficiency, idiosyncrasy, and interest-serving institution
in the health care industry."
Hospitals, insurers and other institutions involved
in health care may battle over available dollars, but they also share an
interest in increasing the nation's resources being diverted into health
care—which is exactly what happens when costs are hidden from those who pay
them.
Continued in article
Jensen Comment
Over a year ago Erika's Medicare-Anthem summary of charges for the month
included an $11,376 charge for out patient surgery that was mistakenly billed to
her account. We called our doctor who did the procedure in the hospital. Our
doctor responded not to bother her or the hospital --- since Medicare-Anthem
paid the entire bill it would not matter.
This bothered us since the woman (I assume it was a woman) may not have been
eligible for Medicare-Anthem. So I phoned Medicare. Medicare said not to bother
them and advised us to contact the hospital where the procedure took place. Any
corrections should be made by the hospital and the doctor.
So I called the hospital's accounting office. They asked that I send in a
copy of the Medicare-Anthem report. I hand-delivered the report to the the
hospital accounting office --- which is miles from the hospital.
Over the ensuing year we waited for a corrected Medicare-Anthem report.
Nothing! So I did a follow up visit to the hospital's accounting office. The
feedback was that since Medicare-Anthem paid the bill there was no need to
waste time correcting this item.
I keep thinking that some woman not eligible for Medicare got a windfall gain
here. Who cares if it was Medicare-Anthem that got screwed?
Erika and I changed to a doctor that we like better. But we cannot change
hospitals.
Moral of the Story
If the third party insurer gets billed mistakenly or pays too much nobody cares,
least of all the doctors and hospitals who got reimbursed.
Question
Who is telling a lie?
Steven Brill wrote a long cover story for Time Magazine, In that story
he describes having his team examine eight very complicated hospital bills from
different hospitals. In every case they found that the bills were laced with
errors and overcharges in favor of the hospital and possible frauds. Bitter Pill: Why Medical Bills Are Killing Us," Time Magazine
Cover Story, March 4, 2013, pp. 16-65 (a very long article) ---
http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/
The following week Stamford Hospital CEO Brian G. Grissler replied as shown,
in part, below. Steven Brill's reply to Grissler, Time Magazine, March
18, 2013, Page 2.
Brian G. Grissler
". . . Brill refused to share the patient's name or
the complete bill, so we are unable to answer those questions . . . "
Steven Brill Responds
"Stamford Hospital was shown the bill and never
disputed its authenticity. I made clear in the article the hospital settled
for cutting its bill entirely in half."
Jensen Comment
There are four possibilities behind this dispute:
Brian Grissler could be lying through his teeth.
Brian Grissler may not have thoroughly investigated the ultimate
resolution of this bill by his staff.
Steven Brill could be lying through his teeth.
Steven Brill and Brian Grissler may not be discussing the same bill
(although Brill claims he only picked one bill to examine from Stamford
Hospital).
My vote is that Answer 1 above is probably the correct answer, but we most
likely will never know.
One in three Americans has delayed seeking medical
treatment due to its high cost, according to a recent Galluppoll.
This marks the highest percentage ever recorded in the 14-year history of
the survey question.
Despite President Obama's dream of providing
affordable health care coverage for all, fewer and fewer Americans are able
to get the coverage they need.
“Last year, many hoped that the opening of the
government healthcare exchanges and the resulting increase in the number
of Americans with health insurance would enable more people to seek
medical treatment. But,
despite a drop in the uninsured rate, a
slightly higher percentage of Americans than in previous years report
having put off medical treatment, suggesting that the Affordable Care
Act has not immediately affected this measure.”
Even Upper-class Americans (those making more than
$75K) were deterred by health care costs. Between 2013 and this year, there
was an 11 percent increase in treatment delay among wealthier Americans.
What's more, the costs are not merely discouraging
people from running to the Doctor for every little sneeze and cough. The
survey found that Americans are becoming increasingly more likely (22
percent) to put off treatment for a "very" or "somewhat serious" condition
or illness. Twice the number recorded (11 percent) for non-serious
conditions.
Even as time continues to reveal Obamacare's
negative impact on Americans, the Obama Administration continues to
relentless promote its product as being what's best for the American people.
Jensen Comment
This still does not explain why the USA has to pay so much more for medications
than other nations pay for the exact same products, which is why so many of my
neighbors make a run for Canada to re-fill their prescriptions.
This still does not explain why
the big pharmaceutical companies lobbied our whores in Washington DC to ban
negotiating lower prices for Medicare D prescriptions.
According to the Centers for Medicare &
Medicaid Services (CMS), spending on Medicaid, the jointly funded
state-federal welfare program that provides health benefits to low-income
people,
increased 6.7 percent in 2013 to $449.5 billion.
And it will keep growing at a fast rate.
In 2014, total Medicaid spending is
projected to grow 12.8 percent because Obamacare has added about 8 million
dependents. A large minority of states have chosen to increase residents’
eligibility for Medicaid by expanding coverage to adults making up to 138
percent of the federal poverty level.
Unfortunately, more states are likely to
expand this welfare program. This is expected to result in a massive
increase in the number of Medicaid dependents: From 73 million in 2013 to 93
million in 2024. Medicaid spending is expected to grow by 6.7 percent in
2015, and 8.6 percent in 2016. For 2016 to 2023, spending growth is
projected to be 6.8 percent per year on average.
This comprises a massive increase in
welfare dependency and burden on taxpayers. Further, official estimates
often low-ball actual experience. This is because it is hard to grapple with
how clever states are at leveraging federal dollars.
The Office of the Inspector General of
the U.S. Department of Health & Human Services has just released
a report that
summarizes a decade of research on how states game the system to increase
spending beyond that which the federal government anticipated.
The incentive lies in Medicaid’s
perverse financing merry-go-round. In a rich state
like California, for example, the federal government (pre-Obamacare) spent
50 cents on the dollar for adult dependents. So, if California spent 50
cents, it automatically drew 50 cents from the U.S. Treasury. And most
states had a bigger multiplier. Which state politician can resist a deal
like that?
One heavily-scrutinized part of the ACA reads that
subsidies should be given to healthcare recipients who are enrolled "through
an Exchange established by the State". Some have read this to mean that
subsidies can be given only in states that have chosen to create their own
healthcare exchanges, and do not use the federal exchange, while the Obama
administration says that the wording applies to all states. This dispute is
currently part of an ongoing series of lawsuits referred to collectively as
King v. Burwell. In July 2014, two separate
recordings of Gruber, both from January 2012, surfaced in which he seemed to
contradict the administration's position.[5]
In one, Gruber states, in response to an audience question, that "if you’re
a state and you don’t set up an exchange, that means your citizens don’t get
their tax credits",[21]
while in the other he says, "if your governor doesn't set up an exchange,
you're losing hundreds of millions of dollars of tax credits to be delivered
to your citizens."[22]
When these recordings emerged, Gruber called these statements mistaken,
describing them as "just a speak-o — you know, like a typo".[21]
In November 2014, a series of four videos emerged
of Gruber speaking at different events, from 2010 to 2013, about ways he
felt the ACA was misleadingly crafted and marketed to get the bill passed;
in several of these videos he specifically refers to American voters as
ill-informed and "stupid." In the first, most widely-publicized video taken
at a panel discussion about the ACA at the
University of Pennsylvania in October 2013, Gruber
said the bill was deliberately written "in a tortured way" to disguise the
fact that it creates a system by which "healthy people pay in and sick
people get money." He said this obfuscation was needed due to "the stupidity
of the American voter" in ensuring the bill's passage. Gruber said the
bill's inherent "lack of transparency is a huge political advantage" in
selling it.[23]
The comments caused significant controversy.[24][25][26][27][28]
In two subsequent videos, Gruber was shown talking about the decision (which
he attributed to
John Kerry) to have the bill tax insurance
companies instead of patients, which he called fundamentally the same thing
economically but more palatable politically. In one video, he stated that
"the American people are too stupid to understand the difference" between
the two approaches, while in the other he said that the switch worked due to
"the lack of economic understanding of the American voter."[29]
In another video, taken in 2010, Gruber
expressed doubts that the ACA would significantly reduce health care costs,
though he noted that lowering costs played a major part in the way the bill
was promoted.[30]
After Massachusetts, California came calling.
So did Connecticut, Delaware, Kansas, Minnesota, Oregon, Wisconsin and
Wyoming.
They all wanted
Jonathan Gruber, a numbers wizard at
M.I.T., to help them figure out how to fix their
health care systems, just as he had helped Mitt Romney overhaul health
insurance when he was the Massachusetts governor.
Then came the call in 2008 from President-elect
Obama’s transition team, the one that officially turned this stay-at-home
economics professor into Mr. Mandate.
Mr. Gruber has spent decades modeling the intricacies
of the health care ecosystem, which involves making predictions about how
new laws will play out based on past experience and economic theory. It is
his research that convinced the Obama administration that
health care reform could not work without
requiring everyone to buy insurance.
And it is his work that explains why
President Obama has so much riding on the three
days of
United States Supreme Court hearings, which ended
Wednesday, about the constitutionality of the mandate. Questioning by the
court’s conservative justices has suggested deep skepticism about the
mandate, setting off waves of worry among its backers — Mr. Gruber included.
“As soon as I started reading the dispatches my
stomach started churning,” Mr. Gruber said of the arguments on Tuesday,
while taking a break from quizzing his son for a biology test. “Losing the
mandate means continuing with our unfair individual insurance markets in a
world where employer-based insurance is rapidly disappearing.”
Mr. Gruber, 46, hates traveling without his wife and
three children, so he is tracking the case from his home in Lexington, Mass.
There he crunches numbers and advises other states on health care, in
between headbanging at Van Halen concerts with his 15-year-old son and
cuddling with the family’s eight parrots. (His wife, Andrea, volunteers at a
bird rescue center.)
If the court rules against the mandate, Mr. Gruber
says he believes the number of newly insured Americans could fall to eight
million from the projected 32 million. He insists that without a mandate,
the law will result in a terrible spiral: only relatively sick Americans
will choose to get insurance, leading premium prices to rise and causing the
healthier of even those sick people to drop their insurance, sending prices
higher and higher.
Some other economists quibble, though, with Mr.
Gruber’s pessimistic assessment.
“My general thought about the mandate is if insurance
is affordable and accessible, most people will buy it anyway,” said David
Cutler, an economist at Harvard and longtime collaborator of Mr. Gruber’s.
Others, like Paul Starr, a Princeton sociologist, say
they believe Mr. Gruber’s work does not account for how hard it will be to
enforce the mandate.
“There is this groupthink about how important the
mandate is,” Mr. Starr says. “Most people don’t understand or won’t
acknowledge how weak the enforcement mechanism is.”
Mr. Starr said he thought Mr. Gruber in particular was
overstating the effectiveness of the mandate because “it’s his baby.”
That said, it is difficult for too many other experts
to categorically refute Mr. Gruber’s work, since he has nearly cornered the
market on the technical science behind these sorts of predictions. Other
models exist — built by nonprofits like the
RAND Corporation or
private consultancies like the
Lewin Group — but they all use Mr. Gruber’s work
as a benchmark, according to Jean Abraham, a health economist at the
University of Minnesota and former senior economist in both the Obama and
George W. Bush administrations.
“He’s brought a level of science to an issue that
would otherwise be just opinion,” Mr. Cutler says. “He’s really the only
person who has been doing all this careful modeling for so long. He’s the
only person you can go to for that kind of thing, which is why the White
House reached out to him in the first place.”
Mr. Obama had made health care reform a cornerstone of
his campaign, and wanted to announce a credible proposal quickly after
taking office. But members of the Obama administration’s transition team
said they had inherited an executive branch that had vastly underinvested in
modeling research on health care, especially compared to the technical
modeling that had been done in areas like tax policy.
“Creating a good model from scratch would have taken
months, maybe years,” said Lawrence H. Summers, who was the director of
President Obama’s National Economic Council and had advised Mr. Gruber on
his dissertation when they were at Harvard.
Mr. Gruber had already spent years researching
government mandates, starting with his 1991 dissertation about how mandated
employer benefits cut into workers’ wages.
He also did similar analyses, on a broader range of
public policies for the Treasury Department in the Clinton administration
from 1997-98. He was recruited by Mr. Summers, who was then deputy secretary
of Treasury.
Then in 2001, after returning to M.I.T., Mr. Gruber
received an e-mail from Amy Lischko, who was then an assistant commissioner
in the Massachusetts healthy policy department under then-Gov. Jane M.
Swift, a Republican.
She was familiar with his work, and contracted him to
model some potential ways that Massachusetts could expand health insurance
coverage.
“He certainly wasn’t as well known then as he is now
in the health care arena,” said Ms. Lischko, now a professor at Tufts
University School of Medicine. “We couldn’t exactly kick the tires on these
kinds of models back then, but we knew he had done work on simulations
before.”
Mr. Gruber calls himself a “card-carrying Democrat.”
He and his wife host a “great quadrennial Democratic victory party” whether
or not the Democratic candidate wins, he said. But given his reputation and
relatively rare expertise, he still ended up working for two Republican
governors in Massachusetts.
When Mr. Romney succeeded Ms. Swift in 2003, he
proposed using an individual mandate to help the state achieve universal
health care coverage. Mr. Gruber was again brought in to analyze the idea,
which he had not formally modeled before.
“Romney saw it as a traditional Republican moral issue
of personal responsibility, getting rid of the free riders in the system,
not as much of an economic issue,” Mr. Gruber said. “Not only were the
Republicans for it, the liberals hated it. People forget that.”
Mr. Obama had vehemently opposed an individual mandate
before his election in 2008.
After the Massachusetts plan passed in 2006, Arnold
Schwarzenegger, then the Republican governor of California, invited Mr.
Gruber to Sacramento to help model a similar proposal.
“That was awesome,” Mr. Gruber says, his eyes widening
at the memory. “I got to see the sword from Conan the Barbarian.”
The California proposal fell apart, but soon Mr.
Gruber had a little cottage industry helping states model potential health
system changes. He also serves on the Massachusetts board that oversees the
state’s new health care exchanges.
Along with these credentials, Mr. Gruber’s position as
an adviser to the influential Congressional Budget Office also left him
perfectly positioned to advise the White House on health reform.
“The most important arbiter of everything was the
C.B.O.,” said Neera Tanden, who was a senior adviser for health reform at
the Department of Health and Human Services.
The C.B.O.’s assessment of a bill’s efficacy and costs
strongly influences political debate, but the office does not publicly
reveal how it calculates those numbers.
“We knew the numbers he gave us would be close to
where the C.B.O. was likely to come out,” Ms. Tanden said. She was right.
After Mr. Gruber helped the administration put
together the basic principles of the proposal, the White House lent him to
Capitol Hill to help Congressional staff members draft the specifics of the
legislation.
This assignment primarily involved asking his graduate
student researchers to tweak his model’s software code. It was also almost
entirely conducted from his home office, while his children were at school
and then after they had gone to bed.
“If I wanted to be in Washington, I’d have taken a job
in Washington,” he said. “I wanted to be around for my family.”
Even though he was brought in by the White House,
Congressional staff members from both parties trusted him because he was
seen as an econometric wonk, not a political agent. But soon his very
involvement with the bill caused questions about his objectivity to be
raised in the news media.
During and after the bill’s slog through Congress, he
frequently spoke with reporters and wrote opinion pieces supporting the
Affordable Care Act but did not always mention his role in helping to devise
it.
He says he regrets not being more upfront about his
involvement with the administration. But he does not apologize for publicly
advocating the legislation, and continuing to do so — including through a
comic book he wrote to explain the law.
“Yes, I want the public to be
informed by an objective expert,” he says.“But the thing is, I know more about this law than any
other economist.”
The unintentional Obamacare Wrecking
Ball Professor from MIT
MIT economist Jonathan Gruber is one of the foremost architects of Obamacare,
having bragged that he "knows more about this law" than anyone else in his
field. He's also emerged as an unintentional one-man wrecking ball against
Obamacare, making public statements that have undermined the Obama
administration's legal and political defenses of the president's signature
domestic legacy.
http://www.townhallmail.com/zlzjrctbjjwkrbjbkbrptkgllfkllbftddpcqrwdbwmdms_wzvdnjvgdsn.html
It's even harder to believe now that he has
admitted that he thinks it's fine to mislead people if doing so
bolsters the policy goals he favors. It's really quite telling,
about the law and also about Gruber. Gruber may believe that American voters
are stupid, but he was the one who was dumb enough to say all this on
camera.
Jensen Comment Condoning the misleading of the public for political
purposes by a scientist borders on fabrication of data and may be in violation
of his university's (MIT) academic integrity policy.
Similar issues arose in the allegations
against Phil Jones regarding integrity of his climate temperature recordings ---
http://en.wikipedia.org/wiki/Climatic_Research_Unit_email_controversy
Professor Jones stepped aside temporarily but was reinstated. Nevertheless these
and similar allegations badly damaged the public's confidence in climate change
data.
Jon Krosnick, professor of communication, political
science and psychology at Stanford University, said scientists were
overreacting. Referring to his own poll results of the American public, he
said "It's another funny instance of scientists ignoring science." Krosnick
found that "Very few professions enjoy the level of confidence from the
public that scientists do, and those numbers haven't changed much in a
decade. We don't see a lot of evidence that the general public in the United
States is picking up on the (University of East Anglia) emails. It's too
inside baseball."[139]
The Christian Science Monitor, in an article titled
"Climate scientists exonerated in 'climategate' but public trust damaged,"
stated, "While public opinion had steadily moved away from belief in
man-made global warming before the leaked CRU emails, that trend has only
accelerated."[140] Paul Krugman, columnist for the New York Times, argued
that this, along with all other incidents which called into question the
scientific consensus on climate change, was "a fraud concocted by opponents
of climate action, then bought into by many in the news media."[141] But UK
journalist Fred Pearce called the slow response of climate scientists "a
case study in how not to respond to a crisis" and "a public relations
disaster".[142]
A. A. Leiserowitz, Director of the Yale University
Project on Climate Change, and colleagues found in 2010 that:
Climategate had a significant effect on public
beliefs in global warming and trust in scientists.
The loss of trust in scientists, however, was
primarily among individuals with a strongly individualistic worldview or
politically conservative ideology. Nonetheless, Americans overall continue
to trust scientists more than other sources of information about global
warming.
In late 2011, Steven F. Hayward wrote that "Climategate
did for the global warming controversy what the Pentagon Papers did for the
Vietnam war 40 years ago: It changed the narrative decisively."[143] An
editorial in Nature said that many in the media "were led by the nose, by
those with a clear agenda, to a sizzling scandal that steadily defused as
the true facts and context were made clear."
Jensen Comment
Professor Gruber's confession will similarly affect the public opinion of the
way Obamacare was foisted on the public. This is not a proud moment in science
or the life of a scientist and his university.
From the CFO Journal's Morning Ledger on November 6, 2014
Jensen Comment
Health insurance is currently a very good business for companies, because bad
debts from people who do not pay contracted premiums are passed on to the
doctors and hospitals after 30 days. In any case Obamacare promises guaranteed
profits for insurance companies at taxpayer expense if necessary. This is not
capitalism since one of the tenants of capitalism is that businesses take risks
risks of losses and failure.
It's the doctors and hospitals that take the financial risks. In New
Hampshire nearly half the hospitals refuse to admit patients with ACA insurance
except in dire emergencies. Many doctors are turning patients away unless they
have something other than ACA medical insurance.
Another good thing for insurers is that the deductibles have become so huge
(40% to 60%) that insured people put off getting medical care until absolutely
necessary --- thereby greatly reducing the number of claims to be processed and
paid.
My point is that just to say that more people now have ACA health insurance
is not saying a whole lot about the quality of health care that this insurance
is buying. There will probably be gridlock for years in Washington DC for any
attempts to bring quality health care to all citizens of the USA. I favor
national health insurance, although national health insurance plans in most
non-OPEC nations like Sweden, Denmark, and the UK are doing badly these days. I
consider Canada to be an OPEC nation. Germany is doing better because it allows
people to take on supplemental health insurance using their own savings.
The USA is now an one of the world's largest oil producers, but gridlock
politics have all but destroyed possibilities for great health care for all
citizens. It's one of the best nations for health care for people who can afford
to pay for the services, including those lucky enough to be on Medicaid or
Medicare.
Some national health plans economize by not funding medical and
pharmaceutical research in anticipation that other nations will make the new
discoveries. These and others also economize with delays in service, such as
waiting what seems like forever for a new hip in Canada, Sweden, or Denmark. But
there are some that have taken on new services (such as dialysis for the
elderly) that are not adequately funded.
ACA Health Insurance Mandate for Employers in 2015 Causes New Obstacles
and Challenges
From the CFO Journal's Morning Ledger on October 15, 2014
With the health law’s insurance mandate for
employers set to kick in next year, companies are trying to avoid the law’s
penalties while holding down costs, using strategies like enrolling
employees in Medicaid,
the WSJ reports. The
law’s penalties, which can amount to about $2,000 per employee, take effect
next year for firms that employ at least 100 people.
Insurance brokers and benefits administrators
are pitching companies on strategies to keep a lid on expenses that exploit
wrinkles in the law. The Medicaid option is drawing particular interest from
companies with low-wage workers, brokers say.
Locals 8 Restaurant Group
LLC, with about 1,000 workers, already offers health coverage, and
next year plans to reduce some employees’ premiums so as to avoid running
afoul of the law’s standard for affordability. It will also help eligible
employees enroll in Medicaid, using a contractor called
BeneStream Inc.
Such maneuvers could fuel controversy as costs are shifted to taxpayers, but
BeneStream said its business is growing rapidly.
From the CFO Journal's Morning
Ledger on October 31, 2014
Small firms (under 50 employees) drop health plans ---
http://online.wsj.com/articles/small-firms-drop-health-plans-1414628013?mod=djemCFO_h
Small companies are starting to turn away from
offering health plans, with many viewing the health law’s marketplace as an
inviting and affordable option.
Wellpoint Inc.
said its small-business-plan membership is shrinking faster than expected
and it has lost about 300,000 people since the start of the year, leaving a
total of 1.56 million in small-group coverage. Other insurers have flagged a
similar trend.
Modestly larger firms are moving more employees to part-time in
order to drop coverage. Larger firms have a much more difficult time avoiding
high penalties for dropping health plans.
Employer-provided health insurance may
not be long for this world. According to
a new report from S&P Capital IQ, 90 percent of
American workers who receive health insurance from large companies will
instead get coverage through Obamacare’s exchanges by 2020.
For that, patients — many of whom no
doubt like the insurance they currently have — can blame Obamacare. The
law’s many mandates, fees, and taxes will increase health costs for large
employers to the point that providing health benefits at work is financially
unsustainable.
Consider some of Obamacare’s most
burdensome new levies. For instance, one fee on group plan sponsors is
intended to fund the Patient Centered Outcomes Research Institute (PCORI), a
government-sponsored organization charged with investigating the relative
effectiveness of various medical treatments. Medicare may consider the
Institute’s research in the determining what sorts of therapies it will
cover.
Set aside the fact that the government —
as paymaster for half of the health care delivered in this country — will
have a significant incentive to twist the findings of such research so that
older, cheaper therapies seem just as effective as more expensive,
cutting-edge ones.
Making matters worse, the federal government is
forcing private firms to underwrite its dirty work. For plan years ending
after September 30, 2013, and before October 1, 2014, employer sponsors must
pay the feds a PCORI fee of $2 per covered life. And for plan years between
October 1, 2014, and October 1, 2019, they’ll have to pay an amount adjusted
for national health inflation.
Large employers also have to pay a Temporary
Reinsurance Fee to help “stabilize” premiums in the individual insurance
market. In
an American Health Policy Institute (AHPI) survey
of businesses with more than 10,000 employees, one company estimated that
this fee could cost it $15.3 million from 2014 to 2016.
Then there’s the 40 percent excise tax on expensive
insurance plans — those with premiums greater than $10,200 for individuals
and $27,500 for families — which goes into effect in 2018. One company
in the same survey
said that this tax could cost it $378 million over five years.
Large employers like these cover
59 percent of private-sector workers, according to
the Employee Benefit Research Institute. So many firms will likely face the
same tax-motivated cost increases as these two.
Obamacare doesn’t just tax employers directly. Its
many coverage mandates also raise the cost of benefits indirectly.
Effective 2015, the law’s employer
mandate requires employers with 100 or more full-time employees to provide
health insurance to full-timers or pay a fine. In 2016, those with 50 to 99
employees will have to follow suit. The law originally intended for both
groups to comply with the mandate in 2014.
Obamacare also orders plans to cover
adult children on their parents’ policies until they’re 26 years of age.
This “slacker mandate” has already raised employer health insurance costs by
1 to 3 percent. One firm
told AHPI that the mandate could cost it almost
$69 million over ten years.
Obamacare also requires
employer-sponsored health plans to cover 100 percent of preventive care
services, such as immunizations, contraceptive care, and depression
screening.
One large employer reported that full coverage of
contraceptive care on its own could cost $25.6 million over ten years.
It’s no wonder that large employers
expect their health bills to escalate in the years to come. The AHPI survey
revealed that Obamacare could increase their health costs by 4.3 percent in
2016, 5.1 percent in 2018, and 8.4 percent in 2023.
Those percentages equate to real dollars.
Over the next ten years, Obamacare could cost large employers $151 billion
to $186 billion. That’s about $163 million to $200 million in additional
cost per employer — or $4,800 to $5,900 per employee — solely attributable
to the health reform law.
Employers will likely pass along these
costs to their workers. According to a recent Mercer survey, 80 percent of
employers are considering raising deductibles — or have already done so.
Eventually, large employers may opt
to pay the fine for not providing health insurance and leave their workers
to get coverage in the exchanges. Doing so might even save them money.
The
care for an employee with hemophilia, for example,
can cost a company $300,000. That could end up being a lot more expensive
than the $2,000 per-employee fine for not offering insurance.
Firms could also continue furnishing
insurance to most of their workers — but nudge their costliest ones onto the
exchanges by making the company insurance plan unattractive to them. A
company could shrink its network of doctors, raise co-payments, or even
offer a chronically ill employee a raise to opt out of the employer plan.
In so doing, the company would save
money. The employee would be able to secure better coverage through the
exchange. And if a raise covered the cost of the exchange policy, both
parties would benefit.
Others in the exchange pool — and the
taxpayers subsidizing them — won’t be so lucky. Exchange enrollees are
already sicker than their counterparts outside the government insurance
portals. Indeed, the exchange pool fills prescriptions for the sorts of
specialty drugs associated with chronic disease at a rate that’s
47 percent higher
than for folks outside the exchanges.
Adding even more high-cost individuals to
the exchanges could cause insurers to hike premiums. And higher premiums
require greater taxpayer subsidies. Already, the
Congressional Budget Office projects that the
federal government will spend $1.03 trillion on exchange subsidies and
related spending from 2015 to 2024.
If employers dump their sickest employees
into the exchanges, that number could go spiral even further upward.
Obamacare enrollees are straining the finances of
community health centers around the country, some
health center leaders say.
The issue is that many lower-income patients with insurance coverage through
the federal and state exchanges bought bronze-tier plans with lower premiums
but high deductibles, coinsurance and copayments and no federal cost-sharing
subsidies. When these patients face high out-of-pocket costs for care that
falls below the deductible, they can't afford it.
So the centers are subsidizing that care by offering them means-tested
sliding-scale fees. When the centers, which are not allowed to turn away
patients for inability to pay, try to get the insurers to pay, the claims
are usually denied, and the centers have to
write it off as
uncompensated care..
“People bought what they could afford and
healthcare centers are in effect subsidizing these policies,” said José
Camacho, executive director of the Texas Association of Community Health
Centers.
There had been uncertainty about whether community health centers, which
receive federal funding and serve 22 million Americans at 9,000 sites around
the country, were allowed to offer sliding-scale fees to patients with
private insurance plans. On Monday,
HHS released a guidance clarifying that the
centers can offer these reduced fees to patients with incomes under 200% of
the federal poverty level.
Of the 7.3 million people who purchased and paid for coverage on the federal
and states exchanges for 2014, about 20% selected bronze-tier plans, which
feature deductibles as high as $5,500 a person. Those plans lack a key
affordability feature of silver plans, which generally have higher premiums.
Under the Patient Protection and Affordable Care Act, people with incomes of
up to 250% of the federal poverty level who buy silver plans
qualify for cost-sharing subsidies that reduce
their out-of-pocket costs for care. Purchasers of bronze plans do not
qualify for those subsidies.
While all health plans that comply with Obamacare standards must cover a
range of primary-care and preventive services on a first-dollar basis,
deductibles and coinsurance apply when patients are diagnosed and treated
for sickness, injuries or chronic illness.
“With the Affordable Care Act, while the number of uninsured may be
dropping, there's a new challenge in that there is now a huge cadre of
underinsured people,” said Sara Rosenbaum, chair of the health policy
department at George Washington University.
Wait, what? We've expressed a healthy
skepticism of the administration's "official"
enrollment numbers, and for good
reason -- but even I must admit to being a bit
flummoxed by the United States Census Bureau's new findings that America's
uninsured population increased in 2014 over 2013. That
data, via Phil Kerpen:
Whether the Affordable Care Act lives up to its
name depends on how, or whether, you consider its consequences for the wider
economy.
Millions of people pay a significant portion of
their income for health insurance so they and their families can get good
health care when they need it. The magnitude of their sacrifices
demonstrates the importance that people ascribe to health care.
The Affordable Care Act attempts to help low- and
middle-income families avoid some of the tough sacrifices that would be
necessary to purchase health insurance without assistance. But no program
can change the fundamental reality that society itself has to make
sacrifices in order to deliver health care to more people. Workers and
therefore production have to be taken away from other industries to beef up
health care, or the workforce itself has to get bigger, or somehow people
have to work more productively.
Although the ACA helps specific populations by
giving them a bigger slice of the economic pie, the law diminishes the pie
itself. It reduces the amount that Americans work, and it makes their work
less productive. This slows growth in both personal income and gross
domestic product.
In further expanding the frontiers of
redistribution, the ACA reduces the benefits of employment for both
employers and employees. Employers that don't provide health insurance are
either subject to large penalties based on the number and types of employees
that they have, or are threatened with enormous penalties when they get the
opportunity to expand their business. About a quarter of the nation's
employees, more than 35 million men and women, currently work for employers
that don't offer health insurance. These tend to be small and midsize
businesses with employees who already make less than the average American
worker. The result of penalizing businesses for hiring and expanding is
going to be less hiring and expanding.
Another sixth of the nation's employees—almost 25
million people—are in a full-time position that makes them ineligible for
the law's new and generous assistance with health-insurance premiums and
cost sharing. They are ineligible for subsidies simply because they are
working full time and thereby eligible for their employers' coverage.
Because the only ways for them to get the new assistance is to move to
part-time status, find an employer that doesn't offer coverage, or stop
working, we can expect millions of workers to make one or more of those
adjustments.
Most people wouldn't give up working merely to
qualify for a few thousand dollars in assistance. But it is a mistake to
assume that nobody is affected by subsidies, because there are people who
aren't particularly happy with working, planning to leave their job anyway,
or otherwise on the fence between working and not working. A new subsidy is
enough to push them over the edge or to get them to stop working sooner than
they would have otherwise.
The law has effects that extend well beyond the
employment rate and the average length of the workweek. People, businesses
and entire sectors will jockey to reduce their new tax burdens or enhance
their subsidies. Their adjustments to the new incentives will make our
economy less productive and stifle wage growth, even among workers who have
no direct contact with the law's penalties and subsidies.
The "29er" phenomenon is a good example of how the
law harms productivity. Because ACA's "employer mandate" requires firms with
50 or more full-time workers to offer health plans to employees who work
more than 30 hours a week, many employers and employees have adopted 29-hour
work schedules. This is not the most productive way to arrange the
workplace, but it allows employers to avoid the mandate and its penalties
and helps the employees qualify for individual assistance.
All of this, and much more, exacerbates the
societal problem that the economy cannot expand its health sector without
giving up something else of value. A complex law like the ACA has a few
provisions that encourage work, such as counting unemployment income against
eligibility for health assistance. But the bulk of the law overwhelms them.
The ACA as a whole will have the nation working fewer hours, and working
those hours less productively.
I estimate that the ACA's long-term impact will
include about 3% less weekly employment, 3% fewer aggregate work hours, 2%
less GDP and 2% less labor income. These effects will be visible and obvious
by 2017, if not before. The employment and hours estimates are based on the
combined amount of the law's new taxes and disincentives and on historical
research on the aggregate effects of each dollar of taxation. The GDP and
income estimates reflect lower amounts of labor as well as the law's effects
on the productivity of each hour of labor.
By the end of this decade, nearly 20 million
additional Americans will have health insurance as a consequence of the law.
But the ultimate economywide cost of their enrollments will be at least
double what it would have been if these people had enrolled without
government carrots and sticks; that is, if they had decided it was worth
spending their own money on health insurance. In effect, people who aren't
receiving assistance through the ACA are paying twice for the law: once as
the total economic pie gets smaller and again as they receive a smaller
piece.
The Affordable Care Act is weakening the economy.
And for the large number of families and individuals who continue to pay for
their own health care, health care is now less affordable.
Mr. Mulligan is a professor of economics at the University of Chicago
and the author of the new e-book "Side Effects: The Economic Consequences of
the Health Reform" (JMJ Economics, 2014).
There has been a distinctive odor of hype lately
about the national jobs report for June. Most people will have the
impression that the 288,000 jobs created last month were full-time. Not so.
The Obama administration and much of the media
trumpeting the figure overlooked that the government numbers didn't
distinguish between new part-time and full-time jobs. Full-time jobs last
month plunged by 523,000, according to the Bureau of Labor Statistics. What
has increased are part-time jobs. They soared by about 800,000 to more than
28 million. Just think of all those Americans working part time, no doubt
glad to have the work but also contending with lower pay, diminished
benefits and little job security.
On July 2 President Obama boasted that the jobs
report "showed the sixth straight month of job growth" in the private
economy. "Make no mistake," he said. "We are headed in the right direction."
What he failed to mention is that only 47.7% of adults in the U.S. are
working full time. Yes, the percentage of unemployed has fallen, but that's
worth barely a Bronx cheer. It reflects the bleak fact that 2.4 million
Americans have become discouraged and dropped out of the workforce. You
might as well say that the unemployment rate would be zero if everyone quit
looking for work.
Last month involuntary part-timers swelled to 7.5
million, compared with 4.4 million in 2007. Way too many adults now depend
on the low-wage, part-time jobs that teenagers would normally fill. Federal
Reserve Chair Janet Yellen had it right in March when she said: "The
existence of such a large pool of partly unemployed workers is a sign that
labor conditions are worse than indicated by the unemployment rate."
There are a number of reasons for our predicament,
most importantly a historically low growth rate for an economic "recovery."
Gross domestic product growth in 2013 was a feeble 1.9%, and it fell at a
seasonally adjusted annual rate of 2.9% in the first quarter of 2014.
But there is one clear political contribution to
the dismal jobs trend. Many employers cut workers' hours to avoid the
Affordable Care Act's mandate to provide health insurance to anyone working
30 hours a week or more. The unintended consequence of President Obama's
"signature legislation"? Fewer full-time workers. In many cases two people
are working the same number of hours that one had previously worked.
Since mid-2007 the U.S. population has grown by
17.2 million, according to the Census Bureau, but we have 374,000 fewer jobs
since a November 2007 peak and are 10 million jobs shy of where we should
be. It is particularly upsetting that our current high unemployment is
concentrated in the oldest and youngest workers. Older workers have been
phased out as new technologies improve productivity, and young adults who
lack skills are struggling to find entry-level jobs with advancement
opportunities. In the process, they are losing critical time to develop
workplace habits, contacts and new skills.
Most Americans wouldn't call this an economic
recovery. Yes, we're not technically in a recession as the recovery began in
mid-2009, but high-wage industries have lost a million positions since 2007.
Low-paying jobs are gaining and now account for 44% of all employment growth
since employment hit bottom in February 2010, with by far the most
growth—3.8 million jobs—in low-wage industries. The number of long-term
unemployed remains at historically high levels, standing at more than three
million in June. The proportion of Americans in the labor force is at a
36-year low, 62.8%, down from 66% in 2008.
Part-time jobs are no longer the domain of the
young. Many are taken by adults in their prime working years—25 to 54 years
of age—and many are single men and women without high-school diplomas. Why
is this happening? It can't all be attributed to the unforeseen consequences
of the Affordable Care Act. The longer workers have been out of a job, the
more likely they are to take a part-time job to make ends meet.
The result: Faith in the American dream is eroding
fast. The feeling is that the rules aren't fair and the system has been
rigged in favor of business and against the average person. The share of
financial compensation and outputs going to labor has dropped to less than
60% today from about 65% before 1980.
Why haven't increases in labor productivity
translated into higher household income in private employment? In part
because of very low rates of capital spending on new plant and equipment
over the past five years. In the 1960s, only one in 20 American men between
the ages of 25 and 54 was not working. According to former Treasury
Secretary Larry Summers, in 10 years that number will be one in seven.
The lack of breadwinners working full time is a
burgeoning disaster. There are 48 million people in the U.S. in low-wage
jobs. Those workers won't be able to spend what is necessary in an economy
that is mostly based on consumer spending, and this will put further
pressure on growth. What we have is a very high unemployment rate, a slow
recovery and across-the-board wage stagnation (except for the top few
percent). According to the Bureau of Labor Statistics, almost 91 million
people over age 16 aren't working, a record high. When Barack Obama became
president, that figure was nearly 10 million lower.
The great American job machine is spluttering. We
are going through the weakest post-recession recovery the U.S. has ever
experienced, with growth half of what it was after four previous recessions.
And that's despite the most expansive monetary policy in history and the
largest fiscal stimulus since World War II.
Continued in article
California's Proposition 45: Will ObamaCare price fixing work in
California?
One of the most expensive and contentious
initiative campaigns in California this year pits progressive Democrats
against the state's ObamaCare exchange. The progressives want to give the
state insurance commissioner veto power over health-insurance rates while
the exchange backers want to prevent ObamaCare from imploding.
State Insurance Commissioner Dave Jones decided to
go to voters after unsuccessfully lobbying the legislature to give him
authority to reject health insurance rate hikes. Backing him are progressive
groups and San Francisco billionaire Tom Steyer, who say consumers need more
protection from money-grubbing health-insurance companies.
Assisting insurers in their fight against the
initiative, Proposition 45, are regulators for the state exchange Covered
California. "It's going to end up hurting Californians, hurting consumers,
increasing costs," declared Democratic exchange board member Susan Kennedy
at a meeting last month. "And it will damage health-care reform, perhaps
permanently, perhaps fatally, in California and I think perhaps nationally."
"I don't think this is the right law at the right
time," added Diana Dooley, who is Gov. Jerry Brown's secretary of health and
human services. "I feel very mother-bearish on protecting the investment we
have made in implementing the Affordable Care Act."
They're afraid Prop. 45 will induce insurers to
narrow their provider networks to minimize rate increases. The larger danger
is that some insurers might drop out of the exchange if they can't raise
rates enough to cover their costs. This would erode choice and quality of
health insurance, and the collateral damage might incite a public backlash.
So to ensure ObamaCare's promise of lower health costs, progressives may
wind up sabotaging the country's best-run state exchange.
Note that the ObamaCare benefit mandates are mainly
to blame for driving up individual health premiums by as much as 88% this
year. While campaigning for Prop. 45, Mr. Jones has flogged the rate spikes
and accused insurers of curtailing their rate increases this year in order
to undercut the initiative.
The anti-Prop. 45 campaign is just gearing up—it
has spent $1.7 million of its $36.7 million war chest—but it seems that all
the kvetching has raised public skepticism of the initiative. A Field Poll
last week showed 41% of voters favoring the initiative, down from 69% in
early July. A third of voters remain undecided, which is twice as many as
two months ago. Ballot measures typically need to be polling above 50% to
stand a chance of passing.
Jensen Comment
Voters should look to the empty supermarkets in Venezuela before going to the
polls in California to vote for price fixing.
Voters should also remember that hospitals, medical clinics, and doctors are
not obligated to serve patients having ACA-exchange insurance. In New Hampshire
nearly half the hospitals in the state refuse to honor ACA-exchange medical
insurance. This is partly due to reimbursement rates as well as having to cover
up to 60 days of free medical care for deadbeats who are bad debts in terms of
ACA insurance premiums.
Price controls ala Proposition 45 in California may result greatly reduced
quantity and quality of medical care for patients insured by California's ACA-exchanges.
One state to watch in this regard is Vermont.
Vermont is in the midst of trying to start up a state-funded insurance plan that
will force all private sector medical insurance companies out of the current
Vermont ACA exchanges. This is probably the closest movement toward a
Canadian-styled public sector health insurance plan. In Canada the province
taxpayers fund healthcare insurance, and coverage varies somewhat between
provinces.
One problem in Vermont is that a state with only 500,000 people (counting
babies) cannot figure out how to raise $1 billion in capital needed to get the
state-exchange plan started. I do hope that Vermont will figure out a way in
this regard. Another problem is that much of Vermont's taxpayer dollars for
state-funded medical care will go out of state since Vermont is so dependent on
specialist services from the bigger medical service providers in surrounding
states such as the Hitchcock-Dartmouth Medical Center and the large medical
centers in Boston.
Gov. Shumlin had missed two earlier financing
deadlines but finally released his proposal. But he immediately cast it as
“detrimental to Vermonters.” The model called for businesses to take on a
double-digit payroll tax, while individuals would face up to a 9.5 percent
premium assessment. Big businesses, in particular, didn’t want to pay for
Shumlin’s plan while maintaining their own employee health plans.
“These are simply not tax rates that I can
responsibly support or urge the Legislature to pass,” the governor said. “In
my judgment, the potential economic disruption and risks would be too great
to small businesses, working families and the state’s economy.”
And that was for a plan that would not be truly
single payer. Large companies with self-insured plans regulated by ERISA
would have been exempt. And Medicare also would have operated separately,
unless the state got a waiver, which was a long shot.
Shumlin added that federal funds available for the
transition were $150 million less than expected.
He also has a lot less political capital than
before November. Shumlin, chairman of the Democratic Governors Association,
still hasn’t even officially won his own reelection bid: The Legislature
will settle the outcome of the November race in January because Shumlin
failed to win more than 50 percent of the vote. He’s leading his Republican
challenger by just a few thousand ballots.
And the substance of the plan isn’t its only
politically problematic aspect. Gruber, now infamous for his blunt
assessments of the Affordable Care Act and his remarks about “stupid”
voters, was until recently a state consultant. Days after the election,
video emerged of him dismissing criticism of Vermont’s plan in 2011 by
asking, “Was this written by my adolescent children, by any chance?” State
officials said they would cut off his contract.
Advocates of a single-payer plan said Shumlin
should not be able to cast aside Act 48, the 2011 law that called for the
creation of Green Mountain Care, without repealing it. A group planned to
hold a rally in front of the statehouse on Thursday to protest his decision.
“The governor’s misguided decision was a completely
unnecessary result of a failed policy calculation that he pursued without
Democratic input,” the group Healthcare Is a Human Right Campaign said in a
statement.
One of
Vermont's many problems with health care is that physicians are leaving the
state due, in large measure, to Vermont's huge taxation of higher income
professionals. This has already forced Vermont to use the medical doctors,
clinics, and hospitals in bordering New Hampshire where there are no taxes on
earned incomes and sales.
Vermont is
also having a problem with loss of students in schools. Thus far efforts to
close nearly-empty schools have failed. Purportedly there are some Vermont
school districts that have more members on the school boards than children in
the schools.
Last year I
wrote that Obamacare could leave doctors holding the bag
for claims for patients who don't pay their insurance
premiums. That's because the law includes a three-month grace period during
which health insurers must continue to cover patients who sign up, but don't
pay the price of their insurance. If the patients eventually make good,
there's no problem. But if patients don't pay the owed premiums, the
insurance company has to cover the cost of claims filed during the first
month. Providers are stuck with the tab for any claims filed during months
two and three.
The piece I wrote last July was theoretical. The
notification letter I'm holding in my hand, addressed to my wife's pediatric
practice, is reality. And reality costs, in this case, over $600. That's the
outstanding balance owed the practice by a patient insured by BlueCross
BlueShield of Arizona. It's a balance that my wife might have to eat, or
else try to collect herself.
Here's the letter, from which my wife redacted all
identifying information before showing it to me.
Dear Practitioner:
Under the Patient Protection and Affordable
Care Act (PPACA), if an individual purchases health insurance through
the Individual Marketplace and receives a subsidy to assist with
premiums, there is a three month grace period in which the individual
can make premium payments. During this period, insurance companies may
not disenroll members, issuers must notify providers as soon as
practicable when an enrollee enters the grace period and, during the
second and third months of the grace period, they are required to notify
providers that claims incurred in the second and third months may deny
if the premium is not paid.
The member referenced above purchased health
insurance through the Marketplace and currently receives a subsidy to
assist with premiums. This letter is a courtesy notification to make you
aware that this member and any covered dependents are currently in the
3rd month of their grace period.
What this means to you
This claim was incurred during the second
or third month of the member's grace period and was pended. All
individual claims under this contract are also in the second or
third month of their grace period.
Any additional claims incurred during the
second and third month of the grace period may be pended until the
full premium due is paid by the member.
If the premium is paid in full by the end
of the grace period, and pended claims will be processed in
accordance with the terms of the contract.
If premium is not paid in full by the end
of the grace period, any claims incurred in the second and third
months may be denied. If claims incurred in the second and third
month are denied due to non-payment of premium, you may seek
reimbursement directly from the member.
The American Medical Association (AMA) has more
information about the grace period
here, though the letter above covers the high
points. Given the potentially high costs providers can face when the
insurance coverage they process for patient care turns out to be more of a
conditional suggestion than a firm guarantee, the AMA also offers
physicians guidance, and urges them to
enter into financial agreements with patients who
receive subsidized care. The idea is to get them to promise to pay their own
bills if they stiff the insurance company.
Of course, those patients promised to pay their
insurance companies, too.
Last year I
wrote that Obamacare could leave doctors holding the bag
for claims for patients who don't pay their insurance
premiums. That's because the law includes a three-month grace period during
which health insurers must continue to cover patients who sign up, but don't
pay the price of their insurance. If the patients eventually make good,
there's no problem. But if patients don't pay the owed premiums, the
insurance company has to cover the cost of claims filed during the first
month. Providers are stuck with the tab for any claims filed during months
two and three.
The piece I wrote last July was theoretical. The
notification letter I'm holding in my hand, addressed to my wife's pediatric
practice, is reality. And reality costs, in this case, over $600. That's the
outstanding balance owed the practice by a patient insured by BlueCross
BlueShield of Arizona. It's a balance that my wife might have to eat, or
else try to collect herself.
Here's the letter, from which my wife redacted all
identifying information before showing it to me.
Dear Practitioner:
Under the Patient Protection and Affordable
Care Act (PPACA), if an individual purchases health insurance through
the Individual Marketplace and receives a subsidy to assist with
premiums, there is a three month grace period in which the individual
can make premium payments. During this period, insurance companies may
not disenroll members, issuers must notify providers as soon as
practicable when an enrollee enters the grace period and, during the
second and third months of the grace period, they are required to notify
providers that claims incurred in the second and third months may deny
if the premium is not paid.
The member referenced above purchased health
insurance through the Marketplace and currently receives a subsidy to
assist with premiums. This letter is a courtesy notification to make you
aware that this member and any covered dependents are currently in the
3rd month of their grace period.
What this means to you
This claim was incurred during the second
or third month of the member's grace period and was pended. All
individual claims under this contract are also in the second or
third month of their grace period.
Any additional claims incurred during the
second and third month of the grace period may be pended until the
full premium due is paid by the member.
If the premium is paid in full by the end
of the grace period, and pended claims will be processed in
accordance with the terms of the contract.
If premium is not paid in full by the end
of the grace period, any claims incurred in the second and third
months may be denied. If claims incurred in the second and third
month are denied due to non-payment of premium, you may seek
reimbursement directly from the member.
The American Medical Association (AMA) has more
information about the grace period
here, though the letter above covers the high
points. Given the potentially high costs providers can face when the
insurance coverage they process for patient care turns out to be more of a
conditional suggestion than a firm guarantee, the AMA also offers
physicians guidance, and urges them to
enter into financial agreements with patients who
receive subsidized care. The idea is to get them to promise to pay their own
bills if they stiff the insurance company.
Of course, those patients promised to pay their
insurance companies, too.
There's No Accounting for the Pricing Differences of Health Care Services
Why does an upper back MRI scan cost three times as much in one reputable
Boston-area hospital as in a nearby reputable hospital?
Without much fanfare, Massachusetts launched a
new era of health care shopping last week.
Anyone with private health insurance in the state
can now go to his or her health insurer’s website and find the price of
everything from an office visit to an MRI to a Cesarean section. For the
first time, health care prices are public.
It’s a seismic event. Ten years ago, I filed
Freedom of Information Act requests to get cost information in
Massachusetts—nothing. Occasionally over the years, I’d receive manila
envelopes with no return address, or secure .zip files with pricing
spreadsheets from one hospital or another.
Then two years ago, Massachusetts passed a law that
pushed health insurers and hospitals to start making this once-vigorously
guarded information more public. Now as of Oct. 1, Massachusetts is the
first state to require that insurers offer real-time prices by provider in
consumer-friendly formats.
“This is a very big deal,” said Undersecretary for
Consumer Affairs and Business Regulation Barbara Anthony. “Let the light
shine in on health care prices.”
There are caveats.
1.) Prices are not standard, they vary from one
insurer and provider to the next. I shopped for a bone density test. The low
price was $16 at Tufts Health Plan, $87 on the Harvard-Pilgrim Health Care
site and $190 at Blue Cross Blue Shield of Massachusetts. Why? Insurers
negotiate their own rates with physicians and hospitals, and these vary
too. Some of the prices include all charges related to your test, others
don’t (see No. 2).
2.) Posted prices may or may not include all
charges, for example the cost of reading a test or a facility fee. Each
insurer is defining “price” as it sees fit. Read the fine print.
3.) Prices seem to change frequently. The first
time I shopped for a bone density test at Blue Cross, the low price was
$120. Five days later it had gone up to $190.
4.) There is no standard list of priced tests and
procedures. I found the price of an MRI for the upper back through Harvard
Pilgrim’s Now iKnow tool. That test is “not found” through the Blue Cross
“Find a Doc” tool.
5.) Information about the quality of care is weak.
Most of what you’ll see are patient satisfaction scores. There is little
hard data about where you’ll get better care. This is not necessarily the
insurer’s fault, because the data simply doesn’t exist for many tests.
6.) There are very few prices for inpatient care,
such as a surgery or an illness that would keep you in the hospital
overnight. Most of the prices you’ll find are for outpatient care.
These tools are not perfect, but they are unlike
anything else in the country. While a few states are moving toward more
health care price transparency, none have gone as far as Massachusetts to
make the information accessible to consumers. Tufts Health Plan Director of
Commercial Product Strategy Athelstan Bellerand said the new tools "are a
major step in the right direction.” Bellerand added: “They will help
patients become more informed consumers of health care.”
Patients can finally have a sense of how much a
test or procedure will cost in advance. They can see that some doctors and
hospitals are a lot more expensive than others. For me, a bone density test
would cost $190 at Harvard Vanguard and $445 at Brigham and Women’s
Hospital.
The most frequent early users of the newly
disclosed data are probably providers. Anthony says some of the more
expensive physicians and hospitals react with, “I don’t want to be the
highest priced provider on your website. I thought I was lower than my
competitors.”
Anthony is hoping that will generate more
competition and drive down prices.
“I’m just talking about sensible rational pricing,
which health prices are anything but,” she added.
Take, for example, the cost of an upper back MRI.
“The range here is $614 to $1,800, so three times,”
said Sue Amsel, searching “Now I Know,” the tool she manages at Harvard
Pilgrim. “That to me is a very big range.”
In this case, the most expensive MRI is at Boston
Children’s Hospital and the lowest cost option is at New England Baptist,
with no apparent difference in quality.
“It’s not just for choosing. It’s primarily for
getting you the information, about whatever you’re having done, so you can
plan for it,” she said.
Most of us don’t have to plan for anything except
our co-pay. But about 15 percent of commercial insurance plans have high
deductible plans, in which patients pay the full cost of an office visit or
test up to the amount of their deductible, and that number is growing.
The Obama administration has spent at least $3.7
billion to build and promote online marketplaces under the Affordable Care
Act, but it can’t prove exactly where it all went, according to an audit
released Monday.
Federal investigators said the Centers for Medicare
and Medicaid Services (CMS) does not properly track certain data that public
officials need in order to determine whether the healthcare law is working.
The government tracks its healthcare spending in an
outdated records system that cannot easily respond to data requests such as
salaries or public relations contracts in certain departments. Instead,
officials rely on manually prepared spreadsheets that can take months to
produce.
Out of that data, “we
were not able to determine the reliability of most of the information,”
according to the
report by the independent Government
Accountability Office (GAO).
“CMS's
processes are inconsistent with certain federal accounting and internal
control standards,” the report states. To
improve the system, the GAO recommends that CMS staff create new procedures
to provide more timely and reliable information to the public. “Particularly
for programs subject to a significant degree of public and congressional
scrutiny,” the GAO reports.
The report marks the third time in two
weeks that a federal audit has criticized the rollout of ObamaCare.
That agency could not verify its total
costs of staff salaries, travel, polling or total advertising spent on
ObamaCare.
The investigation was requested by Rep.
Dave Camp (R-Mich.), the outgoing chair of the House Ways and Means
Committee. Camp released a statement criticizing the administration's
financial tracking.
“After promising transparency and then
ignoring repeated requests from Congress, we now find out that the
administration is not even keeping track of how many taxpayer dollars are
going out the door,” he said. “Worse yet, the administration won’t even
account for how much it spent on public relations campaigns promoting their
unpopular law.”
The Department of Health and Human
Services (HHS), which oversees the other agencies, defended its financial
tracking system, which it described as “up-to-date.”
The department argued it relies on an
ad-hoc process only when responding to non-routine data requests, such as
those from the GAO or Congress.
HHS has endured heavy scrutiny from
lawmakers, particularly over the last year. Members of Congress and their
staff have sent hundreds of inquiries to HHS since the launch of ObamaCare.
As a result, department officials have testified at more than 50 hearings
and supplied 140,000 pages of documents.
The "Blue Ox"
of Minnesota Obamacare is calling it quits.
PreferredOne,
the insurer that sold nearly 60 percent of all private health plans on
Minnesota's Obamacare exchange, on Tuesday said it would leave that
marketplace. PreferredOne's plans were the lowest-cost options on that
exchange, known as
MNSure.
PreferredOne cited the costs of doing business on
MNSure as the reason for its surprising decision, saying that selling plans
is "not administratively and financially sustainable going forward,"
according to KSTP.com, the website of that
Minnesota TV News network.
"Our MNsure individual product membership is only a
small percentage of the entire PreferredOne enrollment but is taking a
significant amount of our resources to support administratively,"
a company statement obtained by KSTP said. "We
feel continuing on MNsure was not sustainable and believe this is an
important step to best serve all PreferredOne members."
The insurer's surprising move came just two months
before the start of open enrollment in Obamacare plans for 2015 and a month
before insurers are expected to release their plan rates for next year.
PreferredOne's
decision is likely to have significant effect not only on its current
Obamacare enrollees, but also on people who will be shopping for plans for
next year on the exchange, which is now left with just four insurers. The
remaining players on the exchange are Blue Cross and Blue Shield, Health
Partners, Medica and UCare.
PreferredOne's relatively low-priced plans on
MNSure for the 2014 enrollment season were a big reason why 59 percent of
the 47,902 people who bought health coverage on the exchange by mid-April
selected the insurer.
Those customers now face the prospects of higher
rates if they want to remain in those same plans next year, as is their
option, while existing customers of other insurers and new customers in the
market will have fewer price options from which to choose.
In a statement released Tuesday, MNSure noted that
"all consumers currently enrolled through Preferred One will have continued
coverage through their existing plan for the rest of 2014."
And the statement said that under state law,
customers have the right to renew their current coverage for 2015, but "this
mandate does not require it to be offered at the same price."
In a joint statement, MNsure's CEO, Scott Leitz,
and Preferred One CEO Marcus Merz said, "Today Preferred One made the
decision to not offer health plans through the health insurance exchange in
2015. Simply put, both organizations understand that MNsure is still an
evolving partnership. This decision impacts 2015 enrollment."
"Consumers
still have at least four, well-known, Minnesota-based carriers who are
committed to providing important health coverage to Minnesotans through
MNsure, including people who qualify for tax credits and public programs,"
the CEOs said.
Jensen Comment
I don't think the ACA is sustainable until state or federal government insurance
exchanges replace those of the private sector. Keep tuned into Vermont where a
serious effort is underway to opt out of private sector medical insurance for
ACA exchanges.
Jensen Comment
What stands in the way of cutting health care cost in the USA relative to other
nations. My answer to this is:
Lawyers who have found a gold mine in malpractice insurance (often
fraudulent) lawsuits. Physicians and hospitals pay ten or more times as much
in the USA for malpractice insurance than health providers in other nations.
In part this is why the USA has 80?% more lawyers than other nations.
Relatives of terminally ill patients who refuse to sign off on dying
patients as long as third-party providers (e.g., Medicare and Medicaid) pay
all the enormous expenses of keeping dying people alive in hospitals.| The Cost of Dying,"CBS Sixty Minutes Video, November 22, 2009
---
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
All other nations are more sensible about costs and benefits of temporarily
extending life at massive costs.
Medical care providers who fear making mistakes (for whatever reason)
and over prescribe diagnostic and treatment tests and medications. The USA
also spends much more than other nations on keeping premature babies alive.
The article below focuses on the medical care providers.
LOS ANGELES — In the little office where they ran
the scam, a cellphone would ring on Sonia Bonilla’s desk. That was the sound
of good news: Somebody had found them a patient.
When Bonilla answered the phone, one of the scam’s
professional “patient recruiters” would read off the personal data of a
senior citizen. Name. DOB. Medicare ID number. Bonilla would hang up and
call Medicare, the enormous federal health-insurance program for those over
65.
BREAKING POINTS:
WHERE GOVERNMENT FALLS APART
Fourth in a series examining the failures at the
heart of troubled federal systems.
She asked a single question: Had the government
ever bought this patient a power wheelchair?
No? Then the scam was off and running.
“If they did not have one, they would be taken to
the doctor, so the doctor could prescribe a chair for them,” Bonilla
recalled. On a log sheet, Bonilla would make a note that the recruiter was
owed an $800 finder’s fee. “They were paid for each chair.”
This summer, in a Los Angeles courtroom, Bonilla
described the workings of a peculiar fraud scheme that — starting in the
mid-1990s — became one of the great success stories in American crime.
The sucker in this scheme was the U.S. government.
That wasn’t the peculiar part.
The tool of the crime was the motorized wheelchair.
The wheelchair scam was designed to exploit blind
spots in Medicare, which often pays insurance claims without checking them
first. Criminals disguised themselves as medical-supply companies. They
ginned up bogus bills, saying they’d provided expensive wheelchairs to
Medicare patients — who, in reality, didn’t need wheelchairs at all. Then
the scammers asked Medicare to pay them back, so they could pocket the huge
markup that the government paid on each chair.
A lot of the time, Medicare was fooled. The
government paid.
Since 1999, Medicare has spent $8.2 billion to
procure power wheelchairs and “scooters” for 2.7 million people. Today, the
government cannot even guess at how much of that money was paid out to
scammers.
Now, the golden age of the wheelchair scam is
probably over.
But, while it lasted, the scam illuminated a
critical failure point in the federal bureaucracy: Medicare’s weak defenses
against fraud. The government knew how the wheelchair scheme worked in 1998.
But it wasn’t until 15 years later that officials finally did enough to
significantly curb the practice.
“If you play it right, you can make a lot of money
quickly, stealing from Medicare,” said James Quiggle, of the nonprofit
Coalition Against Insurance Fraud, recounting the lesson of the past decade
and a half. “You can walk into the United States, with limited English
skills, no knowledge of medicine, and — if you hook up with the right
people, that know how to play the system like a Stradivarius — you can
become an overnight millionaire.” Video: How to scam Medicare in 4 easy
steps
‘I said I didn’t need it’
In the courtroom in Los Angeles, 42-year-old
Olufunke Fadojutimi was on trial. Prosecutors alleged she’d run a
wheelchair-scam operation out of an office-park suite in suburban Carson,
Calif.
As these scams go, this one was medium-sized. It
billed Medicare for about 1,000 power wheelchairs.
“I said I didn’t need it,” witness Heriberto
Cortez, 73, testified on the stand. Cortez was recalling the day when a
stranger — allegedly one of Fadojutimi’s patient recruiters — came to his
house and offered him a wheelchair. He said no. She didn’t listen.
“She insisted,” Cortez said. “She said that they
were giving the chairs away.”
Later in the trial, 71-year-old Rodolfo Fernandez
testified that a woman showed up at his house in Los Angeles. The woman
asked if he was on Medicare. He was.
The next day, she came back with a van. Other
seniors were already inside.
“They took us to a clinic. They did an exam on us,”
Fernandez recalled, translated speaking through a Spanish interpreter.
Authorities said the doctor at this clinic was in
on the scam, too. He was paid to find the same problems, every time. The
patient was too weak to use a cane. Or a walker. Or even a non-motorized
wheelchair. Only a motorized wheelchair would do. Instead of making lame men
walk, the doctor’s job was to make walking men lame — at least on paper. A
surge in power wheelchairs and scooters paid for by Medicare
Since 1999, Medicare has spent $8.2 billion to
procure power wheelchairs and scooters for 2.7 million people. Today, the
federal government does not know how much of that money was actually paid to
scammers.
Source: U.S. Centers for Medicare and Medicaid
Services
In his testimony, Fernandez noted that the clinic
was in a second-floor walk-up.
“I had to climb the stairs,” Fernandez said, in
order for the doctor to proclaim him unfit to climb stairs.
After seeing the doctor, prosecutors said, both
Cortez and Fernandez got power wheelchairs from Fadojutimi’s company. The
company then sent Medicare the bills. Medicare paid.
Today, Cortez’s wheelchair sits in his garage,
still wrapped in plastic from the factory. Fernandez’s wheelchair is
occupied by an enormous stuffed animal wearing a Los Angeles Lakers hat.
“I put my little teddy bear on top of it,”
Fernandez said, as jurors smiled at a photo of the bear in the chair. An
overwhelmed system
Fraud in Medicare has been a top concern in
Washington for decades, in part because the program’s mistakes are so
expensive. In fiscal 2013, for instance, Medicare paid out almost $50
billion in “improper payments.” These were bills that, upon further
reflection, contained mistakes and should not have been paid.
No one knows how much of that money was actually
lost to fraud, and how much of it was caused by innocent errors.
The power-wheelchair scam provided a painful and
expensive example of why Medicare fraud works so often. The fault lay partly
with Congress, which designed this system to be fast and generous. And it
lay partly with Medicare bureaucrats — who were slow to recognize the threat
and use the powers they had to stop it. As a result, scammers took advantage
of a system that was overwhelmed by its own claims and lacked the manpower
and money to check most of those claims before it paid.
The scheme first appeared in the mid-1990s in Miami
— a city whose mix of elderly people and professional scammers has always
made it the DARPA of Medicare fraud, where bad ideas begin.
“The patients would be walking,” said one former
Justice Department official, recalling investigations from that time. “And
they’d have the wheelchair, a $2,500 wheelchair, sitting in the corner with
stacks of [stuff] on it. And [investigators] would say, ‘Why do you have
this?’ And they would say, ‘They told me I could have this, so I took it.’ ”
Fraudsters, they were learning, had invented a new
twist on an old trick: the Medicare equipment scam.
The original equipment scam had sprung up in the
1970s, at a time when Medicare was young and criminals were still learning
how to steal its money. Doctors, for example, could bill Medicare for exams
they didn’t do. Hospitals could bill for tests that patients didn’t need.
The equipment scam was the poor man’s way in, an
entry-level fraud that didn’t require a medical degree or a hospital.
Instead, the crooks only had to set up a “medical
equipment” company and get access to the Medicare system. Then, they needed
to learn a simple scheme, in which the fraudster would run the normal order
of medical decision-making in reverse.
A legitimate medical-supply company, of course,
must wait for a patient to see a doctor, then come looking for somebody to
fill a prescription. But a fraudster starts with a prescription he wants to
fill.
Then he goes looking for a patient and a doctor to
foist it on.
By the 1990s, fraudsters had already perfected
parts of this equipment scam. To find the patients, for instance, they had
learned to use professional recruiters, called “marketers” or “cappers.”
These recruiters induced seniors to hand over their
Medicare ID numbers. Sometimes, they just paid the patients a bribe. Other
times, they talked them into giving the number up free. The government is
offering free wheelchairs, but only for a limited time. If you don’t act now
. . .
Most fraudsters had also learned to buy off a
doctor or two, paying a set price for each bogus prescription. But some had
also perfected a cheaper method.
They corrupted dead doctors instead.
“The Russian mob up in Brooklyn has been doing this
for years. . . . They scour the obits. They find out when Doctor Morris has
died. They immediately write to Medicare and they say, ‘Hi, I’m Doctor
Morris, and I’m changing my address,' ” said Lewis Morris, a former top
official at the Department of Health and Human Services’ office of the
inspector general.
If it works, the dead doctor’s mail is delivered to
the live crook. Including paperwork with the doctor’s Medicare ID number.
“So the new Doctor Morris, Sammy Scumbag, starts writing scrip in the name
of Doctor Morris,” Morris said. Recent reforms have lessened this problem.
The payoff of this whole scheme came when a scammer
sent Medicare a bill. The bill would say that the bought-off doctor had
prescribed some piece of equipment to the bought-off (or hoodwinked)
patient.
The fraudster would say that he had supplied that
thing. Now, he wanted Medicare to pay its share — usually, 80 percent of the
price tag.
Jensen Comment
One reason higher education costs more in the USA is that more
attempts are made to bring college education to everybody with
nearby physical campuses such as community colleges and online
degree programs from major universities. In Europe and most other
parts of the world higher education is available only to a much
smaller portion of the population. In Germany, for example, less
than 25% of young graduates are admitted to college and
opportunities for adult college education are much more limited than
in the USA. Those other nations, however, often offer greater
opportunities for learning a trade that does not require a college
education.
There are many reasons health care costs more in the USA. One reason
is that the USA is the world leader in medical and medication
research. Another reason is that the USA imposes a costly private
sector insurance intermediary where other nations offer insurance
from a more efficient public sector.
Still another reason is that malpractice lawsuits are a legal
punitive damages lottery in most parts of the USA such that
hospitals and physicians must pay ten or more times as much for
malpractice insurance relative to nations like Canada that restrict
malpractice to actual damages only, leaving out the lottery for
lawyers.
Still another reason is that the USA keeps extremely premature
babies alive that other nations throw away. Even more expense if
what Medicare spends on keeping people hopelessly and artificially
alive, dying people that other nations let slip away without all the
very costly artificial life extensions.
On November 22, 2009 CBS Sixty Minutes aired a video featuring
experts (including physicians) explaining how the single largest
drain on the Medicare insurance fund is keeping dying people
hopelessly alive who could otherwise be allowed to die quicker and
painlessly without artificially prolonging life on ICU machines.
"The Cost of Dying,"CBS Sixty Minutes Video, November
22, 2009 ---
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
One of the big questions out of the IRS targeting
scandal is this: How can an agency that engaged in such political misconduct
be trusted to implement ObamaCare? This week's Halbig v. Burwell ruling
reminded us of the answer. It can't.
The D.C. Circuit Court of Appeals ruled in Halbig
that the administration had illegally provided ObamaCare subsidies in 36
insurance exchanges run by the federal government. Yet it wasn't the
"administration" as a whole that issued the lawless subsidy gift. It was the
administration acting through its new, favorite enforcer: the IRS.
And it was entirely political. Democrats needed
those subsidies. The party had assumed that dangling subsidies before the
states would induce them to set up exchanges. When dozens instead refused,
the White House was faced with the prospect that citizens in 36
states—two-thirds of the country—would be exposed to the full cost of
ObamaCare's overpriced insurance. The backlash would have been horrific,
potentially forcing Democrats to reopen the law, or even costing President
Obama re-election.
The White House viewed it as imperative, therefore,
that IRS bureaucrats ignore the law's text and come up with a politically
helpful rule. The evidence shows that career officials at the IRS did indeed
do as Treasury Department and Health and Human Services Department officials
told them. This, despite the fact that the IRS is supposed to be insulated
from political meddling.
We know this thanks to a largely overlooked joint
investigation and February report by the House Oversight and Ways and Means
committees into the history of the IRS subsidy rule. We know that in the
late summer of 2010, after ObamaCare was signed into law, the IRS assembled
a working group—made up of career IRS and Treasury employees—to develop
regulations around ObamaCare subsidies. And we know that this working group
initially decided to follow the text of the law. An early draft of its rule
about subsidies explained that they were for "Exchanges established by the
State."
Yet in March 2011, Emily McMahon, the acting
assistant secretary for tax policy at the Treasury Department (a political
hire), saw a news article that noted a growing legal focus on the meaning of
that text. She forwarded it to the working group, which in turn decided to
elevate the issue—according to Congress's report—to "senior IRS and Treasury
officials." The office of the IRS chief counsel—one of two positions
appointed by the president—drafted a memo telling the group that it should
read the text to mean that everyone, in every exchange, got subsidies. At
some point between March 10 and March 15, 2011, the reference to "Exchanges
established by the State" disappeared from the draft rule.
Emails viewed by congressional investigators
nonetheless showed that Treasury and the IRS remained worried they were
breaking the law. An email exchange between Treasury employees in the spring
of 2011 expressed concern that they had no statutory authority to deem a
federally run exchange the equivalent of a state-run exchange.
Yet rather than engage in a basic legal analysis—a
core duty of an agency charged with tax laws—the IRS instead set about
obtaining cover for its predetermined political goal. A March 27, 2011,
email has IRS employees asking HHS political hires to cover the tax agency's
backside by issuing its own rule deeming HHS-run exchanges to be state-run
exchanges. HHS did so in July 2011. One month later the IRS rushed out its
own rule—providing subsidies for all.
That proposed rule was criticized by dozens of
scholars and congressional members, all telling the IRS it had a big legal
problem. Yet again, the IRS did no legal analysis. It instead brought in a
former aide to Democratic Rep. Lloyd Doggett, whose job appeared to be to
gin up an after-the-fact defense of the IRS's actions. The agency formalized
its rule in May 2012.
To summarize: The IRS (famed for nitpicking and
prosecuting the tax law), chose to authorize hundreds of billions of illegal
subsidies without having performed a smidgen of legal due diligence, and did
so at the direction of political taskmasters. The agency's actions provided
aid and comfort to elected Democrats, even as it disenfranchised millions of
Americans who voted in their states to reject state-run exchanges. And
Treasury knows how ugly this looks, which is why it initially stonewalled
Congress in its investigation—at first refusing to give documents to
investigators, and redacting large portions of the information.
Administration officials will continue to use the
IRS to try to improve its political fortunes. The subsidy shenanigans are
merely one example. Add Democrats' hijacking of the agency to target and
silence political opponents. What you begin to see are the makings of a
Washington agency—a body with the power to harass, to collect, to fine, to
imprison—working on behalf of one political party. Richard Nixon, eat your
heart out.
Reason has been covering the march toward health
care reform for so long, we remember when the Affordable Care Act was just a
glimmer in President Barack Obama’s eye. As the package of health care laws
that would eventually become known as Obamacare stumbled through debate,
passage, and early implementation, our crack team of writers and reporters
was there, chronicling the twists, turns, and dramatic reversals. And now,
in honor of our special Obamacare issue, we have stitched together that
coverage into a single handy, linktastic narrative. Enjoy!
The Pre-Debate:
Barack Obama campaigned on the promise of health
care reform, and the moment he was elected president the push for a major
overhaul began. But how to reform the system? In December 2008, Ronald
Bailey took
a look at "Tom
Daschle’s Plan for Health Care Rationing"—an unsparing assessment of the
proposals of the president’s initial nominee to run the Department of Health
and Human Services (HHS). Daschle’s big idea, a Federal Health Board, was
supposed to produce health care savings by making comparative effectiveness
determinations about different medical procedures. But Bailey concluded that
the Fed Board "would be able to cut costs only by limiting access to care."
What might work better? In March 2009, Bailey
argued that free
markets can provide health security through "health status
insurance"—basically, a form of life-long insurance against catastrophic
changes in an individual’s current health level. "Creating and selling
separate health-status insurance policies would mean that medical insurance
companies would no longer have an incentive to offload sick people," he
wrote. "Instead, because those with pre-existing conditions would have the
funds to pay higher premiums, insurers would compete for their business."
The Debate, Part 1:
Before long, the push for health care reform was
consuming Washington. President Obama, now settled into the Oval Office, was
making it an early top priority, and congressional staffers were beavering
away on options to expand coverage, often citing the health systems of
European countries as models.
Here’s some cheerful news: States and the
federal government are doing little to stop a costly form of Medicaid fraud,
according to a
government report released last week.
Medicaid, the federal-state health insurance
program for poor Americans, now covers more than half its members through
what’s known as Medicaid managed care. States pay private companies a fixed
rate to insure Medicaid patients. It has become more popular in recent years
than the traditional “fee for service” arrangement, in which Medicaid
programs reimburse doctors and hospitals directly for each service they
provide.
Despite the growth of managed care in recent
decades, officials responsible for policing Medicaid “did not closely
examine Medicaid managed-care payments, but instead primarily focused their
program integrity efforts on [fee-for-service] claims,” according to the
Government Accountability Office, the investigative arm of Congress. The
managed-care programs made up about 27 percent of federal spending on
Medicaid, according to the GAO. The nonpartisan investigators interviewed
authorities in California, Florida, Maryland, New Jersey, New York, Ohio,
and Texas over the past 12 months.
Funded jointly by the federal government and the
states, Medicaid provided health insurance to about 72 million low-income
Americans at a cost of $431 billion last year, according to the report. By
the Medicaid agency’s own reckoning, $14.4 billion of federal spending on
Medicaid constituted “improper payments,” which include both overpayments
and underpayments. That’s 5.8 percent of what the federal government spends
on the program. The $14 billion figure doesn’t tally what states lose to bad
payments.
The fraud risk for managed care is twofold. Doctors
or other health-care providers could be bilking the managed-care companies,
which pass on those fraudulent costs to the government. Or the managed-care
companies themselves could be perpetrating schemes that cost taxpayers money
and harm patients.
What does this look like in practice? New York
Times reporter Nina Bernstein wrote a
Dickensian report last month detailing the
competition among managed-care companies in New York to find the most
profitable Medicaid clients:
“Many frail people with greater needs were
dropped, and providers jockeying for business bought, sold or steered
cases according to the new system’s calculus: the more enrollees, and
the less spent on services, the more money the companies can keep.
“Adult home residents, like those caught in the
hotel, had long been victimized under the old fee-for-service Medicaid
system, in which providers were paid for services rendered. Now, under
managed care, they find themselves prey to new versions of old tactics,
including intimidation to accept services they do not need.
“’They came like vultures—”Sign here, sign
here!”—with their doughnuts and cookies,” recalled Robert Rosenberg, 61,
who has a spinal disorder and Crohn’s disease, and, at 4 feet 4 inches
tall, had waded
through hip-high water to escape the flood at
Belle Harbor Manor in Queens. ‘They coerced people. They told residents
they would lose their Medicaid if they didn’t sign.’”
Even well-meaning managed-care companies may not
have an incentive to stop fraud by medical providers, the GAO says. “If
[managed-care organizations] are making payments that are too high, or have
some waste, fraud, and abuse, sometimes those payments then get put into the
calculation for next year’s rates,” says Carolyn Yocom, director of health
care at the GAO and author of the report.
The Department of Health and Human Services, in a
five-page written response to the GAO included with the
report, says the agency periodically
assesses states’ managed-care programs, promotes best practices, and offers
training for state leaders. The agency’s “comprehensive reviews have
identified findings and vulnerabilities related to managed care program
integrity,” according to the response. The agency also noted that
managed-care audits can be more complex than policing traditional Medicaid
payments, so “states can benefit from more direct support.” A spokeswoman
for the department declined provide additional comment.
Part of the problem is that Medicaid in general
“has not traditionally been very transparent, nor has it been very easy to
see where the money goes,” the GAO’s Yocom says. Managed-care arrangements
are even more difficult to monitor. “The visibility of what happens is
once-removed, because of the managed-care entity itself.”
Craziest of all, states aren’t required to audit
the payments they make to managed-care companies, or the payments those
companies make to medical providers. The GAO, in its drily ascerbic way,
recommends they start.
Continued in article
Jensen Comment
An even bigger fraud arises when Medicaid coverage granted to people who are
really not eligible for Medicaid.
The early findings of an ongoing review of the
Illinois Medicaid program revealed that half the people enrolled weren’t
even eligible.
The state insisted it’s not that bad but Medicaid
is on the federal government’s own list of programs at high risk of waste
and abuse.
Now, a review of the Illinois Medicaid program
confirms massive waste and fraud.
A review was ordered more than a year ago-- because
of concerns about waste and abuse. So far, the state says reviewers have
examined roughly 712-thousand people enrolled in Medicaid, and found that
357-thousand, or about half of them shouldn't have received benefits. After
further review, the state decided that the percentage of people who didn't
qualify was actually about one out of four.
"It says that we've had a system that is
dysfunctional. Once people got on the rolls, there wasn't the will or the
means to get them off,” said Senator Bill Haines of Alton.
A state spokesman insists that the percentage of
unqualified recipients will continue to drop dramatically as the review
continues because the beginning of the process focused on the people that
were most likely to be unqualified for those benefits. But regardless of how
it ends, critics say it's proof that Illinois has done a poor job of
protecting tax payers money.
“Illinois one of the most miss-managed states in
country-- lists of reasons-- findings shouldn't surprise anyone,” said Ted
Dabrowski.
Dabrowski, a Vice-President of The Illinois Policy
Institute think tank, spoke with News 4 via SKYPE. He said the Medicaid
review found two out of three people recipients either got the wrong
benefits, or didn't deserve any at all.
We added so many people to medicaid rolls so
quickly, we've lost control of who belongs there,” said Dabrowski.
One of the major selling points of the Affordable Care
Act was its theoretical potential to reduce costly emergency room visits,
given the law's access to coverage.
But a
new survey shows that so far under the healthcare law, more people are going
to the emergency room. The
survey, conducted by
the American College of Emergency Physicians, found that since Jan. 1 — the
day coverage went into effect for millions of Americans — 46% of emergency
physicians have experienced jumps in patients. Half that percentage reported
a decrease, and 27% of physicians said the influx has stayed about the same.
And even though it was one of the points President
Barack Obama and Democrats used to sell the law ahead of its passage,
doctors said they've been expecting this all along.
"We told you this was going to happen. We don't
mind that it has. But we'd sure appreciate some support," Howard Mell, a
spokesman for the ACEP and an emergency care physician, told Business
Insider on Wednesday.
Emergency physicians only expect it to get worse
over the next few years. Eighty-six percent of emergency physicians expect
there to be a slight or "great" increase in the amount of visits to their
departments over the next three years. Moreover, 77% of these doctors think
their facilities are not prepared for the expected influx of patients.
Emergency care physicians also expect payments for
ER visits to sharply reduce. They think access to emergency care will
improve overall, but that doesn't mean quality care will follow — a
plurality of emergency physicians expect the ACA to have a negative effect
on quality and patient safety.
Part of the increase can be expected. Emergency
room use is a covered benefit, and when people get insurance, the use of
those benefits would be expected to increase somewhat.
But here's the problem: Though the healthcare law has
helped get more people insured, it doesn't guarantee care. ACEP says there
is an overall shortage of primary care doctors.
Many of the millions who qualified for coverage
under the expansion of the federal Medicaid program could also be out of
luck, since many primary care doctors do not accept Medicaid patients.
Because Medicaid coverage pays so little, it is the main problem, whereas
more than 8 million people signed up for
private insurance through exchanges established by the law.
The Obama administration said the study comes too
soon to draw any long-term conclusions.
"This survey, looking at only the first three
months of coverage, cannot speak to the long-term effects of expanded
coverage, which will be shaped by our continuing efforts to help people use
their new primary care and preventive care benefits and to invest in
innovative approaches aimed at improving our nation’s system of primary
care," a Department of Health and Human Services told Business Insider in a
statement.
Still, according to the
Association of American Medical Colleges, there
will be a shortage of about 30,000 too few primary care physicians to keep
up with patient demand next year. And the problem is expected to grow — over
the next decade, according to the study, primary care physicians will rise
by only 7%.
Combined with the fact the American population is
getting older — a 36% increase in the American population over 65 — ACEP is
warning the U.S. is on something of a "collision course."
"Emergency visits will increase in large part
because more people will have health insurance and therefore will be seeking
medical care," said Alex Rosenau, the
president of ACEP.
"But America has severe primary care physician
shortages, and many physicians do not accept Medicaid patients, because
Medicaid pays so low. When people can't get appointments with physicians,
they will seek care in emergency departments. In addition, the population
is aging, and older people are more likely to have chronic medical
conditions that require emergency care."
A classic example of where the problem continues to
manifest is with a patient who has asthma but waits until an emergency to
seek coverage. As Mell explains, a primary care doctor should be able to
solve the health problem in its infancy — for example, prescribing an
inhaler to an asthma-inflicted patient. Instead, the patient will wait until
they have an asthma attack. That means $50-$100 worth of medicine becomes
thousands of dollars in emergency care.
Some health-policy experts think much of the
increase can be mitigated by educating patients about their healthcare
options. Many people who just gained insurance for the first time are simply
used to routinely going to the emergency room for their healthcare needs.
"Part of the need in this new environment is to
teach people who have not had insurance at all or very often in the past how
best to use it and the best ways to access care," said Linda Blumberg, a
senior fellow at the Urban Institute. "That is, they need help to understand
the importance of identifying and using a usual source of care outside of
the ER for non emergent situations."
Continued in article
From the CFO Journal's Morning Ledger on May 27, 2014
Health-law costs snarl union contract talks
Labor talks nationwide are becoming more challenging as unions and employers
butt heads over who should pick up the tab for new costs associated with the
Affordable Care Act,
the WSJ reports.
Coverage for dependent children up to age 26 is already an issue, but future
costs, like a tax on premium health plans that starts in 2018, are also
coming up. Labor experts say the law doesn’t take into account that health
benefits have been negotiated over decades, and that rewriting plans to meet
end requirements can affect wages and other labor terms.
Jensen Comment
Many firms like Walgreen have already dropped employee health insurance plans.
On a separate matter, the Obama Administration recently ruled that salary
increases to replace employer-funded medical insurance contributions with
ACA private exchange plans will not be tax deductible. This complicates
payroll and tax accounting for business firms. Of course this will not
matter to government agencies and other non-profit organizations since they do
not seek tax deductions..
From the CFO Journal's Morning
Ledger on October 31, 2014
Small firms drop health plans ---
http://online.wsj.com/articles/small-firms-drop-health-plans-1414628013?mod=djemCFO_h
Small companies are starting to turn away from
offering health plans, with many viewing the health law’s marketplace as an
inviting and affordable option.
Wellpoint Inc.
said its small-business-plan membership is shrinking faster than expected
and it has lost about 300,000 people since the start of the year, leaving a
total of 1.56 million in small-group coverage. Other insurers have flagged a
similar trend.
Many employers had thought they could shift health
costs to the government by sending their employees to a health insurance
exchange with a tax-free contribution of cash to help pay premiums, but the
Obama administration has squelched the idea in a new ruling. Such
arrangements do not satisfy the
health care law, the administration said,
and employers may be subject to a tax penalty of
$100 a day — or $36,500 a year — for each employee who goes into the
individual marketplace.
The ruling this month, by the
Internal Revenue Service, blocks any wholesale
move by employers to dump employees into the exchanges.
Under a central provision of the health care law,
larger employers are required to offer health coverage
to full-time workers, or else the employers may be subject to penalties.
Many employers — some that now offer coverage and some
that do not — had concluded that it would be cheaper to provide each
employee with a lump sum of money to buy insurance on an exchange, instead
of providing coverage directly.
But the Obama administration raised objections,
contained in an authoritative
question-and-answer document released by the
Internal Revenue Service, in consultation with other agencies.
Continued in article
IRS Ruling Prohibits Employers from Dumping Workers into Exchange –
May 27, 2014
The Obama administration is out with a new rule
(May 2014) that
prohibits large groups from giving tax-free contributions to employees in an
attempt steer them into the Exchange. According to the new rule, employers
caught “dumping” employees into the Exchange could face fines up to $100 a
day ($36,500 per year) for each employee who goes into the individual
marketplace. [Jensen Comment: I don't
think these fines are tax deductible by the employer, and the amounts paid
to employees for health exchanges are taxable to those employees because of
this May 2014 ruling by the IRS]
The Affordable Care Act requires large employers to
either offer affordable group coverage or pay a fine. The deadline to do
this varies according to the size of the large group. This requirement is
called the Employer-Shared Responsibility provision (or the “employer
mandate” or “pay-or-play”).
For more information on the new ruling, head to the
IRS website.
Employer-provided health insurance may
not be long for this world. According to
a new report from S&P Capital IQ, 90 percent of
American workers who receive health insurance from large companies will
instead get coverage through Obamacare’s exchanges by 2020.
For that, patients — many of whom no
doubt like the insurance they currently have — can blame Obamacare. The
law’s many mandates, fees, and taxes will increase health costs for large
employers to the point that providing health benefits at work is financially
unsustainable.
Consider some of Obamacare’s most
burdensome new levies. For instance, one fee on group plan sponsors is
intended to fund the Patient Centered Outcomes Research Institute (PCORI), a
government-sponsored organization charged with investigating the relative
effectiveness of various medical treatments. Medicare may consider the
Institute’s research in the determining what sorts of therapies it will
cover.
Set aside the fact that the government —
as paymaster for half of the health care delivered in this country — will
have a significant incentive to twist the findings of such research so that
older, cheaper therapies seem just as effective as more expensive,
cutting-edge ones.
Making matters worse, the federal government is
forcing private firms to underwrite its dirty work. For plan years ending
after September 30, 2013, and before October 1, 2014, employer sponsors must
pay the feds a PCORI fee of $2 per covered life. And for plan years between
October 1, 2014, and October 1, 2019, they’ll have to pay an amount adjusted
for national health inflation.
Large employers also have to pay a Temporary
Reinsurance Fee to help “stabilize” premiums in the individual insurance
market. In
an American Health Policy Institute (AHPI) survey
of businesses with more than 10,000 employees, one company estimated that
this fee could cost it $15.3 million from 2014 to 2016.
Then there’s the 40 percent excise tax on expensive
insurance plans — those with premiums greater than $10,200 for individuals
and $27,500 for families — which goes into effect in 2018. One company
in the same survey
said that this tax could cost it $378 million over five years.
Large employers like these cover
59 percent of private-sector workers, according to
the Employee Benefit Research Institute. So many firms will likely face the
same tax-motivated cost increases as these two.
Obamacare doesn’t just tax employers directly. Its
many coverage mandates also raise the cost of benefits indirectly.
Effective 2015, the law’s employer
mandate requires employers with 100 or more full-time employees to provide
health insurance to full-timers or pay a fine. In 2016, those with 50 to 99
employees will have to follow suit. The law originally intended for both
groups to comply with the mandate in 2014.
Obamacare also orders plans to cover
adult children on their parents’ policies until they’re 26 years of age.
This “slacker mandate” has already raised employer health insurance costs by
1 to 3 percent. One firm
told AHPI that the mandate could cost it almost
$69 million over ten years.
Obamacare also requires
employer-sponsored health plans to cover 100 percent of preventive care
services, such as immunizations, contraceptive care, and depression
screening.
One large employer reported that full coverage of
contraceptive care on its own could cost $25.6 million over ten years.
It’s no wonder that large employers
expect their health bills to escalate in the years to come. The AHPI survey
revealed that Obamacare could increase their health costs by 4.3 percent in
2016, 5.1 percent in 2018, and 8.4 percent in 2023.
Those percentages equate to real dollars.
Over the next ten years, Obamacare could cost large employers $151 billion
to $186 billion. That’s about $163 million to $200 million in additional
cost per employer — or $4,800 to $5,900 per employee — solely attributable
to the health reform law.
Employers will likely pass along these
costs to their workers. According to a recent Mercer survey, 80 percent of
employers are considering raising deductibles — or have already done so.
Eventually, large employers may opt
to pay the fine for not providing health insurance and leave their workers
to get coverage in the exchanges. Doing so might even save them money.
The
care for an employee with hemophilia, for example,
can cost a company $300,000. That could end up being a lot more expensive
than the $2,000 per-employee fine for not offering insurance.
Firms could also continue furnishing
insurance to most of their workers — but nudge their costliest ones onto the
exchanges by making the company insurance plan unattractive to them. A
company could shrink its network of doctors, raise co-payments, or even
offer a chronically ill employee a raise to opt out of the employer plan.
In so doing, the company would save
money. The employee would be able to secure better coverage through the
exchange. And if a raise covered the cost of the exchange policy, both
parties would benefit.
Others in the exchange pool — and the
taxpayers subsidizing them — won’t be so lucky. Exchange enrollees are
already sicker than their counterparts outside the government insurance
portals. Indeed, the exchange pool fills prescriptions for the sorts of
specialty drugs associated with chronic disease at a rate that’s
47 percent higher
than for folks outside the exchanges.
Adding even more high-cost individuals to
the exchanges could cause insurers to hike premiums. And higher premiums
require greater taxpayer subsidies. Already, the
Congressional Budget Office projects that the
federal government will spend $1.03 trillion on exchange subsidies and
related spending from 2015 to 2024.
If employers dump their sickest employees
into the exchanges, that number could go spiral even further upward.
Continued in article
"Best of the Web Today: No 'Dumping' Obama acts to protect workers from
ObamaCare," by James Toronto, The Wall Street Journal,
Two months ago Ezekiel Emaunel, one of the
designers of ObamaCare, predicted that one long-term effect of the so-called
Patient Protection and Affordable Care Act would be the near-abolition of
employer-provided health insurance. On balance, he argued, the law's
incentives would induce employers to drop their plans and instead increase
cash compensation so that employers could buy plans on the ObamaCare
exchanges.
This column was skeptical. Our argument was that
the horrors of the exchanges would give workers newfound appreciation for
their employer plans, increasing the pressure on both companies and
politicians to preserve the existing system. To judge by this story in the
New York Times, we were right:
Many employers had thought they could shift
health costs to the government by sending their employees to a health
insurance exchange with a tax-free contribution of cash to help pay
premiums, but the Obama administration has squelched the idea in a new
ruling. Such arrangements do not satisfy the health care law, the
administration said, and employers may be subject to a tax penalty of
$100 a day--or $36,500 a year--for each employee who goes into the
individual marketplace.
The ruling this month, by the Internal Revenue
Service, blocks any wholesale move by employers to dump employees into
the exchanges.
The key word here is tax-free: Employers can
give raises in lieu of medical insurance, but the former, unlike the
latter, are taxable income. "The I.R.S. is going out of its way to keep
employers in the group insurance market and to reduce the incentives for
them to drop coverage," Richard Lindquist, president of a benefits
software company, tells the Times.
The word that got our attention, though, is dump.
It appears in the headline, too: "I.R.S. Bars Employers From Dumping Workers
Into Health Exchanges." If the New York Times were our only source of
news, we'd be very confused right now. (Well, OK, we'd be very confused
almost always.) For months the Times has been touting the quality of
ObamaCare policies, scoffing at those who liked their previous plans and
were victimized by President Obama's fraudulent promise that they could keep
them.
Now all of a sudden the exchanges are a garbage
dump? Or is it that the exchanges are a pristine wilderness into which
workers are the garbage being dumped?
The law of supply and demand offers a useful
insight: Typically, if you reduce the price of something, people will buy
more of it. Unfortunately, some economists can’t help but take the idea too
far.
"Freakonomics" authors Steven Levitt and Stephen
Dubner tell a story in their new
book, "Think Like a Freak," about meeting David
Cameron before he became the U.K. prime minister. They tried to make him see
the folly of the taxpayer-funded National Health Service, through which
people get treatments free of charge. They explained that the market for
medical services is just like any other market, and it can't work right
unless patients have to pay.
As Levitt, a
professor of economics at the University of
Chicago, summed it up: “It doesn’t take a whole lot of smarts or a whole lot
of blind faith in markets to recognize that when you don’t charge people for
things (including health care), they will consume too much of it.”
Maybe Cameron lacks smarts, because he abruptly
ended the meeting. Far more likely, he's intelligent enough to know a
juvenile ideological argument when he sees one, even if it's made by someone
who ought to know better. Economists have
understood for years that medical services aren't
simple “goods” such as apples or automobiles, and that free markets for such
things don't work very well.
The trouble is an imbalance of knowledge. Most of
us don't know enough about medicine to diagnose our own problems. That
gnawing pain in your gut might be nothing, or it might be a sign of
something more serious. If it persists, you'll need medical experts, aided
by technology, to identify the problem, just as you would need an expert
mechanic to discover what's wrong with a car that won't start or a
refrigerator that won’t cool.
Experts know more than you do, so you're at their
mercy when purchasing their services. You can only hope the doctor will
prescribe the right tests and treatment. Did you really need that $3,000
magnetic resonance imaging scan? What about those super-expensive pills,
allegedly to protect your stomach lining? Even after you recover, you still
won't be sure what part of the treatment was really necessary.
Consumers cannot possibly buy something
intelligently if they don't know what they want or need, and they can't
properly judge whether what they bought was worth it. Hence, such “credence
goods” aren't subject to typical market forces.
Reaching the right amount of consumption at the right price requires lots of
extra things such as better knowledge on the part of consumers (which is
often impossible), ways to verify the quality of treatments (often difficult
or impossible), or ways to hold experts liable for mistreatment (either
impossible or impractical).
Levitt's and Dubner's vision has other flaws. Price
may well deter people from seeking treatments that we actually want to
encourage. What if, for example, we let vaccine manufacturers sell their
products in an open market, rather than requiring parents to vaccinate their
children against diseases such as polio or measles? Many would certainly
choose not to pay $200 for a series of shots. The market would find its
equilibrium, guaranteeing sporadic epidemics of easily preventable diseases.
No wonder many people are deeply suspicious of
economists. We hear way too much cheerleading for the notion that markets
can solve all our problems and way too little about the complexities we face
in trying to supply things such as credence goods to the people who need
them -- which is all of us. Too bad, because this is economics at its best.
The myth of easy solutions through free markets is
endlessly appealing. It makes the complicated seem simple and avoids facing
up to real trade-offs. This may be freaky thinking, but not in a good way.
MEDICAL science is hazy about many things, but
doctors agree that if a patient is losing pints of blood all over the
carpet, it is a good idea to stanch his wounds. The same is true of a
health-care system. If crooks are bleeding it of vast quantities of cash, it
is time to tighten the safeguards.
In America the scale of medical embezzlement is
extraordinary. According to Donald Berwick, the ex-boss of Medicare and
Medicaid (the public health schemes for the old and poor), America lost
between $82 billion and $272 billion in 2011 to medical fraud and abuse (see
article). The higher figure is 10% of medical spending and a whopping 1.7%
of GDP—as if robbers had made off with the entire output of Tennessee or
nearly twice the budget of Britain’s National Health Service (NHS).
Crooks love American health care for two reasons.
First, as Willie Sutton said of banks, it’s where the money is—no other
country spends nearly as much on pills and procedures. Second, unlike a
bank, it is barely guarded.
Some scams are simple. Patients claim benefits to
which they are not entitled; suppliers charge Medicaid for non-existent
services. One doctor was recently accused of fraudulently billing for 1,000
powered wheelchairs, for example. Fancier schemes involve syndicates of
health workers and patients. Scammers scour nursing homes for old people
willing, for a few hundred dollars, to let pharmacists supply their pills
but bill Medicare for much costlier ones. Criminal gangs are switching from
cocaine to prescription drugs—the rewards are as juicy, but with less risk
of being shot or arrested. One clinic in New York allegedly wrote bogus
prescriptions for more than 5m painkillers, which were then sold on the
street for $30-90 each. Identity thieves have realised that medical records
are more valuable than credit-card numbers. Steal a credit card and the
victim quickly notices; photocopy a Medicare card and you can bill Uncle Sam
for ages, undetected.
It is hard to make such a vast system secure:
Medicare’s contractors process 4.5m claims a day. But pointless complexity
makes it even harder. Does Medicare really need 140,000 billing codes, as it
will have next year, including ten for injuries that take place in mobile
homes and nine for attacks by turtles? A toxic mix of incompetence and
political gridlock has made matters worse. Medicare does not check new
suppliers for links to firms that have previously been caught embezzling
(though a new bill aims to fix this). Fraud experts have long begged the
government to remove Social Security numbers from Medicare cards to deter
identity thieves—to no avail.
Start by closing the safe door
One piece of the solution is obvious: crack down on
the criminals. Obamacare, for all its flaws, includes some useful measures.
Suppliers are better screened. And when Medicaid blackballs a dodgy
provider, it now shares that information with Medicare—which previously it
did not. For every dollar spent on probing health-care fraud, taxpayers
recover eight. So the sleuths’ budgets should be boosted, not squeezed, as
now.
But the broader point is that American health care
needs to be simplified. Whatever its defects, Britain’s single-payer
National Health Service is much simpler, much cheaper and relatively
difficult to defraud. Doctors are paid to keep people well, not for every
extra thing they do, so they don’t make more money by recommending
unnecessary tests and operations—let alone billing for non-existent ones.
Too socialist for America? Then simplify what is
left, scale back the health tax-perks for the rich and give people health
accounts so they watch the dollars that are spent on their treatment. After
all, Dr Berwick’s study found that administrative complexity and unnecessary
treatment waste even more health dollars than fraud does. Perhaps that is
the real crime.
Democrats have long been promising that, once
people get signed up, they’re going to love ObamaCare. Candidates are going
to run on its merits, and the law is going to be a big positive for Dems
during the 2014 midterms. Those who were still against it were a small,
dwindling minority. As soon as the signup date passed, and the target
numbers were (allegedly) reached, negative perception was supposed to fade
away.
Uh-oh.
According to a new Washington Post piece entitled
“ObamaCare
hits new low,” that’s simply not happening. In
fact, a new Pew poll shows the law is more despised than ever.
A new poll shows the public’s opposition to
ObamaCare has never been higher.
The Pew Research Center poll shows disapproval of
the law hitting a new high of 55 percent. It comes on the heels of
several polls last week
that showed the law had very little—if any—bump after sign-ups on the
health-care exchanges exceeded goals.
WASHINGTON—Just more than a quarter of
the eight million people who signed up for health plans under the Affordable
Care Act are in the prized demographic of 18 to 34 years old, falling short
of the figure considered ideal to keep down policy prices.
The data, released Thursday by the Obama
administration, painted a more complete picture of enrollment in the plans.
They show that about 28% of people picking plans on the state and federal
insurance exchanges by April 19—after most states' enrollment deadlines
passed—were 18 to 34 years old, a generally healthy group. The proportion is
higher than previous counts. But it is significantly below the 40% level
that some analysts consider important for holding down rates by balancing
the greater medical spending generated by older enrollees.
Insurers right now are setting rates for 2015, and
the age data will be a key factor in their decisions. Some insurers say that
despite seeing a late surge in younger enrollees, their sign-ups still
skewed older overall than they had expected.
One big insurer, Florida Blue, had projected an
average age for enrollees in the late 30s, but instead is seeing a figure in
the low 40s. The difference is "significant," said Senior Vice President Jon
Urbanek. It would "tend to drive a higher rate increase" for next year, he
said. But the impact is likely to be blunted by provisions in the law
designed to compensate insurers that end up with higher-than-anticipated
medical claims.
Federal officials said Thursday they were
comfortable with the balance of risk in the new insurance markets in their
first year of operation.
"We believe, based on the data that we've seen and
the independent data that is out there, that premiums will be stable and
that the risk pool is sufficiently large and varied to support that kind of
pricing," said Michael Hash, a top official overseeing the health law's
implementation at the Department of Health and Human Services. He added that
he believed that to be the case "in every state."
The 28% proportion falls short of the 40% share
that young adults represented in the potential target population for the
exchange plans, according to an analysis by the Kaiser Family Foundation.
But for the insurance industry, the key is how the demographics of the
sign-ups stack up against assumptions they made when they set their rates.
The health law bars insurers from charging riskier
consumers more, and as a result, the health plans have said they need a
large number of younger people and men to sign up to balance out the likely
higher medical claims incurred by older people and women. Insurers view
women as costlier to cover because of pregnancy and other female health
needs.
The administration said previously that through
Feb. 28, 25% of enrollees had been 18 to 34 years old.
The federally run exchanges serving 36 states had
allowed most people until April 15 to sign up for coverage for the year.
Some of the 14 state-run exchanges set deadlines for a few days later, and
in a small number of those states, people were able to sign up through April
30 or after.
Continued in article
Jensen Comment
A table in this article reveals a high variance among states in terms of younger
enrollees. In states that allow large numbers of new signups there are many who
are signing up for free Medicaid rather than the ACA exchanges. It's a better
deal to be on Medicaid than to be on the plans of parents or on ACA exchange
plans.
Many doctors and hospitals that refuse ACA exchange plans will accept
Medicaid patients.
A new survey from the Journal and NBC News shows
that the President's signature health care law remains deeply unpopular.
Yesterday we noted the ABC/Washington Post poll
showing Mr. Obama with the lowest marks of his presidency, just two weeks
after he claimed success in rolling out insurance policies under the
Affordable Care Act. "This thing is working," President Obama said of the
law on April 17.
Now the latest edition of the WSJ/NBC poll suggests
just how few Americans agree with that statement. A mere 8% of respondents
in the new survey say that the Affordable Care Act "is working well the way
it is."
There are differences of opinion on how to respond
to the mess Washington has created, but few Americans think it's time to
shut down the debate over the health law. A full 49% say that the law should
either be scrapped entirely or given "a major overhaul," while 40% say the
law needs "minor modifications to improve it."
Perhaps the White House can take comfort in the
fact that the Journal/NBC survey shows modest improvements in support for
the President and his signature health law, compared to recent editions of
this poll. But both remain underwater. Mr. Obama's 44% approval rating lags
his 50% disapproval rating. And while 36% of respondents say the health law
is a good idea, 46% say it's a bad idea. Congressional Democrats up for
re-election this fall may be especially troubled by these results given that
43% of survey respondents voted for Barack Obama in 2012, versus 34% who
voted for Mitt Romney. In the actual 2012 race, Mr. Obama bested Mr. Romney
by four percentage points.
In the survey, 54% of respondents disapprove of Mr.
Obama's handling of the economy, compared to just 42% who approve. And by
more than two to one, Americans say the country is headed on the "wrong
track" versus the "right direction."
A little more than six months before Americans go
to the polls, Mr. Obama and his signature health law remain liabilities for
his party.
Jensen Comment
I still think that the Affordable Care Act is a politically-crafted abomination
that proves once again that compromise solutions can be terrible solutions due
to absurd compromises. The ACA should should be administered by the government,
leaving out the private sector insurance companies much like Medicare is
administered. Only I would insist on better fraud controls that drag down
Medicare.
Private sector insurance companies should be involved only in providing
supplemental plans. In this respect I favor the German plan where there is basic
public sector insurance coverage for everybody plus optional supplemental plans.
Here's how the German system works:
Health Insurance in Germany ---
http://www.toytowngermany.com/wiki/Health_insurance
Jensen Comment
I'm just not willing to accept the ACA as a success no matter how many people
sign up for the only show in town right now. It has become a political "show"
where politicians are avoiding the main failures of the ACA.
A huge problem is that millions of employer-subsidized plans are being
dropped in favor of inferior high-deductible plans having much more limited
access to doctors and hospitals. Here in New Hampshire nearly half the hospitals
and far too many physicians are refusing to accept ACA covered patients.
Rationing of health care in one form or another is probably inevitable given
that it is so costly and virtually every nation has a shortage of physicians and
other health care workers and facilities. In the USA we've unfairly rationed and
still do ration health care on the basis of income. For example, the somewhat
poor people not eligible for Medicaid often can now only afford the high
deductable Silver or Bronz ACA plans that have 30% or 40% deductibles that
highly discourage seeking medical treatment --- a type of rationing based on
income.
With such high deductibles people who cannot afford their share of the doctor
and hospital bills will put off medical diagnosis and treatment until their
ailments become critical. The is ACA rationing on the basis of income and
economic choice such as getting a new car or a new knee.
Having said this, the USA will probably have to live with the ACA as written
until it is significantly improved by Congress or the courtsw. Here are a few of
my major concerns where improvements are drastically needed.
The high-deductible plans having 30% or higher deductibles are terrible.
Too many people having these plans will put off paying for medical
treatments and medications because ACA-covered people simply cannot or will
not pay the high deductibles. People in the USA will literally become sicker
and sicker, suffer more, and die sooner.
There's a 90-day grace period in the ACA where people who default on
paying premiums are still covered for the first 30-days by the insurance
company and the next 60 days by the doctors and hospitals providing the care
is absolutely absurd. The insurance companies will simply pass on these bad
debt losses (which may be enormous for surgeries and hospital confinements)
into higher premiums for the people who pay their medical insurance
billings.
An enormous number of doctors and hospitals are so afraid of having to
provide free care to ACA deadbeats that they are refusing to participate in
the ACA medical care networks. For example, in New Hampshire where I live
about half the hospitals and many physicians in the state are refusing to
care for ACA patients except in dire emergencies where patients cannot be
shipped by ambulance to other hospitals.
Something drastic must be done to reduce the number of remaining uninsured and the
number of formerly insured people who tried the ACA for a while and got
tired of having to pay for lousy, high deductible health insurance policies.
They take their chances as uninsured people who cannot be turned down by
emergency rooms (much like the system before the ACA was passed).
One partial solution is to provide more and more incentives for
large and small businesses and other employers to provide medical
insurance coverage of employees.
Another partial solution is to net health insurance premiums
out of unemployment and disability benefits and welfare payments for
people who do not qualify for Medicaid.
Another partial solution is to have the IRS garnish wages of people
who are not up to date on paying health insurance premiums and/or cheat
on their claims for subsidies on those premiums.
There are no easy answers here. I hope President Hillary Clinton reignites
her preferred option of taking the private sector insurance companies out of
universal health coverage in a government administered plan that takes us closer
and closer to the German system for health care insurance.
I vote for the German system that operates a lot like Medicare for all ages
of citizens but with better fraud controls. I used to lean toward the Canadian
system, but it's elective medical procedure delays for new hips, knees, and
shoulders forces too many Canadians to pay cash for such procedures in the USA.
when they grow weary of waiting out Canadian health plan approval.
What bothers me the most are the blatant lies our leaders broadcast to voters
just to get a health care bill passed. I would be much less critical if they had
flat out been honest about what they really intend for this legislation to cost.
One example of a political lie is that Cadillac insurance plans will be taxed.
The unions didn't object very loudly because they know full well that by 2018
when the tax is supposed to commence, Congress will have repealed all or most of
the Cadillac tax. The same is true with many other provisions of the
legislation that can be altered at taxpayer expense. Also our leaders promised
that nearly a half trillion dollars will be saved by reducing third party
payments to physicians. Dumb! Dumb! Dumb!
Prepare to be enraged by this exclusive
investigative report from CNN. As Allahpundit
notes, the media has been documenting the VA's
egregiously poor treatment of our veterans for some time, blowing the
whistle on
horrific conditions and
scandalously long wait times for care. But the new
revelations introduce an additional, more sinister, element into the
equation: Lethal, ass-covering corruption. An absolute disgrace:
How Physicians and Hospitals Can Try to Collect Bad Debts During Two
Months When Medical Care is Mandated snf Insurance Companies Refuse to Pay
for Deadbeat Patient Care
The American Medical Association is protesting an
Obamacare provision it argues will leave doctors with the bill for up to two
months of unpaid care (out of the so-called 90-day "grace period"
of unpaid premiums)
One of the Main Reasons Your Doctor and/or Hospital May be Refusing to
Participate in the ACA: Being Forced to Serve Deadbeats at No Pay
In New Hampshire, many of the doctors and 10 or 26 hospitals are refusing to be
part of any ACA network of Medical service providers
The American Medical Association is protesting
an Obamacare provision it argues will leave doctors with the bill for up to
two months of unpaid care.
The provision
requires insurers to allow patients with
federally-subsidized health insurance plans a 90-day grace period to pay
their premiums before canceling the coverage. Insurers are on the hook for
the first 30 days of care, if the
customer
never pays up, but doctors will be stuck without
payment for any services between 30 and 90 days, until the coverage is
canceled.
The American Medical Association was a strong
supporter of Obamacare.
“If a patient is being treated for a serious
illness, that requires ongoing care,” Dr. Ardis Dee Hoven, president of the
AMA,
said in a press
release Wednesday. “The physician is having to assume the
financial
risk for this. That’s the bottom line.”
The AMA released
new resources Wednesday for its member physicians,
offering “step-by-step
help
for minimizing risk,” while admitting that the
Obamacare rule “could pose a significant financial risk for medical
practices.”
The doctors’ association spent $22 million lobbying
for Obamacare to pass in 2010, the most of any health care organization, and
has kept up their spending in the years since while the law’s final
regulations have been tinkered with.
The rule’s damaging effect on doctors — especially
those with private practices — exemplifies the split between the AMA’s
lobbying ambitions and the outlook of the average doctors that do the work.
After Obamacare’s passage, just 13 percent of
American physicians
agreed with the AMA’s support of the law,
according to a survey from physician recruitment firm Jackson & Coker.
Surveys have repeatedly found that doctors don’t believe the law will let
them help patients and make a living.
Jensen Comment
What I wonder is what happens to the deadbeat who plays the following game:
Pay the premium once every four months, then get one month of free coverage from
the insurance company and two months of free coverage from all health care
providers on the network.
However, if you have no assets to make lawsuits worthwhile just get free
medical care in emergency rooms just like in years before the ACA. That
way you avoid having to pay a premium once every four months.
Question
Why are many corporations going to drop their health care coverage of employees
over the next several years?
Ezekiel Emanual, Rahm's elder brother, is a physician who helped design
ObamaCare and has been one of its most intense champions. So you may be
surprised to learn that in his new book, "Reinventing American Health Care,"
he predicts that tens of millions more Americans will lose their medical
plans in the coming decade.
In
its "You're the Boss" small-business blog, the
New York Times quotes
his prediction that by 2025, "fewer than 20 percent of workers in the
private sector will receive traditional employer-sponsored health
insurance." As of March 2013 such benefits were available to 85% of
full-time private-sector workers, according to the
Bureau of Labor Statistics.
If Emanuel is right--and especially if, as he implies, ObamaCare was
designed to produce such an outcome--the president's repeated pledge that
"if you like your plan, you can keep your plan" was a far more widespread
fraud than has yet been realized.
In
the next two to three years, Emanuel predicts, "a few big, blue-chip
companies will announce their intention to stop providing health insurance.
Instead, they will raise salaries substantially or offer large, defined
contributions to their workers. Then the floodgates will open." Small
businesses will be even more eager to drop coverage.
The
main reason Emanuel expects this result is the so-called Cadillac tax, which
takes effect in 2018 and has nothing to do with the bailout of General
Motors. Rather, it is a levy on what the Times calls "especially generous
health plans."
Yet
one cannot say ObamaCare was designed with the clear purpose of discouraging
employer coverage. It leaves in place the tax exemption for such plans,
which Emanuel understatedly acknowledges, in the Times's words, "is a big
obstacle to this vision." It also imposes a fine on companies with more than
50 employees that don't insure enough of them. Although the fine for not
insuring a worker is considerably less than the cost of insuring one, it's
still an incentive to continue coverage.
Continued in article
Jensen
Many of these doomsday forecasts for the ACA are based upon the assumption that
the 2010 ACA legislation won't be changed much. However, a Republican majority
in the Senate could lead to some major revisions in the ACA, including repeal of
the Cadillac Tax and repeal of the way physicians and hospitals must treat
deadbeats for free if they renege on keeping their insurance premiums payments
up to date.
I don't anticipate total repeal of the the ACA, but there are many disasters
in need of legislative repair no matter what the outcomes of the 2014 and
2016 elections.
The Cadillac Tax: A Game Changer for U.S. Health Care: Can you
explain this tax to your students?
Do you understand the Cadillac Tax provision of the Affordable Healthcare Act
that will have a monumental 2018 impact on healthcare coverage of employees who
are now covered by employer plans --- plans now costing the government over $250
billion per year? But not for long!
Do you understand the Cadillac Tax provision?
Me neither. As Nancy Pelosi said years ago, Congress passed the ACA before
anybody in the USA had a chance to study all the surprises in this the enormous
bill.
If you're covered presently on your employer's plan you should most certainly
learn about the Cadillac Tax provision that kicks in in 2018.
Jensen Comment
Non-profit organizations, especially labor unions, for whom Cadillac plans are
especially popular will be allowed to keep their plans without penalty since tax
deductions are not of concern to them.
Having preferred networks of doctors and hospitals is not unheard of in
national health care plans. Germany, for example, has both public health
insurance plus premium coverage with private insurance. Cuba notoriously has
bourgeoisie plans for members of the Communist Party and the wealthy versus
proletariat plans for the poor people.
If you Congressional representative brags about signing
up for Obamacare ask if he or she has a Cadillac Obamacare plan that lets them
choose their own doctors and hospitals.
Hi Jim,
What keeps employer coverage popular is the tax break for
each employee by not making employer contributions to
medical plans taxable on a W-2 form. I hate to see the
Cadillac tax ruin all this and more!
What I see is wrong with losing employer medical coverage is the
adverse societal impact (an externality) of taking medical
insurance choices away from employers and giving it to each and
every cowboy/cowgirl --- this leads to bad decisions for
healthcare in the USA.
When I was on the insurance committee of my university we tried
to make responsible choices keeping in mind the needs of the
highest users of medical services among families of colleagues.
This led to recommendations for a group policy with
relatively low deductibles.
When making individual choices most cowboys will opt for the
lowest-cost high-deductible options such as 40% deductible Bronz
Plans or 30% deductible Silver Plans. The only people choosing the
20%-deductible Gold Plans will be those with known expensive family
preconditions such as heavy diabetes and mental health afflictions
and AIDS.
The government is now considering dirt-cheap 50% deductibles which
will be very popular among the cowboys who even sign up for any
medical insurance.
At the moment most of the people signing up for individual ACA exchanges
are choosing the lower-cost high deductible plans because these people
are relatively poor and their government subsidized premiums for the
most crappy plans are relatively cheap.
Sadly, studies show that crappy high deductible coverage leads to delays
in seeking health care diagnosis and treatment except in emergencies.
These studies show that the cowboys will put off going to the doctor
more than the cowgirls. The cowboys favor other options for their
spending money --- much of which goes for courting cowgirls, more
expensive guns, and " faster horses, younger women,
older whiskey, and more money".
When corporations start dropping their relatively better coverage having 10%
deductibles, the employee cowboys will be given even more salary to choose
their own individual ACA exchange plans. They will be enough increase in
salary to consider gold low deductible plans. For cowboys? Yeah Right!
The thing about most cowboys is that they think they will never get sick or
fall off their horses or get saddled with a sick kid.
They will choose the highest deductible crap plans and use their added
salary money for for cruises, more expensive condos, ski trips, Las Vegas
junkets, newer trucks, and whatever modern cowboys like better than health
care insurance that they think they don't really need at all..
He was an old-time cowboy, don't you understand
His eyes were sharp as razor blades his face was leather tan
His toes were pointed inward from a-hangin' on a horse
He was an old philosopher, of course
He was so thin I swear you could have used him for a whip
He had to drink a beer to keep his britches on his hips
I knew I had to ask him about the mysteries of life
He spit between his boots and he replied "It's faster horses, younger women,
Older whiskey, and more money"
He smiled and all his teeth were covered with tobacco stains
He said, "It don't do men no good to pray for peace and rain.
Peace and rain is just a way to say prosperity,
And buffalo chips is all it means to me."
I told him I was a poet, I was lookin' for the truth
I do not care for horses, whiskey,
Women or the loot I said I was a writer,
My soul was all on fire
He looked at me an' he said, "You are a liar."
"It's faster horses, younger women,
Older whiskey, and more money"
Well, I was disillusioned, if I say the least
I grabbed him by the collar and I jerked him to his feet
There was something cold and shiny layin' by my head
So I started to believe the things he said
Well, my poet days are over and I'm back to being me
As I enjoy the peace and comfort of reality
If my boy ever asks me what it is that
I have learned I think that I will readily affirm
"It's faster horses, younger women,
Older whiskey, and more money" "It's faster horses, younger women,
Older whiskey, and more money.
It ain't no damn expensive ACA
medical insurance plan
that mostly subsidizes sick folks
and fat-cat insurance companies.
One by one, the myths of the
Affordable Care Act have been revealed.
When the curtain on open enrollment falls on March 31, the last remaining
big myth of
ObamaCare
will be fully exposed: The individual mandate has failed.
After a last-ditch effort with President
Obama himself encouraging "young invincibles" to sign up before the
deadline, the administration is scrambling to boost enrollment. On Tuesday,
the White House announced that people who applied for coverage on the
federal health-insurance exchange will have until mid-April to finish the
paperwork.
The mandate was supposed to be the
administration's magical elixir for the assorted shortcomings of the
Affordable Care Act.
Disappointing early enrollment numbers? More people will sign up eventually
to avoid mandate penalties. Potential premium spikes for government-approved
coverage that must ignore cost differences in the age- and health-related
risks of enrollees? Forcing young and healthy individuals to buy coverage
will spread out the costs.
But the individual mandate was never
strong enough to force millions of Americans to buy insurance they did not
want or could not afford. Last week, the Obama administration estimated that
five million Americans had signed up thus far for insurance on the
exchanges, falling short of original projections by the administration and
the Congressional Budget Office that there would be seven million first-year
enrollees. Yet even the five million figure needs to be discounted by at
least another 20% to account for people who fail to pay for their first
month's premium, according to insurers' estimates of early enrollees.
The individual mandate had the least
effect on those it was supposed to encourage to gain coverage—the uninsured.
McKinsey & Co. surveys found that a little over one-quarter of people
signing up for coverage last month were previously uninsured. Goldman Sachs
GS +0.35% analysts estimate that about one million uninsured Americans will
sign up for the ObamaCare exchanges before open enrollment ends. For
perspective, that's about 2% of the 48 million uninsured.
A larger share of the exchange enrollees
is likely coming from people whose previous coverage was canceled (due to
other ObamaCare rules) or those who found a somewhat better deal for
exchange coverage (due to much more generous low-income subsidies). More
recent increases in insurance coverage are appearing in health plans outside
of the exchanges.
The mandate penalties are too small and
limited to be very persuasive. Many uninsured individuals are exempted from
them. Either their incomes are lower than the federal income tax filing
threshold (roughly $10,150 for a single individual), the minimum essential
coverage that ObamaCare requires would be "unaffordable" under the law
(costing them more than 8% of their household income), or they fall within a
growing list of other exemptions from the mandate.
Even when the CBO was more optimistic
about the individual mandate's effects (in April 2010), it expected about
two-thirds of the 21 million nonelderly persons still uninsured in 2016 to
be exempt from the mandate or its penalties.
Those not exempt face modest fines
compared with the out-of-pocket cost of paying premiums for ObamaCare-required
insurance. For example, the maximum penalties for a single adult remaining
uninsured throughout all of 2014 would amount to the higher of $95 or 1% of
household income above the federal income tax filing threshold. This is a
fraction of the cost of health insurance for potential enrollees in
government exchanges.
The threat behind the penalties is even
less believable. The Affordable Care Act explicitly prohibits the Internal
Revenue Service from using its most powerful enforcement tools like criminal
penalties and levying property—such as wage garnishment.
If the IRS manages to discover someone
without required coverage for all or part of a year, it can do little more
than collect the penalty by taking it out of any other income tax refunds
owed to an uninsured taxpayer. That risk can be limited or avoided by
reducing the amounts withheld from one's regular paycheck for income taxes.
For the mandate to have teeth, the size of
the penalty would need to be greatly increased, exemptions would need to
decrease, and enforcement would need to be stronger. Good luck with
convincing congressional Democrats facing midterm elections to commit
political suicide.
Even then, a tougher mandate still might
not work. The CBO concedes that there is "little empirical evidence
concerning individual people's responsiveness to health insurance mandates."
In other countries with much higher penalties, such as Switzerland or the
Netherlands, health-insurance mandates have had little success in changing
the behavior of the uninsured and largely reinforced existing levels of
coverage. This was the finding in a November 2007 Health Affairs study by
former Obama Health and Human Services official Sherry Glied and two
co-authors. They also found mixed results from mandates for auto insurance.
The March 31 deadline to gain coverage in
government exchanges will come and go with a whimper, not a bang. Enrollment
numbers may rally a bit, but likely still will remain low. Any net gains in
coverage will be due primarily to ObamaCare's generous exchange subsidies
for lower-income Americans, plus automatic enrollment of income-eligible
Medicaid beneficiaries.
The ineffectiveness of the individual
mandate is trumped only by its unpopularity. Two-thirds of Americans support
getting rid of the individual mandate completely, according to a recent ABC
News poll. This month, the House of Representatives voted again to delay
enforcement of the individual mandate for a year, with support from 27
Democratic defectors.
The Obama administration already has been
forced to delay, drop or revise a host of other requirements in the law,
such as the employer mandate, minimum benefits standards, and
nondiscrimination rules. Until now, the White House has refused to delay or
repeal the unpopular individual mandate because it was supposed to hide the
full "on-budget" costs of ObamaCare. Its architects hoped that the mandate
could force millions of Americans to pay for the law's expensive coverage
and cross subsidies through higher premiums instead of higher taxes. But
they always lacked sufficient political support to try to make the mandate
powerful enough to accomplish this.
Expect the mandate to turn into even more
of a "suggestion" before votes are cast in this November's congressional
elections. With the mandate illusion off the table, the Affordable Care Act
can no longer hide what it truly is: another unfunded liability for
taxpayers
The promise of Obamacare was the right one and the
hope for extending healthcare coverage to the un-and under-insured a step in
the right direction. Yet the unintended consequences will hit the average,
hard-working American where it hurts: in the wallet. Currently a national
dialogue is emerging by all political parties on the issue of income
inequality. That is a debate worth having. The White House and Congressional
Democrats are “resetting” the domestic agenda following the negative fallout
from the rollout of the ACA. They plan to shift focus from health care to
bread and butter issues of income inequality that have eroded the American
paycheck for decad
Ironically, the Administration’s own signature
healthcare victory poses one of the most immediate challenges to redressing
inequality. Yes, the Affordable Care Act will help many more Americans gain
some health insurance coverage, a significant step forward for equality. At
the same time, without smart fixes, the ACA threatens the middle class with
higher premiums, loss of hours, and a shift to part-time work and less
comprehensive coverage.
• Transferring A Trillion Dollars in Wealth:
Most of the ACA’s $965 billion in subsidies will go directly to
commercial insurance companies, one of the largest transfers of public
wealth to private hands ever. Since the ACA passed, the average stock
price of the big for-profit health insurers doubled, their top
executives were paid more than a half billion dollars in cash and stock
options, and in the past 2 years, the top 10 insurers have spent $25
billion on mergers and acquisitions.
• Strangling Fair Competition: Before reform,
different types of health plans were regulated under different bodies of
law. The Obama Administration has blocked many non-profit health funds
from competing for the law’s proposed trillion dollars in subsidies by
refusing to set fair regulations for different types of plans. The
unbalanced playing field will give employers of people covered by these
plans powerful incentives to drop coverage.
• Moving to Part Time Work: The
Administration’s experts say employers won’t follow the incentives and
drop coverage. But they also told the nation that employers would not
cut workers’ hours to get below the 30-hour per week threshold for “full
time” work, even as 388 employers announced hours cuts since early 2012.
• Cutting People’s Pay: If employers follow the
incentives in the law, they will push families onto the exchanges to buy
coverage. This will force low-wage service industry employees to spend
$2.00, $3.00 or even $5.00 an hour of their pay to buy similar coverage
Making Inequality Worse A Trillion Dollar Wealth
Transfer The Congressional Budget Office projects that the federal
government will spend at least $965 billion in subsidies to make coverage
purchased through the new online marketplaces affordable.
Nearly all of that money will go directly to health
insurance companies, one of the largest transfers of wealth from public to
private hands in history. This is the heart of the ACA — subsidies to
persuade health insurers to make their products affordable to new customers.
Even before subsidy checks, the ACA is benefiting for-profit health
insurers. The average share prices of the top 5 for- profits — Wellpoint,
United, Aetna, Cigna, Humana — have more than doubled since the March 23,
2010 passage of the ACA. At a time of record stock prices, the Big 5’s
aggregate share prices have increased almost twice as fast as the Standard
and Poor’s 500 index of blue chip stocks. 2 For-Profit Health Insurance
Stocks Since Obamacare $965 Billion: Projected insurance subsidies under
Obamacare, 10 years $25
Continued in article
Jensen Comment
The report fails to mention that insurance companies will be bearing very little
of the bad debts of insured people receiving medical care. These losses are
mostly going to be passed on to the physicians, hospitals, and other providers
of health care. The bad debts that are covered by insurance companies will be
passed on to the public by way of higher premiums.
President Obama prefers that private insurance companies to be third parties
in the ACA Act. Like the Clintons he prefers that the ACA be funded and managed
by the Federal Government much like Medicare is managed by the Government.
However, in his zeal to get the ACA passed he agreed to an ACA monster that
brings the private insurers into the ACA --- a disaster in the making where
private insurance companies walk off with guaranteed profits.
Jensen Comment
Many people who are eligible legally or illegally for these new ACA tax credits
don't know about them yet and probably won't understand them after they read
this section of the ACA code. Chances are that your current tax adviser, like
me, does not have clue about these credits that soon will be the law of the
land.
T-minus 14 days until open enrollment closes for
ObamaCare. It is crunch time for thousands as they decide if they want to
enroll, and ultimately how much of a tax credit to accept in order to
determine their first premium payment amount. Much attention has been
lavished on the “positives” of the ACA’s tax credits (also called premium
subsidies). White House press releases often highlight the impact of the
credits while chiding others for not including them when discussing the new
higher premiums under the law. Yet, the new reality of ObamaCare’s tax
credits has left finance reporters to pen articles warning readers to “take
care” when considering a tax credit and providing strategies for how best to
“protect yourself.” So what do finance reporters know that the White House
doesn’t?
By accepting a tax credit, low-income or
lower-middle class families face significant tax ramifications and potential
financial risk. Congress has changed the rules twice on consumers for the
credits, making the income cliffs steeper, and fully equipping the IRS to
claw back overpaid subsidies (unlike the individual mandate penalty).
The flip side of the tax credits is almost unknown
to the general public.
Who Exactly Gets The Tax Credits?
The ACA’s tax credits are given directly to the
insurance companies, and are calculated on a sliding scale, based on family
size, and in theory, to those making between 138% and 400% of the federal
poverty level (FPL) in states that have expanded Medicaid eligibility. In
states that have not expanded Medicaid, the tax credits are available to
those making between 100% and 138% FPL.
However, individuals can claim them by estimating
that they will make over 100% FPL even if they end up making 90% FPL in
these states, effectively closing the coverage gap we have heard Medicaid
expansion supporters and the media complain so loudly about. However, the
tax credits are unavailable to those with an “affordable” offer of
employer-based insurance, or for those on other forms of government-approved
coverage like standard Old Medicaid or Medicare.
Yet, soon to be published research by my colleague
Jonathan Ingram will show that the tax credits phase out quickly for those
in the exchange, and are therefore unavailable for many young people (18-34)
in numerous states making far less than 400% FPL, based on the complex
formula used to calculate the subsidies, and the price of the plans
available on the exchange. This fact is only making the Administration’s job
of convincing young people to sign up even harder.
The credits can only be used in a
government-sanctioned ObamaCare exchange. In other words, individuals
purchasing private insurance on their own must decide if they want to keep
their current insurance plan without a subsidy or drop their coverage to
take the tax credit. Since so many states rejected the President’s call to
renew policies for those facing cancellations, and the recent extension of
that policy, millions of Americans are facing this exact decision of joining
an exchange or buying elsewhere by March 31st.
All citizens that take the credit must file a tax
return to receive the credits regardless of their income. Failure to do so
will result in them being prohibited from seeking a credit in the future.
Married couples must file a joint return.
How You Take The Credit Could Determine Exposure
The initial tax credit calculation will be based on
an applicant’s income tax return from the previous year, or a best estimate
of what it will be next year. The credit can be taken in advance at the
beginning of the year. However, individuals who enroll in the ObamaCare
exchange will run the risk of having to pay back a significant portion of
the tax credit if their life circumstances change (more on this below).
The credit can also be taken on the following
year’s return in the form of a refund. However, individuals who make this
decision will be responsible for coming up with the full cost of the
ObamaCare exchange insurance at the beginning of the year. Individuals and
families do have the option of taking a partial credit.
Congress Has Changed ObamaCare’s Tax Credit Rules
Twice
Republicans have by and large ignored the tax
credit issue unless talking about the budget implications. Perhaps the
silence is due to the fact that Congress has voted to change ObamaCare twice
to increase the financial risk that families could face when they take the
credit.
Since the enactment of ACA, these limits have been
amended twice: first under the Medicare and Medicaid Extenders Act of 2010 (P.L.
111-309), and then under the Comprehensive 1099 Taxpayer Protection and
Repayment of Exchange Subsidy Overpayment Act of 2011 (P.L. 112-9). Congress
changed the payback protection to vanish at the 400% poverty level and
increased the payback amounts at 200% and 300% FPL from what they had been
before.
The result will be surprise bills from the IRS in
the mail come tax time 2015, in the order of a couple hundred dollars all
the way up to full value of any subsidy received if a family crosses the
400% FPL threshold. (This could be $10,000-$12,000 for a family of four, as
an example.) Just a few dollars of extra income could result in thousands of
back taxes to be paid.
Life Change Should Be Reported To The Exchange,
Requiring A New Application
Our lives are constantly in flux. Lower and
middle-class families rarely find themselves in static work and life
environments, but that is exactly what ObamaCare assumes. Even the most
common and mundane life changes could significantly impact an individual’s
financial situation if he or she decides to take the tax credit. So
ObamaCare recommends that individuals report these changes immediately.
Continued in article
Jensen Comment
This suggests to me a possible tax student assignment that might help the IRS.
Assign students in a tax course (probably teams of students) the creative task
of thinking up how identity thieves filing false tax returns for the refunds can
add to those refunds by filing for ACA tax credits. Of course the ID thieves
don't have to worry about subsequent penalties since the IRS does not have a
clue about who the thieves are that are filing false income tax returns for the
refunds.
Better yet expand this to assigning students to write scenarios on all (or at
least many) ways that ID thieves can pad their fake tax returns in general
to maximize illegal tax refunds.
Voters in November might be ready to show Democrats
what they think about removing choice and hiking costs, as well as their
arrogance in determining that a few politicians in Washington know better
about their choices than they do. Unfortunately, Barack Obama doesn’t appear
to have figured out this problem. In an interview with WebMD, Obama finally
acknowledged that, contra his promise, people might not be able to keep the
doctors they liked, but that they probably shouldn’t have liked those
doctors in the first place.
Jensen Comment
Why won't he still admit the truth. Many of those doctors that "they liked" tend
to be so good that they get more than enough business without working for
medical clinics and
Here in New Hampshire 10 of the 26 hospitals and many of the best physicians
in the state refuse to go on network. One of the main reasons is that patients
in default on their health exchange premiums must be treated for 90 days with
physicians and hospitals bearing the treatment costs for the last 60 of those 90
days. God forbid that the fat-cat insurance companies or the Federal government
take the risks of paying for the free care during those 60-days.
It's important to know that the article below was published by The New York
Times and not The Wall Street Journal
The Many Taxes of the Affordable Health Care Act are Badly Hurting Employment
Opportunities
The
Affordable Care Act contains at least two economically distinct taxes on
labor market activity. Even the experts on the law have failed to recognize
all of them.
The Affordable Care Act
tries to make health insurance affordable by offering means-tested subsidies
and tax credits to households so they can make their payments for monthly
health insurance premiums and out-of-pocket health expenses like deductibles
and copayments for medical services.
This assistance is
means-tested because higher-income households get less assistance than
lower-income households. As a household’s income rises, it has to pay more
for the same coverage. As a matter of economics, it wouldn’t have been much
different if the law had given assistance to all households and then paid
for it with a new income tax that was capped once household income hits 400
percent of the federal poverty line.
Naturally, income taxes
discourage people from doing the things that create income. This is not to
say that everyone responds to every tax, just that the average result of an
additional income tax is less income.
Economists have long
understood and publicized the implicit income taxes that come with attempts
to make health care affordable. As my fellow Economix blogger Uwe Reinhardt
put it 20 years ago (in
an article with Alan B. Krueger) about one
specific subsidy plan, health insurance premium assistance “would present
millions of low-income American families with total marginal tax rates in
excess of 75 percent.” Professor Reinhardt also
noted recently that
the marginal tax rate implicit in any particular health insurance proposal
depends very much on the features of that plan.
The Congressional Budget
Office also
highlighted this issue as the Affordable Care Act
was going through Congress. Daniel P. Kessler, a Stanford professor, also
discussed it in
a commentary in 2011.
Under the Affordable Care Act, only a small minority
of workers is expected to get subsidized coverage. So
economists concluded that aggregate labor market
effects of the new law would be minimal.
I would agree if the
implicit income tax were the only new tax on labor market activity in the
new law. But there’s more: The Affordable Care Act also contains a new
implicit tax on employment that affects far more people than its implicit
income tax does.
Income taxes and employment
taxes are not the same, because the income tax is based on income and the
employment tax is based on employment. Two households with the same family
structure (in number and age of family members) and annual income who live
in the same county will not necessarily get the same assistance from the
Affordable Care Act. The household that is employed more months of the year
is likely to get less assistance (and maybe no assistance) from the new law,
because the law requires that, during the months that they are employed,
full-time workers get health coverage from their employer before they turn
to the new health insurance marketplaces for federal government subsidies.
To put it another way, even
if the health insurance subsidies in the Affordable Care Act had been a
specific dollar amount that was not phased out with household income, the
law would still act as a tax on employment because most workers could not
get the assistance during the months they were at work.
This new implicit
employment tax will apply to tens of millions of workers who are offered
health insurance on their job and to millions of non-employed persons who
are considering a position that offers coverage.
(The new employment tax
also changes the types of jobs that are created and accepted by workers, but
this effect does not prevent the law from reducing employment, as
Trevor Gallen and I explain).
As far as I know, before
this month the only place that one could read about the Affordable Care
Act’s new employment tax was in
this paper by David
Gamage, in posts I have written for
this blog, in
my 2012 book or in
a 2013 paper. Even though the consequences of the
law have been debated at least as far back as 2009, the law’s advocates have
yet to acknowledge the new implicit employment tax, let alone estimate the
number of people who will face it.
But in a
recent paper, the Congressional Budget Office has
joined me in explaining that it’s not just the implicit income tax that will
contract the labor market. As the paper puts it, “The loss of subsidies upon
returning to a job with health insurance is an implicit tax on working,”
adding that the effect of the new tax is “similar to the effect of
unemployment benefits” (see Page 120).
Once we consider that the
new law has an
employer penalty, too, the labor market will be
receiving three blows from the new law: the implicit employment tax, the
employer penalty and the implicit income tax. Regardless of how few
economists acknowledge the new employment tax, it should be no surprise when
the labor market cannot grow under such conditions.
Cities, counties, public schools and community
colleges around the country have limited or reduced the work hours of
part-time employees to avoid having to provide them with health insurance
under the Affordable Care Act, state and local officials say.
The cuts to public sector employment, which has failed
to rebound since the recession, could serve as a powerful political weapon
for Republican critics of the health care law, who claim that it is creating
a drain on the economy.
President Obama has twice delayed enforcement of the
health care law’s employer mandate, which would subject larger employers to
tax penalties if they do not offer insurance coverage to employees who work
at least 30 hours a week, on average. But many public employers have already
adopted policies, laws or regulations to make sure workers stay under that
threshold.
Even after the administration said this month that it
would ease coverage requirements for larger employers, public employers
generally said they were keeping the restrictions on work hours because
their obligation to provide health insurance, starting in 2015, would be
based on hours worked by employees this year. Among those whose hours have
been restricted in recent months are police dispatchers, prison guards,
substitute teachers, bus drivers, athletic coaches, school custodians,
cafeteria workers and part-time professors.
Continued in article
Jensen Comment
Sadly these part-time jobs are at the lower end of wage earners.
Cities, counties, public schools and community
colleges around the country have limited or reduced the work hours of
part-time employees to avoid having to provide them with health insurance
under the Affordable Care Act, state and local officials say.
The cuts to public sector employment, which has failed
to rebound since the recession, could serve as a powerful political weapon
for Republican critics of the health care law, who claim that it is creating
a drain on the economy.
President Obama has twice delayed enforcement of the
health care law’s employer mandate, which would subject larger employers to
tax penalties if they do not offer insurance coverage to employees who work
at least 30 hours a week, on average. But many public employers have already
adopted policies, laws or regulations to make sure workers stay under that
threshold.
Even after the administration said this month that it
would ease coverage requirements for larger employers, public employers
generally said they were keeping the restrictions on work hours because
their obligation to provide health insurance, starting in 2015, would be
based on hours worked by employees this year. Among those whose hours have
been restricted in recent months are police dispatchers, prison guards,
substitute teachers, bus drivers, athletic coaches, school custodians,
cafeteria workers and part-time professors.
Continued in article
Jensen Comment
Sadly these part-time jobs are at the lower end of wage earners.
Jensen Comment
Ironically, what may save medical insurance exchanges is that their policies are
so lousy that people, especially those with subsidized premiums, will resist
taking advantage of their coverage unless they become severely ill. Forget
preventative medicine. Forget mental health treatment. The problem is that
20%-40% deductibles and high co-pays are just too expensive. Many people just
will not make a choice to go to a medical center relative to other obligations
on their limited budgets --- like housing and heroin and beer and trips to
Disneyworld.
Also there's a problem of convenience.
People in New Hampshire that were served by 26 hospitals are reduced to only 16
hospitals participating in the health exchange (there's only one in New
Hampshire). This means more time and trouble and costs for same-day surgeries,
therapy, consultations with onsite surgeons, etc. For example, a patient
possibly needing a bone density scan may have to pay 40% of the hospital's
charge, travel 70 miles to a participating hospital, drive in the wintry dark,
and possibly stay in a hotel the night before or the night afterwards. These
costs and inconveniences add up to a point where people will put off health care
unless very serious problems are encountered.
And the millions of people insured under employer plans may see their
deductibles and co-payments increase next year.
In New Hampshire and elsewhere there's serious doubt about having a
sufficient number of specialists like psychiatrists and dermatologists
participating in the ACA. The dream of having better mental health coverage may
be just that --- only a dream. Only half of the psychiatrists in the USA
previously participated in any insurance coverage in the USA. The ACA fees are
so limited it almost certain that the supply of psychiatrists will fall way
short of the ACA and other demands.
Perhaps this is why the Governor of Vermont devoted his entire 2014 State of
Vermont address to the problems of heroin addiction and expense of treatment.
Vermont's generous welfare system attracts a lot of addicts to Vermont.
Another problem for Vermont is that it's high taxes are driving many more
physicians and other medical service providers out of the state than attracting
them to the state. Yesterday nurse that drew my blood for my annual physical
said she had just moved from Vermont. My primary care physician and my eyelid
surgery physician recently moved to New Hampshire from Vermont.
Question
Should colleges wanting to avoid having to provide health insurance to adjunct
teachers rush to cap their total work hours to less than 30 hours per week in
order to avoid the requirements of the Affordable Health Care Act more commonly
known as Obamacare? There is considerable ambiguity about how many hours
adjuncts "work" outside of class for course preparation and for helping students
outside of class (e.g., via email).
When the Internal Revenue Service offered guidance earlier this month on how
college and universities should count adjuncts’ hours in relations to the
Affordable Care Act, the agency raised at least as many questions as it
answered.
Chief among them was whether the guidance would make any real difference in
the lives of adjuncts. Would colleges and universities stop capping
adjuncts’ workloads to prevent them from qualifying as eligible for benefits
under the law? Would institutions that already had done so rethink their
caps? And would administrators even follow the guidance, which offers a
“safe harbor” formula of 2.25 hours worked for each classroom contact hour,
but still allows them to count total hours worked based on a decidedly
ambiguous “reasonable” standard?
. . .
Starting about 18 months ago, colleges moved in droves tocap their adjuncts’course loads ahead of the health care law’s
so-called “employer mandate” taking effect. Large employers under the law
must offer full-time employees – those who work 30 hours or more per week –
health care benefits or face fines, so institutions all over the country
moved to lower their course load caps for adjuncts or create them where they
hadn’t existed before.
College associations warned institutions that they may be acting too soon,
without explicit guidance from the federal government about how to count
adjuncts’ total hours worked per week to determine if they were
benefits-eligible under the law. Since adjuncts work outside of class to
prepare for contact time with students, they said, it was unclear how to
count adjuncts’ hours. Different adjuncts groups, college associations and
unions proposed various formulas, but there was nothing concrete.
Many of the institutions were working off a kind of “worst case scenario”
scenario formula, from the perspective of wanting to provide as few adjuncts
health care as possible. Under that formula, which was supported by the
American Federation of Teachers and some adjunct groups, one hour of contact
time equaled two hours of outside preparation time, for a total of three
hours. So Community College of Allegheny County, followed by many other
institutions, announced a 10-credit-per-semester cap. It replaced a previous
12-credit cap, essentially meaning that most adjuncts could now teach three
courses (nine credits) instead of four per semester in the fall and summer,
for 27 hours per week total.
Allegheny did not respond to a request for comment on whether it would
rethink its policy in light of the IRS guidance. Various institutions also
are staying mum. A spokesman for the College of DuPage, which last year
createdsome full-time positionsfor adjuncts while capping other adjuncts’
workload at 27 credits per, said the guidance wouldn’t change anything, and
showed that the college’s policy is “appropriate within the clarified
guidelines.”
The Virginia Community College system, however, is reviewing a course load
cap it instituted last year for all adjuncts: 10 credits each in the fall
and spring and 7 in the summer, a spokesman said. That cap resulted in
sections being taken away from or limited for about 25 percent of the
system’s some 7,000 adjuncts at 23 campuses, and could change based on a
pending review of the IRS guidance and the Virginia“Manpower Control Program.”The state policy limits adjunct faculty at public
institutions to 29 hours per week. Still, at least one college within the
system has announced that new course loads of 12 credits and contact
hourseach for the fall and spring, and 8 in the summer, soon will be
adopted, based on the relatively “relaxed” IRS guidance,The
Washington Postreported. The
college system spokesman said that announcement was premature.
Josh Ulman, chief government relations officer for the College and
University Professional Association for Human Resources, said he expected
more and more colleges to follow the IRS model, to be in compliance should
the guidelines change going forward.
Randi Weingarten, president of the American Federation of Teachers, said in
email that whether or not colleges would follow the guidelines was "simple."
Employers that "embrace the sprit of the [law] -- which is rooted in the
idea that everyone deserves access to high-quality and affordable healthcare
-- will work with us to make it happen. Those who oppose the law or put
cutting costs above high-quality education probably won't."
Indiana's Ivy Tech Community College, a large community college system,
won’t change the ACA-related course load caps it instituted regardless of
the guidance, President Tom Snyder said. Under the new caps, adjuncts can
work 12 credit hours per semester, or about 27 hours total based on the IRS
formula. Snyder, who recently offered Congressional testimony on what he
saw as the disproportionate impact of the new health care law on community
colleges, given their high rates of employment of adjunct faculty, said he
would continue to lobby for the possible exemption of colleges from the law.
Snyder said the law "penalizes" adjunct faculty who want to teach more hours
but must adhere to new course load caps, and the "school misses out on a
skilled adjunct." And providing health care to all adjuncts teaching beyond
the new caps would be prohibitively expensive, at the cost of $10 million
annually, he said. To do that, Ivy Tech would have to downgrade health care
plans for everyone else.
No college has yet announced it will offer more adjuncts health insurance as
a result of the guidance. That didn’t come as a surprise to adjunct
advocates, who often cite health insurance and other benefits as a kind of
“last nut” to be cracked in organizing and other advocacy efforts that in
many places already have led to better pay and job security, for example.
Because many institutions still recognize adjuncts as working only during
contact classroom hours, Kezar said the guidelines “certainly should make
more adjuncts qualify.” But, she said, “Institutions that are dead-set
against providing them [with health insurance] will find ways around it."
Baime noted that the guidelines offer flexibility to colleges to offer
"robust employment" of adjuncts without necessarily providing health
insurance. Weingarten said that adjuncts who don't get insurance through
their institutions are counting on expanded opportunities for coverage
elsewhere in the law.
Ulman said that at the very least, the IRS guidance will make it clearer who
might qualify for benefits so that institutions and employees can have more
“honest discussions” about coverage.
Maria Maisto, president of the New Faculty Majority, said there was more
work to be done to make sure that those kinds of honest discussions were
happening on campuses. And given the lack of obvious enforcement mechanism
in the guidance, she said, it’s up to adjuncts to demand it.
Despite the tumult of the past 18 months for adjuncts, advocates have said
there’s a silver lining, to which the new IRS guidance adds: It’s brought
the contingent academic labor issue out of the sector and into the broader
policy debate.
Rhoades said the guidance is “official recognition that adjunct faculty work
outside the class, as part of contributing to a quality education for the
students, and that will create additional pressure on institutions to not
just acknowledge that, but to actually remunerate these faculty for that
work.”
Kezar agreed, saying, “the legislation and guidance have been really
instrumental in bringing adjuncts’ plight to light." She noted Democratic
Rep. George Miller’s
recent report on adjunct labor issues,
which was sparked by Maisto’s November testimony to the House Committee
on Education and the Workforce. “He learned all that through the [Affordable
Care Act] discussions.”
Ultimately, she said, the debate’s greatest impact “may not be on health
care but on drawing attention to the slew of problems related to this work
force model that has been grown beyond capacity to serve higher education
well.”
The Obama administration on Mondayreleased its long-awaited final guidanceon how colleges should calculate the hours of
adjunct instructors and student workers for purposes of the new federal
mandate that employers provide health insurance to those who work more than
30 hours a week.
The upshot of the complicated regulation from the Treasury Department and
the Internal Revenue Service:
·On adjuncts,
colleges will be considered on solid ground if they credit instructors for 1
¼ hours of preparation time for each hour they spend in the classroom, and
instructors should be credited for any time they spend in office hours or
other required meeting time.
·On student workers,the IRS opted to exclude work-study employment
from any count of work hours, but the administration declined to provide an
exemption for student workers over all. As a result, colleges and
universities will be required to provide health insurance to teaching and
research assistants who work more than 30 hours a week.
Adjunct Hours
The issues of how to count the hours of part-time instructors and student
workers have consumed college officials and faculty groups for much of the
last 18 months, ever since it became clear that the Affordable Care Act
definition of a full-time employee as working 30 hours or more a week was
leading some colleges tolimit the hoursof adjunct faculty members, so they fell short of
the 30-hour mark.
All that the government said in its initial January 2013 guidance
about the employer mandate under the health care law was that colleges
needed to use "reasonable" methods to count adjuncts' hours.
In federal testimony
and at conferences,
college administrators andfaculty advocateshave debated the appropriate definition of
"reasonable," with a focus on calculating the time that instructors spend on
their jobs beyond their actual hours in the classroom. The American Council
on Education, higher education's umbrella association and main lobbying
group, proposed a ratio of one hour of outside time for each classroom hour,
while many faculty advocates have pushed for a ratio of 2:1 or more.
In its new regulation, published as part of a complex 227-page final rule in
today's Federal Register, the government said that it would be too
complex to count actual hours, and it rejected proposals to treat
instructors as full time only if they were assigned course loads equivalent
or close to those of full-time instructors at their institutions.
The administration continued to say that given the "wide variation of work
patterns, duties, and circumstances" at different colleges, institutions
should continue to have a good deal of flexibility in defining what counts
as "reasonable."
But in the "interest of predictability and ease of administration in
crediting hours of service for purposes" of the health care law, the
agencies said, the regulation establishes as "one (but not the only)"
reasonable definition a count of 2.25 hours of work for each classroom hour
taught. "[I]n addition to crediting an hour of service for each hour
teaching in the classroom, this method would credit an additional 1 ¼ hours
service" for "related tasks such as class preparation and grading of
examinations or papers."
Separately, instructors should also be credited with an hour of service for
each additional hour they spend outside of the classroom on duties they are
"required to perform (such as required office hours or required attendance
at faculty meetings," the regulation states.
The guidance states that the ratio -- which would essentially serve as a
"safe harbor" under which institutions can qualify under the law -- "may be
relied upon at least through the end of 2015."
By choosing a ratio of 1 ¼ hours of additional service for each classroom
hour, the government comes slightly higher than the 1:1 ratio that the
higher education associations sought, and quite a bit lower than the ratio
of 2:1 or higher promoted by many faculty advocates.
David S. Baime, vice president for government relations and research at the
American Association of Community Colleges, praised administration officials
for paying "very close attention to the institutional and financial
realities that our colleges are facing." He said community colleges
appreciated both the continued flexibility and the setting of a safe harbor
under which, in the association's initial analysis, "the vast majority of
our adjunct faculty, under currernt teaching loads, would not be qualifying"
for health insurance, Baime said.
Maria Maisto, president and executive director of New Faculty Majority, said
she, too, appreciated that the administration had left lots of room for
flexibility, which she hoped would "force a lot of really interesting
conversations" on campuses. "I think most people would agree that it is
reasonable for employers to actually talk to and involve employees in
thinking about how those workers can, and do, perform their work most
effectively, and not to simply mandate from above how that work is
understood and performed," she added.
Maisto said she was also pleased that the administration appeared to have
set the floor for a "reasonable" ratio above the lower 1:1 ratio that the
college associations were suggesting.
She envisioned a good deal of confusion on the provision granting an hour of
time for all required non-teaching activities, however, noting that her own
contract at Cuyahoga Community College requires her to participate in
professional development and to respond to students' questions and requests
on an "as-needed basis." "How does this regulation account for requirements
like that?" she wondered.
Student Workers
The adjunct issue has received most of the higher education-related
attention about the employer mandate, but the final regulations have
significant implications for campuses that employ significant numbers of
undergraduate and graduate students, too.
Higher education groups had urged the administration to exempt student
workers altogether from the employer mandate, given that many of them would
be covered under the health care law's policies governing student health
plans and coverage for those up to age 26 on their parents' policies. The
groups also requested an exemption for students involved in work study
programs.
The updated guidance grants the latter exemption for hours of work study,
given, it states, that "the federal work study program, as a federally
subsidized financial aid program, is distinct from traditional employment in
that its primary purpose is to advance education."
But all other student work for an educational organization must be counted
as hours of service for purposes of the health care mandate, Treasury and
IRS said.
Steven Bloom, director of federal relations at the American Council on
Education, said higher ed groups thought it made sense to exempt graduate
student workers, given that their work as teaching assistants and lab
workers is generally treated as part of their education under the Fair Labor
Standards Act. He said the new guidance is likely to force institutions that
employ graduate students as TAs or research assistants -- and don't
currently offer them health insurance as part of their graduate student
packages -- to start counting their hours.
The guidance also includes a potentially confounding approach to students
who work as interns. The new regulation exempts work conducted by interns as
hours of service under the health care employer mandate -- but only "to the
extent that the student does not receive, and is not entitled to, payment in
connection with those hours."
Jensen
Question
How should a university account for a doctoral student who happens to teach 33
hours one semester and works less than 30 hours in all other semesters of the
doctoral program? Is the university required to provide health coverage for
zero, one, or more years while the student is a full time student in the
doctoral program? I assume the university must provide health insurance for one
year, but I'm no authority on this issue.
There also
is a huge difference in hours of work required for teaching. A doctoral student
who only teaches recitation sections under a professor who provides the lecture
sections, writes the syllabus, writes the examinations, and essentially owns a
course versus a doctoral student who owns only section of governmental
accounting with no supervision from a senior instructor.
When I was
Chair of the Accounting Department at Florida State University, the wife
(Debbie) of one of our doctoral students (Chuck Mulford) had total control of
the lectures and 33 recitation sections of basic accounting each semester where
most of the recitation "instructors" were accounting doctoral students. Debbie
had her CPA license and a masters degree, but she was not a doctoral student.
She was very good at this job. The recitation instructors had almost no
preparation time and did not design or grade the examinations. They did not own
all 33 sections like Debbie owned all 33 sections. It would be a bit unfair to
give the recitation instructors as much pay for preparation as the selected
doctoral students who taught more advanced courses and essentially owned those
courses in terms of classroom preparation and examinations.
ACA advocates promised that more people would be insured but nothing was
said about only being half insured.
The lousy 30%-40% high deductible medical insurance plans such as the Silver and Bronze Plans my get lousier with a proposed Copper Plan. This should
possibly be called the Yugo Plan that will pay half of qualified medical
insurance claims..
Some backers of the 2010 health-care law are
pushing to create a new kind of insurance coverage that the measure
essentially had ruled out: policies offering lower premiums but
significantly higher out-of-pocket costs than those now available.
The plans, dubbed "copper" because they would offer
a lower level of coverage than the "gold," "silver" and "bronze" options on
the government-run health-care exchanges, would be a departure from the
minimum level of coverage that is one of the Affordable Care Act's core
principles.
Many plans that offered less coverage were canceled
when the health-care law was rolled out because they didn't meet its new
requirements. Republicans accused President Barack Obama of backtracking on
his promise that the law would allow people to keep their preferred health
plans. In the face of an uproar, the Obama administration asked insurers to
reinstate some of the millions of canceled policies for one year.
Now, some insurers and a pair of Senate Democrats
are trying to change the law permanently so that individuals and small
businesses can buy so-called copper plans. The plans likely would have lower
premiums, but purchasers would pay more of their ordinary health costs
upfront. Greater coverage would kick in for serious, unforeseen health
episodes that would require, for example, a hospital stay.
Sens. Mark Begich of Alaska and Mark Warner of
Virginia, both Democrats facing close re-election races this year, are
sponsoring legislation that would allow people to buy copper plans on the
exchanges. Moreover, insurance-industry officials have been talking up the
idea with federal officials, though it is unclear whether the administration
could make the change through regulations.
The White House said it was weighing the proposal.
"The president remains open to all ideas that would genuinely improve the
Affordable Care Act and appreciates the careful thought Mr. Begich has given
to his legislation," an administration official said.
Copper plans would cover, on average, 50% of
medical costs, and while consumers' out-of-pocket expenses would still be
capped, that limit likely would be higher than the $6,350 maximum for
individuals and $12,700 for families currently set by the law.
People who selected the plan would be allowed tax
credits toward the cost of premiums, as they already get for bronze plans,
which cover 60% of costs; silver plans, which cover 70%; and gold plans,
which cover 80%.
Continued in article
Jensen Comment
We were promised that more people would be insured but nothing was said about
only being half insured.
Teaching Case
From The Wall Street Journal Accounting Weekly Review on February 21,
2014
SUMMARY: "More than 80 public companies told investors the new
health-care rules were, or could be, a financial boost or drag on their
quarterly earnings, though they were often uncertain of the magnitude,
according to a Wall Street Journal search of earnings-call transcripts for
the most recent quarter provided by FactSet... The Congressional Budget
Office's most recent estimate of the ACA's budgetary impact is $1.36
trillion between 2014 and 2023...In general, media and advertising companies
and staffing and outsourcing firms are clocking gains. Insurance providers
are investing heavily now in technology and staffing-and taking a hit to
earnings-in anticipation of future gains. And many large employers across
industries are spending more on insurance benefits for full-time employees
or on training for new, part-time employees...."
CLASSROOM APPLICATION: The article may be used in a financial
reporting class to understand the use of financial statement data to
investigate impact on specific companies and industries of the new
Affordable Care Act (ACA or ObamaCare). The article provides a good
comparison of this micro-economic analysis to macro-economic estimates from
the Congressional Budget Office (CBO).
QUESTIONS:
1. (Introductory) How did the Wall Street Journal prepare its
analysis for this article?
2. (Advanced) In what two ways are large employers expecting cost
increases from the impact of the Affordable Care Act (ACA or ObamaCare)?
Which financial statement expense category or categories do you think will
show these increases?
3. (Introductory) What types of industries expect increases in
revenues from the impact of the Affordable Care Act (ACA or ObamaCare)?
4. (Advanced) To what financial reporting periods do these cost and
revenue impacts relate? Why are these impacts being discussed in 2013
earnings call transcripts?
Reviewed By: Judy Beckman, University of Rhode Island
The Affordable Care Act's impact on the bottom line
is starting to ripple across corporate America.
More than 80 public companies told investors the
new health-care rules were, or could be, a financial boost or drag on their
quarterly earnings, though they were often uncertain of the magnitude,
according to a Wall Street Journal search of earnings-call transcripts for
the most recent quarter provided by FactSet.
The Congressional Budget Office's most recent
estimate of the ACA's budgetary impact is $1.36 trillion between 2014 and
2023. The financial effects on businesses are evolving as changes are made
to the legislation, including a decision this month to again delay when many
smaller companies will face a fine if they fail to offer health insurance.
But some trends are emerging.
In general, media and advertising companies and
staffing and outsourcing firms are clocking gains. Insurance providers are
investing heavily now in technology and staffing—and taking a hit to
earnings—in anticipation of future gains.
And many large employers across industries are
spending more on insurance benefits for full-time employees or on training
for new, part-time employees who won't necessarily be entitled to
company-sponsored coverage.
Several advertising and communications companies,
including Emmis Communications Corp. EMMS +2.83% and LIN Media LIN +2.57%
LLC, said they will register increases in spending on advertising and
outreach campaigns to encourage enrollment through the new state and federal
insurance exchanges.
Emmis is forecasting a 12% to 15% increase in
health-care advertising this year, and up to 20% of that is expected to come
from ACA-related advertising from insurers, hospitals and state-government
agencies, Patrick Walsh, chief financial officer at Emmis, said in an
interview.
The Indianapolis-based company's two biggest
markets are New York and California, both states that have rolled out health
exchanges. Mr. Walsh said Emmis's biggest radio stations are the
hip-hop-music Power 106 and Hot 97, which target young, urban minorities.
"Our audience is an attractive target for the exchanges," he noted.
Oscar Insurance Corp., for example, ran radio ads
on Emmis's New York City Hot 97 radio station in conjunction with a Twitter
and Facebook campaign to attract customers.
"Right now, the ACA-related spending is showing up
in two places, as political advertising or as health-care advertising. But I
foresee it becoming a completely new category as the space develops," said
Edward Atorino, a media analyst at Benchmark Co. "The bigger markets have
national TV covering them, but for the smaller ones, there is a real need to
get the information about exchanges out there by telling people about the
locations and phone numbers."
At the same time, employment-benefit and IT
companies, such as Virtusa Corp. VRTU +4.74% and Automatic Data Processing
Inc. ADP +1.85% say they are seeing more business as they help clients
comply with the ACA's demands.
Virtusa, an IT consulting and outsourcing company
based in Westborough, Mass., said that increased spending from health-care
clients helped boost its fiscal-third-quarter operating profit 14% from the
previous quarter.
Insurers and health-care providers are streamlining
their IT infrastructures and revamping websites to provide more data to
customers, said Ranjan Kalia, the company's CFO, adding, "We believe that
this is a market driver."
However, he said Virtusa has also had to spend more
to bring its own benefit plans for employees into compliance with ACA
demands. He estimated Virtusa could spend "a few hundred thousand dollars"
more on health care for its 900 U.S. employees when it renews its plans this
summer.
Dozens of other large employers also warned
investors that the cost of complying with the ACA will be sizable. United
Parcel Service Inc., UPS +1.28% Pantry Inc. PTRY +4.13% and J&J Snack Foods
Corp. JJSF +1.65% are among the companies that detailed the likely financial
hit for broadening benefits coverage.
Pantry, which operates Kangaroo Express convenience
stores, said the company hired 800 part-time employees late last year and
spent an additional $700,000 on training. The new employees won't be
eligible for company-sponsored health-care benefits.
Nevertheless, Pantry will spend up to $8 million
more a year on health-insurance costs related to the ACA for its 6,600
full-time employees, said CFO B. Clyde Preslar.
J&J Snack Foods, maker of Super Pretzels and Icee
frozen drinks, cautioned shareholders it will spend an additional $600,000,
or $0.02 a share, this year on health-insurance coverage for its 3,300
employees.
But repeated changes in the law have made CFO
Dennis Moore cautious about the financial impact. "The law keeps changing.
That's another unknown. Who knows how many times it's going to change?"
Last week, Wal-Mart Stores Inc. WMT +1.62% said
health-care expenses were a "headwind" last year and will continue to be
this year. The company said "higher than anticipated" enrollment in its
health-insurance program put "pressure on our benefits expense."
Widespread technical problems late last year with
the health law's new online marketplaces helped push down enrollment for
health-insurance companies offering plans on the government-backed websites,
including Cigna Corp. CI +1.34% and WellPoint Inc. WLP +1.83%
In addition, the risk profile of the new enrollees
has been skewing toward somewhat older, potentially higher-cost people,
which could be a concern for the health plans' future earnings. Indeed,
Cigna, Humana Inc. and Aetna Inc. AET +1.65% have all said that they expect
to lose money this year on their public-exchange business.
WellPoint said the ACA would have a $100 million
"unfavorable impact" on its earnings this year.
Continued in article
My objection to the ACA at the beginning of 2014 is that the health care
insurance plans with or without subsidies are awful. The 30%-40% deductibles are
too high coupled with the co-payments are more than most insured people can
afford. They will simply avoid going to doctors for preventative care, for
diagnoses, and for treatments unless they feel their lives are threatened enough
to possibly wipe out their savings for expensive treatments.
Now the Congressional Budget Office is admitting that its own estimates
before the ACA was passed was way off base in terms of estimations of job losses
and economic impacts.
Even liberals writing for liberal magazines knew the Congressional Budget
Office (CBO) optimism for cost and revenue predictions
were not credible before the ACA was passed. The CBO's political bias is
responsible for much of the mess the USA now finds itself in terms of health
coverage.
This is a long and somewhat involved followup to my
previous post on ObamaCare. . For those of you
with O.A.D.D. (online attention-deficit disorder), I’ve provided an express
and local version.
EXPRESS:
The official projections for health-care reform,
which show it greatly reducing the number of uninsured and also reducing the
budget deficit, are simply not credible. There are three basic issues.
The cost and revenue projections rely on
unrealistic assumptions and accounting tricks. If you make some adjustments
for these, the cost of the plan is much higher.
The so-called “individual mandate” isn’t really a
mandate at all. Under the new system, many young and healthy people will
still have a strong incentive to go uninsured.
Once the reforms are up and running, some employers
will have a big incentive to end their group coverage plans and dump their
employees onto the taxpayer-subsidized individual plans, greatly adding to
their cost.
Continued in article
For starters, $1 trillion of extra debt-financed
spending would cause the government to pay about $300 billion of extra interest
in the next decade. Moreover, the CBO's method of estimating the cost of such a
program doesn't recognize the incentives it creates for households and firms to
change their behavior. The House health-care bill gives a large subsidy to
millions of families with incomes up to three times the poverty level (i.e., up
to $66,000 now for a family of four) if they buy their insurance through one of
the newly created "insurance exchanges," but not if they get their insurance
from their employer. The CBO's cost estimate
understates the number who would receive the subsidy because it ignores the
incentive for many firms to drop employer-provided coverage.
It also ignores the strong incentive that individuals would have to reduce
reportable cash incomes to qualify for higher subsidy rates. The total cost of
ObamaCare over the next decade likely would be closer to $2 trillion than to $1
trillion. Martin Feldstein, "ObamaCare's
Crippling Deficits The higher taxes, debt payments and interest rates needed to
pay for health reform mean lower living standard," The Wall Street Journal,
September 7, 2009 ---
http://online.wsj.com/article/SB10001424052970203585004574393110640864526.html?mod=djemEditorialPage
The Budget and Economic Outlook: 2014 to 2024 ---
Congressional Budget Office
February 4, 2014
Jensen Comment
Especially note Page 127 regarding the Affordable Care Act impact on employment
in the USA.
The Affordable Care Act will also reduce the number
of fulltime workers by more than 2 million in coming years, congressional
budget analysts said in the most detailed analysis of the law’s impact on
jobs. The CBO said the law’s impact on jobs would be mostly felt starting
after 2016. The agency previously estimated that the economy would have
800,000 fewer jobs as a result of the law. The impact is likely to be most
felt, the CBO said, among low-wage workers. The agency said that most of the
effect would come from Americans deciding not to seek work as a result of
the ACA’s impact on the economy. Some workers may forgo employment, while
others may reduce hours, for a equivalent of at least 2 million fulltime
workers dropping out of the labor force.
Jensen Comment
Although before the ACA was passed President Obama and and House Majority Leader
Nancy Pelosi erroneously promised that the ACA would create millions of new
jobs. Now that this does not appear to be the case in 2014. President Obama and
his allies MSNBC and the New York Times try to put a positive spin
on this by saying this will allow many people to drop out of the work force by
retiring early (before becoming eligible for Medicare). But what they fail to
mention is that the loss of 800,000 jobs because of the ACA is hardly a good
thing for people needing work. Many of these jobs will be lost when smaller
businesses with 50-100 employees scale back the workforce to 50 or less so as
not to have to pay the stiff penalty for not providing health insurance to
employees. How can you put a favorable spin on this.
Of course most of this document is devoted to good news and bad news items
apart from the ACA.
The federal budget deficit has fallen sharply
during the past few years, and it is on a path to decline further this year
and next year. CBO estimates that under current law, the deficit will total
$514 billion in fiscal year 2014, compared with $1.4 trillion in 2009. At
that level, this year’s deficit would equal 3.0 percent of the nation’s
economic output, or gross domestic product (GDP)—close to the average
percentage of GDP seen during the past 40 years.
As it does regularly, CBO has prepared baseline
projections of what federal spending, revenues, and deficits would look like
over the next 10 years if current laws governing federal taxes and spending
generally remained unchanged. Under that assumption, the deficit is
projected to decrease again in 2015—to $478 billion, or 2.6 percent of GDP.
After that, however, deficits are projected to start rising—both in dollar
terms and relative to the size of the economy—because revenues are expected
to grow at roughly the same pace as GDP whereas spending is expected to grow
more rapidly than GDP. In CBO’s baseline, spending is boosted by the aging
of the population, the expansion of federal subsidies for health insurance,
rising health care costs per beneficiary, and mounting interest costs on
federal debt. By contrast, all federal spending apart from outlays for
Social Security, major health care programs, and net interest payments is
projected to drop to its lowest percentage of GDP since 1940 (the earliest
year for which comparable data have been reported).
The large budget deficits recorded in recent years
have substantially increased federal debt, and the amount of debt relative
to the size of the economy is now very high by historical standards. CBO
estimates that federal debt held by the public will equal 74 percent of GDP
at the end of this year and 79 percent in 2024 (the end of the current
10-year projection period). Such large and growing federal debt could have
serious negative consequences, including restraining economic growth in the
long term, giving policymakers less flexibility to respond to unexpected
challenges, and eventually increasing the risk of a fiscal crisis (in which
investors would demand high interest rates to buy the government’s debt).
After a frustratingly slow recovery from the severe
recession of 2007 to 2009, the economy will grow at a solid pace in 2014 and
for the next few years, CBO projects. Real GDP (output adjusted to remove
the effects of inflation) is expected to increase by roughly 3 percent
between the fourth quarter of 2013 and the fourth quarter of 2014—the
largest rise in nearly a decade. Similar annual growth rates are projected
through 2017. Nevertheless, CBO estimates that the economy will continue to
have considerable unused labor and capital resources (or “slack”) for the
next few years. Although the unemployment rate is expected to decline, CBO
projects that it will remain above 6.0 percent until late 2016. Moreover,
the rate of participation in the labor force—which has been pushed down by
the unusually large number of people who have decided not to look for work
because of a lack of job opportunities—is projected to move only slowly back
toward what it would be without the cyclical weakness in the economy.
Beyond 2017, CBO expects that economic growth will
diminish to a pace that is well below the average seen over the past several
decades. That projected slowdown mainly reflects long-term
trends—particularly, slower growth in the labor force because of the aging
of the population. Inflation, as measured by the change in the price index
for personal consumption expenditures (PCE), will remain at or below 2.0
percent throughout the next decade, CBO anticipates. Interest rates on
Treasury securities, which have been exceptionally low since the recession,
are projected to increase in the next few years as the economy strengthens
and to end up at levels that are close to their historical averages
(adjusted for inflation).
Deficits Are Projected to Decline Through 2015 but
Rise Thereafter, Further Boosting Federal Debt
Assuming no legislative action that would
significantly affect revenues or spending, CBO projects that the federal
budget deficit will fall from 4.1 percent of GDP last year to 2.6 percent in
2015—and then rise again, equaling about 4 percent of GDP between 2022 and
2024. That pattern of lower deficits initially and higher deficits for the
rest of the coming decade would cause federal debt to follow a similar path.
Relative to the nation’s output, debt held by the public is projected to
decline slightly between 2014 and 2017, to 72 percent of GDP, but then to
rise in later years, reaching 79 percent of GDP at the end of 2024. By
comparison, as recently as the end of 2007, such debt equaled 35 percent of
GDP (see the figure below).
Continued in article
Note that declines in deficits are still increases in debt as long as they
remain spending "deficits.". This is not as bad for a government controlling the
money printing presses as it is for entities (citizens, towns, counties, state,
and businesses) that cannot print money to avoid bankruptcy.
Bob Jensen's threads on the sad state of governmental accounting and the $100
trillion of debt that is off balance sheet ---
http://faculty.trinity.edu/rjensen/Entitlements.htm
Meanwhile pray for heavy rains and snow in the Southwest, especially Nevada
and Colorado. Years of drought could destroy any lingering optimism in this CBO
budget forecast.
"Minimum essential coverage and shared-responsibility penalty rules
provide transitional relief for individuals," by Sally P. Schreiber, Journal of Accountancy,
January 24, 2014 ---
http://www.journalofaccountancy.com/News/20149497.htm
Of course, in its
official operations the way the bill works is to first repeal Obamacare
and then replace it with a new law that happens to retain some of
Obamacare's most popular features. For example, "insurers would be
barred from imposing lifetime limits on medical claims and required to
allow individuals to remain on their parents’ policies until the age of
26." And rather than eliminate the Affordable Care Act's restrictions on
insurers charging older people higher premiums than younger people, the
senators would simply make the restrictions a bit less strict. And while
Coburn/Burr/Hatch don't want to altogether ban insurers from refusing to
cover people with pre-existing conditions, they "would require insurers
to offer coverage to anybody who has applied as long as they have
maintained continuous coverage, regardless of whether they are switching
health plans or shifting from employer-based health care to the
individual market."
In other words,
rather than scrapping the main pillars of the Affordable Care Act
entirely, they would partially roll them back.
Conversely, while conservative wonks have
traditionally favored a big bang approach to
eliminating the massive tax subsidies that
keep employer-provided insurance together,
"in consideration of the backlash against
the way that Obamacare has disrupted people’s insurance coverage, the
new GOP proposal would maintain the employer health insurance bias."
Last but by no
means least "[i]nstead of expanding Medicaid, as Obamacare does, the
Coburn-Burr-Hatch proposal would reform it to give more flexibility to
states and allow Medicaid beneficiaries the option of using their tax
credit to purchase private coverage."
I don't think the
plan as written is fully sound from a structural viewpoint. In
particular, the continuous coverage rule is the kind of thing that's
easy to write down as a single sentence in a column but difficult to
turn into a clear piece of legislation. Turning that into a workable
regulation, especially in a world where which insurance plans are
available changes from time to time and place to place, would be a whole
giant process and you'd have to evaluate a specific proposal. But the
key thing about this is that it doesn't envision radically
remaking the health care system along free market lines. Relatively to
the status quo that existed in 2009, it would constitute modestly
remaking the health care system along liberal lines. Most of all, as a
political document it reflects an appreciation of the overwhelming
political power of the status quo. You can't kick those 25-year-olds off
their parents' insurance plan. You can't deny the currently insured the
peace-of-mind that comes from knowing that getting sick won't make them
uninsurable. You can't change tax policy in a way that's too disruptive.
And this plan isn't going to pass in 2014. It's not going to pass in
2015. And it's not going to pass in 2016. By 2017, Medicaid expansion
and subsidized exchange plans will be the new status quo. Are the
Coburns, Burrs, and Hatches of 2017 really going to be willing to blow
that up?
CPA's who advise clients about personal finances and health care insurance
should be aware of the following:
This was not in the fine print of the Affordable
Care Act (that no one read), and there was nothing in it that changed the
existing law from 1993. The ACA however, did expand the number of
people who are eligible for Medicaid, so now there are more people from the
ages of 55 to 65 whose estates could be on the hook for Medicaid expenses
after the beneficiary dies.
This sounds like a cash grab to me. Many states
have not changed the law to limit the amount of expenses the government can
claim are owed for Medicaid, but Oregon and Washington have issued emergency
rule changes. In
Washington it now says that the state can only
recover the cost of nursing home care for the 55-65 age groups.Oregon
followed this path as well.However there are 23 other states that have
expanded Medicare under Obamacare and they have not changed their estate
recovery policies. This could end up with the deceased person’s heirs losing
homes, property and other assets.
The 1993 law stated that spouses and children under
21 of the deceased person were exempt from estate recovery, but the rules
can vary by state. However, with rule changes running rampant under this
administration, there is no guarantee of anything anymore. Laws and rules
can be changed on a whim and the public will never even be aware of it.
Just to give you an example of the amount of money
that the states could potentially confiscate, in 2004, California collected
$44.6 million through estate recovery and MediCal
officials say that they expect 1 to 2 million more enrollees by 2015. That
could add up to a lot of money. Minnesota collected $25 million in 2004 and
is keeping its recovery program in place with no alterations.
Dr. Jane Orient of The Association of American
Physicians and Surgeons says; “I think that people are maybe in for a
shock when they find out that their heirs are going to be paying for their
care, because they got into a system under false pretenses”. Just one
more thing that no one told us about Obamacare and the mainstream media is
not mentioning even now.
This was not in the fine print of the Affordable
Care Act (that no one read), and there was nothing in it that changed the
existing law from 1993. The ACA however, did expand the number of
people who are eligible for Medicaid, so now there are more people from the
ages of 55 to 65 whose estates could be on the hook for Medicaid expenses
after the beneficiary dies.
This sounds like a cash grab to me. Many states
have not changed the law to limit the amount of expenses the government can
claim are owed for Medicaid, but Oregon and Washington have issued emergency
rule changes.In
Washington it now says that the state can only
recover the cost of nursing home care for the 55-65 age groups.Oregon
followed this path as well.However there are 23 other states that have
expanded Medicare under Obamacare and they have not changed their estate
recovery policies. This could end up with the deceased person’s heirs losing
homes, property and other assets.
The 1993 law stated that spouses and children under
21 of the deceased person were exempt from estate recovery, but the rules
can vary by state. However, with rule changes running rampant under this
administration, there is no guarantee of anything anymore. Laws and rules
can be changed on a whim and the public will never even be aware of it.
Just to give you an example of the amount of money
that the states could potentially confiscate, in 2004, California collected
$44.6 million through estate recovery and MediCal
officials say that they expect 1 to 2 million more enrollees by 2015. That
could add up to a lot of money. Minnesota collected $25 million in 2004 and
is keeping its recovery program in place with no alterations.
Dr. Jane Orient of The Association of American
Physicians and Surgeons says; “I think that people are maybe in for a
shock when they find out that their heirs are going to be paying for their
care, because they got into a system under false pretenses”. Just one
more thing that no one told us about Obamacare and the mainstream media is
not mentioning even now.
Think signing up for health insurance through
Covered California is hard? Some consumers say the real battle starts when
it comes to finding a doctor or hospital that will take a plan purchased
through the state-run health exchange.
Sue Kearney of Oakland thought she did her
homework. She found the policy she thought was right for her - one from
Anthem Blue Cross - and checked the plan's
directory of doctors and hospitals to make sure she could get the specialist
she wanted. Assured of that, she signed up for the plan in October.
But right before a doctor appointment this month,
Kearney learned the physician's medical group will not accept any of Covered
California plans.
Kearney, 63, who has a chronic digestive problem
that hasn't responded to treatment, ended up paying $200 for the
appointment, despite her newly minted coverage. "It's confusing and
demoralizing," she said.
Most of the problems with the new health system
have focused on online application glitches, long wait times to get help and
delays in getting insurance cards and first-month premium bills to
new enrollees.
'A lot of confusion'
But now that coverage has started, some people are
finding it tough to determine whether their doctor or hospital will accept
their coverage. Consumers say the insurer's directory of doctors and
hospitals is inaccurate or out of date. In some cases, the doctors don't
even know what to tell their patients.
"There's a lot of confusion. The physicians don't
know if they're actually participating" in the exchange's networks, said
Donald Waters, executive director of the
Alameda-Contra Costa Medical Association, which
represents 3,100 doctors in the East Bay.
The problem is not limited to California. A study
released last month by the consulting group McKinsey found that many plans
sold through the federal health law are using "narrow" or "ultra narrow"
networks - physician and hospital lists that are limited to lower costs.
In more than two-thirds of all exchange networks
analyzed by McKinsey, at least 30 percent of the largest 20 local hospitals
were excluded. Insurers say the move to limit the number of doctors and
hospitals on a network was necessary to keep the costs of premiums low.
In California, plans offered by
Blue Shield through Covered California included
just 60 percent of the doctors that participate in the insurer's group plans
and just 75 percent of the hospitals. On top of that, Blue Shield is
reimbursing doctors and hospitals in Covered California policies up to 30
percent less than those not in the exchange, spokesman
Stephen Shivinsky said.
Limited networks
Sy Neilson, spokesman for Sutter Health, one of
Northern California's largest health chains, said not all of its hospitals
or doctors are participating in Covered California plans. But the hospitals
and doctors that are participating are involved in limited networks,
he said.
Anthem officials did not respond to requests
for comment.
For his part,
Peter Lee, Covered California's executive
director, acknowledged that consumers may be getting misinformation from the
state agency or insurer about whether their providers are participating.
But, he said, the exchange is prepared to help those consumers get new plans
that more suitably meet their needs.
"If our directory or the directory of the health
plan is wrong and a consumer wants to change plans, we'll work with them to
make sure they can do so," Lee said in a news call this week.
As for Kearney, she spent much of the past week
trying to find a gastroenterologist and a lab to complete the tests ordered
by the specialist she paid for. She said
Alameda Health System's
Highland Hospital -
the county hospital - was the only center in her area that would take her,
and not until March.
Kearney had even opted for more comprehensive
coverage including a PPO, or preferred provider organization plan. "I chose
a PPO so I could have had choice," she said. "The thing is, now I have
nothing to choose from."
For
Alison Berndt of Livermore, making sure her
physicians werein her new plan's network is especially
important because she was diagnosed with breast cancer in July.
Berndt, 61, selected a more expensive Covered
California plan to ensure her five doctors, particularly her plastic
surgeon, were in the network because she has yet to go through the
reconstructive surgery.
Cutting medications
After she signed up, she called one of the doctors
she thought was included on her Anthem policy and received conflicting
information from the office staff about whether that was true. She spent a
lot of time on the phone and eventually learned she was given misinformation
and they were, indeed, accepting her coverage.
Berndt still hasn't been able to sort out a problem
getting her drugs covered and has been forced to cut her blood pressure and
cholesterol medication in half.
When Nancy Petro needs routine tests to make sure
her thyroid cancer and high blood pressure have not returned, the retired
gas station attendant and general store clerk must now drive an hour over
mountainous roads to seek care, even though there is a hospital just minutes
from her home in rural northern New Hampshire.
Petro, 62, had been uninsured until January, when
she obtained coverage through President Obama's groundbreaking health law.
The benefit, just $26 a month, came with a downside, however.
To keep premiums affordable, Anthem Blue Cross and
Blue Shield of New Hampshire, the only insurer in the state offering
coverage in the new insurance marketplace, radically reduced the hospitals
in its network. Petro's local provider did not make the cut. . . .
Of the state's 26 hospitals, 10 are excluded from
Anthem's network. Not on the list: Petro's former provider, Upper
Connecticut Valley Hospital, where the uninsured receive free or discounted
care. The 16-bed facility, located 15 miles from the Canadian border, serves
New Hampshire's largest geographic area and its neediest patient population.
In a decision that aids the
implementation of a key provision of 2010’s health care reform legislation,
the federal district court for the District of Columbia held that the Sec.
36B premium tax credit is available to taxpayers who purchase health
insurance through the 34 state health care exchanges that are run by the
federal government (Halbig
v. Sebelius, No. 13-0623 (PLF) (D.D.C.
1/16/14)).
In May 2012, the IRS issued final
regulations interpreting the Patient Protection and Affordable Care Act, P.L.
111-148, as allowing the IRS to grant tax credits to eligible individuals
who purchase health insurance on either a state-run or a federally run
health care exchange (Regs. Sec. 1.36B-1(k)). The plaintiffs in the case
sued to have this regulation struck down, arguing that the IRS’s
interpretation was contrary to the plain language of Sec. 36B(b)(2)(A),
which provides a credit to eligible individuals who purchase health
insurance through “an Exchange established by the State.” They asserted that
the regulation therefore exceeded the IRS’s statutory authority and violated
the Administrative Procedure Act.
The court applied an analysis from
Chevron U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837
(1984), by asking first whether the statute was ambiguous. After looking at
the text of the statute, the statutory structure, and the legislative
purpose, the court concluded that Sec. 36B(b)(2)(A) is not ambiguous and
that Congress clearly intended to make premium tax credits available on all
exchanges, whether or not established by a state. As a result, the court
held that Regs. Sec. 1.36B-1(k) is a valid interpretation of the law.
Continued in article
Jensen Comment
Note that these are tax credits that dollar-for-dollar reduce the amount of tax
owed before the credit is applied. I assume that this can add to tax credits to
where the credits exceed the tax owed, thereby becoming a negative income tax
where a taxpayer receives a refund in excess of the tax owed before the credit.
I don't think such credits are available for qualified health insurance
purchased outside the exchanges, but I could be wrong on this. For example,
President Obama declared it possible for some people to stay on their own
individual plans. I think they may not be eligible for the tax credits. But I
could be wrong on this.
Slightly over 75% of the ACA signups prior to mid*January are over 35 years
of age, raising huge concerns about those prospects18-34 years of age that
are vital to funding the ACA. A third of the signups are age 55-64 which adds
even more worry that the ACA will operate deeply in the red. At age 65 most
people become eligible for Medicare which is funded differently based upon
contributions of workers and employers over the years of their working life.
Most of the people who bought coverage on the
exchanges this fall got subsidies to help them afford the premiums. That’s
in contrast to the first month of the program, when less than one-third of
buyers were subsidized. People earning up to four times the poverty rate—as
much as $96,000 a year for a family of four—can get help buying coverage.
Also about 40% of those signed up have not actually paid their first
premiums, some of whom will not pay once they (especially students) learn
that they are eligible for Medicaid free coverage. An even larger percentage may
default of premiums down the road and still be covered for three months under
the ACA provision of carrying defaulters for 90 days with insurance companies
paying for their medical care for 30 days and doctors and hospitals paying for
their care for an additional 60 days. This could become a game of paying the
premium for one month and then getting four months of coverage followed by
paying another premium for one month followed by four months of coverage and on
and on and on. Paying three monthly premiums may get you 12 months of coverage.
Four million people have additionally signed up for the Medicaid totally free
medical services and medicines intended for additional people supposedly who are
poor but can have substantial assets, including some millionaires who are long
on assets like houses, land, and stocks but short on cash income. I'm totally
amazed that millions more students did not immediately sign up for Medicaid
since in most instances Medicaid is a better deal than staying on policies of
parents where there are copayments and deductibles.
The bottom line is that its probably too soon to tell how good or how bad
the sign up process is going for the Affordable Health Care Act.
Millions more will soon be signing up for private plans without taxpayer
subsidies, private plans with taxpayer subsidies, and totally subsidized
Medicaid plans.
To date about 70% of the 2.2 million people signing up for private plans
chose the Silver Plan that has a whopping 30% deductible.
$4,878 Room and Board Charge for One Night in the Hospital: Those meals
must've been fantastic
"This $55,000 Bill Is The Perfect Example Of Our Broken Hospital System,"
by Lauren F. Friedman, Business Insider, December 30, 2013 ---
http://www.businessinsider.com/redditors-appendectomy-cost-5502931-2013-12
See a copy of the bill itself (note how the charge for aspirin is now hidden)
Jensen Comment
Cost Accounting Student Assignment: Backflush the line items on this bill
to identify possible components and justify the charges
Hint: Don't forget hospital bad debts and executive salaries and subtle
kickbacks to doctors.
For example, it's common for physicians in the Emergency Room to recommend at
least one night at $10,000 in ICU when a $4,878 room for one night would
probably suffice. This recently happened to my wife.
Questions
Was President Obama correct in promising that the ACA insurance would transfer
Medicaid patients from ER rooms to ACA networked physicians?
How does the ACA expansion of Medicaid greatly increase the moral hazard
of new Medicare patients?
One of the naive promises made by President Obama was that uninsured people
previously seeking free care in Emergency Rooms (ER) would relieve the ER rooms
for all the new Medicaid patients who could now have access to network
physicians with their new free medical care and medication insurance policies.
This was naive because he should have known that previous Medicaid patients
preferred ER rooms even when they had freeMedicaid insurance. He should
have known that when Oregon expanded the number of people on Medicaid that
demand for ER services increased by 40%.
People receiving free medical care and medications are inclined to favor ER
services even when they can have care from network physicians. Reasons are
complicated especially when walk-in medical clinics are available. One reason is
that walk-in clinics serving Medicaid patients are not usually as close by as
hospitals with ER services. The physicians in the ER facilities are likely to
not only be MDs, they are sometimes better MDs that the staff of walk-in medical
clinics who often hire newly graduated MDs still in residency or physicians
assistants. In other words, if you want the best physicians the odds are usually
better for ER rooms than networked ACA physicians and walk-in clinics.
When walk-in clinics are not convenient, getting an appointment with a
networked physician may take weeks or even months. Top physicians are available
24/7 for emergency patients and non-emergency Medicaid patients. Insured
patients not on Medicaid may be discouraged by co-pays of expensive ER services.
But Medicaid patients never have to worry about co-payments.
Last night CBS News reported that ER use expanded by 40% due to new Medicaid
patients.
Giving poor people health insurance, the belief
was, would decrease their dependence on hospital emergency rooms by
providing them access to more appropriate, lower-cost primary care.
But a study published in the journal
Science on Thursday finds that's not the case.
When you give people Medicaid, it seems they use both more primary care and
more emergency room services.
"Medicaid coverage increases emergency department
use, both overall and for a broad range of types of visits, conditions, and
subpopulations," says
Amy
Finkelstein, an economics professor at MIT and one
of the authors of the study. "Including visits for conditions that may be
most readily treatable in primary care settings."
In other words, people are going to the emergency
department for things that aren't emergencies. This is exactly what
policymakers hoped to avoid by giving people health insurance – including
the
huge increase in Medicaid coverage coming as part
of the Affordable Care Act.
And the increase in ER use found in the study was
significant – "about 40 percent," Finkelstein said.
This would be a good place to point out this is not
just any study. It is the third major paper from something called the
Oregon Health Insurance Experiment,
which Finkelstein heads along with
Katherine Baicker from the Harvard School of
Public Health.
The experiment was a rare opportunity to create a
randomized controlled experiment – the gold standard of scientific research.
It came about almost by accident, thanks to Oregon's decision in 2008 to
expand its Medicaid program via a lottery.
The result, said Finkelstein, was that the groups
of people with or without insurance were identical, "except for the fact
that some have insurance and some don't. You've literally randomized the
allocation of insurance coverage."
And that gave researchers the ability to compare
the effects of having health insurance — in this case, Medicaid.
The first paper from the research team, published
in 2011, was
mostly positive. It found that people who got
Medicaid coverage were more likely to use health services in general, less
likely to suffer from depression, and less likely to suffer financial
problems related to medical bills than those who remained uninsured.
The results in the second paper, published last
spring,
were more equivocal. Researchers found no
measurable health benefits in the Medicaid group for several chronic
conditions, including hypertension, high cholesterol and diabetes.
It's not clear that the emergency room results will
translate nationwide: The study only lasted 18 months and the study
population is both more while and more urban than the rest of the nation.
But that's not stopping critics of Medicaid
expansion.
"When you make ER care free to people, they consume
more of it. They consume 40 percent more of it," says Michael Cannon, head
of health policy for the libertarian
Cato Institute. "Even as they're consuming more
preventive care. And so one of the main arguments for how Obamacare was
going to reduce health care costs is just flat out false."
Cannon says the study will likely further hurt
President Obama's credibility for vowing that expanding Medicaid would help
get people out of emergency rooms. But what's likely to bother the
administration even more, he says, is what it may do to the half of the
states that have yet to adopt the Medicaid expansion.
"This study is going to make it less likely that
the 25 states that decided not to expand Medicaid are going to change their
minds and decide to expand Medicaid," Cannon predicts.
But this study doesn't come as much of a surprise
to those people who actually run Medicaid programs around the country.
"This is not something that is unexpected and not
something that we're not prepared for," says Kathleen Nolan. She's director
of state policy and programs for the
National Association
of Medicaid Directors.
Continued in article
Jensen Comment
The majority of new Medicaid patients will be poor, although it is possible for
millionaires to now qualify for Medicaid with devious financial planning such as
low income students having million dollar trust funds. The poor patients have
incentives to game the ER services for prescription pain medicine. With one
network physician or clinic, there will be records as to when prescriptions can
be renewed. Given the Administration's track record for implementing databases,
I strongly doubt that a Medicaid patient intent upon selling prescription pain
killers can be prevented by traveling around to different hospital ER service
for prescriptions that would not be granted if the ER physician was aware of the
last time a Medicaid patient received such a prescription in another hospital
and another and another.
I'm not certain how well pharmacies share prescription data or even if
privacy laws even allow CVC and Walgreen and Wal-mart to even share a person's
prescription data without receiving permission from the patient.
The moral hazard is greater with poor people in need of selling their pills
like they sell food stamps.
Can prescription data be shared between different corporations without
patient consent?
And then there's the problem of granting Medicaid to people who do not
qualify for Medicaid. For example, an audit in Illinois revealed that have the
people on Medicaid did not qualify for Medicaid. This appears to be yet another
entitlement going crazy at taxpayer expense.
Over the last 12 months some 3,000 Cubans, mostly
doctors, have arrived in the United States after deserting one of the
Venezuelan government's social programs they staff. This accounts for a 60%
increase as compared with 2012.
In 2012 there were about 5,000 refugee Cuban
doctors and nurses in the United States coming from all over the world.
Through December 1, 2013 this figure had surged to 8,000, 98% of them came
from Venezuela.
These are estimates by Dr. Julio Cesar Alfonso,
head of the South Florida group Solidarity Without Borders Inc. (SWB), which
helps Cuban medical professionals who try to desert the medical programs
Havana sells worldwide as "exports of services."
Venezuela hosts the largest contingent of Cuban
medical professionals under the cooperation agreement signed by Caracas and
Havana in 2003.
By 2012, 44,804 Cubans staffed the seven social
programs starting in 2003, according to the last official data released.
"In 2012 we had 5,000 refugee medical professionals
in the United States under federal assistance, but that figure has surged so
far in 2013 reaching 8,000 doctors, 98% of whom defected from Venezuela
because of continuously worsening conditions in that country," Alfonso says.
"Most Cubans who have defected complain about
low salaries, late payment, increased workload in the Barrio Adentro
neighborhood clinics and CDIs (Comprehensive Diagnostic Centers) across
Venezuela, which to some critics amounts to modern-day slavery," Alfonso
says.
"Cuban doctors only get USD 300 a month, but the
Venezuelan government pays the Castro regime around USD 6,000 per doctor, so
individual doctors are paid less than 10% of what Cuba collects," Alfonso
says.
Since 2006, Cuban doctors and some other health
workers who are serving their government overseas are allowed to request a
United States visa under the Cuban Medical Professional Parole (CMPP)
Program.
After requesting assistance from the US Embassy in
Caracas, most doctors defect to the United States via Colombia, but Brazil
is also being used as an alternative transit route to freedom.
Cuban medical professionals are required to
produce numerous patient records for the purposes of drafting reports, many
of which contain patient data that have been tampered with.
"This is done so that Cuba can show positive
reports to the Venezuelan government," Alfonso says.
Jensen Comment
Cuba and Venezuela have done more than nearly all other nations have done more
to eliminate income inequality than other nations. Contrary to the lies you hear
from Michael Moore, their efforts do not appear to be healthy. Soon the U.S. and
parts of Europe may be getting an influx of very skilled French physicians.
Warning: The numbers in this article need to be validated, but this
should not be too difficult to do since the U.S. government has records most of
these types of defections as opposed to records on people wading across the Rio
Grande. There will also be records on defectors seeking certifications to
practice, many of which will probably be in Florida among the many Cuban
defectors already located in and around Miami.
December 31, 2013
The good news, if you want to call it that, is that
roughly 1.6 million Americans have enrolled in ObamaCare so far. The not-so-good
news is that 1.46 million of them actually signed up for Medicaid . . . New York
spent more than $15 billion on Medicaid last year, roughly 30% of all state
expenditures. The Kaiser Foundation projects that over the next 10 years, New
York taxpayers will shell out some $433 billion for the program. But none of
these projections foresaw that so many of ObamaCare’s enrollees would be
Medicaid eligible. To be sure, the health-care law’s designers saw the expansion
of Medicaid as an important feature of their plan to expand coverage for the
uninsured. Still, they expected most of those enrolling in ObamaCare to qualify
for private (albeit subsidized) insurance.
Michael D. Tanner, NY Post, December 7, 2013 ---
http://nypost.com/2013/12/07/the-medicaid-time-bomb/
Medicaid ---
http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-State/By-State.html
Jensen Comment
It's hard to find Medicaid's share of state budgets because the amounts are
usually buried in other line items. As best I can tell thus far the Medicaid
share of state budgets is approximately a third before the new Obamacare
enrollees in Medicaid are factored into the budgets. Medicaid is a great idea,
but would be a better idea if more was spent to enforce the rules regarding who
qualifies. For example, Russian diplomats received over $5 million in Medicaid
benefits by lying about their incomes. A recent audit in Illinois reveals that
half the people on Medicaid are not eligible to be on Medicaid. What proportion
of the millions of new Medicaid recipients do you think will really qualify for
free medical care if the Medicaid rules were enforced?
President Obama hopes to add another 5 million people who are
above the poverty line to Medicaid in 2014.
NYT: Update on December 11, 2013
Health Exchange Enrollment Improves, But Still Short of Target
http://www.nytimes.com/interactive/2013/10/04/us/opening-week-of-health-exchanges.html?_r=0
What the data does not reveal is the percentage of those signing up for private
(non Medicaid and CHIP) plans that are not subsidized. The entire success of the
Obamacare plan rests on the number of people who enroll in private plans without
premium subsidies and the cooperation of hospitals and doctors with the
exchanges that write those policies. To date, 70% of the doctors and many of the
best hospitals in California are refusing to sign on because it is feared that
Obamacare will be transferring too many losses (bad debts) for unpaid premiums
and unpaid deductibles onto the medical service providers.
Many Democrats who voted in favor of
ObamaCare figured that voters would warm up to the law once its
vaunted benefits and insurance subsidies kicked in. To adapt
Nancy Pelosi, Congress had to pass the law for the public to
love what's in it. Their hope hasn't panned out.
Opposition to ObamaCare hit a record
high this week in a CNN poll, with 62% of respondents saying
they oppose the law compared to 35% who favor it. Disapproval
registered at 54% in December 2010, a month after Democrats were
routed in the midterm elections, and 59% when the law passed in
March 2010.
Democrats hoped that letting kids to
stay on their parents' insurance until age 26, guaranteed
coverage of pre-existing conditions, free preventative care,
mandated minimum benefits and a ban on lifetime and annual
limits would boost support for the law. Ditto subsidies for
consumers earning up to 400% of the poverty line.
But instead, these putative benefits
have driven up premiums and deductibles, which in many cases
aren't offset by the federal insurance subsidies. Many insurers
as a result have restricted provider networks to keep costs
down. Worse, the law's mandates have forced insurers to cancel
millions of policies altogether and restricted consumers'
choice. While the exchange glitches may be due to haphazard
planning, these problems are fundamental to the law.
The Obama administration has tried to
provide political cover to vulnerable Senate Democrats up for
re-election next year—Alaska's Mark Begich, Louisiana's Mary
Landrieu and Arkansas' Mark Pryor, among others—with
administrative patches like allowing insurers to renew cancelled
policies through next year. But the White House fixes haven't
improved support for the law. Instead, they underscore that
Democrats really didn't know what was in the law when they
passed it and didn't much care. And that may help explain why
the public has continued to sour on ObamaCare.
Hi Norma,
Due in heavy part that Obamacare is passing both its deductible
nonpayment bad debts and its premium non-payment bad debts (two of
the three months of a three-month nonpayment grace period), many
hospitals like the Andersen Cancer Center and many doctors (70% in
California) are refusing to serve patients insured by the exchanges.
The TV networks and major newspapers seem to conspire to not report
this.
You may not be able to choose your doctor or hospital unless you pay
cash or go on a high premium Cadillac plan that, in 2015, will cease to
be tax deductible by you or your employer..
After his gun control initiatives failed in Congress, President Obama
unilaterally added very expensive mental health coverage to Obamacare
without mentioning that most psychiatrists will refuse to serve patients
having any type of insurance.. Psychiatrists are already in short
supply in the USA. Nearly half already only serve cash-paying patients and
currently won't bill any insurance companies, including Medicare or
Medicaid. I think even more will reject the the exchanges.
I have a relative who needs psychiatric medications daily. Even though her
husband is on a good state university medical insurance plan for coverage of
most of her medical needs, she's dependent upon the only (overworked)
psychiatrist in the area. That psychiatrist does not accept insurance.
Why are there so few psychiatrists?
One reason is that psychiatry is the most dangerous medical specialty.
Exhibit A is the recent mass murderer James Holmes in Aurora, Colorado who
was booted off campus for threatening his psychiatrist. Personally I think
another reason is that doctors do not like going into a specialty having
such a low proportion of cure rates and having to be on call 24/7 (usually
to prevent suicides).
Something will have to be done to prevent passing bad bad debts onto
hospitals and doctors.
Now that the GOP has given up on deficit reduction (Sen. Ryan lied by
excluding interest on the debt in his budget), perhaps legislation to
Federal coverage of bad debts on to the Federal government along with
assurances that doctors can bill at their full rates they charge cash paying
patients. The blow to the deficit will be devastating since patients have
little incentive to pay their deductibles if the government will pay those
deductibles.
What we now have is two political parties so desperate to win elections that
both are now promising nearly-free medical coverage that will explode the
deficit and provide false promises about the quality of medical care in
short supply to meet exploding demand.
Medical care will be almost free as long as the government fails to
seriously prevent frauds in Medicaid. Medicare phony disability coverage,
and Obamacare subsidies --- all three
of which are now frauds out of control due to failed government
enforcement
U.S. prosecutors have charged 49 current and former
Russian diplomats and their family members with participating in a scheme to get
health benefits intended for the poor by lying about their income . . .
Meanwhile, according to the charges, the family members
had their housing costs paid for by the Russian government and spent "tens of
thousands of dollars" on vacations, jewelry and luxury goods from stores like
Swarovski and Jimmy Choo.
http://www.reuters.com/article/2013/12/05/usa-russia-healthfraud-idUSL2N0JK1AV20131205
It's a question that's popping up more and more. On
the surface, the question answers itself. We're talking about pinstriped
insurance company executives, not Hells Angels. One doesn't want to paint
with too broad a brush, but if you were going to guess which vocations lend
themselves least to revolutionary zeal, actuaries rank slightly behind
embalmers.
Still, it's hard not to wonder how much more these
people are willing to take. Even an obedient dog will bite if you kick it
enough. Since Obamacare's passage, the administration has constantly moved
the goalposts on the industry. For instance, when the small-business mandate
proved problematic in an election year, the administration delayed it,
putting its partisan political needs ahead of its own policy and the needs
of the industry.
But the insurers kept their eyes on the prize: huge
guaranteed profits stemming from the diktat of the health insurance mandate.
When asked how he silenced opponents in the health industry during his
successful effort to socialize medicine, Aneurin Bevan, creator of the
British National Health Service, responded, "I stuffed their mouths with
gold."
Hence, the insurers were ready on Oct. 1. They
rejiggered their industry. They sent out millions of cancellation letters to
customers whose plans no longer qualified under the new standards set by the
Affordable Care Act. They told their customers to go to the exchanges to get
their new plans.
But because President Obama promised Americans "if
you like your health care plan, you can keep it," (PolitiFact's "Lie of the
Year"), those cancellations became a political problem of Obama's own
making.
In response, the president blamed it on the
insurance companies or "bad apple" insurers. White House spokesman Jay
Carney insisted that it was the insurance companies that unilaterally
decided not to grandfather existing plans. (The Washington Post's "Fact
Checker" columnist, Glenn Kessler, gave this claim "Three Pinocchios.")
Then, just last week, Health and Human Services
Secretary Kathleen Sebelius announced that she was "urging" insurers to
ignore both their contracts and the law and simply cover people on the honor
system -- as if they were enrolled and paid up. She also wants doctors and
hospitals to take patients, regardless of whether they are in a patients'
insurance network or even if the patient is properly insured at all. Just go
ahead and extend the deadline for paying, she urged insurers; we'll work out
the paperwork later.
Of course, urging isn't forcing. But as Avik Roy of
Forbes notes, the difference is subtle. Also last week, HHS also announced
last week that it will consider compliance with its suggestions when
determining which plans to allow on the exchanges next year. A request from
HHS is like being asked a "favor" by the Godfather; compliance is less than
voluntary.
The irony, as Christopher DeMuth recently noted in
the Weekly Standard, is that if the architects of Obamacare had their way,
the insurers would have been in even worse shape today. The original plan
was for a "public option" that would have, over time, undercut the private
insurance market to the point where single-payer seemed like the only
rational way to go. If it weren't for then-Sen. Joe Lieberman's insistence
that the provision be scrapped, DeMuth writes, "Obamacare's troubles would
today be leading smoothly to the expansion of direct federal health
insurance to pick up millions of canceled policies and undercut rate
increases on terms no private firm could match."
In other words, the insurers knew the
administration never had their best interests at heart but got in bed with
it anyway.
Continued in article
Jensen Comment
Until recently the enthusiasm of medical insurance companies was understandable
since the the losses for deductible portions of contracts were passed on mostly
to patients themselves and possibly their doctors. Most medical service bad
debts of for default of premium payments were passed on to hospitals and
doctors.
Also the big and prosperous insurance companies were allowed to opt out of
participating in the more risky health insurance exchanges. Most did opt out
such that the government had to make loans for new exchange companies to to
become insurers for individuals not covered by their employers. These exchanges
are poorly capitalized, and many will probably have to be bailed out by the
government if and when they encounter insolvency.
To get more heavily capitalized insurance companies to participate would
require higher premium rates and more protection against bad debt losses. But
this in turn would raise premiums dramatically and be counter to the whole
purpose of Obamacare --- to get more people insured and using more
preventative care options. High premiums and low deductibles could destroy
Obamacare by making more rather than fewer people insured.
The silence of the media on astute health care providers is more
problematic.
Many of the biggest and best hospitals like the Andersen Cancer Center will not
serve patients covered by the exchanges. Over 70% of California's physicians
will not serve patients covered by the exchanges (except in the case where
emergency treatment is called for).
Has any media source complained that with proper investment planning very
wealthy people, especially college students on trust funds, may get free
Medicaid medical care and medications.
Jensen Question I asked the following question on the Turbo Tax Forum Regarding Obamacare
Questions: Question
I'm told that only income, not wealth, will be the deciding factor on
eligibility for Medicaid beginning in 2014.
If I'm a full time student having zero income and $10 million trust fund of
stock paying no dividends, will I be eligible for Medicaid?
A Turbo Tax expert says that wealth may still be a criterion in the states
that rejected the Medicaid expansion. Having valuable assets is no longer a
criterion in those states that yielded to Whitehouse pressure and temporary
funding to expand Medicaid roles.
I am honestly confused by the assertion that your wealth after 2014 will
not affect your eligibility for Medicaid. In does not seem right that students
on trust funds should be getting free medical care and medications.
The Obama administration has
expanded mental health care coverage, but the latest research shows that
psychiatrists often do not accept insurance at all. When only 43% of
psychiatrists accept Medicaid, it is difficult to see how expanded coverage
will help mental health patients.
Psychiatrists accept medical insurance less
frequently than other specialists across the board, according to the
study published in JAMA Psychiatry by
researchers from three separate medical schools:
55.3% of
psychiatrists accepted medical insurance in general, compared to
88.7% of other physicians
54.8% of
psychiatrists accepted Medicare, compared to 86.1% of other
physicians
43.1% of
psychiatrists accepted Medicaid, compared to 73.0% of other
physicians
The mainline media seems to avoid the greatest concerns of Obamacare ---
concerns about making hospitals and doctors absorb most of the costs of medical
care during the 90-day premium default grace period and the cost of serving
patients who afterwards renege on paying the deductible portions that they
agreed to pay to get lower premium plans.
The USA now has a dual health care program --- the highest quality health
care in the world for the wealthy on Cadillac medical insurance plans and
inferior quality health care in the chaos of Obamacare that will force soaring
inflation in health care provider pricings. Your local Congressional
representative is signing up for a Cadillac plan paid for by taxpayers.
"70% of California doctors are boycotting California's Obamacare
exchanges," Washington Examiner, December 7, 2013 ---
http://www.examiner.com/article/70-of-california-doctors-are-boycotting-california-s-obamacare-exchanges
Note there are still unanswered questions about the accuracy of this number.
Most notably, however, is that most exchange will be accepted only by networks
of hospitals and physicians who participate in the network. You may not choose
your own off-network doctor and hospital unless you buy one of the premium
Cadillac plans. President Obama failed to make this clear when he repeated over
and over that "You can choose your own doctor."
An estimated seven out of every 10 physicians in
deep-blue California are rebelling against the state's Obamacare health
insurance exchange and won't participate, the head of the state's largest
medical association said.
“It doesn't surprise me that there's a high rate of
nonparticipation,” said Dr. Richard Thorp, president of the California
Medical Association.
horp has been a primary care doctor for 38 years in
a small town 90 miles north of Sacramento. The CMA represents 38,000 of the
roughly 104,000 doctors in California.
“We need some recognition that we’re doing a
service to the community. But we can’t do it for free. And we can’t do it at
a loss. No other business would do that,” he said.
California offers one of the lowest government
reimbursement rates in the country -- 30 percent lower than federal Medicare
payments. And reimbursement rates for some procedures are even lower.
In other states, Medicare pays doctors $76 for
return-office visits. But in California, Medi-Cal's reimbursement is $24,
according to Dr. Theodore M. Mazer, a San Diego ear, nose and throat doctor.
In other states, doctors receive between $500 to
$700 to perform a tonsillectomy. In California, they get $160, Mazer added.
Only in September did insurance companies disclose
that their rates would be pegged to California’s Medicaid plan, called Medi-Cal.
That's driven many doctors to just say no.
They're also pointing out that Covered California's
website lists many doctors as participants when they aren't.
“Some physicians have been put in the network and
they were included basically without their permission,” Lisa Folberg said.
She is a CMA’s vice president of medical and regulatory Policy.
“They may be listed as actually participating, but
not of their own volition,” said Donald Waters, executive director of the
Alameda-Contra Costa Medical Association.
Waters' group represents 3,100 doctors in the East
Bay area that includes Oakland, with an estimated 200,000 uninsured
individuals.
“This is a dirty little secret that is not really
talked about as they promote Covered California,” Waters said. He called the
exchange's doctors list a “shell game” because “the vast majority” of his
doctors are not participating.
Independent insurance brokers who work with both
insurance companies and doctor networks estimate that about 70 percent of
California's 104,000 licensed doctors are boycotting the exchange.
Continued in article
Jensen Comment
Five guesses as to what will happen to insurance premiums when millions of
people at last are signed up for insurance from the exchanges?
Hint
The answer is not one thing.
First will be the raising of premiums to cover added payments to
doctors.
Second will be the raising of premiums to cover the bad debts of
hospitals and doctors for the high deductibles and higher premiums that
millions of newly insured people will be unable to pay when they are
seriously ill.
Third will be the long delays to make appointments with doctors who are
participating in the exchange programs. Experience with Romneycare in
in Massachusetts found that appointment delays went up an average of six
weeks.
Fourth will be the toughing out of individuals who will not seek medical
care because of the cost of the deductibles.
Fifty will be the increased lines in emergency rooms for people to ill
or injured to wait a month or two to see a doctor.
The White House is claiming that the Healthcare.gov
website is mostly fixed, that the millions of Americans whose health plans
were canceled thanks to government rules may be able to keep them for
another year, and that in any event these people will get better plans
through ObamaCare exchanges. Whatever the truth of these assertions, those
who expect better days ahead for the Affordable Care Act are in for a rude
awakening. The shocks—economic and political—will get much worse next year
and beyond. Here's why:
The "sticker shock" that many buyers of new, ACA-compliant
health plans have experienced—with premiums 30% higher, or more, than their
previous coverage—has only begun. The costs borne by individuals will be
even more obvious next year as more people start having to pay higher
deductibles and copays.
If, as many predict, too few healthy young people
sign up for insurance that is overpriced in order to subsidize older, sicker
people, the insurance market will unravel in a "death spiral" of ever-higher
premiums and fewer signups. The government, through taxpayer-funded "risk
corridors," is on the hook for billions of dollars of potential
insurance-company losses. This will be about as politically popular as bank
bailouts.
The "I can't keep my doctor" shock will also hit
more and more people in coming months. To keep prices to consumers as low as
possible—given cost pressures generated by the government's rules, controls
and coverage mandates—insurance companies in many cases are offering plans
that have very restrictive networks, with lower-cost providers that exclude
some of the best physicians and hospitals.
Next year, millions must choose among unfamiliar
physicians and hospitals, or paying more for preferred providers who are not
part of their insurance network. Some health outcomes will deteriorate from
a less familiar doctor-patient relationship.
More IT failures are likely. People looking for
health plans on ObamaCare exchanges may be able to fill out their
applications with more ease. But the far more complex back-office side of
the website—where the information in their application is checked against
government databases to determine the premium subsidies and prices they will
be charged, and where the applications are forwarded to insurance
companies—is still under construction. Be prepared for eligibility, coverage
gap, billing, claims, insurer payment and patient information-protection
debacles.
The next shock will come when the scores of
millions outside the individual market—people who are covered by employers,
in union plans, or on Medicare and Medicaid—experience the downsides of
ObamaCare. There will be longer waits for hospital visits, doctors'
appointments and specialist treatment, as more people crowd fewer providers.
Those with means can respond to the
government-driven waiting lines by making side payments to providers or
seeking care through doctors who do not participate in insurance plans. But
this will be difficult for most people.
Next, the Congressional Budget Office's estimated
25% expansion of Medicaid under ObamaCare will exert pressure on state
Medicaid spending (although the pressure will be delayed for a few years by
federal subsidies). This pressure on state budgets means less money on
education and transportation, and higher state taxes.
The "Cadillac tax" on health plans to help pay for
ObamaCare starts four years from this Jan. 1. It will fall heavily on unions
whose plans are expensive due to generous health benefits.
In the nearer term, a political iceberg looms next
year. Insurance companies usually submit proposed pricing to regulators in
the summer, and the open enrollment period begins in the fall for plans
starting Jan. 1. Businesses of all sizes that currently provide health care
will have to offer ObamaCare's expensive, mandated benefits, or drop their
plans and—except the smallest firms—pay a fine. Tens of millions of
Americans with employer-provided health plans risk paying more for less, and
losing their policies and doctors to more restrictive networks. The
administration is desperately trying to delay employer-plan problems beyond
the 2014 election to avoid this shock.
Meanwhile, ObamaCare will lead to more part-time
workers in some industries, as hours are cut back to conform to arbitrary
definitions in the law of what constitutes full-time employment. Many small
businesses will be cautious about hiring more than 50 full-time employees,
which would subject them to the law's employer insurance mandate.
On the supply side, medicine will become a far less
attractive career for talented young people. More doctors will restrict
practice or retire early rather than accept lower incomes and work
conditions they did not anticipate. Already, many practices are closed to
Medicaid recipients, some also to Medicare. The pace of innovation in drugs,
medical devices and delivery is expected to slow significantly, as higher
taxes and even rationing set in.
The repeated assertions by the law's supporters
that nobody but the rich would be worse off was based on a
beyond-implausible claim that one could expand by millions the number of
people with health insurance, lower health-care costs without rationing, and
improve quality. The reality is that any squeezing of insurance-company
profits, or reduction in uncompensated emergency-room care amounts to a tiny
fraction of the trillions of dollars extracted from those people overpaying
for insurance, or redistributed from taxpayers.
The Affordable Care Act's disastrous debut sent the
president's approval ratings into a tailspin and congressional Democrats in
competitive districts fleeing for cover. If the law's continuing
unpopularity enables Republicans to regain the Senate in 2014, the president
will be forced to veto repeated attempts to repeal the law or to negotiate
major changes.
And there’s more: most insurance companies don’t
tell you about the taxes they add to their premiums. The numbers will vary,
but one subscriber said their tax amount is $23.14 a month, or nearly $278
annually.
Other add-ons include:
* A 2 percent premium tax on every health plan.
* A user fee of 3.5 percent to sell through the
online marketplace.
* A $2-per-policy fee.
Nonetheless, supporters of the Affordable Care Act
claim the neediest will get the best coverage.
“People who make a little more will pay more;
people who make a little less will pay less,” Arevalo said.
Critics say most insurers don’t specifically post
taxes on invoices, and some question how, in the case Brennan showed
earlier, Alabama Blue Cross-Blue Shield was able to be so specific.
The Obama administration has expanded mental health
care coverage, but the latest research shows that psychiatrists often do not
accept insurance at all. When only 43% of psychiatrists accept Medicaid, it
is difficult to see how expanded coverage will help mental health patients.
Psychiatrists accept medical insurance less
frequently than other specialists across the board, according to the
study published in JAMA Psychiatry by
researchers from three separate medical schools:
55.3% of psychiatrists accepted medical insurance in general,
compared to 88.7% of other physicians
54.8% of psychiatrists accepted Medicare, compared to 86.1% of
other physicians
43.1% of psychiatrists accepted Medicaid, compared to 73.0% of
other physicians
Continued in article
Jensen Comment
Until now the media has has avoided mentioning the really big worries about
Obamacare in an effort to present a rosy picture to encourage millions of people
to sign up. What goes unmentioned, until the December 8, 2013 article in the WSJ
quoted below, is that hospital bad debts with greatly increase due to people
patients being unable to pay their deductibles.
December 6, 2013 message from Bob
Jensen
Hi Eliot,
When there's no Obamacare there will be a USA National
Health Plan that bypasses medical insurance companies. It's possible that we
will still have such companies offering private insurance beyond what the
USA National Plan covers. This "dual coverage" is how the German health
insurance system now works. According to various sources in Germany at the
moment (mostly Erika's relatives), the time and a6ttention and service
varies in ways that that you might find objectionable. The best doctors give
more attention and faster service to German patients with private insurance.
For example, waiting for new knees can take much longer without private
insurance.
Our present USA Medicare system works on a dual basis.
Erika and I pay nearly $200 per month (each) for supplemental p private
Medicare insurance that eliminates the Medicare deductibles (co-insurance)
and does such things as pay for the added cost of private hospital rooms. Of
course Medicare costs us hundreds more each month such that the supposedly
"free" Medicare costs us each nearly $400 per month. Erika pays all our
bills such that I don't know the exact amounts. She allows me to carry one
check if I promise not to use it.
Thus far I've fortunately paid much more into the Medicare
system since my 2006 retirement than I've withdrawn. Erika sadly has
withdrawn over $1 million from the system.
We've gone beyond the point of no return for Obamacare,
although I think the Obamacare is so complicated and unjust that it will
evolve into a national health care plan perhaps something like that in
Germany. The Canada system is not a very good model, because it varies
between provinces and has long delays for elective procedures such as new
knees and hips. Canada has a dual system where the poor wait and the rich
come to the USA for faster service.
Personally I think the evolution of Obamacare into a USA
National Health Plan will be inevitable.
Obamacare is a disaster in terms of the size of the
deductibles for plans that are affordable. Obamacare is a disaster in terms
of the cheating that will become commonplace for the subsidies. Obamacare
will be a disaster for insurance companies and health providers who will
have to absorb enormous losses such as bad debt losses. Obamacare is a
disaster in that we probably won't even note a significant difference in the
crowds lining up in emergency rooms seeking free diagnostics, treatments,
and drugs.
There will be frustrating years of turmoil in the USA
health system until a USA National Health Plan finally evolves.
Respectfully,
Bob Jensen
I might note that the premium subsidies paid my Uncle Sam
are a new thing and will probably become a larger scam than anything we've
known in healthcare fraud prior to 2014. But let's ignore the new scam in
town and the IRS refusal to enforce the subsidy rules.
Of course the hospitals and physicians will send in the
debt collection agencies. But the millions of plans that were wiped out of
the system in 2013 had much lower deductibles and often higher premiums. The
premiums beginning in 2014 are cheaper in many instances because the
deductible amounts were greatly increased such as the new Bronz plans where
insurance companies only pay 60%.
Nobody seems to be talking about it, but when those big
hospital bills hit the fan the people opting for the lowest premiums (and
high deductibles) are the people least able to pay the deductibles for huge
medical bills.
Yes I do think the problem of bad debts for huge
deductibles will be a bigger, and bigger problem beginning in 2014 because
the options for plans with enormous deductibles have been increased so
greatly beginning in 2014.
What was a huge bad debt problem for hospitals and
physicians in 2013 will become a monster bad debt problem after 2013. The
problem is not so much with the premium amounts as it is the deductible
amounts.
But don't look for the media to even whisper the future
bad debt monster for medical providers.
Respectfully,
Bob Jensen
Hi Zafar,
A major portion of the medical cost for the "uninsured"
currently gets passed on to taxpayers since people that have no
insurance are passed on to hospitals that are subsidized by taxpayers to
cover the uninsured such as in San Antonio where most uninsured patients
are passed on to the huge Bexar County Hospital that is heavily funded
by county property taxes. The Bexar County Hospital portion of my
property tax bill exceeded $1,000 per year when I lived in San Antonio.
Of course since that $1,000 gave me about a $400 tax
break on my Federal income tax return, the Federal Government was in
essence paying for 40% of my share of paying for the uninsured served at
the Bexar County Hospital.
The bad debt losses that currently hit hospitals not
subsidized by property taxpayers are for "insured"
patients who do not have sufficient coverage to pay entire billings
beyond what their insurance will pay. The new exchange insurance plans
with enormous deductibles such as the Bronz plans that only pay 60% will
greatly increase the losses to hospitals for "insured"
patients who cannot pay their 40% share of the hospital and physician
billings..
My point is that a huge portion of medical care costs
that are now paid by property taxpayers for "uninsured"
patients will no longer be paid by taxpayers because those patients are
now "insured"
with low premium, high-deductible plans where many of those patients
cannot afford the deductibles for hospital bills. Taxpayers in San
Antonio with high property taxes may cheer the savings that must in the
future be choked on by the hospitals that are not property tax funded.
In other words, somebody pays for hospital patients' bad
debts. The "uninsured" are
now heavily subsidized by county and city property taxpayers. Giving
the uninsured insurance with low premiums and high deductibles is really
a transfer payment from property taxpayers to whomever will pay for
the added bad debts of defaulted deductibles.
I don't think this system is sustainable until there is USA National
Health Program.
Respectfully,
Bob Jensen
The American
Hospital Association, which represents for-profit and nonprofit hospitals and
other health-care providers, concurred that the higher deductibles "will
likely lead to an increase in hospital bad debt,"
said Ashley Thompson, its deputy director for policy.
The health law makes tax credits available to help
cover insurance premiums for people with annual income up to four times the
poverty level, or $45,960 for an individual. In addition, "cost-sharing"
subsidies to help pay deductibles are available to people who earn up to 2.5
times the poverty level, or about $28,725 for an individual, in the
exchange's silver policies.
As enrollment picks up on HealthCare.gov, many
people with modest incomes are encountering a troubling element: deductibles
so steep they may not be able to afford the portion of medical expenses that
insurance doesn't cover. Christopher Weaver discusses. Photo: Getty Images.
But those limits will leave hundreds of thousands
or more people with a difficult trade-off: They can pay significantly higher
premiums for the exchange's silver, gold and platinum policies, which have
lower deductibles, or gamble they won't need much health care and choose a
cheaper bronze plan. Moreover, the cost-sharing subsidies for deductibles
don't apply to the bronze policies.
That means some sick or injured people may avoid
treatment so they don't rack up high bills their insurance won't cover,
according to consumer activists, insurance brokers and public-policy
analysts—subverting one of the health law's goals, which is to ensure more
people receive needed health care. Hospitals, meantime, are bracing for a
rise in unpaid bills from bronze-plan policyholders, said industry officials
and public-policy analysts.
Because all health plans now are required to
provide certain minimum benefits, "consumers may be tempted to shop on
premium alone, not realizing that the out-of-pocket costs can have a
dramatic effect upon the annual costs of health care," said Kevin Coleman,
head of research and data at HealthPocket.
Mr. Coleman said he expects the high deductibles
will "produce some reduction in medical-service use" for enrollees who don't
qualify for subsidies.
. . .
The American Hospital Association, which represents
for-profit and nonprofit hospitals and other health-care providers,
concurred that the higher deductibles "will
likely lead to an increase in hospital bad debt,"
said Ashley Thompson, its deputy director for policy.
It isn't known how many bronze policies have been
bought so far because the exchanges aren't releasing that level of detail,
HealthPocket's Mr. Coleman said.
December 6, 2013 message from Bob
Jensen
Hi Eliot,
When there's no Obamacare there will be a USA National
Health Plan that bypasses medical insurance companies. It's possible that we
will still have such companies offering private insurance beyond what the
USA National Plan covers. This "dual coverage" is how the German health
insurance system now works. According to various sources in Germany at the
moment (mostly Erika's relatives), the time and a6ttention and service
varies in ways that that you might find objectionable. The best doctors give
more attention and faster service to German patients with private insurance.
For example, waiting for new knees can take much longer without private
insurance.
Our present USA Medicare system works on a dual basis.
Erika and I pay nearly $200 per month (each) for supplemental p private
Medicare insurance that eliminates the Medicare deductibles (co-insurance)
and does such things as pay for the added cost of private hospital rooms. Of
course Medicare costs us hundreds more each month such that the supposedly
"free" Medicare costs us each nearly $400 per month. Erika pays all our
bills such that I don't know the exact amounts. She allows me to carry one
check if I promise not to use it.
Thus far I've fortunately paid much more into the Medicare
system since my 2006 retirement than I've withdrawn. Erika sadly has
withdrawn over $1 million from the system.
We've gone beyond the point of no return for Obamacare,
although I think the Obamacare is so complicated and unjust that it will
evolve into a national health care plan perhaps something like that in
Germany. The Canada system is not a very good model, because it varies
between provinces and has long delays for elective procedures such as new
knees and hips. Canada has a dual system where the poor wait and the rich
come to the USA for faster service.
Personally I think the evolution of Obamacare into a USA
National Health Plan will be inevitable.
Obamacare is a disaster in terms of the size of the
deductibles for plans that are affordable. Obamacare is a disaster in terms
of the cheating that will become commonplace for the subsidies. Obamacare
will be a disaster for insurance companies and health providers who will
have to absorb enormous losses such as bad debt losses. Obamacare is a
disaster in that we probably won't even note a significant difference in the
crowds lining up in emergency rooms seeking free diagnostics, treatments,
and drugs.
There will be frustrating years of turmoil in the USA
health system until a USA National Health Plan finally evolves.
Respectfully, Bob Jensen
I might note that the premium subsidies paid my Uncle Sam
are a new thing and will probably become a larger scam than anything we've
known in healthcare fraud prior to 2014. But let's ignore the new scam in
town and the IRS refusal to enforce the subsidy rules.
Of course the hospitals and physicians will send in the
debt collection agencies. But the millions of plans that were wiped out of
the system in 2013 had much lower deductibles and often higher premiums. The
premiums beginning in 2014 are cheaper in many instances because the
deductible amounts were greatly increased such as the new Bronz plans where
insurance companies only pay 60%.
Nobody seems to be talking about it, but when those big
hospital bills hit the fan the people opting for the lowest premiums (and
high deductibles) are the people least able to pay the deductibles for huge
medical bills.
Yes I do think the problem of bad debts for huge
deductibles will be a bigger, and bigger problem beginning in 2014 because
the options for plans with enormous deductibles have been increased so
greatly beginning in 2014.
What was a huge bad debt problem for hospitals and
physicians in 2013 will become a monster bad debt problem after 2013. The
problem is not so much with the premium amounts as it is the deductible
amounts.
But don't look for the media to even whisper the future
bad debt monster for medical providers.
Respectfully, Bob Jensen
Jensen Comment
Until now the media has has avoided mentioning the really big worries about
Obamacare in an effort to present a rosy picture to encourage millups upon
millions of people to sign up. What goes unmentioned, until today's article in
the WSJ quoted below, is that hospital bad debts with greatly increase due to
people patients being unable to pay their deductibles.
December 6, 2013 message from Bob
Jensen
Hi Zafar,
A major portion of the medical cost for the "uninsured"
currently gets passed on to taxpayers since people that have no
insurance are passed on to hospitals that are subsidized by taxpayers to
cover the uninsured such as in San Antonio where most uninsured patients
are passed on to the huge Bexar County Hospital that is heavily funded
by county property taxes. The Bexar County Hospital portion of my
property tax bill exceeded $1,000 per year when I lived in San Antonio.
Of course since that $1,000 gave me about a $400 tax
break on my Federal income tax return, the Federal Government was in
essence paying for 40% of my share of paying for the uninsured served at
the Bexar County Hospital.
The bad debt losses that currently hit hospitals not
subsidized by property taxpayers are for "insured"
patients who do not have sufficient coverage to pay entire billings
beyond what their insurance will pay. The new exchange insurance plans
with enormous deductibles such as the Bronz plans that only pay 60% will
greatly increase the losses to hospitals for "insured"
patients who cannot pay their 40% share of the hospital and physician
billings..
My point is that a huge portion of medical care costs
that are now paid by property taxpayers for "uninsured"
patients will no longer be paid by taxpayers because those patients are
now "insured"
with low premium, high-deductible plans where many of those patients
cannot afford the deductibles for hospital bills. Taxpayers in San
Antonio with high property taxes may cheer the savings that must in the
future be choked on by the hospitals that are not property tax funded.
In other words, somebody pays for hospital patients' bad
debts. The "uninsured" are
now heavily subsidized by county and city property taxpayers. Giving
the uninsured insurance with low premiums and high deductibles is really
a transfer payment from property taxpayers to whomever will pay for
the added bad debts of defaulted deductibles.
I don't think this system is sustainable until there is USA National
Health Program.
Question
What happens if Obamacare insured individuals or companies go into default on
premiums while the insureds keep piling on the medical bills on the pretense
that they are still insured?
Obamacare: Limits Placed Upon Choosing Your Own Doctor and Hospital
Jensen Comment
The media along with President Obama led us to believe that medical insurance
plans were going to vary only be the amount of the deductibles and age of the
applicant. We are now learning more about differences in medical networks of
hospitals and doctors. The President kept insisting that we could keep our
present doctors. Technically that was not a lie, but what was left unsaid is
that to literally keep your favored doctors and hospitals you may have to opt
for the more expensive Cadillac plans having "broader network coverage "of
physicians and selective hospitals that opted out of serving the lower-priced
limited network plans.
Mr. Wallace: "It's a simple yes or no question.
Didn't he say if you like your doctor, you can keep your doctor?"
Dr. Emanuel: "Yes. But look, if you want to pay
more for an insurance company that covers your doctor, you can do that. This
is a matter of choice. We know in all sorts of places you pay more for
certain—for a wider range of choices or wider range of benefits. The
issue isn't the selective networks. People keep saying, 'Oh, the problem is
you're going to have a selective network.'"
Mr. Wallace: "Well, if you lose your doctor or lose
your hospital—"
Dr. Emanuel: "Let me just say something. People are
going to have a choice as to whether they want to pay a certain amount for a
selective network or pay more for a broader
network."
Mr. Wallace: "Which means your premiums would
probably go up."
Dr. Emanuel: "They get that choice. That's a choice
you've always made."
It's nice to hear a central planner embrace choice,
except this needs translating too. The truth is that you may be able to pay
more to keep your doctor, but only after you choose one of ObamaCare's
preferred plans that already costs you more than your old plan that
ObamaCare forced you to give up.
Jensen Comment
What Dr. Emanuel failed to mention is that the "broader expensive network" plans
are Cadillac plans for which employers lose their tax deductions.
The Cadillac Tax: A Game Changer for U.S. Health Care: Can you
explain this tax to your students?
Do you understand the Cadillac Tax provision of the Affordable Healthcare Act
that will have a monumental 2018 impact on healthcare coverage of employees who
are now covered by employer plans --- plans now costing the government over $250
billion per year? But not for long!
Do you understand the Cadillac Tax provision?
Me neither. As Nancy Pelosi said years ago, Congress passed the ACA before
anybody in the USA had a chance to study all the surprises in this the enormous
bill.
If you're covered presently on your employer's plan you should most certainly
learn about the Cadillac Tax provision that kicks in in 2018.
Jensen Comment
Non-profit organizations, especially labor unions, for whom Cadillac plans are
especially popular will be allowed to keep their plans without penalty since tax
deductions are not of concern to them.
Having preferred networks of doctors and hospitals is not unheard of in
national health care plans. Germany, for example, has both public health
insurance plus premium coverage with private insurance. Cuba notoriously has
bourgeoisie plans for members of the Communist Party and the wealthy versus
proletariat plans for the poor people.
If you Congressional representative brags about signing
up for Obamacare ask if he or she has a Cadillac Obamacare plan that lets them
choose their own doctors and hospitals.
Question
What happens if Obamacare insured individuals or companies go into default on
premiums while the insureds keep piling on the medical bills on the pretense
that they are still insured?
I heard about the latest problem this week from an
eye doctor friend who received a letter from a Colorado-based insurer
informing her that she's essentially on the hook for Obamacare's payment
grace period for debtors. The optometrist is bracing for a flood of similar
letters from other insurers. Like countless other independent providers,
she's extremely concerned about the potential liability, uncertainty and
fraud the rule imposes on her business.
Here's the raw deal: The Affordable Care Act
created a 90-day grace period before insurers can drop patients who fall
behind on premiums. So, delinquents who obtain tax-subsidized health
insurance through an Obamacare health insurance exchange have three months
to settle up their bills prior to their policy being canceled. As written,
the law puts insurers on the hook for the grace period.
But the bureaucrats at the Centers for Medicare and
Medicaid Services decided to issue a rule in March
making insurers responsible only for paying claims
during the first 30 days of the debtors' grace period.
Who's on the hook for the other two months?
Well, customers are entrusted to foot the bills
for additional services. But if they blow off the payments, it's up to
physicians and hospitals to collect.
In real-world practice, this means providers will
be eating untold costs. Several large hospital associations raised red flags
over the issue this summer. In August, the Missouri Hospital Association
noted that the regulatory shift "unduly burdens physicians, hospitals and
other health care providers" by making them directly collect payments from
patients, which "puts them at an unfair and significant risk for providing
uncompensated care to patients."
Emillie J DiChristina of Practicefirst Medical
Management Solutions spelled out the financial risks for clients on the
company's blog: "This leaves providers in a potentially bad place as they
have a high potential for accruing bad debt on services provided between 31
and 90 days of the allowed grace period." Can you spell f-r-a-u-d? People
could "go on and off" insurance plans, Tampa Bay health care lawyer Bruce
Lamb told me, and game the system by bailing on payments and exploiting
Obamacare protections against denial of coverage.
Or as MHA officials put it: "We also are very
concerned that some disreputable individuals will learn they can manipulate
the system and win a full year's insurance coverage on only nine months of
premiums. Knowing they are entitled to three months of grace period
coverage, dishonest persons could stop paying premiums on the ninth month,
enjoy free coverage during the 90-day grace period, have their coverage
terminated, and then re-enter the exchange market where the Affordable Care
Act's guaranteed issue mandate would prohibit another plan from denying them
coverage."
Think such nefarious behavior won't occur? Then you
haven't been paying attention to the data manipulators and con artists in
the Obamacare navigator program. As I reported earlier this year, the seedy
nonprofit Seedco secured multimillion-dollar navigator contracts in Georgia,
Maryland, Tennessee and New York to recruit Obamacare recipients into the
government-run exchanges -- despite settling a civil fraud lawsuit for
faking at least 1,400 of 6,500 job placements under a $22.2 million
federally funded contract with New York City a year ago.
Additionally, investigative journalist James
O'Keefe and his Project Veritas team have caught Obamacare navigators on
tape advising health insurance exchange customers to under-report their
income and lie about their health status in order to cheat the system.
CMS has made no effort to repeal its cost-shifting
rule or to do anything to address the concerns of providers who will be left
holding the bag. As one hospital rep told me: "It's potentially
catastrophic." Private practices are already being hit hard with slashed
reimbursements, the electronic medical records mandate, ICD-10 medical
diagnostic code changes, and increasing federal intrusions on how they
provide care. In yet another entry on the laundry list of Obamacare's
unintended consequences, this regulation will hurt patients by dissuading
doctors from participating in exchange plans.
The Cadillac Tax: A Game Changer for U.S. Health Care: Can you
explain this tax to your students?
Do you understand the Cadillac Tax provision of the Affordable Healthcare Act
that will have a monumental 2018 impact on healthcare coverage of employees who
are now covered by employer plans --- plans now costing the government over $250
billion per year? But not for long!
Do you understand the Cadillac Tax provision?
Me neither. As Nancy Pelosi said years ago, Congress passed the ACA before
anybody in the USA had a chance to study all the surprises in this the enormous
bill.
If you're covered presently on your employer's plan you should most certainly
learn about the Cadillac Tax provision that kicks in in 2018.
Democrats in Illinois have dug a $100 billion
pension hole, and now they want Republicans to rescue them by voting for a
plan that would merely delay the fiscal reckoning while helping to re-elect
Governor Pat Quinn. The cuckolded GOP seems happy to oblige on this
quarter-baked reform.
Legislative leaders plan to vote Tuesday on a bill
that Mr. Quinn hails as a great achievement. But the plan merely tinkers
around the edges to save a fanciful $155 billion over 30 years, shaves the
state's unfunded liability by at most 20%, and does nothing for Chicago's
$20 billion pension hole.
Most of the putative savings would come from
trimming benefits for younger workers. The retirement age for current
workers would increase on a graduated scale by four months for 45-year-olds
to five years for those 30 and under. Teachers now in their 20s would have
to wait until the ripe, old age of 60 to retire, but they'd still draw
pensions worth 75% of their final salary.
Salaries for calculating pensions would also be
capped at $109,971, which would increase over time with inflation. Yet
Democrats cracked this ceiling by grandfathering in pensions for workers
whose salaries currently top or will exceed the cap due to raises in
collective-bargaining agreements.
Democrats are also offering defined-contribution
plans as a sop to Republicans who are desperate to dress up this turkey of a
deal. These plans would only be available to 5% of workers hired before
2011. Why only 5%? Because if too many workers opt out of the traditional
pension, there might not be enough new workers to fund the overpromises
Democrats have made to current pensioners.
At private companies, such 401(k)-style plans are
private property that workers keep if they move to a new job. But the
Illinois version gives the state control over the new defined-contribution
plans and lets the legislature raid the individual accounts at anytime.
That's a scam, not a reform.
Even under the most optimistic forecasts, these
nips and tucks would only slim the state's pension liability down to $80
billion—which is where it was after Governor Quinn signed de minimis fixes
in spring 2010 to get him past that year's election.
Safely elected in January 2011, Democrats then
raised the state's 3% flat income tax rate to 5% and its corporate rate from
7.3% to 9.5%, the fourth highest in the country. All $7 billion a year in
new revenues have gone to pension payments, which will leave a huge new hole
in the budget when the supposedly temporary tax hikes are phased out in
2015.
The truth is that Democrats will never let the tax
increases expire, and state Senate President John Cullerton all but admitted
as much in October. Mr. Quinn won't rule out another tax hike, which means
round two is a certainty in 2015 if he wins re-election next year. The
difference is that this time Democrats will kill the flat income tax and
impose a progressive rate scheme that will make future tax hikes politically
easier.
It's a sign of their desperation that the state's
business lobbies are supporting the reform as the best they can hope for.
Others want special tax breaks to offset the 2011 tax hike. Archer Daniels
Midland ADM +1.49% (Decatur) and Office Max (Naperville) have threatened to
move their corporate headquarters if the state doesn't guarantee $75 million
in tax breaks. But Mr. Quinn has refused to approve more gifts for the
legislature's corporate cronies until lawmakers pass something on pensions.
Democrats hold comfortable majorities in the
legislature and don't need GOP votes. Yet they are demanding Republican
support so they won't be the only targets of union wrath. Mr. Quinn watered
down the reforms to reduce opposition from the teachers and other government
unions, but the unions are still promising to go to court to block the
changes if they pass.
GOP leaders who are rounding up votes must be
feeling especially charitable this holiday season because they're making an
in-kind contribution to Mr. Quinn, who will claim a bipartisan victory as he
runs for re-election. While GOP gubernatorial candidate Bruce Rauner has
denounced the pension legislation as window-dressing, his Republican primary
challengers aren't as savvy. State Senator Bill Brady, who lost to Mr. Quinn
in 2010, is supporting the bill while treasurer Dan Rutherford says it is
too hard on unions. Such me-too thinking is why the Illinois GOP has become
a useless minority.
The early findings of an ongoing review of the
Illinois Medicaid program revealed that half the people enrolled weren’t
even eligible.
The state insisted it’s not that bad but Medicaid
is on the federal government’s own list of programs at high risk of waste
and abuse.
Now, a review of the Illinois Medicaid program
confirms massive waste and fraud.
A review was ordered more than a year ago-- because
of concerns about waste and abuse. So far, the state says reviewers have
examined roughly 712-thousand people enrolled in Medicaid, and found that
357-thousand, or about half of them shouldn't have received benefits. After
further review, the state decided that the percentage of people who didn't
qualify was actually about one out of four.
"It says that we've had a system that is
dysfunctional. Once people got on the rolls, there wasn't the will or the
means to get them off,” said Senator Bill Haines of Alton.
A state spokesman insists that the percentage of
unqualified recipients will continue to drop dramatically as the review
continues because the beginning of the process focused on the people that
were most likely to be unqualified for those benefits. But regardless of how
it ends, critics say it's proof that Illinois has done a poor job of
protecting tax payers money.
“Illinois one of the most miss-managed states in
country-- lists of reasons-- findings shouldn't surprise anyone,” said Ted
Dabrowski.
Dabrowski, a Vice-President of The Illinois Policy
Institute think tank, spoke with News 4 via SKYPE. He said the Medicaid
review found two out of three people recipients either got the wrong
benefits, or didn't deserve any at all.
We added so many people to medicaid rolls so
quickly, we've lost control of who belongs there,” said Dabrowski.
Continued in article
From the CFO Journal's Morning Ledger on November 25, 2013
Corporate health-care plans may get hit by a wave of new participants
Many companies are betting that the insurance requirement in the Affordable
Care Act will bring people into their plans who have previously opted out,
the WSJ’s Theo Francis reports.
Towers Watson figures that about half of the usual
opt-outs will sign up for next year—meaning an enrollment increase of about
7% or 8%, and a corresponding increase in costs of about 5%. In response,
companies are raising workers’ premium contributions, steering them toward
high-deductible plans and charging them more to cover family members.
Employers have been pushing more of the cost of providing health insurance
on to their workers for years, Francis notes. Some are making employees pick
up a bigger share of the premiums for coverage of family members. Employees
this year are responsible for an average 18% of the cost of individual
coverage, but 29% of the cost of family coverage, according to a survey by
the Kaiser Family Foundation and the Health Research & Educational Trust.
Gannett, for
example, has replaced the two plans for families it used to offer its
workers with a single high-deductible plan that requires employees to pay
the first $3,000 of medical costs each year.
Ryder has taken a
similar path, replacing one of its two insurance options with a
high-deductible plan. And it’s encouraging employees to choose the new
option in part by raising the cost of more-traditional coverage.
Haverty Furniture, which has
stores in 17 Southern and Midwestern states, expects health-care costs to
rise by about $2 million, or 20%, next year. It expects the bulk of that to
come from enrollment increases, so it’s raising premiums, deductibles and
copayments in response, CFO Dennis Fink said. “We do think our per capita
cost is going up, but the bigger piece is just people who’ve chosen not to
have coverage.”
Companies are bracing for an influx of participants
in their insurance plans due to the health-care overhaul, adding to pressure
to shift more of the cost of coverage to employees.
Many employers are betting that the Affordable Care
Act's requirement that all Americans have health insurance starting in 2014
will bring more people into their plans who have previously opted out. That,
along with other rising expenses, is prompting companies to raise workers'
premium contributions, steer them toward high-deductible plans and charge
them more to cover family members.
The changes as companies roll out their health
plans for 2014 aren't solely the result of the ACA. Employers have been
pushing more of the cost of providing health insurance on to their workers
for years, and firms that aren't booking much sales growth due to the
sluggish economy are under heavy pressure to keep expenses down.
Some are dealing with rising expenses by making
employees pick up a bigger share of the premiums for coverage of family
members. Employees this year are responsible for an average 18% of the cost
of individual coverage, but 29% of the cost of family coverage, according to
a survey of employee health plans by the Kaiser Family Foundation and the
Health Research & Educational Trust.
"We have seen employers do more cost-shifting, if
you will, for an employee to pay a higher portion of the cost of dependent
and spouse coverage," said Tracy Watts, U.S. health-care reform leader at
Mercer, a benefits consulting unit of Marsh & McLennan MMC -0.27% Cos.
Between 15% and 20% of eligible workers nationwide
tend to skip insurance, benefits consultants say.
Towers Watson TW -1.25% & Co., a benefits
consulting firm, figures that about half of the usual opt-outs will sign up
for next year—meaning an enrollment increase of about 7% or 8%, and a
corresponding increase in costs of about 5%.
Haverty Furniture, HVT -2.76% an Atlanta-based
retail furniture chain with stores in 17 Southern and Midwestern states,
expects health-care costs to rise by about $2 million, or 20%, next year.
The company expects the bulk of that to come from
enrollment increases, and it is raising premiums, deductibles and copayments
in response, Chief Financial Officer Dennis Fink said.
"We do think our per-capita cost is going up, but
the bigger piece is just people who've chosen not to have coverage," he
said.
A quirk of the Affordable Care Act could make it
more appealing for companies to raise rates for family coverage than for
individuals, said Vivian Ho, a Rice University health-care economist.
Starting in 2015, companies employing 50 or more
people must offer affordable health-care coverage to anyone working 30 hours
a week or more.
But affordability is measured using the cost of
individual coverage, capping the cost at 9.5% of income, Ms. Ho said.
Raising family rates could help companies recoup
costs without running afoul of that limit, she said. Starting now, instead
of next year, would allow a more gradual change.
U.S. Department of Health and Human Services
spokeswoman Joanne Peters said that the health-reform law is keeping a lid
on health-care costs overall, and makes it easier for employers to offer
coverage. "Since the Affordable Care Act became law, health-care costs have
been slowing and premiums are increasing by the lowest rates in years," she
said.
Gannett Co. GCI +0.11% , which owns more than 80
newspapers and 23 television stations, expects one factor in its increased
health costs to be the addition of more employees to its insurance plans due
to the ACA rules, according to a person familiar with the company's
projections.
To address an overall increase in costs, Gannett
has replaced the two plans for families it used to offer its workers with a
single high-deductible plan that requires employees to pay the first $3,000
of medical costs each year, according to workers at the Indianapolis Star,
one of the company's papers. For those with individual coverage, who make up
a little over half of Gannett's insurance pool, the figure is $1,500.
The company also scrapped a sliding scale that let
lower-income workers pay lower premiums. For some employees, the result was
a 60% jump in monthly premiums for family coverage, to $575 from about $360.
Gannett said more than half of its employees will
see premiums fall by 12%.
United Parcel Service Inc. UPS -0.16% made
headlines in August when it said that it would bar spouses from its nonunion
health plan if they could get coverage at their own jobs. The company said
it expected to see an increase in its health-care costs in part from adding
employees to its plan who currently opt out.
About 6% of employers ban coverage for spouses who
can get it elsewhere, and another 6% impose an explicit surcharge for
covering a spouse, according to Mercer. American Electric Power Co. AEP
-0.02% , for example, began imposing a $50 monthly surcharge this year to
cover spouses with access to insurance at their own workplace. AEP said 92%
of its employees usually sign up for coverage, so it doesn't expect a surge
of new enrollment.
In another shift this year, companies have become
increasingly aggressive about steering employees toward plans in which they
pay more of the initial costs for their care in exchange for lower premiums.
Trucking and logistics company Ryder System Inc. R
+0.42% has replaced one of its two insurance options with one such
high-deductible plan. Ryder is encouraging employees to choose the new
option in part by raising the cost of more traditional coverage.
These changes are expected to keep Ryder's total
premium cost lower even as it keeps the share of employee premiums that it
pays steady at about 70%, executives said. They accompany earlier decisions
to close Ryder's plan to spouses who can get insurance elsewhere.
Continued in article
Three very smart coders who say the HealthCare.gov site was designed wrong
from get go.
What users first want is a listing of exchange alternatives before feeding in
any personal data.
(CBS News) On Friday,
President Obama had this to say about problems with the Obamcare website during
a speech in New Orleans:
"I promise you, nobody's been more frustrated. I
wanted to go in and fix it myself, but I don't write code."
But plenty of
programmers do write code. And three of them have created their own website that
addresses some of the mostannoying
problems with HealthCare.gov.
In a San Francisco
office shared with other tech start-ups, three 20-year-olds saw HealthCare.gov
as a challenge.
With a few late nights,
Ning Liang, George Kalogeropoulos and Michael Wasser built "thehealthsherpa.com,"
a two-week-old website that solves one of the biggest
problems with the government's site.
They got it completely
backwards in terms of what people want up front," said Liang. He added: "They
want prices and benefits, so that they could make the decision."
Liang showed CBS News how
it worked. "You come to our website and you put in your zip code -- in this case
a California zip code. You hit 'find plans,' and you immediately see the
exchange plans that are available for that zip code."
They have plenty of
experience working at places like Twitter and Microsoft before setting out to
build their own Internet companies. But this project is a public service.
"There was no thought of,
'How do we make money this time?'" said Wasser. "It was like, 'This is a problem
that we know we can solve in a really short period of time. So let's just do
it.'"
Using information buried
in the government's own website built by high-priced government contractors,
they found a simpler way to present it to users.
"That's the great thing
about having such a small team," said Kalogeropoulos. "You sit around a table
and say, 'Okay, how does this work?' There's no coordination meetings, there's
no planning sessions. It's like, 'Well, let's read the document and let's
implement this.'"
And the features keep on
coming. CBS News looked at the team's website Thursday and pointed out that the
tax subsidy wasn't in there, which is supposed to be one of the most complicated
parts of the HealthCare.gov site. But as Liang explained: "Yes, we added this
last night...the subsidy calculation is fairly complicated, but it wasn't too
bad."
You can't actually enroll
on the HealthSherpa site, but they do provide contact information for companies
offering the plans. Users who find a plan they like can go directly to the
insurance companies without ever using HealthCare.gov.
Health Sherpa ---
http://www.thehealthsherpa.com/ This site is unbelievably easy. It does discuss subsidy options. But it is not
so great regarding discussion of the real sticking point of these plans --- the deductibles that will probably be the main reason many individuals will go
uninsured --- if they can't afford the deductibles.
I advise reading the top
line to apply for "Updates" via email.
I also have questions regarding deductibles.
Plan Type
Select the metal levels you prefer.
I cannot find zip codes that offer Platinum or Catastrophic options. Where
are these available? Or is this merely a defect in the database to date?
Also it seems that only HMOs are available in most zip codes that I explored.
This can be a problem for people who want to choose their doctors or even choose
getting an MD-certified doctor.
How are highly variable capital gains and losses factored into the calculation?
They must be included in the income calculation, although these can sometimes be
timed in or out temporarily (such as wait for next year to sell at a gain and
this year at a loss) or use a deferral strategy such as rolling capital gains on
a residence put into another (newer to you) residence. Gains on long-term
deferrals such as pension plans are exempt.
Is income
to be estimated income for last year, this year, or next year, or some type of
average?
Unclear, but I think your last filed tax return is the desired choice. Some
ethical adjustments are recommended by me such as when you became employed this
year it is unethical to claim a future subsidy on a very outdated tax return.
The High
Cost of Dying
The undisputed most expensive coverage in Medicare is the cost of dying where
dependents of a dying parent will keep that parent in intensive care (at $10,000
or more per day) as long as Medicare picks up the full tab. CBS Sixty Minutes
even did a module on this "scandal" where hospitals salivate over keeping a
Medicare patient in ICU for a very, very long time.
On
November 22, 2009 CBS Sixty Minutes aired a video featuring experts (including
physicians) explaining how the single largest drain on the Medicare insurance
fund is keeping dying people hopelessly alive who could otherwise be allowed to
die quicker and painlessly without artificially prolonging life on ICU machines.
"The Cost of Dying,"CBS Sixty Minutes Video, November 22, 2009
---
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
This is one huge cost difference between most national health care plans and the
USA plans beginning in 2014. The USA plans will bear the enormous "cost of
dying." But this is mitigated for non-Medicare and non-Medicaid insurance
coverage if that coverage carries a relatively high deductible. Dependents
may let Grandma slip away if her estate must pay $4,000 of the $10,000 per day
it takes to keep her on life extending machines. In this respect Obamacare
differs from Medicare and Medicaid.
Regulating Annual Limits on Insurance Coverage. Under
the law, insurance
companies’ use of annual dollar limitson
the amount of insurance coverage a patient may receive will be restricted for
new plans in the individual market and all group plans. In 2014, the use of
annual dollar limits on essential benefits like hospital stays will be banned
for new plans in the individual market and all group plans.
There should be a Website hot button to a Glossary on Health
Sherpa. No such luck! Maybe someday.
Health Sherpa ---
http://www.thehealthsherpa.com/
This site is unbelievably easy. It does discuss subsidy options. But it is not
so great regarding discussion of the real sticking point of these plans ---
the deductibles that will probably be the main reason many individuals will go
uninsured --- if they can't afford the deductibles.
A Bait and Switch Question
This is a serious question that I hope will not be taken as political.
Has President Obama just played a bait and switch game on the
Obamacare health exchanges?
The exchanges posted their deals for individuals at their own Websites
and various other Websites, including Healhcare.gov. Then belatedly
President Obama announced changes to required mental health coverage that
could increase the cost of that particular coverage ten fold.
"Mental Health Coverage Expanded to Most Insurance Plans," by Alex
Wayne, Bloomberg Businessweek, November 8, 2013 ---
http://www.bloomberg.com/news/2013-11-08/u-s-said-to-announce-new-rule-for-mental-health-coverage.html
Will the exchanges be required to honor their
original deals or will they be allowed in retrospect to increase the
premiums for the mental health component in those deals now being signed by
individuals?
A second question concerns the years it will take to generate enough
psychiatrists to meet the spike in demand ignited by this executive order,
but that's another matter entirely.
I'm not arguing against having this extended coverage. Personally a young
member of my family will benefit enormously the rest of her life from this
executive order for extended coverage. Her daily medications cost a fortune.
Another question concerns the extent to which executive orders can be
expanded. For example, can the President suddenly declare that all colleges
and universities receiving Federal assistance be required to provide free
tuition, room, and board to all students whose parents earn less than
$50,000 per year?
Because his mental healthcare executive order will create enormous
shortages of psychiatrists can the President declare that medical schools
will be free to students majoring in psychiatry --- without having to get
Congressional approval of added funding for this purpose?
In other words what are the limits to "executive orders" for lame duck
presidents?
It seems to me that we are facing an enormous constitutional question
concerning balance of powers.
And by the way, this
favor harms all other taxpayers. The IRS assesses the reinsurance tax in annual
tranches; it must collect $12 billion in 2014, $8 billion in 2015 and $5 billion
2016. So the smaller pool of ordinary people without a union card will pay a
larger individual share of the same overall amount.
"ObamaCare's Union Favor: The White House may let Big Labor dodge a
reinsurance," The Wall Street Journal, November 18, 2013 ---
http://online.wsj.com/news/articles/SB10001424052702303309504579182061106839366?mod=djemEditorialPage_h
The Affordable Care Act's greatest hits keep
coming, and one that hasn't received enough attention is a looming favor for
President Obama's friends in Big Labor. Millions of Americans are losing
their plans and paying more for health care, and doctors are being forced
out of insurance networks, but a lucky few may soon get relief.
Earlier this month the Administration suggested
that it may grant a waiver for some insurance plans from a tax that is
supposed to capitalize a reinsurance fund for ObamaCare. The $25 billion
cost of the fund, which is designed to pay out to the insurers on the
exchanges if their costs are higher than expected, is socialized over every
U.S. citizen with a private health plan. For 2014, the fee per head is $63.
The unions hate this reinsurance transfer because
it takes from their members in the form of higher premiums and gives to
people on the exchanges. But then most consumers are hurt in the same way,
and the unions have little ground for complaint given that ObamaCare would
not have passed in 2010 without the fervent support of the AFL-CIO, the
Teamsters and the rest.
The unions ought to consider this tax a civic
obligation in solidarity with the (uninsured) working folk they claim to
support. Instead, they've spent most of the last year demanding that the
White House give them subsidies and carve-outs unavailable to anyone else.
But don't expect ObamaCare favors unless you helped
to re-elect the President. In an aside in a Federal Register document filed
this month, the Administration previewed its forthcoming regulation: "We
also intend to propose in future rulemaking to exempt certain self-insured,
self-administered plans from the requirement to make reinsurance
contributions for the 2015 and 2016 benefit years."
Allow us to translate. "Self-insured" means that a
business pays for the medical expenses of its workers directly and hires an
insurer as a third-party administrator to process claims, manage care and
the like. Most unions as well as big corporations use this arrangement.
But the kicker here is "self-administered." That
term refers to self-insured plans that don't contract with the Aetnas and
Blue Shields of the world and instead act as their own in-house benefits
manager.
Almost no business in the real world still follows
this old-fashioned practice as both medicine and medical billing have become
more complex. The major exception is a certain type of collectively
bargained insurance trust known as Taft-Hartley plans. Such insurance covers
about 20 million union members, and four out of five Taft-Hartley trusts are
self-administered.
There's no conceivable rationale—other
than politics—for releasing union-only plans from a tax that is defined as
universal in the
Affordable Care Act statute.
Like so many other ObamaCare waivers, this labor dispensation will probably
turn out to be illegal.
And by the way, this favor harms all other
taxpayers. The IRS assesses the reinsurance tax in annual tranches; it must
collect $12 billion in 2014, $8 billion in 2015 and $5 billion 2016. So the
smaller pool of ordinary people without a union card will pay a larger
individual share of the same overall amount.
Count all of this as one more illustration of the
way that ObamaCare has put politicians in control of health care. Some
people get taxed but others don't, some people get subsidies but others
don't, and some have to pay more so Mr. Obama can deliver favors to his
political constituents.
The reinsurance tax is one of several measures
intended to stabilize premiums in the individual insurance market as major
provisions of the health care law take effect in January. The fees, to be
charged from 2014 to 2016, will provide money to insurers that incur high
claims for consumers in the individual insurance market, both inside and
outside the new exchanges, or marketplaces. Insurers are apprehensive that
some of their new customers, having been uninsured for years, will have
costly existing conditions.
The fees are to be paid by insurers in the
individual, small group and large group markets, as well as by employers
that serve as their own insurers.
A delay in the implementation of the tax is popular
with both employers and labor unions, many of which provide health coverage
to members, because it would put off significant new costs.
The government set the fee for 2014 at $63 per
covered life, or $5.25 a month. Insurers and some self-insured employers may
have to pay not only for subscribers and employees, but also for spouses and
children who are covered.
The total amount of fees to be collected over three
years is $25 billion. Of that amount, $20 billion will go to the reinsurance
program and $5 billion to the Treasury.
“The primary purpose of the reinsurance program is
to stabilize premiums in the individual market from 2014 through 2016,” the
Obama administration said when it proposed the rules in December 2012. “The
reinsurance program is designed to protect against issuers’ potential
perceived need to raise premiums due to the implementation of the 2014
market reform rules, specifically guaranteed availability.’’
The tax, the administration said, should alleviate
the concerns of insurance companies about the risk of “high-cost claims from
newly insured individuals.’’
Jensen Comment
Political favors are like that on both sides of the aisle. This one is just a
bit more blatant without a justifiable reason.
It will be interesting to watch Big Ed try
to squirm around this one. Even though he's employed by MSNBC, Ed Shultz draws
hundreds of thousands in promotion fees from labor unions. At the same time he's
an effective champion for the common man who will be footing the bill for this
gift to labor unions. My guess is that, like The New York Times, he will
not even mention this pending labor union exemption on the Ed Show.
“U.S. labor unions paid MSNBC ‘Ed Show’ host Ed Schultz roughly $200,000 in
2011, and roughly $337,000 in 2005-2012, according to Department of Labor
documents.”
Teaching Case on Cost Accounting in a Medical Revolution and Those 500% Mark
Ups
From The Wall Street Journal Accounting Weekly Review on November 21,
2013
TOPICS: Cost Management, Cost-Basis Reporting, Health Care,
Managerial Accounting
SUMMARY: Brent C. James is "...Chief Quality Officer for
Intermountain Healthcare, a...network of 22 hospitals and 185 clinics in
Utah and Idaho. Dr. James has been using electronic records to improve care
and cut costs since the 1980s." In this interview-format article, he
discusses the medical field push to a cost-based system, away from a current
system of charging for services performed regardless of necessity of the
procedure. The article gives classic examples of establishing standard costs
for materials and labor such as management engineers "who go around and
stopwatch how much time it takes a technician to set up a lab test. They
measure how much glassware and reagent the test consumes to process...."
CLASSROOM APPLICATION: The article may be used in a management
accounting class to introduce standard costs, particularly the process of
establishing standard costs.
QUESTIONS:
1. (Introductory) Who is Brent C. James? What "medical revolution"
may he be starting?
2. (Advanced) Define the term "standard cost." What measurement
techniques are described I the article to establish standard costs for
hospital products and services?
3. (Introductory) What does Dr. James say is the reason has it
taken until now for hospitals to establish cost management systems?
4. (Advanced) What is "transparency"? How has Dr. James's hospital
network's management pledged to provide transparency?
5. (Advanced) Are patients at Dr. James's hospital network going to
seeing the cost data his team is compiling? Explain your answer.
Reviewed By: Judy Beckman, University of Rhode Island
Brent C. James may be starting another medical
revolution.
As chief quality officer for Intermountain
Healthcare, a Salt Lake City-based network of 22 hospitals and 185 clinics
in Utah and Idaho, Dr. James has been using electronic records to improve
care and cut costs since the 1980s.
His data-driven clinical-management systems have
been emulated around the world. He estimates that they save at least $250
million and 1,000 lives a year at Intermountain alone.
Now, Intermountain is building an ambitious new
data system that will also be able to track the actual cost of every
procedure and piece of equipment used in its hospitals and clinics, a
function that is standard in many industries but not in health care.
Dr. James shared his vision and the challenges
ahead with The Wall Street Journal. Cost Clarity
WSJ: You've described your new data system as a
"cost master," in contrast to the "charge master" that many hospitals use to
set prices. What's the difference?
DR. JAMES: In a charge master, what you're seeing
is the old phenomenon called "mark it up to mark it down." Hospitals will
make an initial estimate of what something costs, and then they'll mark it
up—sometimes 400% to 500%. Insurance brokers measure success in the size of
the discount they get. That's how you end up with $17 pieces of gauze. It
loses all connection to reality.
In a cost-master system, you have empirical,
fact-based costs. We have eight management engineers, for example, who go
around and stopwatch how much time it takes a technician to set up a lab
test. They measure how much glassware and reagent the test consumes to
process, and how much time it takes on the analyzing machine. The engineers
load all that information into the cost master and they get the true cost of
running that lab test. They do similar cost measurements on every item
contained in our cost master.
We figure we have about 5,000 clinical terms and
upward of 25,000 total items in our cost master. Once I get those costs, I
can manage them the way I would if I were building an automobile or a
washing machine.
These are not new systems. They've been around for
a long time in other industries. All we're doing is shifting them over to
health care. Truth is, Intermountain has run this sort of activity-based
costing since 1983. It just wasn't integrated into clinical documentation
through an electronic medical record [EMR]. With a link to the EMR, maybe
we'll be able to move health care out of the dark ages.
WSJ: How will knowing what
everything costs change the way you deliver care?
DR. JAMES: If you know the true
cost of providing care, you can ask yourself whether doing one thing is
really more important than doing something else.
Our mission statement is: the best medical result
at the lowest necessary cost. We think there is enough waste in health care
that we can dramatically improve our costs. But to do that, I've got to be
able to measure and manage those costs.
A Money Loser?
WSJ: In fee-for-service
medicine, hospitals lose money when they cut costs and unnecessary care. How
do you get around that?
DR. JAMES: That's why
Intermountain made the decision several years ago to shift our business,
over time, to capitated care.
In the past, the way to make money was to do more.
Figure out how to do more surgeries, even if they're unnecessary. Add that
famous physician to try to attract more patients. It creates a medical arms
race. Imagine instead that I get a per-member, per-month payment for a
population of patients. I no longer have a strong financial incentive for
doing more. If I find a way to save money by taking out waste, all the
savings come back to me and my patients. At the same time, I make measures
of quality outcomes transparent. That way patients can know they are getting
good care, and know what it will cost them.
WSJ: What impact do you expect
this to have on the health-care industry?
DR. JAMES: The whole health-care
world is shifting to having the care provider take over the financial risk.
In that world, your survival depends on being able to manage your costs. We
happened, by luck and circumstance, to get going on it early on. Suddenly
this is becoming a race, with some very capable groups entering the fray—but
it's a race toward excellence.
Total Transparency
WSJ: Will patients be able to
see your actual costs?
DR. JAMES: We made a commitment
from senior management that we will be completely transparent.
We have already started to post prices for things
that many patients buy directly, such as lab tests and imaging exams [such
as X-rays]. We will soon add things like routine office visits and simple
procedures, like screening colonoscopy. Later we will add major treatments
like delivering a newborn, or surgery to implant an artificial knee joint.
While we will post prices on our website, probably
the most effective sharing of cost information will happen through our
insurance partners' websites. We believe that patients will mostly want to
know what their own out-of-pocket costs will be, given that they've already
paid for their health insurance. That's true even if your "insurance plan"
is the care delivery group.
Finally, remember that some care delivery is
impossible to price as a package deal in advance. For example, treatment of
major automobile trauma is so unique that it's impossible to predetermine a
standard price.
WSJ: How much will the new
system cost?
DR. JAMES: Several hundred million
dollars. But I could pay for it in one year, if I can use it to get
significantly more waste out.
Continued in article
The President made one sorry excuse that
riles my feathers.
Yesterday he made the claim that "government is incapable of creating high
quality Websites." That just has not been true over the past two decades. The
Federal government created some of the finest Websites in the world. Exhibit A
is the IRS Website. Exhibit B is the OLAP implementation of FedScope over 15
years ago ---
http://www.fedscope.opm.gov/index.asp
The White House had no estimates on how many
consumers whose policies were canceled might want reinstatement as opposed
to buying something better, often with the help of subsidies. It is also
unclear how the temporary fix might affect the overall goal of upgrading the
benefits covered and keeping premiums affordable.
If a relatively small population of people get
extensions, as some experts think likely, the effect on premiums in the
overall health insurance market may be minimal. Even so, this disturbing
reversal is caused by the incompetence of the administration in ushering in
reforms that millions have been waiting for.
Is President Obama’s “fix” to the health-care
rollout more about politics than substance? (Yoon S. Byun/The Boston Globe)
(Yoon S. Byun/The Boston Globe)
Probably, but not for the reasons that some
Republican commentators spun up shortly after news of the plan leaked out.
Obama’s plan is to allow insurance companies to
extend certain health-care policies that don’t meet the Affordable Care
Act’s minimum standards, offering a one-year reprieve to people upset about
the cancellation notices their insurers sent them over the past several
weeks.
“Why only a year?” Sean Hannity asked of the
president’s plan. “Because he wants to get past the midterms.”
“One year from now is when an election occurs, and
conveniently, the delay would occur right after the election,” said
Republican National Committee spokesman Sean Spicer. “So all of these 2014
Democrats that are running for the hills right now would get a one-year
reprieve until after their election.”
Actually, the political timing could be worse for
the Democrats under the president’s plan. Federal law requires insurers to
give customers 90 days’ notice before canceling their insurance policies.
That is why so many cancellation letters have gone out over the past couple
months; insurance companies have been sending notice that plans up for
renewal at the beginning of next year will terminate then instead. Under the
president’s new policy, renewed plans would presumably expire on the same
date, just shifted forward a year. So one would expect a similar wave of
cancellation letters to hit right before next November’s midterm elections,
not right after.
That possibility could encourage the White House to
offer another extension next year, before the wave would hit, in which case
Hannity and Spicer’s accusation would be a plausible explanation for the
second time shift.
The calendar could also indicate that the White
House doesn’t expect many people will end up renewing their noncompliant
plans under its new scheme. Even though the Obama administration has given
permission, state regulators might not allow it, insurance companies might
not want to revive plans they were in the process of winding down and lots
of customers might move on to different policies anyway. The practical
effect of the president’s “fix” is likely to be small.
For now, the desired political effect seems to be
twofold. First, it might relieve some of the pressure Democrats in Congress
feel to approve worse “fixes” that would undermine the new health-care
insurance system. Second, it might enable Democrats to shift blame onto
state regulators or insurance companies for this year’s cancellations. The
first is understandable. The second is not.
Now these mass cancellations are proving to be unpopular, and Democrats are
panicking, so Mr. Obama is offering a temporary stay of execution. He is
instructing his health regulators to suspend eight complicated rules that
all insurance plans had to meet and had caused the market implosion.
There is less reprieve here than Mr. Obama claims.
It's hard to un-cancel insurance. The rules Mr. Obama is repudiating were
written in 2010, and insurers have been adapting to them for years. They
will now have to scramble to revive the policies they can while throwing all
of their actuarial assumptions out the window.
The faux reprieve also lasts for only one year and
applies only to anyone who was covered in 2013. The insurers are essentially
being asked to agree to accept losses on behalf of a rump group of policy
holders in a legacy business that would then turn into a pumpkin in 2015.
Continued in article
Jensen Comment
The President's plan seems to be a ploy to buy time and votes rather than fix
the fundamental problem. The fundamental problem is that all the expensive
additions to required coverage are making the plans too expensive for buyers of
medical insurance until the government picks up the lion's share of the tab
(nationalize those deductibles?) after the 2014 wipe out of Republicans (Obama
hopes) in the next election.
This is a real test of confrontational
political power of President Obama (where the other side is comprised of
scumbags) versus the Johnson era of backroom politics (where everybody on both
sides of the fence is honorable).
Johnson ushered in the Voting Rights Act, Aid
to Education, Attack on Disease, Medicare, Medicaid, Urban Renewal,
Beautification, Conservation, Development of Depressed Regions, a wide-scale
fight against poverty ---
http://en.wikipedia.org/wiki/Lyndon_B._Johnson
Obama ushered in Obamacare. Yeah Right! With
a total of 29 apologies (according to ABC News) to the public for his
fumbles in connecting people to the exchanges.
I think those "honorable "representatives in
back rooms probably accomplish more that public media wars among scumbags on
both sides of the fence.
PS The President made one sorry excuse that riles my feathers.
Yesterday he made the claim that "government is incapable of creating high
quality Websites." That just has not been true over the past two decades. The
Federal government created some of the finest Websites in the world. Exhibit A
is the IRS Website. Exhibit B is the OLAP implementation of FedScope over 15
years ago ---
http://www.fedscope.opm.gov/index.asp
Jensen Comment
Fraud is inevitable and cannot be prevented when it comes to giving out
subsidies to to insured that are not legally entitled to such subsidies.
Firstly, there's the $2 trillion underground economy where people are receiving
income that even the IRS cannot detect --- those folks who work for unreported
cash earnings. We're talking about millions of people who do not report any
income to the IRS or greatly under report their incomes ---
http://www.cs.trinity.edu/~rjensen/temp/TaxNoTax.htm
Secondly, the 17 million reported above does not jive with the estimated
49.5% (of 130 million) of taxpayers who file tax returns but do not pay any
income taxes. Some of them have incomes offset by credits such as credits for
dependents, but its likely that the nearly all of 50% of taxpayers who pay no
qualify, at least on paper, for subsidies ---
http://www.cs.trinity.edu/~rjensen/temp/TaxNoTax.htm
Most of those making more than $100,000 pay some income taxes. Bloomberg
reports that 98% of those that pay no income taxes have less than $100,000 in
earnings. Most are availing themselves of recent tax breaks such as energy
credits, tax breaks from employer contributions to medical insurance, increased
tax breaks for dependents, and deferred tax breaks such as breaks professors get
for employer contributions to TIAA-CREF.
A family of four making less than $98,000 qualifies for a health insurance
subsidy from the government.
Hence I think the 17 million estimate is wildly inaccurate unless tens of
millions of those eligible for subsidies simply go uninsured because they cannot
afford the deductibles even if the premiums with subsidies are affordable.
One added qualifier is the huge unknown (at least to me) number of Medicaid
and Medicare recipients who are scoped out of the Affordable Health Care Act.
Those on Medicaid do not pay income taxes. Most of those on Medicare do pay
income taxes such that the sources of error in estimating the number of others
who will actually claim subsidies under the Affordable Health Care Act is
probably impossible to estimate within a 10 million range of error or more.
The enormous source of error that cannot be eliminated is that $2 trillion
underground cash-only economy that takes place under the noses of the IRS
enforcers of taxes.
"Obamacare Leaves Doctors On the Hook for Deadbeats: The Affordable Care
Act doles out three months of free health care to individuals who choose to
default on their premiums; providers and insurers pick up the tab," by Tori
Richards, Reason.com, November 7, 2013 ---
http://reason.com/archives/2013/11/09/obamacare-leaves-doctors-on-the-hook-for
Tucked inside nearly 11,000 pages of the
Affordable Care Act is a little-known provision that doles out three months
of free health care to individuals who choose to default on their premiums.
People who receive the federal subsidy to be
part of Obamacare will be allowed to incur a three-month “grace period” if
they can’t pay their premiums and then simply cancel their policies,
stiffing the doctors and hospitals.
Their only repercussion is that they have to
wait until the following year’s open enrollment if they want coverage on the
exchange.
“It will help break the system,” said Rep.
Louie Gohmert, R-Texas, one of a core group of Republicans who oppose
Obamacare. “This is a huge piece of evidence to show this can’t work, you
will break the system and bankrupt people involved.
“The hospitals, doctors and insurance
companies will be left holding the bag. There will be disagreements over who
will pay for what. Lawyers will get involved because we are talking about a
lot of money,” he said.
Under
Section 156.270 of the Affordable Care Act,
the insured needs to pay a premium for just one month before qualifying for
the three-month grace period. The insurance company must pay the claims
during the first month of the grace period; during the second and third
month doctors and hospitals are left to collect unpaid bills.
This loophole wasn’t lost on some unnamed
individuals who queried the Department of Health and Human Services during
an open comment period for the new law in 2011.
While officials at HHS did not respond to
requests for comment on this story, they did offer a glimpse into their
thinking in a March 27, 2012, report
contained in the Federal Register.
“HHS will continue to explore options for
incentivizing appropriate use of the grace period,” the register said. “HHS
will monitor this issue moving forward and will continue to work on the
development of policies to prevent misuse of the grace period.”
Experts say the federal government has given
people the green light to commit fraud.
“In a sense, it legalizes fraud,” said
Wesley J. Smith, a senior fellow at the
Discovery Institute of Human Exceptionalism and a frequent critic of the
Affordable Care Act. “It legalizes putting your burdens on the insurance
companies’ shoulders and never paying your premiums. The government wants
people to be irresponsible and apparently they want the whole system to
descend into chaos.”
In Massachusetts, where a variation of
Obamacare already exists, the problem already has emerged, said Devon
Herrick, senior fellow with the National Center for Policy Analysis.
“People are signing up and getting care and
bailing out,” Herrick said. “I was talking to an insurance agent a few years
ago (in Massachusetts). She said once a week she would get a call from a
college girl who discovers she’s pregnant and wants health insurance. That’s
an example of a condition that you can schedule.”
Some medical professionals are bracing
themselves for the worst.
The Texas Medical Association is educating its
members about the loophole and receiving feedback from worried doctors. Many
in that state operate on a shoestring budget, sometimes taking out loans to
stay in business.
November 10, 2013 reply from Bob Jensen
Hi Bob
Who picks it up now?
Elliot
November 10, 2013 reply from Bob Jensen
I think that the patient eventually loses coverage
for non-payment these days. If people, before Obamacare, could keep
their coverage while not paying premiums what's the incentive to pay
premiums?
One time my wife fell out of a tree in San Antonio.
The silly thing decided to cut a limb that she knew I had arranged
for a tree service to remove the next day. She got impatient ---
grrrr! The North East Baptist Hospital (where she worked as an OR
nurse before her back surgeries took command of her life) was less
than a block down the street. When I got home I took her to the ER
down the street because I thought she needed X-rays.
To make a long story shorter, while we both were in
the waiting room of the NE Baptist Hospital ER an ambulance wheeled
in patient on a stretcher who supposedly had a heart attack. The
first thing the ER checked on was if he had insurance. He did not
have insurance. Next a physician checked his vital readings. It
was decided that he was stable enough to be put back in the
ambulance with orders to take him to the huge downtown Bexar County
Hospital that had a contract with Bexar County to treat uninsured
patients --- including many, many pregnant women who crossed the Rio
Grande shortly before giving birth in the Bexar County Hospital.
In another instance I know a neighbor woman who
overdosed on pills and parked her car in the parking lot outside the
NE Baptist Emergency Room. When she was discovered unconscious and
needing her stomach pumped she was rushed by ambulance downtown to
the Bexar County Hospital that saved her life and stole her purse
--- a Bexar County Hospital ER nurse was caught later using this
woman's credit cards.
That Elliot is what happens in a city if the patient
has no medical insurance. Bob Jensen's Bexar County Property taxes
included over a thousand dollars a year paid for uninsured to be
treated in the Bexar County Hospital.
The physicians and hospitals often do not treat uninsured patients
through normal channels. They ship them off to "approved" hospitals
that have tax-supported emergency rooms. The emergency rooms treat
the patients who often endure the long waits of maybe a day in the
waiting rooms unless there is a life-threatening emergency. The ER
can eventually admit the patient to the hospital, and the hospital
can take legal action to get what it can out of the uninsured
patients.
I don't know how this system will change for the
uninsured under Obamacare.
My guess is that the Bexar County Hospital will need more money to treat
uninsured patients even though the insurance companies may have a
somewhat harder time dumping customers who default on their premiums. An
increasing number of babies born at the Bexar County Hospital will
return south of the Rio Grande as USA Citizens thanks to the 14th
Amendment to the U.S. Constitution and the taxpayers of Bexar County.
I'm not exaggerating when I say that a lot of people,
including professors, who work in Bexar County reside outside the county
just to save on property taxes. I don't mean to sound like a redneck,
but that is the way it works. Many of us also lived in Bexar County
and paid higher taxes thinking that this was a fair thing to do.
PS
In Boston hospitals like the New England Baptist hospital
where Erika had many of her spine surgeries dropped its ER service
entirely so it was no use for ambulances to bring in emergency patients
to New England Baptist Hospital. It would be too costly to treat dire
emergencies pro bono without a contract with the City of Boston to pay
for uninsured patients. I think most of Boston's ER patients are shipped
to Mass. General Hospital supported by Boston's property owners.
Respectfully,
Bob Jensen
November 10, 2013 reply from Elliot Kamlet
OK. So as we all know, someone always pays. It
seems like arguments can be made for different constituencies picking up the
tab. Frankly I don't know the most "fair" approach but is the new reality
of who pays worse than what you just described we have now?
November 11, 2013 reply from Bob Jensen
The myth is that insurance companies pay
for bad debt customers in the long run. As with all
costs in the long run they are passed on to customers or
taxpayers if the companies do not go bankrupt.
I don't think Obamacare envisions letting its
exchanges, most of whom are financed with new low-interest
government loans, go bankrupt. So bad debts will be passed
on somewhat with increased premiums to customers. However,
the lion's share will eventually be charged to income
taxpayers --- the 50% of taxpayers who actually pay some
income taxes.
Alternatively, the government will bypass
taxpayers with more Treasury bond borrowing or simply print
money through a complicated process we know as Quantitative
Easing.
Who pays in the long run with more government
borrowing and printing of money to pay its bills? That's a no
brainer.
The difference between Obamacare and national health
Insurance is that even the poor and the middle class are sharing in some
of taxes collected to pay for their national health insurance. In the
USA the 50% paying no income taxes are paying for the premium costs net
of premium subsidies.
However, where non-Medicaid patients are getting hit hardest is in those
deductibles that may ruin Obamacare unless taxpayers shovel in more to
reduce those deductibles.
Plan Type
Select the metal levels you
prefer.
Bad debt expenses, premiums, premium subsidies, and
deductible expenses are four things.
The biggest "thing" will be the millions that remain
uninsured who turn up at hospital ERs with no insurance after Obamacare
is in full force. My understanding is that local property taxpayers will
still pay the lion's share of those ER services, although some of the
non-reimbursed expenses will be passed on to paying patients just like
they are today. This a major reason why hospital rooms costing less than
$50 per day when I was a kid are now well over $1,000 per day and going
up and up and up.
The United States spent 17.9% of the GDP on
healthcare in 2012. Academic medicine, which makes up, approximately, 20% of
these costs ($540 billion), is under profound threat. Teaching hospitals and
medical schools are faced with declining clinical revenue, dwindling
research dollars and increasing tuition costs. To meet these challenges, we
believe
academic medicine must embrace disruptive innovation
in its core missions: educating the next generation of
health professionals, offering comprehensive cutting-edge patient care, and
leading biomedical and clinical research. Medical schools and academic
health centers will need to significantly adapt in each of these areas in
order to ensure the long-term health of the medical profession. The
following are a few examples of disruptive innovations Tulane School of
Medicine has embraced.
Medical information
doubles roughly every five years, making it
impossible for physicians to stay current. Computing power has also
increased to the point that machines like
IBM’s Watson, first programed to play chess and
Jeopardy, are now used to diagnose and recommend treatment for patients.
Mary Cummings, one of the first women aviators to land a plane on an
aircraft carrier, faced a similar situation when she left the navy; a
computer was replacing many of the skills she had acquired in order to fly.
Today, as the Director of the Human and Automation Lab at MIT, she poses an
important and related question: “Are we in Medicine teaching the next
generation of physicians skills or are we teaching them expertise?” If we
are teaching the former, then academic medicine faces obsolescence. However,
if we emphasize the latter, our mission is durable. Skills equip people to
respond to specific well-understood circumstances; expertiseprovides
the capability to respond to highly complex, dynamic and uncertain
environments.
At Tulane University School of Medicine, we believe
that the focus of medical education should be on how we teach; because what
we teach will be largely out of date by the time students finish their
training. The expertise required for the next generation of physicians is to
be lifelong learners, team players, educators and problem solvers. We teach
expertise through an “inverted” learning model. Students are expected to
have reviewed the subject material before class. During class-time the
students work in small groups to solve problems and explain to their
colleagues issues they did not understand. Master teachers are still needed
to facilitate students’ synthesis of material in a collaborative
discussion-oriented environment, but this structure has the advantage of
allowing investment in the areas where hands-on teaching adds value while
providing cost savings in the areas where it does not. The organization that
is likely to play a major role in providing on-line medical education is the
Kahn Academy under Dr. Rishi Desai. A newly established three and a half
year program for medical students with PhDs in the biomedical sciences
leverages these adult learning principles. This program shortens the time to
get a degree and so reduces the cost of tuition.
Business models for patient care, a key source of
revenue for medical schools, are also undergoing enormous change. Driven by
the need to lower costs, and aided by new technologies, patient care is
moving from the hospital to the outpatient setting and ultimately to
wherever the patient happens to be located. For example, when the ACA
(Affordable Care Act) is fully implemented in 2014 with a substantial
increase in Medicaid recipients, the need for more primary care, as
experienced in Massachusetts, will overwhelm the available capacity to
provide such care.
One solution to this problem is moving the majority
of primary and secondary healthcare delivery into the community. After
Hurricane Katrina, Tulane partnered with a network of Federally Qualified
Health Centers in order to provide services to low and middle-income
patients in community-based clinics designated as medical homes. These not
only provide less expensive care, but also provide the kind of experiential
learning necessary to teach expertise to trainees. Expansion into
telemedicine, which has been shown to reduce the cost of Medicaid in
California and has had a dramatic impact in the United Kingdom on patients
with diabetes, heart failure, and chronic obstructive pulmonary disease,
will further reduce costs while
improving the quality of care.
Yet another driver of disruption in academic
medicine is the changing nature of how research is performed. It has been
estimated that for every research grant dollar received by an academic
health center, the institution must spend an additional 25 to 40 cents to
support that research. Given declining clinical revenues and the relative
flattening of the NIH budget, the ability to garner research funding is
increasingly competitive and difficult to sustain. For most medichttp://faculty.trinity.edu/rjensen/HigherEdControversies.htmal
schools, this makes traditional research models inefficient and some
institutions that have traditionally been primarily research focused will
have to change their emphases.
An additional disruptive technology in research is
using “big data,” large data sets that can be analyzed in distributed and
cloud computing environments. In 2011, the 3-dimensional structure of a
retrovirus protease was finally determined after eluding scientists for over
a decade. The configuration was not discovered by a computer, by a single
scientist or even by a group of scientists working in a laboratory. Rather,
the
structure was determined by a group of gamers
working in the cloud with a program called Foldit that was developed by
computer scientists at the University of Washington in only three weeks. The
ability to collaborate without physical interaction using a variety of skill
sets challenges the definition and funding models of research (not to
mention who gets credit), but has vastly superior economies of scale.
Continued in article
Jensen Comment
One thing about top university hospitals is that they are being overwhelmed with
patients. I'm most familiar with the great Dartmouth (Hitchcock) University
Hospital that serves New Hampshire and surrounding states, including Canada. Yes
Canada since Canada's National Health plan might delay some elective surgeries
(think new knees and hips) for months or even years. All hospitals, including
Hitchcock, like Canadians who pay up front cash at full prices.
It seems to Erika and me that getting access to some of the Hitchcock's
specialty services is getting harder and harder. One way of cutting down on
demand is for those specialty departments (Ophthalmology, Dermatology, etc.) to
insist upon referrals from doctors/hospitals and refusing patients who are not
given strong referrals. And when you finally get in you may not see a
full-qualified doctor. My wife has had great service from Cardiology and
Ophthalmology and poor service from Gastrology where she never has been able to
get access to a real MD. Dermatology put off her appointment for seven
months. The Orthopedics Department refused to do her spine surgeries --- which
is how we ended up with a top surgeon in Boston. I forgive Hitchcock for this
since no hospital, including a university hospital, can be expected to have a
nationally-acclaimed surgeon in every department ---
http://faculty.trinity.edu/rjensen/Erika2007.htm
Erika spent a few nights in Hitchcock's hospital (after a heart attack) and was
not impressed with that hospital relative to the New England Baptist Hospital in
Boston and San Antonio's North East Baptist Hospital and several other hospitals
in San Antonio. One problem at Hitchcock is the pod design that greatly
increases the noise level in the patient rooms. It saves steps for the nurses
but prevents patients from sleeping nights.
Hopefully, we will never have to seek out psychiatric services from Dartmouth
Hitchcock. That must be a nightmare given the increased demand amidst huge
shortages of psychiatrists.
One of the many real scandals of the Affordable Healthcare Act
Most Obamacare exchange insurance companies offer inferior policies, many of
which come from newly-formed sham insurance companies started up on shoe-string
government loans --- companies without any prior experience in the insurance
business or any other type of business. Guess who will get stuck with the bills
when those poorly capitalized and inexperienced new "insurance" companies
declare bankruptcy? This is really a no-brainer question.
Americans who sign up for insurance on the state
exchanges may not have access to the nation's top hospitals, Watchdog.org
reports.
The Obama Administration has been claiming that
insurance companies will be competing for your dollars under the Affordable
Care Act, but apparently they haven't surveyed the nation's top hospitals.
Americans who sign up for Obamacare will be getting
a big surprise if they expect to access premium health care that may have
been previously covered under their personal policies. Most of the top
hospitals will accept insurance from just one or two companies operating
under Obamacare.
[CHART: Which Top Hospitals Take Your Insurance
Under Obamacare?]
"This doesn't surprise me," said Gail Wilensky,
Medicare advisor for the second Bush Administration and senior fellow for
Project HOPE. "There has been an incredible amount of focus on the premium
cost and subsidy, and precious little focus on what you get for your money."
Regulations driven by the Obama White House have
indeed made insurance more affordable – if, like Health and Human Services
Secretary Kathleen Sebelius, you're looking only at price. But responding to
Obamacare caps on premiums, many insurers will, in turn, simply offer
top-tier doctors and hospitals far less cash for services rendered.
Watchdog.org looked at the top 18 hospitals
nationwide as ranked by U.S. News and World Report for 2013-2014. We
contacted each hospital to determine their contracts and talked to several
insurance companies, as well.
The result of our investigation: Many top hospitals
are simply opting out of Obamacare.
Chances are the individual plan you purchased
outside Obamacare would allow you to go to these facilities. For example,
fourth-ranked Cleveland Clinic accepts dozens of insurance plans if you buy
one on your own. But go through Obamacare and you have just one choice:
Medical Mutual of Ohio.
And that's not because their exchanges don't offer
options. Both Ohio and California have a dozen insurance companies on their
exchanges, yet two of the states' premier hospitals – Cleveland Clinic and
Cedars-Sinai Medical Center – have only one company in their respective
networks.
A few, like No. 1-rated Johns Hopkins in Maryland,
are mandated under state law to accept all insurance companies. Other than
that, the hospital with the largest number of insurance companies is
University Hospitals Case Medical Center in Cleveland with just four. Fully
11 of the 18 hospitals had just one or two carriers.
"Many companies have selectively entered the
exchanges because they are concerned that (the exchanges) will be dominated
by risky, high-using populations who wanted insurance (before Obamacare) and
couldn't afford it," said Wilsensky, who is also on the board of directors
of UnitedHealth. "They are pressed to narrow their networks to stay within
the premiums."
Consumers, too, will struggle with the new system.
Many exchanges don't even list the insurance companies on their web sites.
Some that do, like California, don't provide names of doctors or hospitals.
The price differences among hospitals "can be
pretty profound," said Joe Mondy, spokesman for Cigna insurance. "When you
are doing a cost comparison with doctors, you should look up the quality of
the hospital as well. Hospital 'Y' could be great at pediatrics and not
great at surgery."
Insurers operating in the exchanges are apparently
hesitant to talk about the trade-off between price and quality. Two of the
nation's largest insurers – Wellpoint and Aetna – refused to respond to a
dozen calls and emails placed over the course of a week.
Wellpoint and Aetna's decision to not educate the
public on its choices doesn't sit well with two experts.
"There is no reason to keep that quiet. It's not
going to be a good secret for very long when people want to use the plans,"
Wilensky said.
"In many cases, consumers are shopping blind when
it comes to what doctors and hospitals are included in their Obamacare
exchange plans," said Josh Archambault, senior fellow with the think tank
Foundation for Government Accountability. "These patients will be in for a
rude awakening once they need care, and get stuck with a big bill for going
out-of-network without realizing it."
All of this represents a larger problem with the
Affordable Care Act, said Archambault, who has extensively studied the law.
"It reflects deeper issues in implementation," he
said. "Some hospitals and doctors don't even know if they are in the
network."
Just look at Seattle Children's Hospital, which
ranks No. 11 on the U.S. News & World Report best pediatric hospital list.
When Obamacare rolled out, the hospital found itself with just two out of
seven insurance companies on Washington's exchange. The hospital sued the
state's Office of Insurance on Oct. 4 for "failure to ensure adequate
network coverage."
Continued in article
Jensen Comment
Of course this is correctable when Congress forces all accredited hospitals to
accept insurance receivables from exchange companies that are likely to go
bankrupt. Or the Congress can guarantee the payments from these unstable startup
companies. But try getting this legislation past the "defeated" Republicans in
Congress.
The only hope for Obamacare is probably in the hands of the American voters who
might kill and bury the Republican Party in the 2014 and 2016 elections. Will
the nation be better off with a one-party system? Probably so if you talk to
most college professors.
The Affordable Care Act sets standards that private
insurance companies must follow. Health plans must pay for at least 60
percent of their members’ medical costs on average. They also have to
provide 10 areas of coverage, called essential health benefits, such as
hospitalization, mental health treatment, and maternity care. Plans that
don’t meet these standards generally can’t be sold after 2013, unless
they’re grandfathered (more on that below). Insurers are ending these plans
and pushing people to buy more comprehensive policies, some of which may
also have higher premiums. For low- and middle-income people, the law
provides subsidies to make health coverage more affordable.
. . .
What about “grandfathered” plans?
Health plans that existed before Obamacare was passed in 2010 could avoid
some of the new standards if they didn’t change much else. It’s up to
insurers and employers to decide whether they want to keep offering
so-called grandfathered plans. But plans that significantly increased what
people have to pay or changed the benefits offered in the last three years
would lose their grandfathered status, and they have to follow the new rules
starting in 2014. The grandfather option also gives some political cover to
the White House, because it puts the decision to terminate a plan on
insurance companies, not the government.
When Obama repeatedly made the claim – "If you like
your health plan; you can keep your health plan" – objective observers knew
it wasn't so. This morning, the media is buzzing with evidence that Obama
knew it was a lie, but deliberately kept spinning the same phony claim for
years.
The shock in all this is not that Obama was lying;
he has a well established record of that. It's that somebody has uncovered
the evidence; the smoking gun. The following is the NBC News account of the
mess du jour for the White House and ObamaCare.
Our sources deeply involved in the Affordable Care
Act tell NBC NEWS that 50 to 75 percent of the 14 million consumers who buy
their insurance individually can expect to receive a “cancellation” letter
or the equivalent over the next year because their existing policies don’t
meet the standards mandated by the new health care law. One expert predicts
that number could reach as high as 80 percent. And all say that many of
those forced to buy pricier new policies will experience “sticker shock.”
None of this should come as a shock to the Obama
administration….
Buried in Obamacare regulations from July 2010 is
an estimate that because of normal turnover in the individual insurance
market, “40 to 67 percent” of customers will not be able to keep their
policy. And because many policies will have been changed since the key date,
“the percentage of individual market policies losing grandfather status in a
given year exceeds the 40 to 67 percent range.”
That means the administration knew that more than
40 to 67 percent of those in the individual market would not be able to keep
their plans, even if they liked them.
Yet President Obama, who had promised in 2009, “if
you like your health plan, you will be able to keep your health plan,” was
still saying in 2012, “If [you] already have health insurance, you will keep
your health insurance.”
Continued in article
Jensen Question
Will the Affordable Health Care Act taxpayer subsidies also help with the
deductibles?
On television the other night a woman who succeeded in signing up for Obamacare
said the only plan she could afford cost her $140 per month with a $13,500
deductible.
I don't know if this is better or worse than she can get on the market these
days, but this does not seem especially affordable to me unless she has
substantial savings and very low probability of filing large claims. I think the subsidy only helps with the
$140 monthly payments and not the deductibles. I could be wrong about this. The
bottom line is that the people who can least afford the premiums are even less
able to afford the higher deductibles.
Will the subsidies also help with the deductibles or do they only help her
with her $140 monthly payments if she qualifies for a subsidy?
Subsidies are available to an insured person or family making 0% to 400% of
the government-defined poverty threshold of declared (not including underground)
revenue. But people on Medicaid are not required to buy added medical insurance
and are covered free of charge jointly by the federal and state governments.
One of the purposes of the Affordable Health Care Act is to sign up people
with mental illnesses and other chronic conditions or pre-conditions that are
not presently covered for them in currently available medical insurance plans.
It does not seem to me that plans with $13,500 deductible gives them
much improvement unless they have access to income or savings to cover such huge
deductibles. The Affordable Health Care medical insurance plan should have been
a national health care plan from the start. Oh Canada!
It's very hard to provide help with deductibles since those that choose
higher deductibles so they can have lower premiums might unfairly be getting
government help relative to those that pay higher monthly premiums to get lower
deductibles.
It's a bit analogous to a fast food restaurant that allows refills on small
cups of soda. Why would any body who eats inside the restaurant pay more for a
large cup of soda?
On Piers Morgan Live Tuesday, guest Bill Maher
openly admitted Obama “lied” about Americans keeping their insurance plans, but
insisted that he had to because of unified Republican opposition—and the
increasingly “stupider” American public
http://www.truthrevolt.org//news/bill-maher-obama-had-lie-stupider-americans
Does this mean lying is a remedy for stupidity?
Actually, throughout history lying by a political candidate is rationalized if
leads to one side's political goals? On occasion political leaders do believe or
are led to believe their own lies which makes the lies less less onerous than
intentional lying. A more common form of "lying" is to tell the truth without
filling in some crucial assumptions. For example, President Obama claims that he
told the truth about individuals keeping their former health insurance plans.
What he left out was the part about the parts of the law that made many
individual plans illegal because they did not cover such things as maternity and
mental health. He knew that many plans would be revoked but failed
to mention this in his promotional speeches before the law was passed.
Another example of huge lies were those expounded by FDR, before Lend-Lease became
official in 1941, about the USA's neutrality in the earliest days of WW II. In
the eyes of President Roosevelt a majority of Americans were just too stupid to
realize the global threat of the Third Reich.
The problem with lying to stupid people is that they don't always remain
stupid enough over time to believe it when a liar later on when he or she is
telling the truth or lying. They just don't believe most anything coming out of
the mouth of a liar. Then again many people believe what they want to believe
and deny what they want to deny. We no longer value truth and integrity in
our political leaders. We only cheer when the other guy's oxen get gored to
put meat on our table
From the CFO Journal's Morning Ledger on October 15, 2013
Some
small businesses are finding that if they don’t have a handle on the
health-care law’s cost and impact,
they may have a harder time getting a loan,
Maxwell Murphy reports on CFOJ. To qualify for some loans, especially for
growth capital, more companies are being required to provide assurances that
they will be in compliance with the law by 2015. “To raise capital, if
you’re in a growth mode, you want a [CFO] who exudes credibility,” says
Christian Oberbeck, CEO of the lender Saratoga Investment.
Among the small businesses that will be affected by the law, a survey of
roughly 1,300 executives this summer by the U.S. Chamber of Commerce found
just 30% said they were ready to comply. About 27% said they would cut hours
to reduce full-time employees and 23% planned to replace full-time workers
with part-timers. Those options might not help their loan applications, Mr.
Oberbeck says, because firing workers and cutting hours can damage a
business. He also says he would question a business plan that risks running
afoul of the spirit of the law.
Executives weighing their options also might have to wait awhile for any
relevant data to come from the new public health-care exchanges created by
the law. The exchanges have been beset by glitches and other problems, at
both the federal and state levels. “It’s tougher to lend money to those
companies until we see how the ACA will play through,” says Art Penn,
managing partner at PennantPark Investment Advisers, a middle-market lender.
From the CFO Journal's Morning Ledger on October 15, 2013
The complexities of federal, international, state and
other taxes often leave CFOs wanting to deal with the tax function at arm's
length. Doing so, though, may increase finance risk and dilute the value the
tax function can bring. CFOs' discussions with tax executives should be more
frequent, focused and strategic, and the place to start is by engaging them
in targeted conversations, from succession planning to technology to
compliance processes.
Jensen Comment
Like it or not government and politics of government are at the heart and center
of rationing most scarce essential goods and services as well as protecting the
quantity and quality of non-scarce resources.
Inequities are likely to arise when health care is is rationed by market
pricing. However, scarce medical care services and medications will have
inequities under any other rationing system.
Your statement leads to the classic question of how very scarce goods and
services can be rationed in ways other than market pricing. For example,
socialism is replete with examples where health care is rationed according to
power with the socialist party elite receiving the best health care available
while the masses receive pretty lousy health care as in Cuba today and the
Soviet Union in history.
The fact of the matter is that scarce goods and services would not be
"scarce" if they did not have to be rationed in some way. Socialist economist
Oskar Lange proposed an economic theory that prices to ration scarce goods and
services could be derived in the absence of markets ---
http://en.wikipedia.org/wiki/Oskar_Lange
The fact of life is that scarce goods and services must be rationed by some
means whatever the political and economic system. In nationalized health care
systems like Canada the access to critical life saving services is available to
virtually everybody, but access to elective surgeries for things like knee
replacements may be delayed for months or years, thereby forcing Canadians to
suffer in pain a very long time relative to the millions who have received
rather speedy replacements in the USA.
In England the national health play a few decades ago would not pay for
kidney dialysis of older people. For many who cannot otherwise afford dialysis
this is a prescription of death by age rationing. Rationing improved somewhat in
recent years, but providing dialysis and kidney transplants is still problematic
in most of Europe. The U.S. Provides twice as many kidney transplants per
million people.
In the USA it's not just the wealthy who receive speedy knee
replacements.Rather low-waqe professors and factory workers get such
replacements rather quickly and from the best surgeons if their employers
provide health insurance to supplement low wages. But the high price for such
insurance coverage must be borne by all members of the insurance plan.
The very poor on Medicare and Medicaid can also get new knees rather quickly.
The problem in the present health insurance system is that there are too many
uninsured.who are not poor enough for Medicaid, not old or disabled enough for
Medicare, and are either unemployed or their employers do not pay for health
coverage. The main goal of the Affordable Health Care Act is to remedy that
inequity. But much of the cost will be borne by taxpayers since the providers of
scarce medical services and medications are still going to command high prices
and the uninsured will not be able to afford decent health insurance unless it
is heavily subsidized by employers and/or taxpayers.
Market rationing may be imperfect for health care, but every other
alternative known to mankind is also inequitable in some way for scarce medical
services and medications. The countries having the best of both worlds are
typically those nations with gazillions in oil revenues (e.g., Norway and
Kuwait), small populations that are not poor (e.g., Switzerland), and nations
without low income minorities to abuse (e.g., Finland and Denmark)..
Of the countless reasons that congressional
Republicans hate the Affordable Care Act enough to shut down the government,
the most politically potent is the claim that it will do untold damage to
the economy and cripple small companies. Orrin Hatch has said that Obamacare
will be “devastating to small business.” Ted Cruz argues that it is already
“the No. 1 job killer.” And the vice-president of the National Federation of
Independent Businesses called it simply “terrible.” So it comes as some
surprise to learn that Obamacare may well be the best thing Washington has
done for American small business in decades.
The G.O.P.’s case hinges on the employer mandate,
which requires companies with fifty or more full-time employees to provide
health insurance. It also regulates the kind of insurance that companies can
offer: insurance has to cover at least sixty per cent of costs, and premiums
can’t be more than 9.5 per cent of employees’ income. Companies that don’t
offer insurance will pay a penalty. Republicans argue that this will hurt
companies’ profits, forcing them to stop hiring and to cut workers’ hours,
in order to stay below the fifty-employee threshold.
The story is guaranteed to feed the fears of
small-business owners. But the overwhelming majority of American
businesses—ninety-six per cent—have fewer than fifty employees. The employer
mandate doesn’t touch them. And more than ninety per cent of the companies
above that threshold already offer health insurance. Only three per cent are
in the zone (between forty and seventy-five employees) where the threshold
will be an issue. Even if these firms get more cautious about hiring—and
there’s little evidence that they will—the impact on the economy would be
small.
Meanwhile, the likely benefits of Obamacare for
small businesses are enormous. To begin with, it’ll make it easier for
people to start their own companies—which has always been a risky
proposition in the U.S., because you couldn’t be sure of finding affordable
health insurance. As John Arensmeyer, who heads the advocacy group Small
Business Majority, and is himself a former small-business owner, told me,
“In the U.S., we pride ourselves on our entrepreneurial spirit, but we’ve
had this bizarre disincentive in the system that’s kept people from starting
new businesses.” Purely for the sake of health insurance, people stay in
jobs they aren’t suited to—a phenomenon that economists call “job lock.”
“With the new law, job lock goes away,” Arensmeyer said. “Anyone who wants
to start a business can do so independent of the health-care costs.” Studies
show that people who are freed from job lock (for instance, when they start
qualifying for Medicare) are more likely to undertake something
entrepreneurial, and one recent study projects that Obamacare could enable
1.5 million people to become self-employed.
Even more important, Obamacare will help small
businesses with health-care costs, which have long been a source of anxiety.
The fact that most Americans get their insurance through work is a
historical accident: during the Second World War, wages were frozen, so
companies began offering health insurance instead. After the war, attempts
to create universal heath care were stymied by conservatives and doctors,
and Congress gave corporations tax incentives to keep providing insurance.
The system has worked well enough for big employers, since large workforces
make possible the pooling of risk that any healthy insurance market
requires. But small businesses often face so-called “experience rating”: a
business with a lot of women or older workers faces high premiums, and even
a single employee who runs up medical costs can be a disaster. A business
that Arensmeyer represents recently saw premiums skyrocket because one
employee has a child with diabetes. Insurance costs small companies as much
as eighteen per cent more than it does large companies; worse, it’s also a
crapshoot. Arensmeyer said, “Companies live in fear that if one or two
employees get sick their whole cost structure will radically change.” No
wonder that fewer than half the companies with under fifty employees insure
their employees, and that half of uninsured workers work for small
businesses or are self-employed. In fact, a full quarter of small-business
owners are uninsured, too.
Obamacare changes all this. It provides tax credits
to smaller businesses that want to insure their employees. And it requires
“community rating” for small businesses, just as it does for individuals,
sharply restricting insurers’ ability to charge a company more because it
has employees with higher health costs. And small-business exchanges will in
effect allow companies to pool their risks to get better rates. “You’re
really taking the benefits that big companies enjoy, and letting small
businesses tap into that,” Arensmeyer said. This may lower costs, and it
will insure that small businesses can hire the best person for a job rather
than worry about health issues.
Continued in article
Jensen Comment The New Yorker is a liberal (er progressive) magazine that generally
backs anything said or done by President Obama. But The New Yorker was
also among the first magazines to warn of deceptions early on in the Affordable
Health Care Act.
Once the reforms are up and running, some
employers will have a big incentive to end their group coverage plans and dump
their employees onto the taxpayer-subsidized individual plans, greatly adding to
their cost. John Cassidy, The New Yorker, March 2010
This is a long and somewhat involved followup to my
previous post on ObamaCare. . For those of you
with O.A.D.D. (online attention-deficit disorder), I’ve provided an express
and local version.
EXPRESS:
The official projections for health-care reform,
which show it greatly reducing the number of uninsured and also reducing the
budget deficit, are simply not credible. There are three basic issues.
The cost and revenue projections rely on
unrealistic assumptions and accounting tricks. If you make some adjustments
for these, the cost of the plan is much higher.
The so-called “individual mandate” isn’t really a
mandate at all. Under the new system, many young and healthy people will
still have a strong incentive to go uninsured.
Once the reforms are up and running,
some employers will have a big incentive to end
their group coverage plans and dump their employees onto the
taxpayer-subsidized individual plans, greatly adding to their cost.
LOCAL:
For future reference (or possibly to roll up and
beat myself over the head with in my dotage) I have filed away a copy the
latest analysis (pdf) of health-care reform from the Congressional Budget
Office. By 2019, it says, the bills passed by the House and Senate will have
cut the number of uninsured Americans by thirty-two million, raised the
percentage of people with some form of health-care coverage from
eighty-three per cent to ninety-four per cent, and reduced the federal
deficit by a cumulative $143 billion. If all of these predictions turn out
to be accurate, ObamaCare will go down as one of the most successful and
least costly government initiatives in history. At no net cost to the
taxpayer, it will have filled a gaping hole in the social safety net and
solved a problem that has frustrated policymakers for decades.
Does Santa Claus live after all? According to the
C.B.O., between now and 2019 the net cost of insuring new enrollees in
Medicaid and private insurance plans will be $788 billion, but other
provisions in the legislation will generate revenues and cost savings of
$933 billion. Subtract the first figure from the second and—voila!—you get
$143 billion in deficit reduction.
The first objection to these figures is that the
great bulk of the cost savings—more than $450 billion—comes from cuts in
Medicare payments to doctors and other health-care providers. If you are
vaguely familiar with Washington politics and the letters A.A.R.P. you might
suspect that at least some of these cuts will fail to materialize. Unlike
some hardened skeptics, I don’t think none of them will happen. One part of
the reform involves reducing excessive payments that the Bush Administration
agreed to when it set up the Medicare Advantage program in 2003. If Congress
remains under Democratic control—a big if, admittedly—it will probably enact
these changes. But that still leaves another $300 billion of Medicare
savings to be found.
The second problem is accounting gimmickry. Acting
in accordance with standard Washington practices, the C.B.O. counts as
revenues more than $50 million in Social Security taxes and $70 billion in
payments towards a new home-care program, which will eventually prove very
costly, and it doesn’t count some $50 billion in discretionary spending.
After excluding these pieces of trickery and the questionable Medicare cuts,
Douglas Holtz-Eakin, a former head of the C.B.O., has calculated that the
reform will actually raise the deficit by $562 billion in the first ten
years. “The budget office is required to take written legislation at face
value and not second-guess the plausibility of what it is handed,” he wrote
in the Times. “So fantasy in, fantasy out.”
Holtz-Eakin advised John McCain in 2008, and he has
a reputation as a straight shooter. I think the problems with the C.B.O.’s
projections go even further than he suggests. If Holtz-Eakin’s figures
turned out to be spot on, and over the next ten years health-care reform
reduced the number of uninsured by thirty million at an annual cost of $56
billion, I would still regard it as a great success. In a $15 trillion
economy—and, barring another recession, the U.S. economy should be that
large in 2014—fifty or sixty billion dollars is a relatively small sum—about
four tenths of one per cent of G.D.P., or about eight per cent of the 2011
Pentagon budget.
My two big worries about the reform are that it
won’t capture nearly as many uninsured people as the official projections
suggest, and that many businesses, once they realize the size of the
handouts being offered for individual coverage, will wind down their group
plans, shifting workers (and costs) onto the new government-subsidized
plans. The legislation includes features designed to prevent both these
things from happening, but I don’t think they will be effective.
Consider the so-called “individual mandate.” As a
strict matter of law, all non-elderly Americans who earn more than the
poverty line will be obliged to obtain some form of health coverage. If they
don’t, in 2016 and beyond, they could face a fine of about $700 or 2.5 per
cent of their income—whichever is the most. Two issues immediately arise.
Even if the fines are vigorously enforced, many
people may choose to pay them and stay uninsured. Consider a healthy single
man of thirty-five who earns $35,000 a year. Under the new system, he would
have a choice of enrolling in a subsidized plan at an annual cost of $2,700
or paying a fine of $875. It may well make sense for him to pay the fine,
take his chances, and report to the local emergency room if he gets really
sick. (E.R.s will still be legally obliged to treat all comers.) If this
sort of thing happens often, as well it could, the new insurance exchanges
will be deprived of exactly the sort of healthy young people they need in
order to bring down prices. (Healthy people improve the risk pool.)
If the rules aren’t properly enforced, the problem
will be even worse. And that is precisely what is likely to happen. The
I.R.S. will have the administrative responsibility of imposing penalties on
people who can’t demonstrate that they have coverage, but it won’t have the
legal authority to force people to pay the fines. “What happens if you don’t
buy insurance and you don’t pay the penalty?” Ezra Klein, the Washington
Post’s industrious and well-informed blogger, asks. “Well, not much. The law
specifically says that no criminal action or liens can be imposed on people
who don’t pay the fine.”
So, the individual mandate is a bit of a sham.
Generous subsidies will be available for sick people and families with
children who really need medical care to buy individual coverage, but
healthy single people between the ages of twenty-six and forty, say, will
still have a financial incentive to remain outside the system until they get
ill, at which point they can sign up for coverage. Consequently, the number
of uninsured won’t fall as much as expected, and neither will prices.
Without a proper individual mandate, the idea of universality goes out the
window, and so does much of the economic reasoning behind the bill.
The question of what impact the reforms will have
on existing insurance plans has received even less analysis. According to
President Obama, if you have coverage you like you can keep it, and that’s
that. For the majority of workers, this will undoubtedly be true, at least
in the short term, but in some parts of the economy, particularly industries
that pay low and moderate wages, the presence of such generous subsidies for
individual coverage is bound to affect behavior eventually. To suggest this
won’t happen is to say economic incentives don’t matter.
Take a medium-sized firm that employs a hundred
people earning $40,000 each—a private security firm based in Atlanta,
say—and currently offers them health-care insurance worth $10,000 a year, of
which the employees pay $2,500. This employer’s annual health-care costs are
$750,000 (a hundred times $7,500). In the reformed system, the firm’s
workers, if they didn’t have insurance, would be eligible for generous
subsidies to buy private insurance. For example, a married forty-year-old
security guard whose wife stayed home to raise two kids could enroll in a
non-group plan for less than $1,400 a year, according to the Kaiser Health
Reform Subsidy Calculator. (The subsidy from the government would be
$8,058.)
In a situation like this, the firm has a strong
financial incentive to junk its group coverage and dump its workers onto the
taxpayer-subsidized plan. Under the new law, firms with more than fifty
workers that don’t offer coverage would have to pay an annual fine of $2,000
for every worker they employ, excepting the first thirty. In this case, the
security firm would incur a fine of $140,000 (seventy times two), but it
would save $610,000 a year on health-care costs. If you owned this firm,
what would you do? Unless you are unusually public spirited, you would take
advantage of the free money that the government is giving out. Since your
employees would see their own health-care contributions fall by more than
$1,100 a year, or almost half, they would be unlikely to complain. And even
if they did, you would be saving so much money you afford to buy their
agreement with a pay raise of, say, $2,000 a year, and still come out well
ahead.
Even if the government tried to impose additional
sanctions on such firms, I doubt it would work. The dollar sums involved are
so large that firms would try to game the system, by, for example, shutting
down, reincorporating under a different name, and hiring back their
employees without coverage. They might not even need to go to such lengths.
Firms that pay modest wages have high rates of turnover. By simply refusing
to offer coverage to new employees, they could pretty quickly convert most
of their employees into non-covered workers.
The designers of health-care reform and the C.B.O.
are aware of this problem, but, in my view, they have greatly underestimated
it. According to the C.B.O., somewhere between eight and nine million
workers will lose their group coverage as a result of their employers
refusing to offer it. That isn’t a trifling number. But the C.B.O. says it
will be largely offset by an opposite effect in which employers that don’t
currently provide health insurance begin to offer it in response to higher
demand from their workers as a result of the individual mandate. In this
way, some six to seven million people will obtain new group coverage, the
C.B.O. says, so the overall impact of the changes will be minor.
The C.B.O.’s analysis can’t be dismissed out of
hand, but it is surely a best-case scenario. Again, I come back to where I
started: the scale of the subsidies on offer for low and moderately priced
workers. If economics has anything to say as a subject, it is that you can’t
offer people or firms large financial rewards for doing something—in this
case, dropping their group coverage—and not expect them to do it in large
numbers. On this issue, I find myself in agreement with Tyler Cowen and
other conservative economists. Over time, the “firewall” between the
existing system of employer-provided group insurance and taxpayer-subsidized
individual insurance is likely to break down, with more and more workers
being shunted over to the public teat.
At that point, if it comes, politicians of both
parties will be back close to where they began: searching for health-care
reform that provides adequate coverage for all at a cost the country can
afford. What would such a system look like? That is a topic for another
post, but I don’t think it would look much like Romney-ObamaCare.
Jensen Comment
Canada's approach to elderly grandmas who are only slightly impaired is to haul.
at taxpayer expense, in portable Granny Cabins behind the homes of their
children. When the time comes when Granny is no longer able to care for herself
adequately in her Granny Cabin the cabin is hauled off for another grandma. I
don't know if the same applies to a Grandpa Cabin, but I suspect the program is
gender neutral. Usually grandpa kicks the bucket before grandma.
In the USA Medicare does not pay for nursing home care or Grandma Cabins. The
only patients who get taxpayer-funded nursing home care are the very poor on
Medicaid. Most nursing care in the USA is funded by family savings until the
patients become so ill that hospitalization is required. A major Medicare
expense is keeping terminally ill people alive in hospitals, often in intensive
care units costing over $10,000 per day. No other nation spends as much keeping
terminally ill patients artificially live on machines.
On November 22, 2009 CBS Sixty Minutes aired a video featuring experts
(including physicians) explaining how the single largest drain on the Medicare
insurance fund is keeping dying people hopelessly alive who could otherwise be
allowed to die quicker and painlessly without artificially prolonging life on
ICU machines.
"The Cost of Dying,"CBS Sixty Minutes Video, November 22, 2009
---
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
On November 22, 2009 CBS Sixty Minutes aired a video featuring experts
(including physicians) explaining how the single largest drain on the Medicare
insurance fund is keeping dying people hopelessly alive who could otherwise be
allowed to die quicker and painlessly without artificially prolonging life on
ICU machines.
"The Cost of Dying,"CBS Sixty Minutes Video, November 22, 2009
---
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
It's becoming chaos in the labor market as
Obamacare deadlines approach. I certainly do not advocate ending
or defunding the Affordable Health Care Act. But some delays may be
desirable in order to stop the epidemic of conversion of full-time
workers to part-time workers and the epidemic of dropping employer
health insurance coverage.
We should legislate greater penalties for
companies and non-profit organizations who drop employee medical insurance
coverage.
We should also legislate greater penalties for individuals who simply opt
out of health insurance. This will become an epidemic leading to long lines for
medical services at emergency rooms and inferior health care as more and more
hospitals simply close their emergency rooms.
From the CFO Journal's Morning Ledger on September
26, 2013
Companies drop cheapest health plans. The U.S. arm of Sweden’s
Securitas
plans to discontinue its lowest-cost health plans and
steer roughly 55,000 workers to new government-sponsored insurance exchanges
for coverage next year,
in
the latest sign of the fraying ties between employment and health care,
writes the WSJ’s Scott Thurm. Securitas is among more
than 1,200 employers that offer the kind of bare-bones health plans that
must be phased out beginning
Jan. 1. Nearly four million people are enrolled in these
so-called mini-med plans, which cap benefits to participants, sometimes at
as little as $3,000 a year. Other big employers, including
Darden Restaurants,
Home Depot
and Trader Joe’s
will stop offering health insurance to part-time workers, and will direct
those employees to the state exchanges. Darden, Home Depot and Trader Joe’s
previously offered mini-meds to their part-timers.
From the CFO Journal's Morning Ledger on September 11, 2013
CFOs are relying more on part-time workers
That’s partly due to the looming rollout of the Affordable Care Act, but
it’s also a reaction to lingering uncertainty about the economy,
according to the latest Duke University/CFO Global
Business Outlook Survey. The third-quarter
survey findings were pretty positive overall, though the U.S. Business
Optimism Index edged down to 58 on a scale of zero to 100 after shooting
above 60 in Q2. In a nutshell: Profits are expected to jump by more than
10%, capital spending is seen rising by nearly 5% and full-time employment
is anticipated to increase by 2%. And 59% of CFOs say they’ve increased the
proportion of their workforce made up of temporary and part-time workers or
shifted toward outside advisers and consultants.
Among the companies making that shift, 38% say it’s
due to health-care overhaul, while 44% say it’s down to extreme economic
uncertainty. “Another trend that is affecting the growth in domestic
employment is the hiring by U.S.-based companies of full-time employees in
foreign countries,” says John Graham, professor of finance at Duke Fuqua
School of Business and director of the survey. “More than one in four U.S.
CFOs say their firms have hired full-time employees in other countries, and
that number is expected to accelerate.” (Prof. Graham
discusses the findings in this video.)
From the CFO Journal's Morning Ledger on September 4, 2013
More health-industry players are launching such
private exchanges, which are separate from the government-operated
marketplaces being created in each state. And insurers are creating their
own versions.
Aetna plans to launch a “proprietary”
marketplace model next year.
WellPoint
already has one, and
UnitedHealth Group‘s Optum
health-services arm owns an exchange operator.
Sears Holdings and
Darden Restaurants adopted this approach
last year. The idea has been gaining the most traction among small and
midsize employers, but interest is growing among companies of all sizes,
Matthews writes.
Bob Evans Farms,
which owns about 560 restaurants and has about 34,000 employees including
part-timers, will start directing workers to an exchange from
Xerox's Buck unit
that’s set to launch next January.
From the CFO Journal's Morning Ledger on August 22, 2013
Health-care law fuels part-time hiring
U.S. businesses are hiring, but three out of four of the nearly one million
hires this year are part-time and many of the jobs are low-paid, writes
Reuters’s Lucia Mutikani.
Executives at several staffing firms told Reuters that
the Affordable Care Act, which requires
employers with 50 or more full-time workers to provide health-care coverage,
was a frequently cited factor in requests for part-time workers. A memo that
leaked out from retailer
Forever 21 last week showed it was reducing a number of full-time
staff to positions where they will work no more than 29.5 hours a week, just
under the law’s threshold. “They have put some of the full-time positions on
hold and are hiring part-time employees so they won’t have to pay out the
benefits,” said Client Staffing Solutions’ Darin Hovendick. “There is so
much uncertainty. It’s really tough to design a budget when you don’t know
the final cost involved.”
U.S. officials for the first time disclosed
insurance prices that will be offered through new federally run health-care
exchanges starting Oct. 1, showing that young, healthy buyers likely will
pay more than they do currently while older, sicker consumers should get a
break.
The plans, offered under the health-care overhaul
to people who don't get insurance through an employer or government program,
in many cases provide broader coverage than current policies.
Costs will vary widely from state to state and for
different types of consumers. Government subsidies will cut costs for some
lower-income consumers.
Across the country, the average premium for a
27-year-old nonsmoker, regardless of gender, will start at $163 a month for
the lowest-cost "bronze" plan; $203 for the "silver" plan, which provides
more benefits than bronze; and $240 for the more-comprehensive "gold" plan.
But for some buyers, prices will rise from today's
less-comprehensive policies. In Nashville, Tenn., a 27-year-old male
nonsmoker could pay as little as $41 a month now for a bare-bones policy,
but would pay $114 a month for the lowest-cost bronze option in the new
federal health exchanges. More
Shutdown Unlikely to Hit Health Law's Rollout
Likewise, the least-expensive bronze policy would
rise to $195 a month in Philadelphia for that same 27-year-old, from $73
today. In Cheyenne, Wyo., the lowest-cost option would be $271 a month, up
from $82 today.
The Affordable Care Act marks a fundamental shift
in the way insurers price their products. Carriers won't be allowed to
charge higher premiums for consumers who have medical histories suggesting
they might be more expensive to cover because they need more care. They will
have to treat customers equally, with limited variation in premiums based on
buyers' ages or whether they smoke.
Insurers also will have to offer a more generous
benefits package that includes hospital care, preventive services,
prescription drugs and maternity coverage.
For consumers used to skimpier plans—or young,
healthy people who previously enjoyed attractive rates—that could mean
significantly higher premiums.
The benefits are greater for people who previously
were rejected for coverage because they were ill, or who were charged higher
premiums. They are expected to find better coverage through the exchanges
for the first time.
The concern for supporters of the law, and the
administration, is whether enough healthy people sign up to balance the
likely higher costs incurred by the sick and newly covered.
The data, which the administration was set to
release Wednesday, cover 36 states where the federal government is operating
insurance exchanges because state officials have declined to do so
themselves. Fourteen states are operating exchanges on their own.
The Obama administration called the rates a good
deal for consumers.
"The prices are affordable," said Gary Cohen, a top
regulator at the Department of Health and Human Services.
"Because of the Affordable Care Act, the health
insurance that people will be buying will actually cover them in the case of
them getting sick. It doesn't make sense to compare just the number the
person was paying, you have to compare the value people are getting," Mr.
Cohen added.
Critics of the health law long have argued that the
price changes represent a dramatic increase in premiums, and Senate
Republicans repeated those arguments during a floor debate Tuesday.
"Obamacare hasn't even been fully implemented yet,
but we can already see the train wreck headed our way. Premiums are
skyrocketing," said Senate Minority Leader Mitch McConnell (R., Ky.).
Republicans are trying to repeal the law and have
tied the issue to a bill to extend government funding beyond the Sept 30 end
of the fiscal year. Sen. Ted Cruz (R., Texas) spoke on the Senate floor for
hours into Tuesday night in what he said was a battle to block the law from
taking effect.
Continued in article
Jensen Comment
In my opinion we would be far better off if Congress had passed a national
health insurance plan back in 2009 when the Democrats controlled the legislative
and executive branches of Federal government. Instead we are left with a mess
where the largest medical insurance companies are avoiding the state insurance
exchanges. In some states there's almost no pricing competition such as in West
Virginia where only one company offers the exchange insurance for individuals.
An enormous problem is that both profit and non-profit organizations,
including government agencies, are dropping their employee medical insurance
plans and/or are shifting more and more into use of part-time workers. Many like
Walgreen will instead offer cash allowances to full-time employees and force all
employees to shop for their own medical insurance. There will be differences
what employees are charged in the various states. I don't know that Walgree and
the other companies will make allowances for state pricing differentials.
Many young people benefit by being able to remain on the plans of their
parents until age 26. High medical risk patients will have access that
previously was denied or very high priced from insurance companies. Taxpayers
will be paying for more poor people not eligible for Medicaid, although many
states have resisted expanding their Medicaid roles.
Meanwhile the U.S. Congress will keep its free gold-plated medical insurance
for lifetime coverage of current and former legislators. Too bad legislators can
legislate the Affordable Health Care act without having to participate in that
act.
Hopefully, health care in the USA will not be thrown entirely into chaos by
failing to fund Obamacare at this late date. It would probably be best, however,
if we could somehow adopt a national health care plan better than the one in
Canada (which varies between provinces).
From the CFO Journal's Morning Ledger on September 19, 2013
Big insurers skip health exchanges When the consumer marketplaces for insurance go live
Oct. 1, don’t expect to see much of familiar names like
Cigna or
Aetna, writes the
WSJ’s Timothy W. Martin. The
biggest health insurers are eschewing many of the
exchanges out of concern that many of the individuals who will
purchase coverage need it because they have chronic illnesses or other
medical conditions that are expensive to treat. Their expected absence
creates an opening for small regional players such as
Molina Healthcare,
Centene and
Magellan Health Services
to grab market share across multiple states in the rollout of the new
federal health law.
Jensen Comment
Only one company will participate in West Virginia’s new individual health
insurance marketplace.Media outlets report that Highmark Blue Cross Blue Shield
and Carelink/Coventry applied and were accepted to participate in the individual
marketplace. But Carelink/Coventry later decided to withdraw ---
http://times-news.com/local/x789528391/Insurance-market-in-W-Va-will-have-one-company
Only one company will participate in West
Virginia’s new individual health insurance marketplace.
Media outlets report that Highmark Blue Cross Blue
Shield and Carelink/Coventry applied and were accepted to participate in the
individual marketplace. But Carelink/Coventry later decided to withdraw.
“We came to this decision (not to participate in
the marketplace) as part of our ongoing review of Aetna’s overall company
strategy, including the impact of the Coventry acquisition which closed in
May, after the original exchange filings were submitted for both companies,”
Walt Cherniak, a spokesman for Aetna, Carelink/Coventry’s parent company,
told the Charleston Gazette.
“We are taking a measured, multi-year approach to
exchanges. In 2014 we are focusing on the markets where we can be most
competitive and deliver the greatest value to our customers,” Cherniak said.
Highmark plans to offer 11 different plans in the
individual market and four plans in the state’s small business marketplace,
the Charleston Daily Mail reported.
“We do intend to make good on our commitment to
continue to participate. We’ll be there and enrolling people in the West
Virginia plan,” Highmark CEO William Winkenwerder said in a conference call
Wednesday.
The health insurance marketplace is part of the
Affordable Care Act. Enrollment begins Oct. 1. Coverage will begin Jan. 1,
2014.
Perry Bryant, executive director of West Virginians
for Affordable Health Care, said that he hopes more companies over time will
participate in the marketplace.
“If we had more competition, you’d probably see
more competitive premiums. Nobody knows what the premiums are yet, but will
there be affordable prices despite lack of competition? We just don’t know
yet,” Bryant said.
It isn’t clear how much money the move might
ultimately save Walgreen or whether its workers will face higher costs. Mark
Englizian, Walgreen’s vice president of compensation and benefits, said the
submitted bids for monthly premiums for the private exchanges were roughly
equal to its current 2013 rates—meaning some savings could come from the
fact the bids didn’t factor in year-over-year increases.
But it’s another example of how dramatically the
insurance landscape is shifting ahead of the rollout of the Affordable Care
Act.
IBM and
Time Warner are
both planning to move thousands of retirees from their own
company-administered plans to private exchanges.
Sears and
Darden Restaurants
said last year they would send employees to a private exchange. And last
month, UPS said
it would end benefits for 15,000 employee spouses who are able to get
coverage through their own employers. By 2017, nearly 20% of American
workers could get their health insurance through a private exchange,
according to Accenture Research. And a recent report by the National
Business Group on Health said that
30% of large employers are considering moving active
employees to exchanges
by 2015, Reuters
notes.
Labor unions are among the key institutions
responsible for the passage of Obamacare. They spent tons of money electing
Democrats to Congress in 2006 and 2008, and fought hard to push the health
law through the legislature in 2009 and 2010. But now, unions are waking up
to the fact that Obamacare is heavily disruptive to the health benefits of
their members.
Last Thursday, representatives of three of the
nation’s largest unions fired off a letter to Harry Reid and Nancy Pelosi,
warning that Obamacare would “shatter not only our hard-earned health
benefits, but destroy the foundation of the 40 hour work week that is the
backbone of the American middle class.”
The
letter was penned by James P. Hoffa, general
president of the
International Brotherhood of Teamsters; Joseph
Hansen, international president of the United Food and Commercial Workers
International Union; and Donald “D.” Taylor, president of UNITE-HERE, a
union representing hotel, airport, food service, gaming, and textile
workers.
“When you and the President sought our support for
the Affordable Care Act,” they begin, “you pledged that if we liked the
health plans we have now, we could keep them. Sadly, that promise is under
threat…We have been strong supporters of the notion that all Americans
should have access to quality, affordable health care. We have also been
strong supporters of you. In campaign after campaign we have put boots on
the ground, gone door-to-door to get out the vote, run phone banks and
raised money to secure this vision. Now this vision has come back to haunt
us.”
The union leaders are concerned that Obamacare’s
employer mandate
incentivizes smaller
companies to shift their workers to part-time status, because employers are
not required to provide health coverage to part-time workers. “We have a
problem,” they write, and “you need to fix it.”
“The unintended consequences of the ACA are
severe,” they continue. “Perverse incentives are causing nightmare
scenarios. First, the law creates an incentive for employers to keep
employees’ work hours below 30 hours a week. Numerous employers have begun
to cut workers’ hours to avoid this obligation, and many of them are doing
so openly. The impact is two-fold: fewer hours means less pay while also
losing our current health benefits.”
What surprises me about this is that union leaders
are pretty strategic when it comes to employee benefits. It was
obvious in 2009 that
Obamacare’s employer mandate would incentivize this shift. Why didn’t labor
unions fight it back then?
Regulations will ‘destroy the very health
and wellbeing of our members’
The labor bosses are also unhappy, because of the
way Obamacare affects multi-employer health plans. Multi-employer plans,
also called Taft-Hartley plans, are health insurance benefits typically
arranged between a labor union in a particular industry, such as
restaurants, and small employers in that industry. About 20 million workers
are covered by these plans; 800,000 of Joseph Hansen’s 1.3 million UFCW
members are covered this way.
Taft-Hartley plans, they write, “have been built
over decades by working men and women,” but unlike plans offered on the ACA
exchanges, unionized workers will not be eligible for subsidies, because
workers with employer-sponsored coverage don’t qualify.
Obamacare’s regulatory changes to the small-group
insurance market will drive up the cost of these plans. For example, the
rules requiring plans to cover adult children up to the age of 26, the
elimination of limits on annual or lifetime coverage, and the mandates that
plans cover a wide range of benefits will drive premiums upward.
But the key problem is that the Taft-Hartley plans
already provide generous and costly coverage; small employers now have a
more financially attractive alternative, which is to drop coverage and put
people on the exchanges, once the existing collective bargaining agreements
are up. That gives workers less reason to join a union; a big part of why
working people pay union dues is because unions play a big role in
negotiating health benefits.
So the labor leaders are demanding that their
workers with employer-sponsored coverage also gain eligibility for ACA
subsidies. Otherwise, their workers will be “relegated to second-class
status” despite being “taxed to pay for those subsidies,” a result that will
“make non-profit plans like ours unsustainable” and “destroy the very health
and wellbeing of our members along with millions of other hardworking
Americans.”
‘The law as it stands will hurt millions of Americans’
The leaders conclude by stating that, “on behalf of
the millions of working men and women we represent and the families they
support, we can no longer stand silent in the face of elements of the
Affordable Care Act that will destroy the very health and wellbeing of our
members along with millions of other hardworking Americans.”
President Obama, of course, pledged that “if you
like your plan, you can keep your plan.” But the labor leaders say that,
“unless changes are made…that promise is hollow. We continue to stand behind
real health care reform, but the law as it stands will hurt millions of
Americans including the members of our respective unions. We are looking to
you to make sure these changes are made.”
From the CFO Journal's Morning Ledger on September 11, 2013
CFOs are relying more on part-time workers
That’s
partly due to the looming rollout of the Affordable Care Act, but it’s also
a reaction to lingering uncertainty about the economy,
according to the latest Duke University/CFO Global
Business Outlook Survey. The third-quarter
survey findings were pretty positive overall, though the U.S. Business
Optimism Index edged down to 58 on a scale of zero to 100 after shooting
above 60 in Q2. In a nutshell: Profits are expected to jump by more than
10%, capital spending is seen rising by nearly 5% and full-time employment
is anticipated to increase by 2%. And 59% of CFOs say they’ve increased the
proportion of their workforce made up of temporary and part-time workers or
shifted toward outside advisers and consultants.
Among the companies making that shift, 38% say it’s
due to health-care overhaul, while 44% say it’s down to extreme economic
uncertainty. “Another trend that is affecting the growth in domestic
employment is the hiring by U.S.-based companies of full-time employees in
foreign countries,” says John Graham, professor of finance at Duke Fuqua
School of Business and director of the survey. “More than one in four U.S.
CFOs say their firms have hired full-time employees in other countries, and
that number is expected to accelerate.” (Prof. Graham
discusses the findings in this video.)
Another key finding is
that
finance chiefs are starting to think more about their
competitors and less about their legislators,
CFO’s David Owens writes. The survey shows that “price
pressure from competitors” overtook “federal government agenda/policies” on
the list of external concerns for respondents. Bill Velasco, controller for
the Engineered Products Division at
Flowserve, a supplier
of industrial and heavy machinery, tells Owens that price competition is
heating up, but it’s still unclear who gets the credit—or the blame. “We
know the pressure is coming,” he says, “but I don’t know how much is being
generated by activity in the market, and how much comes from customers
asking us to be more efficient.”
More health-industry players are launching such
private exchanges, which are separate from the government-operated
marketplaces being created in each state. And insurers are creating their
own versions.
Aetna plans to launch a “proprietary”
marketplace model next year.
WellPoint
already has one, and
UnitedHealth Group‘s Optum
health-services arm owns an exchange operator.
Sears Holdings and
Darden Restaurants adopted this approach
last year. The idea has been gaining the most traction among small and
midsize employers, but interest is growing among companies of all sizes,
Matthews writes.
Bob Evans Farms,
which owns about 560 restaurants and has about 34,000 employees including
part-timers, will start directing workers to an exchange from
Xerox's Buck unit
that’s set to launch next January.
From the CFO Journal's Morning Ledger on August 22, 2013
Health-care law fuels part-time hiring
U.S. businesses are hiring, but three out of four of the nearly one million
hires this year are part-time and many of the jobs are low-paid, writes
Reuters’s Lucia Mutikani.
Executives at several staffing firms told Reuters that
the Affordable Care Act, which requires
employers with 50 or more full-time workers to provide health-care coverage,
was a frequently cited factor in requests for part-time workers. A memo that
leaked out from retailer
Forever 21 last week showed it was reducing a number of full-time
staff to positions where they will work no more than 29.5 hours a week, just
under the law’s threshold. “They have put some of the full-time positions on
hold and are hiring part-time employees so they won’t have to pay out the
benefits,” said Client Staffing Solutions’ Darin Hovendick. “There is so
much uncertainty. It’s really tough to design a budget when you don’t know
the final cost involved.”
From the CFO Journal's Morning Ledger on August 22, 2013
UPS
is delivering a big change to employee health-care benefits. The company is
cutting off health
benefits to working spouses of thousands of
employees starting in 2014 and it says the
health-care overhaul is partly to blame, the WSJ reports. UPS said in an
internal memo to employees last month that rising costs for coverage of
chronic and other health conditions, “combined with the costs associated
with the Affordable Care Act, have made it increasingly difficult to
continue providing the same level of health-care benefits to our employees
at an affordable cost.”
The change applies to working spouses who can get
health-care coverage through their own employers and doesn’t apply to
spouses who can’t get their own coverage, or the spouses of unionized
employees, who make up the bulk of the company’s work force. The change will
affect about 15,000 spouses—slightly less than half of the 33,000 spouses
covered today under its health plan for nonunionized workers.
The shift is
a sign of corporate America’s increasing willingness
to make deep changes to benefits once taken
as a given by workers, according to Bloomberg. “The feeling is drastic times
call for drastic measures,” says Rich Fuerstenberg, a partner at benefits
consultant Mercer. “What employers are adopting today are strategies that
were considered crazy or out of the mainstream just a few years ago.”
Jensen Comment
Another article I read estimated that about 15,000 spouses will lose their UPS
benefits.
Tax credits
will be available to subsidize premiums for people who buy their insurance
in the new marketplaces, do not have access to other affordable coverage,
and have incomes between 100 percent and 400 percent of the federal poverty
level (between about $11,500 and $46,000 for a single person, and $24,000
and $94,000 for a family of four).
An estimated 48
percent of people who currently have individual market coverage will be
eligible for tax credits, according to the study. Tax credits among those
eligible will average $5,548 per family, and subsidies will average $2,672
across all families now purchasing their own insurance. Many people who are
now uninsured also will be eligible for subsidies in the new marketplaces,
and their tax credits will likely be higher on average because they have
lower incomes than those who now buy their own coverage.
There are many
reasons why premium costs in the individual insurance market will change
under the ACA before tax credits are applied. For instance, insurance
companies will be prohibited from discriminating against people with
pre-existing conditions, leading to higher enrollment of people with
expensive health conditions. More young, healthy people may also enroll due
to the ACA's individual mandate and premium subsidies.
Furthermore,
insurance providers will be required to meet a minimum level of coverage
that will raise premiums for people buying skimpier coverage today, but also
lower their out-of-pocket costs on average when they use those services.
Premiums before and after the law goes into effect are not necessarily
comparable, as health plans in the new marketplaces will be required to
cover a broader range of services than are found in many current individual
market policies, and the health needs of people who will enroll are likely
to be different.
The Kaiser
Family Foundation also has developed a health reform
subsidy calculator
that estimates the premiums and tax credits available
to people next year through the insurance marketplaces based on their income
levels, family size, ages, and tobacco use.
About the
study:
Based on data from the Congressional Budget Office
(CBO) and the federal government's Survey of Income and Program
Participation, the Kaiser Family Foundation analysis estimates the
average impact of the Affordable Care Act on the individual market by
quantifying how current enrollees will fare once relevant provisions of the
health law are implemented. Premium data released by states to date suggest
that the CBO premium projection is reliable. While subsidies and premiums
will vary widely depending on each enrollee's personal characteristics, the
analysis focuses on averages to provide an indication of how much overall
assistance the law will provide to people buying their own coverage today.
Jensen Comment
Note that a tax credit is much more lucrative than a tax deduction. For example,
a deduction for home mortgage interest and medical expenses is subject to
various adjustments to where each dollar of deduction may results in a much
lower net tax benefit. Each dollar of credit, however, may be a full one dollar
of benefit in the pocket of a taxpayer. And for some credits like the earned
income credit, taxpayers having zero tax to pay can receive cash back from the
government for the credit. It's a lot like getting a tax-free government
paycheck without being a government employee. Nobel Economist Milton Friedman
might have called it a negative income tax. He proposed replacing the the
welfare system with a negative income tax system.
August 14, 2013 message from Scott Bokacker regarding the Affordable Care Act
implementation
That one will be relevant if you are an employer required to give notice
to employees.
Repeal Obamacare? Too late.
Scott Bonacker CPA – McCullough and Associates LLC – Springfield, MO
Howard Dean, a physician, is the former Governor of Vermont and Chairman of
the Democratic Party who launched an unsuccessful campaign to become President
of the United States ---
http://en.wikipedia.org/wiki/Howard_Dean
In the earlier parts of the article he chastises Republicans and some
Democrats who want to derail the Affordable Healthcare Act at this late stage.
Then he explains a part of the Affordable Healthcare Act that truly needs
amending.
That said, the law still has its flaws, and
American lawmakers and citizens have both an opportunity and responsibility
to fix them.
One major problem is the so-called Independent
Payment Advisory Board. The IPAB is essentially a health-care rationing
body. By setting doctor reimbursement rates for Medicare and determining
which procedures and drugs will be covered and at what price, the IPAB will
be able to stop certain treatments its members do not favor by simply
setting rates to levels where no doctor or hospital will perform them.
There does have to be control of costs in our
health-care system. However, rate setting—the essential mechanism of the
IPAB—has a 40-year track record of failure. What ends up happening in these
schemes (which many states including my home state of Vermont have
implemented with virtually no long-term effect on costs) is that patients
and physicians get aggravated because bureaucrats in either the private or
public sector are making medical decisions without knowing the patients.
Most important, once again, these kinds of schemes do not control costs. The
medical system simply becomes more bureaucratic.
The nonpartisan Congressional Budget Office has
indicated that the IPAB, in its current form, won't save a single dime
before 2021. As everyone in Washington knows, but less frequently admits,
CBO projections of any kind—past five years or so—are really just
speculation. I believe the IPAB will never control costs based on the long
record of previous attempts in many of the states, including my own state of
Vermont.
If Medicare is to have a secure future, we have to
move away from fee-for-service medicine, which is all about incentives to
spend more, and has no incentives in the system to keep patients healthy.
The IPAB has no possibility of helping to solve this major problem and will
almost certainly make the system more bureaucratic and therefore drive up
administrative costs.
To date, 22 Democrats have joined Republicans in
the House and Senate in support of legislation to do away with the IPAB. Yet
because of the extraordinary partisanship on Capitol Hill and Republican
threats to defund the law through the appropriations process, it is unlikely
that any change in the Affordable Care Act will take place soon.
The IPAB will cause frustration to providers and
patients alike, and it will fail to control costs. When, and if, the
atmosphere on Capitol Hill improves and leadership becomes interested again
in addressing real problems instead of posturing, getting rid of the IPAB is
something Democrats and Republicans ought to agree on.
Mr. Dean, governor of Vermont from 1991 to 2002 and a former chairman
of the Democratic National Committee, is a strategic adviser to McKenna Long
& Aldridge LLP.
Remember when President Obama famously promised
that if you like your health-care plan, you'll be able to keep your
health-care plan? It was a brilliantly crafted political sound bite. Turns
out, the statement is untrue.
Aside from that small detail, the slightly larger
problem is that the Obama administration doesn't have a health-care plan.
Yes, the White House has a law with thousands of pages, but the closer we
get to Oct. 1, the day government-mandated health-insurance exchanges are
supposed to open, the more we see that the administration doesn't have a
legitimate plan to successfully implement the law.
Unworkable. That word best describes ObamaCare.
Government agencies in states across the country, whether red or blue, have
spent countless hours and incalculable dollars trying to keep the ObamaCare
train on its track, but the wreck is coming. And it is the American people
who are going to pay the price.
Fifty-five working days before the launch of the
ObamaCare health-insurance exchanges on Oct. 1, the administration published
a 600-page final rule that employers, individuals and states are expected to
follow in determining eligibility for millions of Americans. Rather than
lending clarity to a troubled project, the guidelines only further
complicated it.
If the experience of those working with the
ObamaCare implementation at the state level had been taken into account,
progress might have been possible, but the administration has treated states
with mistrust. Perhaps that's because we can see that the federal government
is repeating mistakes of the past and we know that outcomes rarely reflect
what Washington has promised.
Adding to this mounting problem, the guidance that
President Obama has offered to date has been inconsistent, arbitrary and
frustrating—contributing further to the grave uncertainty that surrounds
this law. But not everything about it is uncertain: In February, the
nonpartisan Congressional Budget Office reported that seven million
Americans will lose their employer-based health insurance as a result of
ObamaCare.
On July 12, three of the country's largest unions
sent a letter to Democratic leaders in Congress stating that ObamaCare would
shatter not only hard-earned health benefits, but also destroy the 40-hour
workweek that is the backbone of the American middle class. ObamaCare
defines full-time employment as 30 hours per week. No wonder these unions
are alarmed: They are widely credited with helping to get the votes to pass
this unworkable law.
The administration, recognizing that ObamaCare is a
ticking bomb, earlier this month announced that it would delay until 2015
the requirement that businesses offer health-care insurance to their
employees or pay a fine. Yet the administration didn't also grant relief to
individuals.
Think about that for a moment: The Obama team, for
now, has spared employers but not employees. The day of reckoning for
businesses is put off, but not for everyday citizens. Many Americans may
wonder: On what authority does the administration arbitrarily decide which
aspects of a law not to enforce and which ones to keep?
As governors, we have been expressing concern about
the unworkability of ObamaCare since its passage in 2010. We have seen the
trouble the law poses for our own state economies. The most recent evidence:
The government now says that it will not verify the eligibility of
individuals who apply for subsidized insurance on the health-care exchanges.
Governors have firsthand experience with
implementing public-assistance programs. We know how important it is to care
for our most vulnerable citizens and to ensure that people are healthy and
able to work. We also know that a one-size-fits-all approach like ObamaCare
simply doesn't work. It only creates new problems and inequalities. That's
why if you look at all 50 states, you'll see 50 unique ways of handling
Medicaid.
Health-care premiums are going up. Many businesses
have stopped hiring, to avoid reaching the limit of 50 full-time employees
where they are required to offer health benefits. Those businesses that are
hiring often take on part-time workers to stay under the full-time cap.
Older individuals seeking work are finding that companies are reluctant to
take a chance on their potential health-care costs.
These are just a few of the problems resulting from
a program that wasn't thought through before it was rushed into law. No
wonder we hear that the Obama attack machine is gearing up to blame everyone
but the law itself for the chaos that lies ahead.
This law was a bad idea from the start, and the
American public never supported it. The Obama team, taking advantage of an
unusual two-year window when Democrats controlled all branches of
government, foisted upon the country a liberal hodgepodge of unworkable
notions that will wreak havoc on American health care. Delaying
implementation of ObamaCare, not just the employer mandate, is a reasonable
idea. But an even better one would be a complete repeal.
Mr. Jindal is the governor of Louisiana. Mr. Walker is the governor of
Wisconsin.
MERRICK, N.Y. —
Deirdre Yapalater’s recent
colonoscopy at a surgical center near her home here on Long Island went
smoothly: she was whisked from pre-op to an operating room where a
gastroenterologist, assisted by an anesthesiologist and a nurse, performed
the routine
cancer screening procedure in less than an hour. The test, which found
nothing worrisome, racked up what is likely her most expensive medical bill
of the year: $6,385.
That is fairly
typical: in Keene, N.H., Matt Meyer’s colonoscopy was billed at $7,563.56.
Maggie Christ of Chappaqua, N.Y., received $9,142.84 in bills for the
procedure. In Durham, N.C., the charges for Curtiss Devereux came to
$19,438, which included a polyp removal. While their insurers negotiated
down the price, the final tab for each test was more than $3,500.
“Could that be
right?” said Ms. Yapalater, stunned by charges on the statement on her
dining room table. Although her insurer covered the procedure and she paid
nothing, her health care costs still bite: Her premium payments jumped 10
percent last year, and rising co-payments and deductibles are straining the
finances of her middle-class family, with its mission-style house in the
suburbs and two S.U.V.’s parked outside. “You keep thinking it’s free,” she
said. “We call it free, but of course it’s not.”
In many other
developed countries, a basic colonoscopy costs just a few hundred dollars
and certainly well under $1,000. That chasm in price helps explain why the
United States is far and away the world leader in medical spending, even
though numerous studies have concluded that Americans do not get better
care.
Whether directly
from their wallets or through insurance policies, Americans pay more for
almost every interaction with the medical system. They are typically
prescribed more expensive procedures and tests than people in other
countries, no matter if those nations operate a private or national health
system. A list of drug, scan and procedure prices compiled by the
International Federation of Health Plans, a global network of health
insurers, found that the United States came out the most costly in all 21
categories — and often by a huge margin.
Americans pay, on
average, about four times as much for a hip replacement as patients in
Switzerland or France and more than three times as much for a
Caesarean section as those in New Zealand or Britain. The average price
for Nasonex, a common nasal spray for
allergies, is $108 in the United States
compared with $21 in Spain. The costs of hospital stays here are about
triple those in other developed countries, even though they last no longer,
according to a recent
report by the Commonwealth Fund, a foundation that studies health
policy.
¶ While the United States medical system is famous for drugs
costing hundreds of thousands of dollars and heroic care at the end of life,
it turns out that a more significant factor in the nation’s $2.7 trillion
annual health care bill may not be the use of extraordinary services, but
the high price tag of ordinary ones. “The U.S. just pays providers of health
care much more for everything,” said Tom Sackville, chief executive of the
health plans federation and a former British health minister.
¶ Colonoscopies offer a compelling case study. They are the most
expensive screening test that healthy Americans routinely undergo — and
often cost more than childbirth or an
appendectomy in most other developed countries. Their numbers have
increased manyfold over the last 15 years, with data from the Centers for
Disease Control and Prevention suggesting that more than 10 million people
get them each year, adding up to more than $10 billion in annual costs.
¶ Largely an office procedure when widespread screening was first
recommended, colonoscopies have moved into surgery centers — which were
created as a step down from costly hospital care but are now often a
lucrative step up from doctors’ examining rooms — where they are billed like
a quasi operation. They are often prescribed and performed more frequently
than medical guidelines recommend.
¶ The high price paid for colonoscopies mostly results not from
top-notch patient care, according to interviews with health care experts and
economists, but from business plans seeking to maximize revenue; haggling
between hospitals and insurers that have no relation to the actual costs of
performing the procedure; and lobbying, marketing and turf battles among
specialists that increase patient fees.
¶ While several cheaper and less invasive tests to screen for
colon cancer are recommended as equally effective by the federal
government’s expert
panel on preventive care — and are commonly used in other countries —
colonoscopy has become the go-to procedure in the United States. “We’ve
defaulted to by far the most expensive option, without much if any data to
support it,” said Dr. H. Gilbert Welch, a professor of medicine at the
Dartmouth Institute for Health Policy and Clinical Practice.
¶ In coming months, The New York Times will look at common
procedures, drugs and medical encounters to examine how the economic
incentives underlying the fragmented health care market in the United States
have driven up costs, putting deep economic strains on consumers and the
country.
¶ Hospitals, drug companies, device makers, physicians and other
providers can benefit by charging inflated prices, favoring the most costly
treatment options and curbing competition that could give patients more, and
cheaper, choices. And almost every interaction can be an opportunity to send
multiple, often opaque bills with long lists of charges: $100 for the ice
pack applied for 10 minutes after a
physical therapy session, or $30,000 for the artificial joint implanted
in surgery.
¶ The United States spends about 18 percent of its gross domestic
product on health care, nearly twice as much as most other developed
countries. The Congressional Budget Office has said that if medical costs
continue to grow unabated, “total spending on health care would eventually
account for all of the country’s economic output.” And it identified federal
spending on government health programs as
a primary cause of long-term budget deficits.
¶¶ While the rise in health care spending in the United States
has slowed in the past four years — to about 4 percent annually from about 8
percent — it is still expected to rise faster than the gross domestic
product. Aging baby boomers and tens of millions of patients newly insured
under the Affordable Care Act are likely to add to the burden.
¶ With
health insurance premiums eating up ever more of her flat paycheck, Ms.
Yapalater, a customer relations specialist for a small Long Island company,
recently decided to forgo physical therapy for an injury sustained during
Hurricane Sandy because of high out-of-pocket expenses. She refused a
dermatology medication prescribed for her daughter when the pharmacist said
the co-payment was $130. “I said, ‘That’s impossible, I have insurance,’ ”
Ms. Yapalater recalled. “I called the dermatologist and asked for something
cheaper, even if it’s not as good.”
¶ The more than $35,000 annually that Ms. Yapalater and her
employer collectively pay in premiums — her share is $15,000 — for her
family’s Oxford Freedom Plan would be more than sufficient to cover their
medical needs in most other countries. She and her husband, Jeff, 63, a
sales and marketing consultant, have three children in their 20s with good
jobs. Everyone in the family exercises, and none has had a serious illness.
¶ Like the Yapalaters, many other Americans have habits or traits
that arguably could put the nation at the low end of the medical cost
spectrum. Patients in the United States make fewer doctors’ visits and have
fewer hospital stays than citizens of many other developed countries,
according to the Commonwealth Fund report. People in Japan get more CT
scans. People in Germany, Switzerland and Britain have more frequent hip
replacements. The American population is younger and has fewer smokers than
those in most other developed countries. Pushing costs in the other
direction, though, is that the United States has relatively high rates of
obesity and limited access to routine care for the poor.
¶ A major factor behind the high costs is that the United States,
unique among industrialized nations, does not generally regulate or
intervene in medical pricing, aside from setting payment rates for
Medicare and
Medicaid, the government programs for older people and the poor. Many
other countries deliver health care on a private fee-for-service basis, as
does much of the American health care system, but they set rates as if
health care were a public utility or negotiate fees with providers and
insurers nationwide, for example.
¶ “In the U.S., we like to consider health care a free market,”
said Dr. David Blumenthal, president of the Commonwealth Fund and a former
adviser to President Obama. ”But it is a very weird market, riddled with
market failures.”
¶ Consumers, the patients, do not see prices
until after a service is provided, if they see them at all.And there is little quality data on hospitals and doctors
to help determine good value, aside from surveys conducted by popular Web
sites and magazines.Patients with insurance pay a
tiny fraction of the bill, providing scant disincentive for spending.
It's called the Affordable Care Act, but President
Barack Obama's health care law may turn out to be unaffordable for many
low-wage workers, including employees at big chain restaurants, retail
stores and hotels.
That might seem strange since the law requires
medium-sized and large employers to offer "affordable" coverage or face
fines.
But what's reasonable? Because of a wrinkle in the
law, companies can meet their legal obligations by offering policies that
would be too expensive for many low-wage workers. For the employee, it's
like a mirage — attractive but out of reach.
The company can get off the hook, say corporate
consultants and policy experts, but the employee could still face a federal
requirement to get health insurance.
Many are expected to remain uninsured, possibly
risking fines. That's due to another provision: the law says workers with an
offer of "affordable" workplace coverage aren't entitled to new tax credits
for private insurance, which could be a better deal for those on the lower
rungs of the middle class.
Some supporters of the law are disappointed. It
smacks of today's Catch-22 insurance rules.
"Some people may not gain the benefit of affordable
employer coverage," acknowledged Ron Pollack, president of Families USA, a
liberal advocacy group leading efforts to get uninsured people signed up for
coverage next year.
"It is an imperfection in the new law," Pollack
added. "The new law is a big step in the right direction, but it is not
perfect, and it will require future improvements."
Andy Stern, former president of the Service
Employees International Union, the 2-million-member service-sector labor
union, called the provision "an avoidance opportunity" for big business.
SEIU provided grass-roots support during Obama's long struggle to push the
bill through Congress.
The law is complicated, but essentially companies
with 50 or more full-time workers are required to offer coverage that meets
certain basic standards and costs no more than 9.5 percent of an employee's
income. Failure to do so means fines for the employer. (Full-time work is
defined as 30 or more hours a week, on average.)
But do the math from the worker's side: For an
employee making $21,000 a year, 9.5 percent of their income could mean
premiums as high as $1,995 and the insurance would still be considered
affordable.
Even a premium of $1,000 — close to the current
average for employee-only coverage — could be unaffordable for someone
stretching earnings in the low $20,000's.
With such a small income, "there is just not any
left over for health insurance," said Shannon Demaree, head of actuarial
services for the Lockton Benefit Group. "What the government is requiring
employers to do isn't really something their low-paid employees want."
Based in Kansas City, Mo., Lockton is an insurance
broker and benefits consultant that caters to many medium-sized businesses
affected by the health care law. Actuaries like Demaree specialize in cost
estimates.
Another thing to keep in mind: premiums wouldn't be
the only expense for employees. For a basic plan, they could also face an
annual deductible amounting to $3,000 or so, before insurance starts paying.
"If you make $20,000, are you really going to buy
that?" asked Tracy Watts, health care reform leader at Mercer, a major
benefits consulting firm.
And low-wage workers making more than about $15,900
won't be eligible for the law's Medicaid expansion, shutting down another
possibility for getting covered.
It's not exactly the picture the administration has
painted. The president portrays his health care law as economic relief for
struggling workers.
"Let's make sure that everybody who is out there
working hard and doing the right thing, that they're not going to go
bankrupt because they get sick, that they're going to have health care they
can count on," Obama said in a Chicago appearance last summer during the
presidential campaign. "And we got that done."
White House senior communications advisor Tara
McGuinness downplayed concerns. "There has been a lot of conjecture about
what people might do or could do, but this hasn't actually happened yet,"
she said. "The gap between sky-is-falling predictions about the health law
and what is happening is very wide."
The administration believes "most businesses want
to do right by their employees and will continue to use tax breaks to
provide quality coverage to their workers," she added. Health insurance is
tax deductible for employers, and the health law provides additional tax
breaks to help small businesses.
Virtually all major employers currently offer
health insurance, although skimpy policies offered to many low-wage workers
may not meet the requirements of the new law. Companies affected have been
reluctant to telegraph how they plan to comply.
"It clearly isn't going to be a morale-boosting
moment when you redo your health plan to discourage participation," said
Stern, the former labor leader, now a senior fellow at Columbia University.
"It's not something most want to advertise until they are sure it's the
right decision."
The National Retail Federation's top health care
expert said there's no "grand scheme to avoid responsibility" among
employers. "That is a little too Machiavellian," said Neil Trautwein.
Nonetheless, he acknowledged it's "a possible
outcome" that low-wage workers could find coverage unaffordable because of
the wrinkle in the law.
Continued in article
Belatedly The New York Times Fesses Up on the Obamacare Mess
By David Brooks, April 2013
David Brooks
Implementation got off to a
bad start because the Obama administration didn’t want to release
unpopular rules before the election. Regulators have been working hard
but are clearly overwhelmed, trying to write rules that influence the
entire health care sector — an economic unit roughly the size of France.
Republicans in Congress have made things much more difficult by refusing
to provide enough money for implementation.
By now, everybody involved
seems to be in a state of anxiety. Insurance companies are trying to put
out new products, but they don’t know what federal parameters they have
to meet. Small businesses are angry because the provisions that
benefited them have been put on the back burner. Health care systems are
highly frustrated. They can’t plan without a road map. Senator Max
Baucus, one of the authors of the law, says he sees a “huge train wreck”
coming.
I’ve been talking with a
bipartisan bunch of health care experts, trying to get a sense of
exactly how bad things are. In my conversations with this extremely
well-informed group of providers, academics and former government
officials, I’d say there is a minority, including some supporters of the
law, who think the whole situation is a complete disaster. They predict
Obamacare will collapse and do serious damage to the underlying health
system.
But the clear majority,
including some of the law’s opponents, believe that we’re probably in
for a few years of shambolic messiness, during which time everybody will
scramble and adjust, and eventually we will settle down to a new normal.
What nobody can predict is
how health care chaos will interact with the political system. There’s a
good chance that Republicans will be able to use unhappiness with what
is already an unpopular law to win back the Senate in 2014. Controlling
both houses of Congress, they will be in a good position to alter,
though not repeal, the program.
The law’s biggest
defenders will then become insurance companies and health care
corporations. Having spent billions of dollars adapting to the new
system, they are not going to want to see it repealed or replaced.
The experts talk about the
problems that lie ahead in cascades. First, there is what you
might call the structural cascade. Everything is turning out to
be more complicated than originally envisioned. The Supreme Court
decision made the Medicaid piece more complicated. The decision by many
states not to set up exchanges made the exchange piece more complicated.
The lines of accountability between, for example, state and federally
run exchanges have grown byzantine and unclear.
A law that was very
confusing has become mind-boggling. That could lead people to freeze up.
Insurance companies will hesitate before venturing into state exchanges,
thereby limiting competition and choice. Americans are just going to be
overwhelmed and befuddled. Many are just going to stay away, even if
they are eligible for benefits.
Then there is
the technical cascade.
At some point, people are going to sit at computers and enroll. If the
data process looks like some 1990s glitchmonster, if information doesn’t
flow freely, then the public opinion hit will be catastrophic.
Then there is
the cost cascade.
Nearly everybody not in the employ of the administration agrees this law
does not solve the cost problem, and many of the recent regulatory
decisions will send costs higher. A study in California found that
premiums could increase by an average of 20 percent for people not
covered by federal subsidies. A study by the Society of Actuaries found
that by 2017 costs could rise by 32 percent for insurers covering people
in the individual exchanges, and as high as 80 percent in states like
Ohio.
Then there is
the adverse selection cascade.
Under the law, young healthy people subsidize poorer, sicker and older
people. But the young may decide en masse that it is completely
irrational for them to get health insurance that subsidizes others while
they are healthy. They’ll be better off paying the fines, if those are
even enforced, and opting out. Without premiums from the young,
everybody else’s costs go up even higher.
Then there is
the provider concentration cascade.
The law further incentivizes a trend under way: the consolidation of
hospitals, doctors’ practices and other providers. That also boosts
prices.
Over all, it seems likely
that in some form or another Obamacare is here to stay. But the turmoil
around it could dominate politics for another election cycle, and the
changes after that — to finally control costs, to fix the mind-boggling
complexities and the unintended consequences — will never end.
Regulatory regimes can be
simple and dumb or complex and sprawling. When you build complex, it
takes a while to work through the consequences.
Beginning January 1, 2013, Obamacare – through the
enactment of Section 1411 — will impose upon certain high earners a brand
spankin’ new 3.8% tax on their “net investment income.” This additional tax
has been the source of much confusion and misinformation for taxpayers and
tax advisors alike.
Much of the uncertainty is to be anticipated; after
all, Section 1411 is not an amendment, expansion, or alteration of
preexisting law. Rather, this is brand new statute, which means there are no
judicial precedents or administrative rulings available to help interpret
the legal language.
But this new statute presents hurdles beyond what
we typically see with recently enacted legislation; specifically, the
vagaries of a term as critical to its implementation as “net investment
income” is to Section 1411.
In my honest opinion (man, I wish there was a
shorthand way to write that), the determination of what does and does not
constitute “net investment income” for purposes of Section 1411 will vex tax
advisors more than any other issue in 2013. So as a public service, I
thought I’d take advantage of this post-April 15th downtime to
put together a handy, four-part overview of the new investment income tax,
focusing primarily on answering the question, “What IS net investment
income?”
Before we begin unraveling that mystery, however,
let’s address the basic mechanics of Section 1411.
Beginning January 1, 2013, taxpayers will pay an
additional 3.8% Medicare tax on the
lesser of:
The taxpayer’s “net investment income,” or
The taxpayer’s “modified adjusted gross
income” (if the taxpayer does not have foreign earned income excluded
under Section 911, this will be identical to adjusted gross income)”
less the “applicable threshold;” specifically:
•For married taxpayers
filing jointly: $250,000.
•For married taxpayers
filing separately: $125,000.
•For all other
taxpayers: $200,000.
There are two very important distinctions to be
made about the math behind this
lesser of calculation that should serve to dispel two popular
misconceptions about the new tax:
First, because this is a “lesser of” rather than
“greater of” computation, the tax cannot apply unless an
individual’s modified adjusted gross income exceeds the applicable
threshold. If the taxpayer’s MAGI does not exceed the applicable threshold,
the second component of the “lesser of” calculation will always be zero, and
the last time I checked, zero will always be the lesser of two positive
numbers. Thus, right from the start, we can eliminate from the reaches of
Section 1411 all married filing jointly taxpayers with MAGI less
than $250,000, married filing separately taxpayers with MAGI less than
$125,000, and all other taxpayers with MAGI less than $200,000.
Secondly, just because an individual’s MAGI exceeds
the applicable threshold does not necessarily sentence the taxpayer to
paying the 3.8% tax on all of their net investment income. Again,
this is due to the mechanics of the “lesser of” calculation.
Example: Hansel, a single taxpayer, earns
$195,000 in compensation and $30,000 of dividend and interest income during
2013. These are his only items of income or loss.
Hansel is subject to the 3.8% Medicare tax on
the lesser of:
1. Net investment income, or $30,000, or
2. MAGI ($225,000) less the applicable
threshold ($200,000) or $25,000.
Thus, despite the fact that Hansel has both net
investment income and MAGI in excess of his applicable threshold, he does
not owe the 3.8% on all of his investment income. Rather, he owes the tax on
the lesser of the two
components, or $25,000.
But let’s not kid ourselves; it’s not the
mechanics or mathematics behind Section 1411 that will be the bane of the
tax advisor’s existence during 2013, it’s the understanding of what
constitutes “net investment income.” And for clarity on that issue, we must
look to our only source of guidance on the topic.
In late November, the IRS released long-awaited
proposed regulations under Section 1411. While the proposed regulations are
not effective until tax years beginning after December 31, 2013, they may be
relied on until final regulations are issued, which is expected to happen
sometime during 2013.
The definition of “net investment income” is first
introduced in Prop. Reg. Section 1.1411-4(a)(1), which breaks those items
constituting “net investment income” into three subparagraphs:
(i) Gross income from interest, dividends,
annuities, royalties, rents, substitute interest payments, and substitute
dividend payment. (one little i income)
(ii) Other gross derived from a trade or business
described in Prop. Reg. Section 1.1411-5 (two little i income); and
(iii) Net gain attributable to the disposition of
property (three little i income).
In parenthesis following each of the three types of
income, you will find the term the tax community has begun to use to
describe the income as part of its general parlance. As you can see, the
term relates to which subparagraph the income is found in, and is as good a
way as any to present the types of net investment income in this overview.
So today, we take on “one little i income” – the interest, dividends, rent,
etc… found in Prop. Reg. Section 1.1411-4(a)(1)(i) — and we’ll examine “two
little i” and “three little i” income in subsequent posts.
One Little i Income, In General
While the Section 1411 regulations are full of
surprises, the items that constitute net investment income under Prop. Reg.
Section 1.1411-4(a)(1)(i) are not among them; in fact, these are the items
we all anticipated to be included in net investment income before
promulgation of the proposed regulations. As mentioned above, they include:
Interest
Dividends
Annuities
Royalties
Rents
Substitute interest and dividend payments
(even though these amounts are not categorically “interest” and
“dividends’” for income tax purposes.
The preamble to the regulations offers additional
detail. For example, gross income from dividends includes any item treated
as a divided for purposes of chapter 1 of the Code (the income tax
provisions). This includes:
Constructive dividends
Amounts treated as distributions under Section
1248(a), relating to the gain from the sale of stock in a controlled
foreign corporation, and
Amounts distributed by an S corporation that
are treated as a dividend by virtue of the fact that the distribution is
deemed to have come from earnings and profits accumulated in prior C
corporation years.
Exceptions
In general, any interest, dividends, etc… listed
under Prop. Reg. Section 1.1411-4(a)(1)(i) will constitute net investment
income. However, the regulations and preamble note four exceptions to this
general rule:
Interest earned on state and local bonds that
is exempt from income tax under Section 103 is excluded from the
definition of net investment income for purposes of Section 1411.
Net investment income does not include
distributions from a qualified plan described in Sections 401(a),
403(a), 403(b), 408, 408A or 457(b).
Interest paid to an employee by an employer
under a nonqualified deferred compensation plan is not
considered net investment income.
Any “one little i income” earned in the
“ordinary course of a trade or business” is not included in net
investment income. This is an
important exclusion that warrants further examination.
Assume you own an interest in an S corporation,
partnership, or sole proprietorship. Assume further that interest and
dividends are earned in the activity and are either allocated to you on a
Schedule K-1 (in the case of an S corporation or partnership) or reported by
you on Schedule C (in the case of a sole proprietorship).
Naturally, you might assume that the interest and
dividends are to be included in net investment income as “one little i
income,” and nine times out of ten, you’d be correct. However, under the
“ordinary course of trade or business exception” the interest and dividends,
despite generally meeting the definition of net investment income under “one
little i,” can be excluded from the computation of net investment income if
four tests are met:
Continued in article
Jensen Comment
Investors who do not get hit with this tax every year may bet blind sided in a
year when they (or their estates) dispose of some property such as rental
property or a farm investment.
Remember those tiresome and frequent adds on television from "The Scooter
Store"
If you watch daytime TV or have been stuck watching
daytime TV while visiting your parents, surely you’re familiar with The
Scooter Store. The power wheelchair vendor has had some trouble lately,
including accusations of Medicare and Medicaid fraud, a raid by the FBI, and
even a lawsuit from the company’s hometown, of New Braunfels, Texas. The
company laid off most of its employees, and plans to deal directly with
health care providers, rather than blanketing the airwaves and selling
directly to consumers.
Those investigations came after a
a scathing investigative piece by CBS News about the company.
(Warning: the video at that link plays automatically.) Former salesmen and
doctors who prescribed chairs in the past explained the company’s tactics:
contact doctors’ offices incessantly to wear them down and convince them to
prescribe scooters and power chairs whether the patient really needed one or
not, and to depend on bureaucratic incompetence and error to get them
approved by Medicare and Medicaid.
That got the attention of the federal government,
and led to a raid by the Federal Bureau of Investigation. The company’s CEO
insists that The Scooter Store itself wasn’t accused of fraud. Just
a few weeks later, the company
furloughed all employees, then permanently laid off about 1,000.
An independent audit found that the company had
overbilled Medicare and Medicaid somewhere between $46.8 million and $87.7
million. The company had agreed to pay back $19.5 million. The Centers for
Medicare and Medicaid Services is one of the largest creditors listed in the
company’s bankruptcy petition, which details about $50 million in debt.
There are three big reasons why there’s more
government-financed healthcare spending in the United States.
1. Richer nations tend
to spend more, regardless of how they structure their healthcare systems.
2. As you can see at
the 1:18 mark of this video, the United States is
halfway down the road to a single-payer system thanks to programs such as
Medicare and Medicaid.
So what’s the moral of the story? Simple,
notwithstanding the shallow rhetoric that dominates much of the debate, the
United States does not have anything close to a free-market healthcare
system.
That was true before Obamacare and it’s even more
true now that Obamacare has been enacted.
Indeed, it’s quite likely that many nations with
“guaranteed” health care actually have more market-oriented systems than the
United States.
Avik Roy argues, for instance, that
Switzerland’s system is the best in the world. And
the chart above certainly shows less direct government spending.
And there’s also the example of Singapore, which
also is
a very rich nation that has far less government spending on healthcare
than the United States.
Continued in article
Jensen Comment
Articles like this are controversial and misleading. Firstly, we may be
comparing apples and kangaroos when it comes to the terms "health care" and
"cost." Much of the USA health care "cost" gets buried in other accounts like
"research" and "education." The many research universities in the USA are
contributing tuition and state taxpayer money to fund biomedical science faculty
and other science and engineering faculty who are doing medical research and
development in one way or another. But these costs are treated as "education"
and "research" costs rather than medical costs.
An enormous proportion of what the USA includes in costs of medical care is
really the cost of fraud that other nations, especially those with either free
market or nationalized coverage, avoid much more efficiently and effectively.
The frauds are especially high in Medicare billings for our aged and disabled
such as billings for nonexistent medical equipment and $6,384 cost of an aspirin
administered inside a hospital.
Much of what gets billed as "medical care" in the USA is the massive cost of
malpractice insurance, costs which nations like Canada with national health care
cover much more efficiently and effectively by leaving out the lawyers
salivating over punitive damages.
In the USA and Mexico much of the cost of geriatric and disability care is
borne by patient savings and family earnings that does not pass through
governmental or third-party insurance "medical care" accounts.. In nations with
nationalized medicine like Norway such costs are more apt to be called "medical
costs."
In the USA most patients like me bear their own eye care and dental billings
out-of-pocket and are not captured in governmental "medical care" accounts. In
many other nations the costs of these services pass through governmental
accounts.
The USA spends (usually under Medicare) hundreds of billions on patients that
are terminally ill, often extending their lives uselessly for weeks or a few
months in intensive care and cardiac care units. Most other nations save this
money by letting nature run its course for dying patients and/or facilitating
euthanasia. CBS Sixty Minutes ran a module on this under the title "The High
Cost of Dying" in the USA.
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
Similar discrepancies arise for extremely premature and/or underweight new
babies that are not saved in most nations outside the USA.
The above comparison of nations by Daniel Mitchell is mostly an example of
the many attempts (such as poverty and unemployment) to make international
comparisons on variables that are inconsistently defined and subject to enormous
measurement error and variation between nations
The fees will hit most large U.S. employers, and
several have been lobbying to change the program, contending the levy is
unfair because it subsidizes individually purchased plans that won't
cover their workers. Boeing Co. BA -0.15% and a union health plan
covering retirees of General Motors, GM +0.32% Ford Motor Co. F +0.22% and
Chrysler, among other groups, have asked federal regulators to exclude or
shield their insurance recipients from the fee.
Insurance companies, which helped put the fee in
the law, say the fee is essential to prevent rates from skyrocketing when
insurers get an influx of unhealthy customers next year. The fee is part of
a new insurance landscape created by the health law that will forbid
insurers from denying coverage to people with pre-existing conditions.
The $63 fee will apply to plans covering millions
of Americans in 2014. It applies to employers that assume the risk for
workers' medical bills, and many private plans sold by insurers. The fee
will be smaller for 2015 and 2016, though regulators haven't set those
amounts.
Few noticed the fee when the 2010 Affordable Care
Act passed. Employers have spent recent months trying to peel it back, but
final regulations published Monday in the Federal Register left it largely
intact.
"It's caught most employers, if not all employers,
by surprise," said Steve Wojcik, vice president of public policy at the
National Business Group on Health in Washington, which represents large
employers. "They're very upset about it."
The fee comes on top of other costs employers
expect to face. Proponents of the law say it eventually will lower
employers' health costs by expanding insurance coverage to 30 million
Americans, meaning employers won't subsidize their unpaid medical bills.
Simple lab work done during a few days in the
hospital can cost more than a car. A trip to the emergency room for chest
pains that turn out to be indigestion brings a bill that can exceed the
price of a semester at college. When we debate
health care
policy in America, we seem to jump right to the issue
of who should pay the bills, blowing past what should be the first question:
Why exactly are the bills so high?
Steven Brill spent seven months analyzing hundreds
of bill from
hospitals,
doctors, and drug companies and medical equipment
manufacturers to find out who is setting such high prices and pocketing the
biggest profits. What he discovered, outlined in detail in the
cover story of the new issue of TIME, will
radically change the way you think about our medical institutions:
· Hospitals arbitrarily set prices based on a
mysterious internal list known as the “chargemaster.” These prices vary from
hospital to hospital and are often ten times the actual cost of an item.
Insurance companies and Medicare pay discounted prices, but don’t have
enough leverage to bring fees down anywhere close to actual costs. While
other countries restrain drug prices, in the United States federal law
actually restricts the single biggest buyer—Medicare—from even trying to
negotiate the price of drugs.
· Tax-exempt “nonprofit” hospitals are the most
profitable businesses and largest employers in their regions, often presided
over by the most richly compensated executives.
· Cancer
treatment—at some of the most renowned centers such as
Sloan-Kettering and M.D. Anderson—has some of the industry’s highest profit
margins. Cancer drugs in particular are hugely profitable. For example,
Sloan-Kettering charges $4615 for a immune-deficiency drug named Flebogamma.
Medicare cuts Sloan-Kettering’s charge to $2123, still way above what the
hospital paid for it, an estimated $1400.
· Patients can hire medical billing advocates who
help people read their bills and try to reduce them. “The hospitals all know
the bills are fiction, or at least only a place to start the discussion, so
you bargain with them,” says Katalin Goencz, a former appeals coordinator in
a hospital billing department who now works as an advocate in Stamford, CT.
Brill concludes:
The health care market is not
a market at all.
It’s a crapshoot. Everyone fares differently based on circumstances they
can neither control nor predict. They may have no insurance. They may
have insurance, but their employer chooses their insurance plan and it
may have a payout limit or not cover a drug or treatment they need. They
may or may not be old enough to be on Medicare or, given the different
standards of the 50 states, be poor enough to be on Medicaid. If they’re
not protected by Medicare or protected only partially by private
insurance with high co-pays, they have little visibility into pricing,
let alone control of it. They have little choice of hospitals or the
services they are billed for, even if they somehow knew the prices
before they got billed for the services. They have no idea what their
bills mean, and those who maintain the chargemasters couldn’t explain
them if they wanted to. How much of the bills they end up paying may
depend on the generosity of the hospital or on whether they happen to
get the help of a billing advocate. They have no choice of the drugs
that they have to buy or the lab tests or CT scans that they have to
get, and they would not know what to do if they did have a choice. They
are powerless buyers in a sellers’ market where the only consistent fact
is the profit of the sellers.
Without diminishing the epic scope of Steven
Brill's Time magazine piece about the U.S. health care system, he reiterates
in lengthy detail perversities that are already well known, without offering
a single useful insight on how it go that way, and even less on how to fix
it.
Yet Mr. Brill, founder of CourtTV and American
Lawyer magazine, author of books on terrorism and education, has written the
longest piece in Time's history—24,000 words—so attention must be paid.
That health-care costs are inflated compared to
what they would be in a reasonably transparent, competitive market (a point
Mr. Brill never clearly makes) won't be a revelation. That hospitals
allocate their costs to various items on their bills and price lists in ways
that are opaque and arbitrary is not a new discovery either.
He finds it shocking that a hospital charging
$1,791 a night won't throw in the generic Tylenol for free (instead charging
$1.50 each). But this is to commit the reification fallacy of thinking there
is some organic relationship between what a hospital charges for a
particular item and what that item costs in the first place.
He dwells on the irrationality of hospitals
charging their highest prices to their poorest customers, those without
insurance. But he's also aware that these customers often pay little or
nothing of what they are charged and hospitals reallocate the cost to the
bills of other patients. He even notes that a hospital might collect as
little as 18% of what it bills.
He vaguely gets that hospital price lists are memos
for the file, to be drawn out and waved as a reference in negotiations with
their real customers, the big health-care insurers, Medicaid, Medicare and
other large payers.
The deals hammered out with these customers tend
naturally to gravitate toward round numbers, leaving a hospital free to
allocate its costs and profits to specific items however it wants. Mr. Brill
may be offended that certain "non-profit" hospitals appear to be highly
profitable. He probably wouldn't be happier, though, if they diverted their
surplus revenues into even higher salaries and more gleamingly superfluous
facilities.
"What is so different about the medical ecosystem
that causes technology advances to drive bills up instead of down?" Mr.
Brill asks. But his question is rhetorical since he doesn't exhibit much
urge to understand why the system behaves as it does, treating its nature as
a given.
In fact, what he describes—big institutions
dictating care and assigning prices in ways that make no sense to an
outsider—is exactly what you get in a system that insulates consumers from
the cost of their health care.
Your time might be better spent reading Duke
University's Clark Havighurst in a brilliant 2002 article that describes the
regulatory, legal and tax subsidies that deprive consumers of both the
incentive and opportunity to demand value from medical providers. Americans
end up with a "Hobson's choice: either coverage for 'Cadillac' care or no
health coverage at all."
"The market failure most responsible for economic
inefficiency in the health-care sector is not consumers' ignorance about the
quality of care," Mr. Havighurst writes, "but rather their ignorance of the
cost of care, which ensures that neither the choices they make in the
marketplace nor the opinions they express in the political process reveal
their true preferences."
You might turn next to an equally fabulous 2001
article by Berkeley economist James C. Robinson, who shows how the
"pernicious" doctrine that health care is different—that consumers must shut
up, do as they're told and be prepared to write a blank check—is used to
"justify every inefficiency, idiosyncrasy, and interest-serving institution
in the health care industry."
Hospitals, insurers and other institutions involved
in health care may battle over available dollars, but they also share an
interest in increasing the nation's resources being diverted into health
care—which is exactly what happens when costs are hidden from those who pay
them.
Continued in article
Jensen Comment
Over a year ago Erika's Medicare-Anthem summary of charges for the month
included an $11,376 charge for out patient surgery that was mistakenly billed to
her account. We called our doctor who did the procedure in the hospital. Our
doctor responded not to bother her or the hospital --- since Medicare-Anthem
paid the entire bill it would not matter.
This bothered us since the woman (I assume it was a woman) may not have been
eligible for Medicare-Anthem. So I phoned Medicare. Medicare said not to bother
them and advised us to contact the hospital where the procedure took place. Any
corrections should be made by the hospital and the doctor.
So I called the hospital's accounting office. They asked that I send in a
copy of the Medicare-Anthem report. I hand-delivered the report to the the
hospital accounting office --- which is miles from the hospital.
Over the ensuing year we waited for a corrected Medicare-Anthem report.
Nothing! So I did a follow up visit to the hospital's accounting office. The
feedback was that since Medicare-Anthem paid the bill there was no need to
waste time correcting this item.
I keep thinking that some woman not eligible for Medicare got a windfall gain
here. Who cares if it was Medicare-Anthem that got screwed?
Erika and I changed to a doctor that we like better. But we cannot change
hospitals.
Moral of the Story
If the third party insurer gets billed mistakenly or pays too much nobody cares,
least of all the doctors and hospitals who got reimbursed.
Question
Who is telling a lie?
Steven Brill wrote a long cover story for Time Magazine, In that story
he describes having his team examine eight very complicated hospital bills from
different hospitals. In every case they found that the bills were laced with
errors and overcharges in favor of the hospital and possible frauds. Bitter Pill: Why Medical Bills Are Killing Us," Time
Magazine Cover Story, March 4, 2013, pp. 16-65 (a very long article)
---
http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/
The following week Stamford Hospital CEO Brian
G. Grissler replied as shown, in part, below. Steven Brill's reply to Grissler,
Time Magazine, March 18, 2013, Page 2.
Brian G. Grissler
". . . Brill refused to share the patient's name or
the complete bill, so we are unable to answer those questions . . . "
Steven Brill
Responds
"Stamford Hospital was shown the bill and never
disputed its authenticity. I made clear in the article the hospital settled
for cutting its bill entirely in half."
Jensen Comment
There are four possibilities behind this dispute:
Brian Grissler could be lying through
his teeth.
Brian Grissler may not have thoroughly
investigated the ultimate resolution of this bill by his staff.
Steven Brill could be lying through his
teeth.
Steven Brill and Brian Grissler may not
be discussing the same bill (although Brill claims he only picked one
bill to examine from Stamford Hospital).
My vote is that Answer 1 above is probably the
correct answer, but we most likely will never know.
From Paul Caron's TaxProf Blog on March 8, 2013
ObamaCare Tax Increases Are Double Original Estimate
The Joint Committee on Taxation recently
released a
96 page report on the tax provisions associated with Affordable Care
Act. The report describes the 21 tax increases included in Obamacare,
totaling $1.058 trillion – a steep increase from initial assessment. The
summer 2012 estimate is nearly twice the $569 billion estimate produced at
the time of the passage of the law in March 2010. ...
Provision
2010 Estimate,
2010-2019, $billion
2012 Estimate,
2013-2022, $billion
0.9% payroll tax on wages
and self-employment income and 3.8% t tax on dividends, capital
gains, and other investment income for taxpayers earning over
$200,000 (singles) / $250,000 (married)
210.2
317.7
“Cadillac tax” on high-cost
plans *
32
111
Employer mandate *
52
106
Annual tax on health
insurance providers *
60.1
101.7
Individual mandate *
17
55
Annual tax on drug
manufacturers/importers *
27
34.2
2.3% excise tax on medical
device manufacturers/importers*
20
29.1
Limit FSAs in cafeteria
plans *
13
24
Raise 7.5% AGI floor on
medical expense deduction to 10% *
15.2
18.7
Deny eligibility of “black
liquor” for cellulosic biofuel producer credit
23.6
15.5
Codify economic substance
doctrine
4.5
5.3
Increase penalty for
nonqualified HSA distributions *
1.4
4.5
Impose limitations on the
use of HSAs, FSAs, HRAs, and Archer MSAs to purchase
over-the-counter medicines *
5.0
4
Impose fee on insured and
self-insured health plans; patient-centered outcomes research trust
fund *
2.6
3.8
Eliminate deduction for
expenses allocable to Medicare Part D subsidy
4.5
3.1
Impose 10% tax on tanning
services *
2.7
1.5
Limit deduction for
compensation to officers, employees, directors, and service
providers of certain health insurance providers
0.6
0.8
Modify section 833 treatment
of certain health organizations
0.4
0.4
Other Revenue Effects
60.3
222**
Additional requirements for
section 501(c)(3) hospitals
Negligible
Negligible
Employer W-2 reporting of
value of health benefits
Negligible
Negligible
Total Gross Tax
Increase:
569.2
1,058.3
* Provision
targets households earning less than $250,000.
** Includes CBO’s
$216.0 billion estimate for “Associated Effects of Coverage
Provisions on Tax Revenues” and $6.0 billion within CBO’s “Other
Revenue Provisions” category that is not otherwise accounted for in
the CBO or JCT estimates.
Source: Joint
Committee on Taxation Estimates, prepared by Ways and Means
Committee Staff
March 4, 2013 message from Roger Collins
Rivetting - and chilling - account of a care
control system
breakdown.Its in the UK but could easily happen here. I sent this to a
colleague in our School of Nursing yesterday - this evening she's
suggested that we run a joint Nursing/School of Business seminar on the
report.
Note - I found the .pdf files to be troublesome to
save; you may have
to specify that the file should be opened with Adobe Reader and then
save - but they repay the effort.
Two quotes from the Chairman of the Public Inquiry, which began in 2010
and cost around $20 million
"This is a story of appalling and unnecessary suffering of hundreds of
people. They were failed by a system which ignored the warning signs
and put
corporate self interest and cost control ahead of patients and their
safety. I have today made 290 recommendations designed to change this
culture and
make sure that patients come first.
……
There was a lack of care, compassion, humanity and leadership. The
most basic standards of care were not observed, and fundamental rights
to dignity were not respected. Elderly and vulnerable patients were left
unwashed, unfed and without fluids. They were deprived of dignity and
respect. Some patients had to relieve themselves in their beds when they
offered no help to get to the bathroom. Some were left in excrement
stained sheets and beds. They had to endure filthy conditions in their
wards. There were incidents of callous treatment by ward staff. Patients
who could not eat or drink without help did not receive it. Medicines
were prescribed but not given. The accident and emergency department as
well as some wards had insufficient staff to deliver safe and effective
care. Patients were discharged without proper regard for their welfare.
"
Roger
Roger Collins
Associate Professor
OM1275
TRU School of Business & Economics
"The Coming Failure of 'Accountable Care' The Affordable Care Act's
updated versions of HMOs are based on flawed assumptions about doctor and
patient behavior,"
Clayton Christensen is a professor of business administration at Harvard
Business School and co-founder of Innosight Institute, a think tank focusing on
disruptive innovation. Jeffrey Flier is dean of the faculty of medicine at
Harvard University and professor of medicine at Harvard Medical School.and.
Vineeta Vijayaraghavan is a senior research fellow at Innosight Institute. The Wall Street Journal, February 19, 2013 ---
http://professional.wsj.com/article/SB10001424127887324880504578296902005944398.html?mod=djemEditorialPage_h&mg=reno64-wsj
Spurred by the Affordable Care Act, hundreds of
pilot programs called Accountable Care Organizations have been launched over
the past year, affecting tens of millions on Medicare and many who have
commercial health insurance.
The ACOs are in effect latter-day
health-maintenance organizations—doctors, hospitals and other health-care
providers grouped together to provide coordinated care. The ACOs assume
financial responsibility for the cost and quality of the care they deliver,
making them accountable to patients. With President Obama's re-election
making it certain that the Affordable Care Act will begin taking full effect
next year, the number of ACOs will continue to increase.
We believe that many of them will not succeed. The
ACO concept is based on assumptions about personal and economic behavior—by
doctors, patients and others—that aren't realistic. Health-care providers
are spending hundreds of millions of dollars to build the technology and
infrastructure necessary to establish ACOs. But the country isn't likely to
get the improvements in cost, quality and access that it so desperately
needs.
The first untenable assumption is that ACOs can be
successful without major changes in doctors' behavior. Many proponents of
ACOs believe that doctors automatically will begin to provide care different
from what they have offered in the past. Doctors are expected to adopt new
behavior that reduces the cost of care while retaining the ability to do
what's medically appropriate. But the behavior of doctors today has been
shaped by decades of complicated interdependencies with other medical
practices, hospitals and insurance plans. Such a profound behavior shift
would likely require re-education and training, and even then the result
would be uncertain.
To give one example, if ACOs are to achieve their
cost-saving goals and improve medical care, most doctors will need to change
some of their approaches to treating patients. They'll need to employ
evidence-based protocols more often to determine optimal treatment—for
instance, in prescribing medication or deciding whether certain kinds of
surgery are necessary. Doctors will also have to find ways to move some care
to lower-cost sites of service, such as more surgery in ambulatory clinics
instead of a hospital. ACOs aren't designed or equipped to transform
physician behaviors on the scale that will be needed.
The second mistaken assumption is that ACOs can
succeed without changing patient behavior. In reality, quality-of-care
improvements are possible only with increased patient engagement. Managed
care, as formulated in the 1990s by the HMO model, left consumers with a bad
taste because the HMOs acted as visible gatekeepers to patient access to
care. ACOs, seemingly wary of stirring a similar backlash, allow Medicare
patients to obtain care anywhere they choose, but there is no preferential
pricing, discounting or other way for ACOs to steer patients to the most
effective providers.
The Everett Clinic in Washington state has taken
steps to plug this hole by deciding not to become a full-fledged ACO. Last
year, the clinic told patients that to remain with Everett, they must shift
to Medicare Advantage—which encourages preventive care and supports
disease-management programs. Those who want to remain on regular Medicare
were required to obtain their care elsewhere.
Accountable Care Organizations are also on the hook
for patients who don't comply with recommended treatment or lifestyle
changes. Patients can even decide not to share their claims data or medical
history with the ACO. If a woman from, say, Massachusetts, spends half the
year in Florida and receives care there, the Massachusetts ACO is still
responsible for managing the patient's medical costs, though it in no way
was able to manage the Florida care. The seems to be unfair both to the
responsible ACO provider and to the patient, who will likely not receive
optimal care in these transitions.
In other words, ACOs hold caregivers accountable
without requiring patient accountability. How can this work?
The third and final flawed assumption of the
Affordable Care Act is that ACOs will save money. Even if the pilot Medicare
Pioneer ACOs—as the 32 most advanced Medicare ACOs are called—achieve their
full desired impact, the Congressional Budget Office estimates that the
savings would total $1.1 billion over the next five years. This is
insignificant in a total annual Medicare budget of $468 billion. As for the
commercial and Medicare ACOs that are operating outside these pilot
programs, even the most optimistic assumptions come up with relatively small
reductions to annual health-care spending nationally.
The architects of the ACO initiative somehow assume
that making the existing system more efficient will make health-care
affordable. But slowing the rise of health-care costs can't address the
challenge of adding 50 million uninsured to the system while keeping
expenditures the same or even somewhat lower than the unsustainable
percentage of national wealth that they already represent. No dent in costs
is possible until the structure of health care is fundamentally changed.
How can that level of change be achieved? We
beseech policy makers in Washington to study a range of reform approaches
that aren't burdened by as many untenable assumptions as Accountable Care
Organizations, and go well beyond them in their aspirations.
• Consider opportunities to shift more care to
less-expensive venues, including, for example, "Minute Clinics" where nurse
practitioners can deliver excellent care and do limited prescribing. New
technology has made sophisticated care possible at various sites other than
acute-care, high-overhead hospitals.
• Consider regulatory and payment changes that will
enable doctors and all medical providers to do everything that their license
allows them to do, rather than passing on patients to more highly trained
and expensive specialists.
• Going beyond current licensing, consider changing
many anticompetitive regulations and licensure statutes that practitioners
have used to protect their guilds. An example can be found in states like
California that have revised statutes to enable highly trained nurses to
substitute for anesthesiologists to administer anesthesia for some types of
procedures.
• Make fuller use of technology to enable more
scalable and customized ways to manage patient populations. These include
home care with patient self-monitoring of blood pressure and other indexes,
and far more widespread use of "telehealth," where, for example, photos of a
skin condition could be uploaded to a physician. Some leading U.S. hospitals
have created such outreach tools that let them deliver care to Europe. Yet
they can't offer this same benefit in adjacent states because of U.S.
regulation.
IBM has been working closely with WellPoint and
Memorial Sloan Kettering to "teach" Watson how to process and analyze
clinical data, specifically around cancer care. The supercomputer has
already ingested more than 600,000 pieces of medical evidence, according to
Big Blue, as well as 2 million pages of text from clinical oncology trials.
Continued in article
Jensen Comment
The worst news for you is when the screen says nothing but "Checkmate."
After reading this article I can barely lift one hand to the keyboard. The
thought of going out to both shovel and blow snow in a wind chill well below
zero makes me want "to crawl back in bed, assume a prenatal position, and turn
the electric blanket up to nine" [as spoken by one of the Limelighters (the base
player) years ago]. In truth I'm in great shape relative to the old folks
discussed in the article below. Give me one for my baby and one more for the
road.
Aging baby boomers are fatter and sicker than
their predecessors were at the same age, says a new study that’s raising
alarms about the future costs of health care and disability.
The study, published online on Feb. 4 by JAMA
Internal Medicine, says boomers were less likely to report excellent
health and to do regular exercise, and more likely to suffer from obesity,
hypertension, diabetes, and other maladies. To pick one sorrowful example,
they were twice as likely to use a “walking assist device,” such as a cane.
(See below for a statistical table.)
Boomers who are in poor health will not only have
more expensive health care; they are more likely to retire early, depriving
employers of their specialized knowledge. That’s bad news for companies like
Chrysler, FedEx (FDX),
J.C. Penney (JCP),
Raytheon (RTN),
and Vanguard Group. All of those companies are members of the San
Diego-based Disability Management Employer Coalition.
The JAMA study, if accurate, is “very
discouraging,” says Charlie Fox, president of the Disability Management
Employer Coalition. “What we’d been hearing all along was that boomers were
the most healthy,” agrees Terri Rhodes, the coalition’s manager of education
programs. “There’s been some thought that if we can hang on to boomers
longer, we can hang on to their intellectual capital. If we’re having a
population now that’s going to be disabled, that definitely is going to
impact the sheer number of available workers.”
Since the start of the 2007-09 recession, there’s
been a rise in the number of people filing for disability insurance and the
government’s Supplemental Security Income program. The Council for
Disability Awareness in Portland, Me., which represents insurers,
said last year that
in its survey, “most, but not all, companies continue to believe the
economic environment is a factor.” But the JAMA Internal Medicine
report makes clear that genuine deterioration in health is also a factor.
The study is by five researchers from West Virginia
University School of Medicine and the Medical University of South Carolina,
led by Dr. Dana E. King of West Virginia’s Department of Family Medicine. It
draws on data from the
National Health and Nutrition Examination Survey,
a project of the Centers for Disease Control. The boomer group had an
average age of 54 during the study period of 2007-10. It was compared to a
group of people who were the same age in 1988-94.
The study says that although boomers have a longer
life expectancy than their elders, their health is another matter. Better
habits would help, the authors say. “The present study demonstrates a clear
need for policies that expand efforts at prevention and healthy lifestyle
promotion in the baby boom generation,” they write.
Now, some statistics pulled from the two-page
report:
Eleven ways that aging boomers are worse off than
their predecessors …
Pre-
Boomer Boomer
Excellent health status 32% 13%
Use a walking assist device 3.3 6.9
Limited in work 10.1 13.8
Functional limitation 8.8 13.5
Obese 29 39
Regular exercise 50 35
Moderate drinking 37 67
Hypertension 36 43
Hypercholesterolemia 34 74
Diabetes 12 16
Cancer 10 11
Rahm Emanuel's parting gift to national taxpayers
upon leaving Washington two years ago was a $1 trillion bill for ObamaCare.
Now the Chicago Mayor may add billions more to the tab by dumping his city's
retirees on the federally subsidized state health exchange.
This public service announcement is brought to you
by a city commission that the mayor appointed last summer to study the cost
of continuing health benefits for retired workers. A 25-year-old legal
settlement requiring the city and its pension funds to pay between 40% and
55% of most retirees' health costs conveniently expires this June—convenient
because the city can't afford the bill.
The city is running a $370 million budget deficit,
which will blow up in 2015 when a $1.2 billion balloon payment for pensions
comes due. The bill for retiree health benefits is $194 million this year
and will grow to $540 million by 2023. Actuaries have recommended that the
city sock away $2 billion this year to finance future benefits and pay down
a $23 billion unfunded liability. Meanwhile, Chicago's pension funds, which
are projected to run dry by the end of the decade, are scraping the bottoms
of their barrels to pay for retiree health benefits as required by the
settlement.
Enter the Mayor's commission. The four-member panel
issued a report this month suggesting that dumping pre-Medicare retirees
onto the state's ObamaCare exchange in 2014 could be fab for retirees and
city taxpayers. Nearly 60% of retirees and 94% of those who receive
subsidies would pay less for their health care on the exchange. Married
retirees with dependents would save an average of $4,300.
Chicago and its pension funds in turn would shed
$23 billion in liabilities, assuming supplemental benefits for Medicare
recipients are also cancelled. (These calculations are based on models that
assume public pensions are retirees' only source of income.)
On the other hand, the cost to national taxpayers
would be enormous, especially if other local and state governments joined
the party. Federal subsidies for Chicago retirees would amount to $44
million in 2014 and increase as more workers retire in their early to
mid-50s and health costs grow. All told, state and local governments are on
the hook for between $700 billion and $1.5 trillion for retiree health
benefits, and like Chicago most will soon be unable to afford even their
minimum annual payments.
Offloading the costs on Uncle Sam will look
attractive since retiree health benefits don't enjoy the legal protections
that some states have bestowed upon pensions. Stockton, California intends
to shed its $400 million unfunded liability for retiree benefits in
bankruptcy.
Mr. Emanuel says the city's decision on retiree
health benefits will "strike the right balance between meeting the needs of
the retirees and providing them health-care choices with protecting the
interests of the city's taxpayers." So, let's see. On the one hand, Chicago
pays, on the other everyone else does. Which do you think he'll choose?
The Chicago report illustrates once again how
ObamaCare provides a convenient mechanism and incentive for employers to
transfer health-care liabilities to national taxpayers—and how the costs
will explode beyond Washington's phony projections.
It is exceptionally difficult -- for all practical
purposes, impossible," writes Eberstadt, "for a medical professional to disprove
a patient's claim that he or she is suffering from sad feelings or back pain. In
other words, many people are gaming or defrauding the system. This includes not
only disability recipients but health care professionals, lawyers and others who
run ads promising to get you disability benefits. Between 1996 and 2011, the
private sector generated 8.8 million new jobs, and 4.1 million people entered
the disability rolls. Michael Barone, "Men Find
Careers in Collecting Disability," ---Click Here
http://townhall.com/columnists/michaelbarone/2012/12/03/men_find_careers_in_collecting_disability?utm_source=thdaily&utm_medium=email&utm_campaign=nl
Jensen Comment
Even after one or more spine surgeries it is virtually impossible to determine
whether remaining pain is real or faked. I can claim first hand that after 15
spine surgeries and metal rods from neck to hip that my wife's suffering is
real. However, I know of at least two instances where the disability careers are
faked in order to get monthly lifetime disability payments and access to
Medicare long prior to age 65. This seems to be one of the unsolvable problems
in society that becomes even more problematic when a disability career is easier
to enter than a job-like career.
A southwestern Pennsylvania hospital will stop
delivering babies after March 31 because its obstetricians are either
leaving or refocusing their practices, and because hospital officials
believe they can’t afford it based on projected reimbursements under looming
federal health care reforms.
The Windber Medical Center, about 60 miles
southeast of Pittsburgh, is losing two obstetricians and two others are
shifting their focus more to gynecology.
Hospital officials say the population of women of
child-bearing age is dropping and that the number of births the hospital
would be called upon to perform isn’t enough for it to provide the service
in the face of lower reimbursements under the federal Affordable Care Act.
The hospital delivered about 200 babies each year
since restarting its obstetrics program in 2005.
As you know, health care has been a highly
politicized topic in recent years and become a focal point of theupcoming
elections. Solving our health care crisis is crucial to the survival,
productivity and well being of boththe U.S. economy and all its citizens.
Fortunately, there exists a growing body of evidence from across theworld
offering solutions for fixing our health system – evidence that bridges and
blends the best of bothpolitical parties for those open minded enough to see
it. Yet it is stuck behind the curtain of drama andpartisanship, and I fear
the ongoing political theatre will prevent us from utilizing this body of
knowledge.I recently finished my PhD in Health Systems Financing, Economics
and Policy and returned from working atthe World Health Organization in
Geneva. While my background focuses on the U.S. health care system, mostof
my work involves reforming health systems in other developed and developing
countries. I essentially dealwith (a) how institutional frameworks,
governance, and political systems impact health care and (b) howhealth care
dollars are collected, pooled, and redistributed / paid among the big three
(insurance, individualsand medical providers). Because this is the primary
goal of the Affordable Care Act (Obamacare) and given thetremendous amount
of misinformation circulating about these issues, I have writtena summary of
(a) whatour existing health care system looks like, notably the root causes
of rising costs and the uninsured, (b) thetrue content of the Affordable
Care Act, (c) what the ACA should have done differently, and (d)
someadditional insights into our health care system that you might find
prevalent and interesting.I realize that terms like “Evidence” and “Facts”
are thrown around so frequently in American society,individuals rarely know
which are truly accurate and non-biased. Political parties, special interest
groups, andmany Americans are also willing to utilize sound research when it
supports their arguments but are keen todebunk it as biased when it does
not. As such, I want to ensure your confidence that this write-up is
accurateand non-biased. My data comes from my own work and a range of
sources including the World Bank, WorldHealth Organization, top academic
literature, and the best non-partisan policy think tanks (RAND,Commonwealth
Fund, Health Affairs, Kaiser). I have also been critical of many liberal and
conservative "talkingpoints" as well as the ACA, while providing the most
updated evidence where possible. If you have any questions about these
sources or wish to read them, please don’t hesitate to email me.
The Problem Interestingly, the U.S. health care
system is not actually a system, but something that has been put
togetherpiecemeal over decades of policymaking. Our political system is
built for incremental policymaking at best;thus health care reforms have
built on one another only to fill in any existing gaps. Yet we have never
steppedback, looked at the big picture and restructured the entire system to
be coordinated, efficient or effective. It'slike continuing to put band-aids
on a gushing wound, when what's needed is surgery. Or it's like having
40workers operate an assembly line that's meant for 15 people -- instead of
removing them and simplifying, weadd more people to manage those 40. The
system becomes increasingly layered, inefficient, ineffective,complex and
stagnant. The following is a brief overview of what our existing health care
system looks like as aresult of this reform process. While there is no
silver bullet or single change that will fix our health care system(despite
what people tell you), overwhelming evidence from dozens of developed
countries and the USsuggests that the following factors account for a
significant portion of the growth in our healthcare costs (18percent of GDP
vs. 8-13 percent in most other developed countries) and lack of health care
coverage (19percent of the population / 49 million vs. 1-2 percent in other
countries
Three major trends already
happening in healthcare lend themselves to the revolution in mobile
technology:
Ageing population
Ageing populations and
chronic illness are driving regulatory reform. Public sector healthcare
is seeking better access and quality, and it's looking to the private
sector for innovation and efficiency. mHealth improves access and
quality, and offers dramatic innovation and cost reduction.
Foundations already in
place
The foundations of
industrialisation of healthcare are already in place — electronic
medical records, remote monitoring and communications. ‘Care anywhere’
is already emerging. The platform for mHealth is set.
Personalisation
Healthcare, like other
industries, is getting personal. mHealth can offer personal toolkits for
predictive, participatory and preventative care.
The program was originally sold as a cost-saving
measure. In theory, modernizing record-collection is a good idea, and many
private health care providers have already made the change. But as with many
government "incentive" programs, the EMR bribe is a tax-subsidized,
one-size-fits-all mandate. This one pressures health care professionals and
hospitals across the country into radically federalizing their patient data
and opening up medical information to untold abuse. Penalties kick in for
any provider that hasn't switched over by 2014.
So, what's it to you? Well, $4 billion has already
gone out to 82,535 professionals and 1,474 hospitals, and a total of $6
billion will be doled out by 2016. But the feds' reckless profligacy,
neglect and favoritism have done more harm than good.
Don't take my word for it. A recent report released
by the Department of Health and Human Services Inspector General
acknowledged that the incentive system is "vulnerable to paying incentives
to professionals and hospitals that do not fully meet" the program's quality
assurance requirements. The federal health bureaucracy "has not implemented
strong prepayment safeguards, and its ability to safeguard incentive
payments postpayment is also limited," the IG concluded.
Translation: No one is actually verifying whether
the transition from paper to electronic is improving patient outcomes and
health services. No one is actually guarding against GIGO (garbage in,
garbage out). No one is checking whether recipients of the EMR incentives
are receiving money redundantly (e.g., raking in payments when they've
already converted to electronic records). No one is actually protecting
private data from fraud, abuse or exploitation.
Little is being done to recoup ill-gotten payments.
In any case, such "pay and chase" policing after the fact is a crummy way to
run government in lean times -- or in fat times, for that matter.
Some low-wage employers are moving toward hiring
part-time workers instead of full-time ones to mitigate the health-care
overhaul's requirement that large companies provide health insurance for
full-time workers or pay a fee.
Several restaurants, hotels and retailers have
started or are preparing to limit schedules of hourly workers to below 30
hours a week. That is the threshold at which large employers in 2014 would
have to offer workers a minimum level of insurance or pay a penalty starting
at $2,000 for each worker.
The shift is one of the first significant steps by
employers to avoid requirements under the health-care law, and whether the
trend continues hinges on Tuesday's election results. Republican
presidential nominee Mitt Romney has pledged to overturn the Affordable Care
Act, although he would face obstacles doing so.
President Barack Obama is set to push ahead with
implementing the 2010 law if he is re-elected.
Pillar Hotels & Resorts this summer began to focus
more on hiring part-time workers among its 5,500 employees, after the
Supreme Court upheld the health-care overhaul, said Chief Executive Chris
Russell. The company has 210 franchise hotels, under the Sheraton, Fairfield
Inns, Hampton Inns and Holiday Inns brands.
"The tendency is to say, 'Let me fill this position
with a 40-hour-a-week employee.' "Mr. Russell said. "I think we have to
think differently."
Pillar offers health insurance to employees who
work 32 hours a week or more, but only half take it, and Mr. Russell wants
to limit his exposure to rising health-care costs. He said he planned to
pursue new segments of the population, such as senior citizens, to find
workers willing to accept part-time employment.
He described the shift as a "cultural change"
toward hiring more part-timers and not a prohibition against hiring
full-timers.
CKE Restaurants Inc., parent of the Carl's Jr. and
Hardee's burger chains, began two months ago to hire part-time workers to
replace full-time employees who left, said Andy Puzder, CEO of the
Carpinteria, Calif., company. CKE, which is owned by private-equity firm
Apollo Management LP, APO -3.31% offers limited-benefit plans to all
restaurant employees, but the federal government won't allow those policies
to be sold starting in 2014 because of low caps on payouts. Mr. Puzder said
he has advised Mr. Romney's campaign on economic issues in an unpaid
capacity.
Home retailer Anna's Linens Inc. is considering
cutting hours for some full-time employees to avoid the insurance mandate if
the health-care law isn't repealed, said CEO Alan Gladstone.
Mr. Gladstone said the costs of providing coverage
to all 1,100 sales associates who work at least 30 hours a week would be
prohibitive, although he was weighing alternative options, such as raising
prices.
The Costa Mesa, Calif., company currently offers
benefits to workers who put in at least 32 hours a week.
Supporters of the health-care overhaul said most
large employers already covered workers voluntarily, and requiring others to
do so or pay a penalty was important to level the playing field between
businesses.
A spokeswoman for the Department of Health and
Human Services said the administration didn't believe the law would
substantially affect employment, citing the Massachusetts health-care
overhaul signed by then-Gov. Romney in 2006.
"Consistent with the experience in Massachusetts
and projections of the Congressional Budget Office, the health-care law will
improve the affordability of health care while not significantly impacting
the labor market," spokeswoman Erin Shields Britt said in a written
statement. "This law will decrease costs, strengthen our businesses and make
it easier for employers to provide coverage to their workers."
Administration officials declined to answer further questions.
Companies in industries that already offer full
benefits have indicated that they weren't planning major changes around the
law. Several employers with hourly workforces, including Marriott
International Inc. MAR -0.73% hotels, the Costco Wholesale Corp. COST -1.04%
warehouse chain and the Panera Bread Co. PNRA -0.01% restaurant chain also
said they had no plans to change employee hours in response to the law.
But benefits consultants said most retail and hotel
clients have explored shifting toward part-time workers.
Those industries are less likely to offer health
coverage now, and if they do, the plans typically are too skimpy to meet the
minimum-coverage requirements.
"They've all considered it," Matthew Stevenson, a
workforce-strategy principal at Mercer. In a July survey, 32% of retail and
hospitality company respondents told the consulting firm that they were
likely to reduce the number of employees working 30 hours a week or more.
Consultants have warned that companies that use
more part-time labor risk productivity losses from high staff turnover and
lower morale. Laurence Geller, who until last week was CEO of Strategic
Hotels & Resorts Inc., BEE +0.36% said he weighed moving toward part-time
workers but decided against risking that highly trained staff at his
high-end hotels would go elsewhere. The company owns hotels bearing the Four
Seasons, Fairmont and Ritz-Carlton names.
The insurance mandate applies to companies with the
equivalent of 50 or more full-time workers, a calculation based on the
number of people employed by the company and an average of hours they work
in a week. Companies are adjusting schedules now because they will have to
review employment rolls for up to a year in advance to determine which
workers will be deemed full-time under the law.
A company will have to pay a penalty of $2,000 for
every such worker, after the first 30, if it doesn't offer qualifying health
coverage. If a company offers health insurance but the coverage is deemed
sparse or unaffordable, the company must pay $3,000 for every worker who
gets a federal tax subsidy to purchase coverage as an individual.
When former Massachusetts Governor Mitt Romney
chose Paul Ryan to be his running mate in the 2012 United States
Presidential election, he guaranteed that Medicare would become a central
battleground of the campaign. Ryan, a veteran Congressman from Wisconsin,
is widely known for his efforts to turn the federal Medicare program into a
voucher program (with the value of the vouchers deliberately calibrated
not to keep up with health care costs over time), a transformation that
would change everything about Medicare except its name.
Ryan’s proposal is sufficiently controversial that
the Romney/Ryan camp has gone to significant lengths to distance itself from
it – refusing to use the word “vouchers,” for example, which they evidently
believe is toxic politically. At the same time, the Republican team’s
strategists have made a point of highlighting the decreases in Medicare
spending that have been projected as a result of various cost-saving
measures in the Patient Protection and Affordable Care Act, calling those
measures “cuts in Medicare” for which President Obama should be blamed.
Both parties apparently believe that there is such strong support among
likely voters to preserve Medicare that they must try to convince voters
that the other candidate is going to gut the program, even though only the
Republican side has ever proposed actually doing so.
Jotwell readers who wish to know more
about Medicare might lament the lack of an accessible source of basic facts
about how Medicare works. That is where Professor Richard L. Kaplan comes
in. Kaplan, a noted tax scholar who teaches at the University of Illinois
College of Law, is the founding advisor of the Elder Law Journal,
and a noted expert in the field of elder law. Professor Kaplan draws on his
wealth of knowledge about the subject of health care for the elderly in “Top
Ten Myths of Medicare,” which was published this past summer. The article
expertly walks the line between being technically accurate and broadly
understandable. Neophytes, as well as those of us who think we know a lot
about these issues, will come away from Professor Kaplan’s short article
(fewer than 14,000 words) with both knowledge and insight that are sorely
lacking in public discussions about this crucial program.
To put the importance of this article in some
perspective, readers might consider that the forecasts of long-term U.S.
budget deficits that are so often mentioned in the press are driven almost
entirely by projected increases in health care costs. As the economist Paul
Krugman once put it, any long-term fiscal problem that the United States
faces can be summarized “in seven words: health care, health care, health
care, revenue.” In other words, other than replacing the revenues lost to
the Bush tax cuts of 2001 and 2003, the only thing that matters in our
long-term fiscal picture is getting health care spending under control. (I
should also note that this means, as both Professor Kaplan and I have each
written about in many other venues, Social Security is most definitely
not part of the problem, nor need it be any part of a solution.)
Professor Kaplan’s article, however, does not
merely enlighten readers about the costs of the program and its interaction
with federal budgeting (although he does that well). He also includes
explanations of the nuts and bolts of the program, while trying to correct
the public’s misunderstandings about a wide range of issues regarding
Medicare beneficiaries, medical providers, and so on.
The article, as its title makes clear, is usefully
organized as a “top ten” list. In a short review like this one, one must
fight the temptation simply to list the ten subject headings, even though
each one offers its own enticing hint of what one might learn by reading the
article. In addition to debunking a few obvious myths (#2: “Medicare is
Going Bankrupt,” and #10: “Increased Longevity Will Sink Medicare”), the
reader is treated to some genuinely unexpected revelations, perhaps the most
surprising of all being Myth #1: “There is One Medicare Program.” Some
readers will know that Medicare has multiple parts (Part A, Part B, and so
on), but few will know the specifics of those separate programs as well as
Professor Kaplan does.
This kind of academic article does, however, often
run the risk of simply becoming a summary of a statute. Fortunately, the
myth-busting format provides an over-arching narrative to the article that
allows Professor Kaplan to make some larger points – points that are truly
counter-intuitive, or that are at least contrary to the conventional wisdom
in U.S. policy circles today.
One theme that infuses the article is that Medicare
is not the gold-plated, overly generous big government program that so many
portray. On page 13 of the article, for example, we learn how stringently
(and, I would argue, absurdly) the program restricts benefits for nursing
home care. After detailing five surprising requirements before a patient
can qualify for such coverage at all, Kaplan notes that Medicare pays for
only twenty days of such care, and then for no more than an additional
eighty days, with an inflation-adjusted deductible currently set at $144.50
per day.
This theme – that Medicare is hardly a freebie,
forcing its enrollees to have serious financial “skin in the game” – is not
merely a point about how well or poorly we actually provide for our elders’
care. Professor Kaplan’s concern is also about planning, noting that too
many people believe that Medicare simply covers everything, and so they fail
to prepare for the large costs that they will actually face when they
inevitably need health care. Failure to plan, under the many onerous rules
that Kaplan describes, is truly disastrous for many elderly Americans and
their families.
Finally, although Professor Kaplan is very
obviously a passionate proponent of Medicare in its current basic form, he
is more than willing to acknowledge some troubling facts – facts that might
(at least partially) support those whose views of Medicare are less
favorablethan Kaplan’s.
One of the common themes among supporters of
Medicare is to point to the very low administrative costs associated with
the program, compared to the costs borne by private, for-profit health
insurers. Even while debunking the myth that “Medicare Is Less Efficient
than Private Health Insurance” – a myth that, as he points out, is based on
little more than the presumption that government programs must be
inefficient, because they are government programs – Kaplan carefully
discusses why one key statistic is misleading: “Medicare spends only 1.4% of
medical benefits paid on administrative expenditures, while private insurers
spend 25% or more for such costs.”
The most cynical explanation for this “apparently
excellent result” is that any program can keep its administrative costs down
if it does not put much effort into policing false claims. Medicare, we
learn, sometimes has a “practice of paying apparently reasonable claims for
medical services with little verification of the claims’ validity.”
Moreover, some of the program’s administrative needs are already covered by
other agencies, such as the IRS’s role in collecting Medicare premia from
workers’ paychecks. This means that Medicare itself need not expend those
resources, but the government as a whole does.
Still, the reader cannot help but come away with
the sense that the lower administrative costs of Medicare mostly reflect
genuine advantages over private plans. Medicare need not advertise, and,
perhaps most importantly, it has no reason to try to exclude sick people
from its coverage, which is a major activity of private plans that must (for
reasons of profit maximization) try to cherry-pick the healthiest customers
and deny benefits to as many people as possible.
In short, readers could not find a better article
to explain Medicare’s basic workings, its budgetary and political realities,
and its combination of shortcomings and truly significant benefits to
American society. Even if the next U.S. President were not going to be
chosen on the basis of his commitment to protecting Medicare, reading this
article would be worth anyone’s time.
Jensen Comment
One reason Medicare's administrative costs are so low, is that it is a piñata
for fraud, including payments to scam artists for equipment to never delivered
on fictitious claims. Medicare floods us with mailings about every payment they
make on our behalf. However, when there's a billing error such as when report a
charge that was not our charge (maybe a payment for some phony claim or for a
patient not eligible for Medicare) the system seemingly does nothing about it.
Of course we do not really, really care personally if we had not copays for a
phony claim, but not investigating phony claims is one way of keeping Medicare's
administrative costs low. Perhaps more would get done if we filed a claim with
the Justice Department, but the Justice Department most likely would do nothing
until a pattern of related claims are reported.
The Patient Protection and Affordable Care Act
creates, among many other things, a new marketplace for individuals and
small businesses to purchase health insurance, and for the first time, the
federal government will provide subsidies to individuals to make it
affordable. These and other issues are discussed in Deloitte Insights and in
a paper, Power to the People? How health care reform could result in the
disruption of the group health insurance industry.
The individual market starts January 1, 2014, and
while no one really knows exactly what the size is going to be, it is
certainly going to be much larger than it is today, which is about 14
million people. Depending on how many people decide to sign up for the new
insurance products and the subsidies from the federal government, as well as
how many employers might decide to drop coverage and promote their employees
to go to the exchange, there could be anywhere between 25 million and 60
million people inside these individual market exchanges.
Watch Deloitte Insights to learn how the growth of
the new individual market could disrupt the existing health insurance
industry. Deloitte Insights speakers are:
Bill Copeland, vice chairman, U.S. Life
Sciences & Health Care leader and U.S. Health Plans leader, Deloitte LLP
Michael Raynor, director, Deloitte Consulting
LLP, and a New York Times best-selling author
It’s hard to say "I’m sorry."
Especially if it could get you sued.
But physicians in Massachusetts
say a new law represents a major breakthrough in how doctors and patients
interact after a medical error causes harm — not to mention reforming a
medical-liability system that has become onerous and expensive for doctors.
The approach is called
’disclosure, apology, and offer’ (DA&O), and is included in the healthcare
cost-control bill passed by the Massachusetts Legislature and signed into
law by Gov. Deval Patrick in August.
The reform language was hammered
out in multi-year negotiations by representatives of the Mass. Medical
Society (MMS), the Mass. Bar Assoc., and the Mass. Academy of Trial
Attorneys, all of whom agree that the change will both improve patient
safety and reduce the volume of unnecessary and protracted lawsuits — and
perhaps lower ever-spiraling insurance costs for physicians.
Jensen Comment
This does not go as far as the Texas constitutional amendment limiting punitive
damages, but it's a good start for the blue, blue state of Massachusetts.
September 30, 2012
Why it's better to grow old in the United States (at least for the moment)
United Kingdom National Health patients’ lives are at risk in NHS hospital wards
that are “on the brink of collapse” due to a critical shortage of out-of-hours
doctors and growing numbers of the elderly.
Some hospitals narrowly avoid “catastrophe” every
weekend, research by the Royal College of Physicians has found, because
doctors’ shifts are limited by the European Working Time Directive and they
do not want to work anti-social hours.
Some are “struggling to cope” with the volume of
older patients. Many are discharged in the middle of the night or shunted
around “like parcels” to free beds for new arrivals.
If the problem is not tackled there will be more
tragedies like the Mid Staffs scandal, in which up to 1,200 mainly elderly
patients died from substandard care. A radical reorganisation of the NHS is
needed, according to the college. It may include shutting the
worst-performing hospitals to expand care at better ones, with more staff
coverage at nights and weekends.
The Hospitals on the Edge report warns that:
Four in 10 doctors surveyed said that staff
shortages were jeopardising patient care
One in four was concerned about the impact of
the Working Time Directive, with one warning that “weekends and bank
holidays function on a skeleton staff of doctors – very dangerous”
Doctors are reluctant to work unsociable
hours, leaving one in 10 consultant posts in emergency medicine vacant
Over-65s account for seven in 10 beds, but the
“the system continues to treat older patients as a surprise, at best, or
unwelcome, at worst”.
The report notes that the number of beds in acute
and general wards has fallen by a third over the past 25 years, while
patients have increased. Beds have been cut as better care has led to
shorter stays.
Dr Andrew Goddard, medical director for the
college’s workforce unit, said: “Many hospitals run a traffic light system
for their status: they are green if they are taking in patients; amber if
they need to be a bit more careful; red for full or black if they are shut.
According to the findings from a recent survey by
KPMG LLP, the U.S. audit, tax and advisory firm, healthcare and
pharmaceutical executives are clearly uncertain whether or not existing
business models are sustainable over the next five years, even though they
do anticipate major change in the short-term.
In fact, despite their majority opinions that
current business models are at least somewhat sustainable, many provider (65
percent) and health plan (41 percent) executives do expect major business
model changes in the next five years, while a majority of pharmaceutical
executives (63 percent) expect only moderate changes.
Payers were more optimistic about the possibility
of partnerships involving providers and suppliers, with 55 percent of
respondents saying it was possible. Additionally, they said they expect that
healthcare information technology, evidence-based medicine, disease
management, and pay for performance incentives will be the most effective
approaches to curbing costs.
Pharmaceutical executives are also struggling with
change strategies. On one hand, 47 percent said a shift toward health system
accountability would have a positive impact on their industry, and more than
half said they are currently or will be using risk and outcome-based
contracting in the future. Additionally, more than 70 percent of the
executives said that comparative effectiveness research (CER) data would
help show the value of their products.
Two Ivy League Professors Slugging It Out in a Political Arena
It seems to me that
when readers declare that some piece of economics commentary is “wrong”,
they often confuse three different notions of wrongness, which are neither
intellectually nor morally equivalent.
First, there’s the
ordinary business of expressing a view about the economy that the reader
disagrees with – e.g., “Krugman is wrong, because the government can’t
create jobs”; or, if you prefer, “Casey Mulligan is wrong, because we’re
suffering from demand problems, not supply problems.” Obviously it’s OK to
say things like this, and sometimes the criticism is correct. (I’m not
wrong, but Mulligan is!) But equally obviously, there’s nothing, er, wrong
about being wrong in this sense: people will disagree, and that’s
legitimate.
Second, and much
less legitimate, is the kind of wrongness that involves making assertions
that are logically or empirically indefensible. I’d put the
Cochrane/Fama claims that government spending
can’t increase demand as a matter of accounting in this category; this is a
basic conceptual error, which goes beyond mere difference of opinion. And
economists who are wrong in this sense should pay a professional price.
That said, I don’t
think it’s realistic to expect the news media to be very effective at
policing this kind of wrongness. If professors with impressive-sounding
credentials spout nonsense, it’s asking too much of a newspaper or magazine
serving the broader public to make the judgment that they actually have no
idea what they’re talking about.
Matters are quite
different when it comes to the third kind of wrongness: making or
insinuating false claims about readily checkable facts. The case in point,
of course, is Ferguson’s attempt to mislead readers into believing that the
CBO had concluded that Obamacare increases the deficit. This was unethical
on his part – but Newsweek is also at fault, because this is the sort of
thing it could and should have refused to publish.
Now, I don’t expect
a publication that responds to daily or weekly news to do New Yorker-style
fact checking. But it should demand that anyone who writes for it document
all of his or her factual assertions – and an editor should check that
documentation to see that it actually matches what the writer says.
¶There are
multiple errors and misrepresentations in Niall Ferguson’s
cover story in Newsweek — I guess they don’t do
fact-checking — but this is the one that jumped out at me. Ferguson says:
¶The president pledged that health-care
reform would not add a cent to the deficit. But the CBO and the Joint
Committee on Taxation now estimate that the insurance-coverage
provisions of the ACA will have a net cost of close to $1.2 trillion
over the 2012–22 period.
¶Readers are no doubt meant to interpret
this as saying that CBO found that the Act will increase the deficit. But
anyone who actually read, or even skimmed, the
CBO report (pdf) knows that it found that the ACA
would reduce, not increase, the deficit — because the insurance subsidies
were fully paid for.
¶Now, people
on the right like to argue that the CBO was wrong. But that’s not the
argument Ferguson is making — he is deliberately misleading readers,
conveying the impression that the CBO had actually rejected Obama’s claim
that health reform is deficit-neutral, when in fact the opposite is true.
¶More than
that: by its very nature, health reform that expands coverage requires that
lower-income families receive subsidies to make coverage affordable.
So of course reform comes with a positive
number for subsidies — finding that this number is indeed positive says
nothing at all about the impact on the deficit unless you ask whether and
how the subsidies are paid for. Ferguson has to know this (unless he’s
completely ignorant about the whole subject, which I guess has to be
considered as a possibility). But he goes for the cheap shot anyway.
Jensen Comment
The CBO assumes that the requirement (just upheld by a Supreme Court decision)
that all people in the United States have health insurance or otherwise will
have health insurance premiums deducted from their tax refunds that will fund
the added cost of covering current poor people needing subsidies for health
insurance coverage. This is what Krugman means above when he assumes "the
insurance subsidies are fully paid for." This is why the Affordable Health Care
Act (ACA) tried to get states to raise the number of people receiving state
subsidies for Medicaid. About half the states, however, are refusing to along
with the expanded coverage under Medicaid. This means that more higher-end low
income people will depend on the ACA "subsidies" instead of Medicaid coverage
from federal and state Medicaid funding.
It seems to be a matter of semantics whether these tax return add-ons are a
tax or not, but Krugman (probably rightfully) ignores this matter of semantics.
But since about half the taxpayers in the U.S. pay no income taxes and over 90%
of them are below the median in earnings it's not clear whether enough insurance
premiums expected to be collected will really be collected. The CBO may have
been planning on an economic recovery that perhaps will never materialize in
this new era of global competition with Asia. The CBO expectations of lower
unemployment may not materialize (currently there are nearly 13 million
unemployed people not counting the many who've simply given up looking for work
or received fraudulent Social Security lifetime disability awards). The required
subsidies in reality may greatly exceed the added premiums "tax" collected.
But nobody, including the CBO, knows what deficits will become.
Also it's not at all clear that the CBO correctly estimated health care
claims given the double-digit inflation in the cost of medical services. This is
the real Achilles Heel of the Affordable Health Care Act. The costs of actually
providing the promised services in the future may greatly exceed expectations.
What may be more subject to dispute is how accurate the CBO is on estimating
future costs of bringing on people who have prior conditions that prevent them
from currently being able to obtain health care coverage. I'm definitely in
favor of providing affordable coverage to these people with prior conditions.
But I think the eventual coverage costs will exceed CBO estimates since many of
them need high-cost organ transplants and other very expensive medical services.
I am very surprised by the hysterical reaction of
many readers to Krugman's comment. The point of the argument is what the HBO
report says. Does Ferguson lie about the HBO report in his Newsweek article?
Either Ferguson or Krugman is correct. I would expect readers disagreeing
with Krugman to provide quotations from the HBO report showing that he is
wrong and that Ferguson is right.
Instead of that I see a lot of ideological delirium
in too many of the comments.
I cancelled my subscription to Newsweek
today. I do not need this kind of uninformed blather in my home. If I feel
the need to read/hear totally unfactual, biased reporting, I can just turn
on FOX news at any hour of the day or night. Which I will never do.
Laurie Wick
Jensen Comment
Actually, since Tina Brown became editor, Newsweek became a liberal
feminist magazine. Niall Ferguson's column is only there for tokenism. The
Ferguson cover story is most likely a desperate attempt to recover the
millions of conservative subscribers who've defected since Tina Brown took
over. One of the recent cover's of Newsweek accuses Candidate Romney
of "being a Wimp." Are you sure you want to cancel Newsweek Laurie?
FTA: "health reform that expands coverage requires
that lower-income families receive subsidies to make coverage affordable. "
And, exactly,. Mr. Krugman, where do you think those subsidies are gonna
come from? You can continue to carry Obama's water that's what you get paid
to do, but the rest of us know a TAX when we see one.
J. Phillip
Closing Jensen Comment
I wish the Democrats had rammed a national health care plan down our throats in
that short window of time 2008-2010 when they controlled the entire executive
and legislative branches of the federal government. Instead we ended up with a
bastardized public-private ACA that pleases neither the left nor the right. I am
inclined to believe that the ACA will always have insurance premiums falling way
short of costs of delivering medical services. Whether or not this adds to the
deficit is simply a matter of accounting gimmicks the familiar governmental
accounting shell game ---
http://faculty.trinity.edu/rjensen/Theory02.htm#GovernmentalAccounting
Why U.S. Medical Costs Are so High: Wastes Caused by Losing Causes
As usual, I preface this by saying that I favor a national health care
insurance system, possibly like the one in Canada where people of all levels of
income pay their fair share for medical services. Having said this, I point out
that in providing basic medical services to all citizens the quality of the
medical services decline in terms of waits for such services, difficulties for
many to get replacement knees, hips, and organs, and the need to come to the
U.S. for some of the great specialty physicians and medical centers.
Two reasons medical costs are higher in the U.S. is that the U.S. spends more
on average per capita on futile extensions of life for a few weeks or
months, which is the most single costly component of Medicare costs according to
CBS Sixty Minutes. The other reason is the hundreds of billions spent in the
U.S. on medical research where other nations become free riders on the the most
successful discoveries.
The High Cost of Dying
On November 22, 2009 CBS Sixty Minutes aired a video featuring experts
(including physicians) explaining how the single largest drain on the Medicare
insurance fund is keeping dying people hopelessly alive who could otherwise be
allowed to die quicker and painlessly without artificially prolonging life on
ICU machines.
"The Cost of Dying,"CBS Sixty Minutes Video, November 22, 2009
---
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
What is really sad is the way Republicans are standing in the way of making
rational cost-benefit decisions about dying by exploiting the "Kill Granny"
political strategy aimed at killing a government option in health care reform.
See the "Kill Granny" strategy at ---
www.defendyourhealthcare.us
Other nations simply do not spend as much on saving extremely premature babies
and the terminally ill.
In his more than 35 years of practice, Dr. Lowell
Schnipper has seen a lot of women die from breast cancer. A patient’s
options start to dwindle by the time tumor cells set up outposts in the
bones, lungs, and other organs, defying all attempts to keep them under
control. But in June, when the government approved Perjeta, Schnipper had
something new to offer. The drug is one of an innovative class of drugs
known as “targeted therapies.”
As the chief of oncology at Beth Israel Deaconess
Medical Center in Boston, Schnipper knew Perjeta was not a cure: added to a
standard treatment with Herceptin—another targeted therapy that was hailed
as a breakthrough in 1998—Perjeta gives the average woman only about six
months more of calm before her disease starts to stir again. Given the
limited benefit, the price was startling. For most women, a full course of
the drug combination will cost $188,000—enough, he says, “to give anybody a
cold sweat.”
Americans spent more than $23 billion last year for
cancer drugs, more than we paid for prescriptions to treat anything else.
But many oncologists are starting to question what we are getting in return
for that bill, whether the war on cancer has become too much of a race to
produce the next blockbuster. “In general, progress for cancer has been
halting and slow,” says David Howard of the Department of Health Policy and
Management at Emory University. So far, most new drugs offer only marginal
extensions of life and few cures. Howard says new so-called breakthroughs
“overpromise and underdeliver.” Consider the popularity of Avastin, a
targeted drug approved for metastatic colon cancer in 2004. A recent study
found that almost 70 percent of patients on chemotherapy were receiving
Avastin within a year of its release. In clinical trials, the drug increased
survival by about five months. The cost? About $10,000 a month.
Treating cancer has never been cheap, but today,
the price of each new treatment seems to outpace the one before, with little
bearing on its efficacy. According to figures from insurer United
Healthcare, a standard cocktail of drugs for treating lung cancer used to
run about $1,000 a month. Today’s regimens cost from more than $6,000 to
almost $10,000—for about two more months of life. “There is no such thing as
a cancer drug coming on the market that is some sort of regular drug price,”
says Dr. Peter Bach of Memorial Sloan-Kettering Cancer Center in New York,
who studies the impact of cancer costs on U.S. health care. “They’re all
priced at spectacularly high levels.” Which leads to an unsettling question:
how much is a little more time worth? Would you spend $50,000 for four more
months? How about $15,000 for two weeks?
Of three frontiers in cancer treatment, targeted
therapies like Perjeta are widely seen as the best hope for a cure.
Traditional chemotherapy is notorious for side effects because it wields
destruction indiscriminately throughout the body. Targeted therapies are
designed to hit cancer cells only. Perjeta, for example, targets a protein
produced in excess amounts in some breast cancers; Avastin hinders the
ability of a tumor to form new blood vessels to feed itself.
. . .
The Cancer “Breakthroughs” that Cost Too Much
and Do Too Little
Doctors envision the day when every patient will
have therapy precisely matched to the genetic bull’s-eyes of their own
cancers. The holdup has been that cancer has proven to be more genetically
crafty than researchers once imagined. Scientists may build a drug to hit
one target, but a tumor may also employ lots of yet-undiscovered genetic
tricks to keep itself alive. Instead of a magic bullet, scientists now know
that any particular tumor may need lots of magic bullets. With so many
targets unknown, a lot of patients end up getting drugs that barely touch
their cancers, which is why the effectiveness of many new drugs remains
underwhelming.
Not that this keeps a drug from becoming a
blockbuster. Patients with advanced cancer, and their physicians, are hungry
for progress. As a result, almost all of the 10 bestselling cancer drugs are
targeted therapies, many less than a decade old. All came on the market at
thousands of dollars a month, a trend that continues today with gusto. The
drug Afinitor, a daily pill, was approved in July for patients with breast
cancer. It costs more than $200 a tablet. But price rarely matters to
patients or even doctors, says Dr. Oliver Sartor, medical director of the
Tulane Cancer Center in New Orleans. “People have already been told there is
no cure for their disease,” he says. “Every increment, every improvement,
gives hope, and when options are extremely limited, we all focus on the
positive possibilities.”
In addition to targeted therapies, drugs have come
on the market that can spur the body’s own immune cells to lead the charge.
Significant hurdles have hindered this kind of treatment for years. But they
are finally being overcome. The prostate cancer drug Provenge, which came on
the market in 2010, was the first immune-therapy drug to gain governmental
approval. It was followed the next year by Yervoy, when approved the only
drug ever shown to extend survival in advanced melanoma. Men with a common
kind of advanced prostate cancer who used Provenge lived an average of four
months longer than the comparison group; patients on Yervoy got an average
of 3.6 months. The gains are modest, but not the cost. When Sartor learned
Provenge would run $93,000 per patient, “I was stunned,” he says. And even
that was cheaper than Yervoy, which appeared the following year at $120,000
for four injections. He predicts the pricing of immune therapies may be seen
as “a watershed moment” in the debate over health-care costs.
The third area of touted breakthroughs has been in
radiation, most recently by using protons instead of traditional X-rays to
kill cancer cells. It’s a controversial undertaking: many doctors believe
that protons offer better precision, able to get rid of tumors without
collateral damage to nearby healthy tissues. But whether protons can treat
with fewer side effects than traditional radiation is, to date, a matter of
debate for almost all but pediatric and certain neurological tumors.
As with new drugs, proton-beam radiation is
expensive—it can run roughly twice as much as the current state-of-the-art
form of radiation that uses X-rays. In the case of proton beams, much of
the cost has to do with building a cyclotron to harvest the protons—a
construction project that can cost upwards of $150 million. In 2001 just
three centers in the country offered proton treatment, but that number is
now up to 10, with a half dozen more planned. About three quarters of the
proton patient population covered by Medicare are men with prostate cancer,
which, because of the length of their therapy, are the most lucrative to
treat.
Why do new drugs cost so much? Pharmaceutical
companies say it’s payment for scientific creativity, that high prices are
necessary to recover the expense of developing and manufacturing their
products and to encourage more research. A spokeswoman for Bristol-Myers
Squibb, which makes Yervoy, says the cost of drugs is “based on a number of
factors, including the value they deliver to patients, the scientific
innovation they represent, and the cost to develop them.” Part of the price
is also an investment in drug discovery. “We look at not only the past
research and development, but development in the future,” says Krysta
Pellegrino, a spokeswoman for Genentech, which developed Perjeta.
That said, many cancer experts remain skeptical of
the notion that drug companies are simply passing along the cost of doing
business and funding the incubation of new drugs. In 2004 researchers tried
to test the relationship between a drug’s development and its final asking
price. In the Journal of Clinical Oncology, the scientists concluded “that
the drug companies are not pricing their drugs to recuperate losses
associated with research and development, marketing, and operating prices,
but rather [the average wholesale price] depends on what the market itself
can bear.”
“It’s a marketplace where the seller has all of the
control,” says Bach, from Memorial Sloan-Kettering, because private
insurance companies and Medicare—the largest purchasers of drugs—are
powerless to bargain for a less expensive deal. “Prices are high because
they can be,” Bach says. As one doctor observed, “we are always paying for a
Ferrari but often getting a Ford.” The occasional Ferrari does exist. The
targeted drug Gleevec, which treats certain forms of leukemia and intestinal
tumors, has allowed patients to live for years with their cancer in check.
Continued in article
Jensen Comment
At a cost of $150 million each, how many other nations have built 10 cyclotrons
for harvesting proton beams for cancer treatments and research?
Only the most successful findings in the U.S. will motivate other free-rider
nations to invest in such expensive hardware.
If we adopt a national health care plan the medical services will be spread
more evenly across all residents of the U.S. However, we will then have to come
to grips with costs of dying and costs of research that we perhaps can no longer
afford on the same scale.
We will also have to come to grips with controlling punitive damage hundreds
of billions in lawsuits like other nations control such frictions on medical
services. Other nations like Canada provide for damages and lost income, but
they do not turn medical litigation into a legal lottery.
The
St. Petersburg Times takes a look at the cost
of insurance in Canada for health care providers.
A neurosurgeon in Miami pays about $237,000 for medical malpractice
insurance. The same professional in Toronto pays about $29,200, reports
Susan Taylor Martin.
A Canadian orthopedic surgeon pays just over $10,000 for coverage
that costs a Miami physician $140,000. An obstetrician in Canada pays
$36,353 for insurance, while a Tampa Bay obstetrician pays $98,000 for
medical malpractice insurance.
Why the difference?
In the U.S., private for-profit insurance companies extend medical
malpractice coverage to doctors.
In Canada, physicians are covered through
membership in a nonprofit. The
Canadian Medical Protective Association
offers substantially reduced fees for the same coverage, especially
considering that their payout is limited by caps in Canada just as in
some U.S. states.
In 1978, the Canadian Supreme Court limited
pain and suffering awards to just over $300,000, circumventing the
opportunity for a jury to decide on an award depending on the case
before them.
Canadian Medical Protective Association
Here’s how it works.
Fees for membership vary depending on the region of the country in
which the doctor works and their specialty. All neurosurgeons in Ontario
will pay the same, for example. The number of claims they have faced for
medical malpractice does not figure into their premium
"We don't adjust our fees based on individual
experience; it's the experience of the group,'' says Dr. John Gray, the
executive director, "That's what the mutual approach is all about, and
it helps keep the fees down for everyone,” he tells the
St. Petersburg Times.
If a doctor is sued, the group pays the claim
and provides legal counsel.
In the U.S., the push has been on for limiting claims, no matter how
egregious the medical malpractice. President Obama was booed in June
when, before the American Medical Association, he said he would not
limit a malpractice jury award.
"We got a crazy situation where Obama is
talking about the cost of medicine but he said, 'I don't believe in
caps,' " complains Dr. Dennis Agliano, past president of the
Florida Medical
Association. "If you don't have caps, the
sky's the limit and there's no way to curtail those costs.''
But the importance of limiting jury awards may not play into the big
picture on health care reform.
Malpractice lawsuits amount to
less than one percent of both the Canadian and
the U.S. healthcare system, meanwhile between 44,000 and 98,000
Americans die each year due to medical errors in hospitals alone, while
16 times as many suffer injuries without receiving any compensation,
reports the group
Americans for Insurance Reform.
Major Difference
In Canada, an injured patient is often required to pay for the
initial investigation into his case. In the U.S. the contingency fee
basis, usually in the range of 30 percent, allows the injured party to
proceed without a financial downside.
In both the U.S. and Canada, the definition of medical negligence is
that a duty of care was owed to the patient by the physician, there was
a breach h of the standard of care and the patient suffered harm by the
physician’s failure to meet that standard of care.
A bad outcome in itself is not the basis of a lawsuit.
The Canadian Medical Protective Association insures virtually all of
the country’s 76,000 doctors, as opposed to the U.S. where private
for-profit insurance companies cover physicians for medical malpractice.
In Canada, the median damaged paid in 2007 was $91,999 and judgments
favored patients 25 times, doctors 70 times.
In the U.S., many physician groups are
requiring patients to waive their rights to a jury trial, even though
malpractice litigation accounts for just 0.6 percent of healthcare costs.
Public Citizen,
the consumer group, charges that the facts don’t
warrant the “politically charged hysteria surrounding medical
malpractice litigation.”
For the third straight year,
medical malpractice payments were at record
lows finds the group in a study released this month. The decline,
however, is likely due to fewer injured patients receiving compensation,
not improved health safety.
2008 saw the lowest number of medical
malpractice payments since the federal government’s
National
Practitioner Data Bank began compiling
malpractice statistics. In 2008, payments were 30.7 percent lower than
averages recorded in all previous years.
In the report titled,
The 0.6 Percent Bogeyman, the nonprofit
watchdog group states, “between three and seven Americans die from
medical errors for every 1 who receives a payment for any type of
malpractice claim.”
Public Citizen previously reported that about
five percent of doctors are responsible for
half of the medical malpractice in the U.S. that can result in permanent
injury or death. #
Prof. Jensen,
While it's true our spending on health-care is much lower than the US in
terms of percentage of GDP and we don't have the level of malpractice
suits as in the USA there are severe problems with the healthcare
system. The federal government has a guaranteed I think 6% accelerator,
much higher than inflation, transfer payment to the provinces for health
care. I doubt the federal government can guarantee that kind of spending
in the next negotiations between the provinces and the federal
government.
Then again federal government transfers amount
to only about 15-20% of most provincial health spending and provinces
spend about 40-50% of their budget on the health budget and growing
larger as the boomers age. Provinces especially Ontario and Quebec but
even Alberta with it's oil and natural gas royalties will not be able to
keep this up,
Ontario has a bigger deficit at $21 billion
Canadian than California I think and Ontario only has 12-13 million
people. Quebec which is usually a very socialist province, has actually
liberalized the private element of health care services the most, there
are many Ontarians who go to Quebec to get treated including private MRI
scans etc. British Columbia is also following Quebec and has allowed
private clinics to serve patients.
There are two cures for reducing the deficits
of the provinces, one is to stop the increase in health spending so per
capita spending goes down along with co-payments for superficial
emergencies like colds and coughs to the doctor or emergencies. Other is
to create a two tier system with a fully private one along with the
public system. All three federal parties, even the governing
Conservatives who are most similar to your Republicans and the Bloc
Quebecois (the Quebec nationalists-separatists) are against a private
system but there is a lot of support for it from the more conservative
elements in Canada, including Preston Manning, the former leader of the
populist Reform and former Conservative premier of Ontario Mike Harris.
Large employers plan to continue offering health
benefits after the health-insurance exchanges provided for under the
Affordable Care Act (ACA) begin operating — whether that’s in 2014, as the
law currently requires, or later, as seems more likely.
At least, that’s what those employers are saying
now. “My corporate clients, most of which are large, are asking a lot of
questions about [the ACA], but none are about the exchanges,” says Priscilla
Ryan, a partner at law firm Sidley Austin, which has a large health-care
practice. “None of them are considering dropping their health-care
coverage.”
Many such companies considered the idea when the
law was enacted in 2010, or even earlier, and rejected it, according to
Ryan. “They’ve moved on and are well on to new plan designs and expanding
coverage as required by the law,” she says.
But companies have no reason to show their hands
now. That’s especially so because timetables for the state-run exchanges, as
well as federally operated exchanges that are to be created for residents of
states that decline to tap federal subsidies and create their own, are so
iffy. Thirty-six states have achieved less than 10% of the 109 milestones
toward the establishment of an exchange identified by the National Academy
for State Health Policy.
That may mean it’s a long shot that a majority of
states will meet a November 16 deadline to indicate whether they plan to set
up an exchange and, if so, provide a blueprint demonstrating their readiness
in 13 areas so that the exchange will be operational by January 1, 2014, as
stipulated in the ACA. That will in turn delay the federal government’s work
on creating the state exchanges it will run (which could turn out to be as
many as half of them, by some estimates), since the health insurers that
will participate in the exchanges will vary from state to state.
“Maybe a few states will be ready, but it seems
quite unlikely that most of these things will be running by 2014,” says
Susan Nash, a partner at McDermott Will & Emery, another law firm with a
strong health-care focus.
So companies have plenty of time to make the “pay
or play” decision. It’s called that because employers with more than 50
full-time-equivalent workers that decide to forgo offering health insurance
will have to pay a tax, in most cases $2,000 per employee per year, minus 30
employees.
Companies that now say they have no intention of
abandoning employee health-care benefits — even though it likely would be a
financial plus for them, because average per-employee costs are almost
always greater than $2,000 per year — might change their mind if a
competitor makes the move.
“I think it’s going to be like the lemmings: who’s
going to jump off the cliff first?” says Nash. “I haven’t heard any large
employers say they’ll do it yet, but it’s highly possible. If Wal-Mart or
Costco did it and were successful, it might become an easier and easier
decision for other retailers to make and it could become a standard in that
sector.”
Indeed, retailers, restaurants, and other companies
that employ many low-wage workers are the most likely to bid adieu to
employee health benefits at some point. That’s partly because it’s a fiscal
strain to provide a large number of employees with benefits whose worth is
equal to a relatively high percentage of their wages.
But it’s also partly because of the sliding-scale
subsidies the federal government will provide under the ACA to workers who
lose their health-care coverage. That’s important for employers who elect to
nix their health plans, because it could lessen a potential blow to employee
engagement stemming from the move. “The value of the subsidy to employees
would dwarf the employer’s tax for not offering coverage,” says benefits
consultant Ed Kaplan, senior vice president and national health practice
leader at The Segal Co. “But at an engineering firm or an IBM, for example,
employees’ incomes are much higher so their subsidies would be much
smaller.”
Some companies could opt for what Nash calls a
“soft landing”: dropping their health plans but giving employees a certain
amount of money with which to buy insurance on their own through an
exchange.
It remains to be seen, though, how well the
exchanges will work. A key reason they may not be operational until after
2014, and why the federal government is subsidizing their creation, is that
they are big undertakings.
Q: Is the new health care law “the biggest tax
increase in history”?
A: In raw dollars, perhaps. But several tax
increases just since 1968 were larger as percentages of the economy, or in
inflation-adjusted dollars.
FULL QUESTION
Will “Obamacare” be the largest tax hike in US
history?
FULL ANSWER
Several readers have asked us about this since Rush
Limbaugh made a hugely exaggerated claim that the new health care law is
“the biggest tax increase in the history of the world.”
We’re not sure Limbaugh meant his statement to be
taken seriously; He offered no figures or citations to back up what he said.
But other critics of the law have made similar claims.
The increase is certainly large. So let’s take a
look at how the taxes and fees that finance “Obamacare” stack up against
earlier increases.
In the context of changing demographics, the
increasing cost of health care services, and continuing federal budgetary
pressures, Medicare has become one of the most controversial federal
programs. To facilitate an informed debate about the future of this
important public initiative, this article examines and debunks the following
ten myths surrounding Medicare: (1) there is one Medicare program, (2)
Medicare is going bankrupt, (3) Medicare is government health care, (4)
Medicare covers all medical cost for its beneficiaries, (5) Medicare pays
for long-term care expenses, (6) the program is immune to budgetary
reduction, (7) it wastes much of its money on futile care, (8) Medicare is
less efficient than private health insurance, (9) Medicare is not
means-tested, and (10) increased longevity will sink Medicare.
Jensen Comment
I don't agree with every conclusion in this paper, but it is one of the best
summaries of Medicare that I can recommend.
Waste, Fraud, and Abuse: The gap between
payments and payees in Medicare makes it a criminal's piñata
It should be emphasized at the outset that this
contention is not about the ever-present specter of “waste, fraud, and
abuse” that haunts governmental programs generally. That Medicare is
targeted by scammers and schemers of all sorts is both indisputable and
hardly surprising. As the famed bank robber, Willie Sutton, reportedly
replied when asked why he robbed banks: “That’s where the money is.”101
Indeed, Medicare is where the money is—specifically $509 billion in fiscal
year 2010 alone.102 Any program that pays out this amount of money to a wide
variety of service providers in literally every county in America will be
very difficult to police. That reality notwithstanding, such violations of
the public trust as are encapsulated in the phrase “waste, fraud, and abuse”
should be ferreted out whenever possible and eliminated. No one excuses
these leakages, just as no one has a sure-fire solution to stem them once
and for all. Kaplan, Page 19
One thing to think about is why
Medicare may be losing hundreds of billions of dollars relative to the national
health care plans of Canada, Europe, etc. The obvious thing to pick on is that
Medicare is a third party payment system where medical services, medications,
equipment such as battery-powered scooters and home hospital beds, and medical
care centers are not directly managed by the government. This opens the
door to millions of fraudulent claims, often by extremely clever criminals,
unscrupulous physicians, etc. The gap between payments and payees in Medicare
makes it more vulnerable to abuse and waste.
This and other articles make a
big deal about how administrative costs of Medicare are significantly less that
the administrative costs of private insurance carriers like Blue Cross. However,
what this article and related articles almost always fail to mention is that the
major component of administrative cost to companies like Blue Cross lies in
operating controls to prevent waste, fraud, and abuse.
National plans like those in
Canada have both lower administrative costs and less waste, fraud, and abuse
because the government provides most of the services directly without the moral
hazards that arise from the gap between funding and delivery of services.
Personally, I favor national plans. Of course, in some nations like Germany
there are premium alternatives where people that can afford it can pay for
premium services not covered in the national plans.
http://faculty.trinity.edu/rjensen/Health.htm
Futile Care Waste: My
former University of Maine colleague was given thirty days to live (because of
Stage Four bone cancer) received two new hips but never walked again and died in
less than two weeks
But the issue of “futile care” is very different
from “waste, fraud, and abuse.” The claim that Medicare should not pay for
pointless medical interventions presumes that funds were indeed spent on
actual medical procedures. The issue is whether those procedures should not
have been done for reasons of inefficacy or insufficient “bang for the
buck.” It is certainly true that Medicare spends a disproportionate amount
of its budget on treatments in the final months of its beneficiaries’ lives.
Some twenty-eight percent of the entire Medicare budget is spent on medical
care in enrollees’ final year of life,103 and nearly forty percent of that
amount is spent during a patient’s last month. The critical issue, of
course, is whether these expenditures are pointless.
In one respect, it is not surprising that the cost
of a person’s final medical episode is unusually expensive. That person’s
presenting condition must have been especially severe because he or she did
in fact die during or shortly after treatment. Moreover, when circumstances
are particularly bleak, more intensive and often much more expensive
procedures, tests, and interventions seem appropriate. After all, the
patient was literally fighting off death at that point, so medical personnel
try everything in their armamentarium to win what was ultimately the
patient’s final battle. Only after the fact does one know that the battle in
question was indeed the patient’s last episode. Does that mean that the
effort expended, and the attendant costs, were wasted?
This question is more difficult than some might
suspect. A recent study of Medicare claims data examined the association
between inpatient spending and the likelihood of death within thirty days of
a patient’s being admitted to a hospital.It found that for most of the
medical conditions examined, including surgery, congestive heart failure,
stroke, and gastrointestinal bleeding, a ten percent increase in inpatient
spending was associated with a decrease in mortality within thirty days of
3.1 to 11.3%, depending upon the specific medical condition in question.
Only for patients who presented with acute myocardial infarction was there
no association of increased inpatient spending and improved outcomes. Thus,
the authors concluded, “the amount [of waste] may not be as large as
commonly believed, at least for hospitalized Medicare patients.” To be sure,
the results might not be as encouraging in non-hospital settings, but
Medicare does not cover the cost of nursing home patients who are lingering
at death’s door while receiving “custodial care.”In any case, hospital costs
represent the single largest component of Medicare’s expenditures— fully
twenty-seven percent in the most recent year for which such data are
available.
That is not to say that some of Medicare’s
expenditures near the end of beneficiaries’ lives provide insufficient
benefit to justify their cost. But the tough questions are how to determine
those wasteful expenditures in advance and who should make that
determination. Such considerations are beyond the scope of this Article,but
suffice it to note that end-of-life care discussions are extraordinarily
contentious and easily demagogued. After all, former Vice Presidential
candidate Sarah Palin effectively scuttled a rather benign effort to include
payment for end-of-life counseling in Medicare’s newly provided “annual
wellness visit[s]” by contending that such counseling was a first step to
rationing health care by “death panels” run by government bureaucrats. Thus,
while patients can individually indicate in advance how much treatment they
want at the end of their lives, any comprehensive effort to root out
Medicare’s wasteful expenditures on “futile care” might face serious
political opposition.
In any case, an authoritative analysis published in
The New England Journal of Medicine concluded that “the hope of
cutting the amount of money spent on life-sustaining interventions for the
dying in order to reduce overall health care costs is probably vain.” The
authors noted that “there are no reliable ways to identify the patients who
will die” and that “it is not possible to say accurately months, weeks, or
even days before death which patients will benefit from intensive
interventions and which ones will receive ‘wasted’ care.” That leaves
age-based rationing of care or more precisely, denial of medical services on
the basis of chronological age, as the only easily implemented pathway to
eliminate what some might regard as inefficacious expenditures of medical
resources. Such age-based rationing of health care is practiced in other
national health care systems, even though studies of prognostic models have
demonstrated that “age alone is not a good predictor of whether treatment
will be success ful.” In any case, polls of Americans have shown little
support and significant opposition to the concept. One survey undertaken in
late 1989 sought agreement with the following statement: “Lifeextending
medical care should be withheld from older patients to save money to help
pay for the medical care of younger patients.” Only 5.7% of respondents
under age sixty-five strongly agreed with this statement while 38.3% of that
group strongly disagreed with it.120 Interestingly, among respondents who
were themselves age sixty-five and older, the gap between these opposing
viewpoints was narrower: 8.8% strongly agreed with the statement in question
while 35.4% strongly disagreed.
Whether results would be substantially different
today when the range of medical interventions has increased significantly
and when the nation’s budgetary situation has worsened considerably is an
open question. Yet, when the 2010 health care reform legislation created an
Independent Payment Advisory Board to reduce Medicare’s expenses, the
enabling statute was explicit that this Board may not make proposals that
would “ration health care.” Clearly, the prospect of eliminating Medicare
expenditures that are medically futile will not be an easy task to
accomplish. Kaplan, pp. 19-22
Jensen Comment
My former University of Maine
colleague on Medicare was given thirty days to live (because of Stage Four bone
cancer) received two new hips but never walked again and died in less than two
weeks. I don't think he would've received those two useless and very expensive
hips on any of the national plans of Canada or Europe.
Where Did Medicare Go So Wrong?
Medicare is a much larger and much more complicated entitlement burden relative
to Social Security by a ratio of about six to one or even more. The Medicare
Medical Insurance Fund was established under President Johnson in1965.
Note that Medicare, like Social Security in general, was intended to be
insurance funded by workers over their careers. If premiums paid by workers and
employers was properly invested and then paid out after workers reached
retirement age most of the trillions of unfunded debt would not be precariously
threatening the future of the United States. The funds greatly benefit when
workers die before retirement because all that was paid in by these workers and
their employers are added to the fund benefits paid out to living retirees.
The first huge threat to sustainability arose beginning in 1968 when medical
coverage payments payments to surge way above the Medicare premiums collected
from workers and employers. Costs of medical care exploded relative to most
other living expenses. Worker and employer premiums were not sufficiently
increased for rapid growth in health care costs as hospital stays surged from
less than $100 per day to over $1,000 per day.
A second threat to the sustainability comes from families no longer concerned
about paying up to $25,000 per day to keep dying loved ones hopelessly alive in
intensive care units (ICUs) when it is 100% certain that they will not leave
those ICUs alive. Families do not make economic choices in such hopeless cases
where the government is footing the bill. In other nations these families are
not given such choices to hopelessly prolong life at such high costs. I had a
close friend in Maine who became a quadriplegic in a high school football game.
Four decades later Medicare paid millions of dollars to keep him alive in an ICU
unit when there was zero chance he would ever leave that ICU alive.
On November 22, 2009 CBS Sixty Minutes aired a video featuring experts
(including physicians) explaining how the single largest drain on the Medicare
insurance fund is keeping dying people hopelessly alive who could otherwise be
allowed to die quicker and painlessly without artificially prolonging life on
ICU machines.
"The Cost of Dying,"CBS Sixty Minutes Video, November 22, 2009
---
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
What is really sad is the way Republicans are standing in the way of making
rational cost-benefit decisions about dying by exploiting the "Kill Granny"
political strategy aimed at killing a government option in health care reform.
See the "Kill Granny" strategy at ---
www.defendyourhealthcare.us
The third huge threat to the economy commenced in when disabled persons
(including newborns) tapped into the Social Security and Medicare insurance
funds. Disabled persons should receive monthly benefits and medical coverage
in this great land. But Congress should've found a better way to fund disabled
persons with something other than the Social Security and Medicare insurance
funds. But politics being what it is, Congress slipped this gigantic
entitlement through without having to debate and legislate separate funding for
disabled persons. And hence we are now at a crossroads where the Social Security
and Medicare Insurance Funds are virtually broke for all practical persons.
Most of the problem lies is Congressional failure to sufficiently increase
Social Security deductions (for the big hit in monthly payments to disabled
persons of all ages) and the accompanying Medicare coverage (to disabled people
of all ages). The disability coverage also suffers from widespread fraud.
Other program costs were also added to the Social Security and Medicare
insurance funds such as the education costs of children of veterans who are
killed in wartime. Once again this is a worthy cause that should be funded. But
it should've been separately funded rather than simply added into the Social
Security and Medicare insurance funds that had not factored such added costs
into premiums collected from workers and employers.
The fourth problem is that most military retirees are afforded full lifetime
medical coverage for themselves and their spouses. Although they can use
Veterans Administration doctors and hospitals, most of these retirees opted for
the underfunded
TRICARE plan the pushed most of the hospital and physician costs onto the
Medicare Fund. The VA manages to push most of its disabled veterans onto the
Medicare Fund without having paid nearly enough into the fund to cover the
disability medical costs. Military personnel do have Medicare deductions from
their pay while they are on full-time duty, but those deductions fall way short
of the cost of disability and retiree medical coverage.
The fifth threat to sustainability came when actuaries failed to factor in
the impact of advances in medicine for extending lives. This coupled with the
what became the biggest cost of Medicare, the cost of dying, clobbered the
insurance funds. Surpluses in premiums paid by workers and employers disappeared
much quicker than expected.
A sixth threat to Medicare especially has been widespread and usually
undetected fraud such as providing equipment like motorized wheel chairs to
people who really don't need them or charging Medicare for equipment not even
delivered. There are also widespread charges for unneeded medical tests or for
tests that were never really administered. Medicare became a cash cow for
crooks. Many doctors and hospitals overbill Medicare and only a small proportion
of the theft is detected and punished.
The seventh threat to sustainability commenced in 2007 when the costly
Medicare drug benefit entitlement entitlement was added by President George W.
Bush. This was a costly addition, because it added enormous drains on the fund
by retired people like me and my wife who did not have the cost of the drug
benefits factored into our payments into the Medicare Fund while we were still
working. It thus became and unfunded benefit that we're now collecting big time.
In any case we are at a crossroads in the history of funding medical care in
the United States that now pays a lot more than any other nation per capita and
is getting less per dollar spent than many nations with nationalized health care
plans. I'm really not against Obamacare legislation. I'm only against the lies
and deceits being thrown about by both sides in the abomination of the current
proposed legislation.
Democrats are missing the boat here when they truly have the power, for now
at least, in the House and Senate to pass a relatively efficient nationalized
health plan. But instead they're giving birth to entitlements legislation that
threatens the sustainability of the United States as a nation.
The New York Times Timeline History of Health Care Reform in the
United States ---
http://www.nytimes.com/interactive/2009/07/19/us/politics/20090717_HEALTH_TIMELINE.html
Click the arrow button on the right side of the page. The biggest problem with
"reform" is that it added entitlements benefits without current funding such
that with each reform piece of legislation the burdens upon future generations
has hit a point of probably not being sustainable.
Call it the fatal arithmetic of imperial decline.
Without radical fiscal reform, it could apply to America next. Niall Ferguson, "An Empire at Risk: How Great Powers Fail," Newsweek
Magazine Cover Story, November 26, 2009 ---
http://www.newsweek.com/id/224694/page/1
. . .
In other words, there is no end in sight to the
borrowing binge. Unless entitlements are cut or taxes are raised, there will
never be another balanced budget. Let's assume I live another 30 years and
follow my grandfathers to the grave at about 75. By 2039, when I shuffle off
this mortal coil, the federal debt held by the public will have reached 91
percent of GDP, according to the CBO's extended baseline projections.
Nothing to worry about, retort -deficit-loving economists like Paul Krugman.
. . .
Another way of doing this kind of exercise is to
calculate the net present value of the unfunded liabilities of the Social
Security and Medicare systems. One recent estimate puts them at about
$104 trillion, 10
times the stated federal debt.
Continued in article
This is now President Obama's problem with or without new Obamacare
entitlements that are a mere drop in the bucket compared to the entitlement
obligations that President Obama inherited from every President of the United
States since FDR in the 1930s. The problem has been compounded under both
Democrat and Republican regimes, both of which have burdened future generations
with entitlements not originally of their doing.
Professor Niall Ferguson and David Walker are now warning us that by year
2050 the American Dream will become an American Nightmare in which Americans
seek every which way to leave this fallen nation for a BRIC nation offering some
hope of a job, health care, education, and the BRIC Dream.
Question
Should we keep increasing the government spending deficit and the national debt
every year ad infinitum?
Answers
Although in these down economic times, the liberal's Keynesian hero and Nobel
Prize economist, Paul Krugman, thinks recovery is stalled because the government
is not massively increasing spending deficits. But he's not willing to commit
himself to never reducing deficits or never paying down some of the national
debt. Hence, he really does not answer the above question ---
http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html
So let's turn to a respected law professor who advocates increasing the
government spending deficit and the national debt every year ad infinitum?
Abstract:
Calls either to balance the federal budget on an annual basis, or to pay
down all or part of the national debt, are based on little more than
uninformed intuitions that there is something inherently bad about borrowing
money. We should not only ignore calls to balance the budget or to pay down
the national debt, but we should engage in a responsible plan to increase
the national debt each year. Only by issuing debt to lubricate the financial
system, and to support the economy’s healthy growth, can we guarantee a
prosperous future for current and future citizens of the United States.
Student Assignment
Since many of the most liberal economists are not quite
willing to assert that "we should never pay down the national debt," what
questionable and unmentioned assumptions have been made by Neil H. Buchanan
that need to be addressed?
Are some of these assumptions unrealistic in any world
other than a utopian world?
The Bright Side (it has a chance of working) and Dark Side (fiscal
disaster) of the Affordable Care Act
Interestingly, among the quotes below a University of Chicago law professor
sides with liberals and a U.C. Berkeley law professor sides with conservatives
That is academia at it's best.
The Supreme Court has upheld the Affordable Care
Act, President Obama’s signature bill, clearing the way for the largest revamp
of America’s healthcare system since the 1960s. We get reaction from acclaimed
filmmaker Michael Moore, whose 2007 documentary, "Sicko," tackled many failures
of the U.S. healthcare system. "This really is a huge victory for our side, in
spite of all of my concerns with this law," Moore says. "We have to work toward
Medicare for all, so that everyone’s covered ... We can’t allow private
insurance — people making a profit off of people getting sick." [includes rush
transcript]
http://www.democracynow.org/2012/6/29/michael_moore_supreme_court_healthcare_ruling
The Supreme Court’s decision in National Federation of
Independent Business v. Sebelius—the healthcare cases—was a tremendous political
victory for the Obama administration and, more importantly, the tens of
thousands of Americans who will be saved from illness and death by the law. But
make no mistake: the decision could also be a significant legal victory for the
political forces committed to limiting the state’s ability to care for the weak
and fragile among us.
Ariz Huq (University of Chicago Law School) , "In the Healthcare Decision, a
Hidden Threat?" The Nation, June 29, 2012 ---
http://www.thenation.com/article/168677/healthcare-decision-hidden-threat
Since you can easily access this article for free, I will not waste space
by quoting it here.
Jensen Comment
If over half the nation's graduates (higher percentage for Literature, Music,
and Philosophy PhDs) and unemployed teachers are not finding jobs or can only
get part-time McJobs it's never been clear what we will do with them if they
really cannot afford the mandated health insurance coverage mandated for them.
Do they go to jail or will Uncle Sam simply pick up their insurance premiums?
And do emergency rooms refuse services to the uninsured. Yeah Right!
The Affordable Health Care Act is a sorry excuse for what should have been
the More Like Canada Health Care Act.
The Journal of Accountancy discusses tax implications of the Affordable
Health Care Act ---
"Supreme Court upholds health care law," by Sally P. Schreiber and Alistair M.
Nevius, Journal of Accountancy, June 28, 2012
http://www.journalofaccountancy.com/News/20125972.htm
Worse, in doing so, he may have read any
constitutional limit on Congress out of the Constitution while pretending to
do the opposite. Congress cannot compel you to do anything Congress wishes,
but it can impose taxes on you until you finally have no rational
alternative but to do whatever Congress wishes.
History will judge whether Mr. Roberts saved the
reputation of the court or lost his nerve. Many conservatives obviously
suspect the latter. Resolved: The government cannot make you eat broccoli,
though it may levy a non-broccoli-eating tax on any who refuse.
Yet he may also think—and would not be wrong to
think—that ObamaCare is doomed in any case. His opinion makes clearer than
ever that ObamaCare is a tax program—throwing more tax dollars at an
unreformed health-care system. ObamaCare is a huge new entitlement in a
nation laboring under commitments it already can't afford. Those who gripe
that he just authorized a vast expansion of the welfare state haven't
reckoned with this fiscal reality principle.
What's more—and save us your constitutional
brickbats—the mandate's survival could actually be a convenience to those
who remain seriously interested in fixing health care.
GOPers, including Mitt Romney, immediately adopted
"repeal" as their mantra. But repealing ObamaCare would just leave us with
the health-care system we have, which is already ObamaCare in many
respects—an unsustainable set of subsidies bankrupting the nation.
The solution is a tweak. Republicans already are
lip-committed to a national health-insurance charter that allows insurers to
design their own policies and market them across state lines. Republicans
are also lip-committed to a tax reform to equalize the tax treatment of
health care whether purchased by individuals or by employers on behalf of
individuals.
Now just modify the Affordable Care Act so buying
any health policy authorized by the new charter, no matter how minimalist,
satisfies the employer and individual mandate.
What would follow is a boom in low-cost,
high-deductible plans that leave individuals in charge of managing most
their ordinary health-care costs out of pocket. Because it would be cheap,
millions who would opt not to buy coverage will buy coverage. Because it
will be cheap, companies will direct their low-wage and entry-level
employees to this coverage.
Now these workers will be covered for serious
illness or injury, getting the rest of us off the hook. As they grow older,
wealthier and start families, they will choose more extensive but still
rationally limited coverage. Meanwhile, the giant subsidies ObamaCare would
dish out to help the middle class afford ObamaCare's gold-plated mandatory
coverage would be unneeded.
With consumers shouldering a bigger share of health
expenses directly, hospital and doctors would discover the advantages of
competing on price and quality. This way lies salvation. In the long run,
whatever share of GDP society decides to allocate to health care, it will
get its money's worth—the fundamental problem today.
Perhaps a not-discreditable sense of the political
moment lies behind the chief justice's opinion after all. The court's job,
he wrote, is not to "protect the people from the consequences of their
political choices."
He may have meant: The chief justice's job is to
get the court out of the way while the body politic still remains suspended
between recognizing the unsustainabilty of the current welfare model and
deciding what to do about it.
This was always the fatal problem of ObamaCare.
Reality could not have instructed President Obama more plainly: The last
thing we needed, in a country staggering under deficits and debt, a sluggish
economy and an unaffordable entitlement structure, was a new Rube Goldberg
entitlement. The last thing we needed was ObamaCare. The nation and the
times were asking Mr. Obama to reform health care, not to double-down on
everything wrong with the current system.
Even with this week's Court success, he failed—and
it's not as if there wasn't a deep well of policy understanding in
Washington that he could have drawn on to take the country in a better
direction. Regardless of any Supreme Court ruling, reality will pass its own
judgment on the Affordable Care Act and it won't be favorable.
White House judge-pickers sometimes ask prospective
nominees about their favorite Supreme Court justice. The answers can reveal
a potential judge's ideological leanings without resorting to litmus tests.
Republican presidential candidates similarly promise to appoint more judges
like so-and-so to reassure the conservative base.
Since his appointment to the high court in 2005,
the most popular answer was Chief Justice John Roberts. But that won't
remain true after his ruling on Thursday in NFIB v. Sebelius, which upheld
President Barack Obama's signature health-care law.
Justice Roberts served in the Reagan Justice
Department and as a White House lawyer before his appointment to the D.C.
Circuit Court of Appeals and then to the Supreme Court by President George
W. Bush. Yet he joined with the court's liberal wing to bless the greatest
expansion of federal power in decades.
Conservatives are scrambling to salvage something
from the decision of their once-great judicial hero. Some hope Sebelius
covertly represents a "substantial victory," in the words of conservative
columnist George Will.
After all, the reasoning goes, Justice Roberts's
opinion declared that the Constitution's Commerce Clause does not authorize
Congress to regulate inactivity, which would have given the federal
government a blank check to regulate any and all private conduct. The court
also decided that Congress unconstitutionally coerced the states by
threatening to cut off all Medicaid funds if they did not expand this
program as far as President Obama wants.
All this is a hollow hope. The outer limit on the
Commerce Clause in Sebelius does not put any other federal law in jeopardy
and is undermined by its ruling on the tax power (discussed below). The
limits on congressional coercion in the case of Medicaid may apply only
because the amount of federal funds at risk in that program's expansion—more
than 20% of most state budgets—was so great. If Congress threatens to cut
off 5%-10% to force states to obey future federal mandates, will the court
strike that down too? Doubtful.
Worse still, Justice Roberts's opinion provides a
constitutional road map for architects of the next great expansion of the
welfare state. Congress may not be able to directly force us to buy electric
cars, eat organic kale, or replace oil heaters with solar panels. But if it
enforces the mandates with a financial penalty then suddenly, thanks to
Justice Roberts's tortured reasoning in Sebelius, the mandate is transformed
into a constitutional exercise of Congress's power to tax.
Some conservatives hope that Justice Roberts is
pursuing a deeper political game. Charles Krauthammer, for one, calls his
opinion "one of the great constitutional finesses of all time" by upholding
the law on the narrowest grounds possible—thus doing the least damage to the
Constitution—while turning aside the Democratic Party's partisan attacks on
the court.
The comparison here is to Marbury v. Madison
(1803), where Chief Justice John Marshall deflected President Thomas
Jefferson's similar assault on judicial independence. Of the Federalist
Party, which he had defeated in 1800, Jefferson declared: "They have retired
into the judiciary as a stronghold. There the remains of federalism are to
be preserved and fed from the treasury, and from that battery all the works
of republicanism are to be beaten down and erased." Jeffersonians in
Congress responded by eliminating federal judgeships, and also by impeaching
a lower court judge and a Supreme Court judge.
In Marbury, Justice Marshall struck down section 13
of the Judiciary Act of 1789, thus depriving his own court of the power to
hear a case against Secretary of State James Madison. Marbury effectively
declared that the court would not stand in the way of the new president or
his congressional majorities. So Jefferson won a short-term political
battle—but Justice Marshall won the war by securing for the Supreme Court
the power to declare federal laws unconstitutional.
While some conservatives may think Justice Roberts
was following in Justice Marshall's giant footsteps, the more apt comparison
is to the Republican Chief Justice Charles Evans Hughes. Hughes's court
struck down the centerpieces of President Franklin Roosevelt's early New
Deal because they extended the Commerce Clause power beyond interstate trade
to intrastate manufacturing and production. Other decisions blocked
Congress's attempt to delegate its legislative powers to federal agencies.
FDR reacted furiously. He publicly declared: "We
have been relegated to a horse-and-buggy definition of interstate commerce."
After winning a resounding landslide in the 1936 elections, he responded in
February 1937 with the greatest attack on the courts in American history.
His notorious court-packing plan proposed to add six new justices to the
Supreme Court's nine members, with the obvious aim of overturning the
court's opposition to the New Deal.
After the president's plan was announced, Hughes
and Justice Owen J. Roberts began to switch their positions. They would vote
to uphold the National Labor Relations Act, minimum-wage and maximum-hour
laws, and the rest of the New Deal.
But Hughes sacrificed fidelity to the
Constitution's original meaning in order to repel an attack on the court.
Like Justice Roberts, Hughes blessed the modern welfare state's expansive
powers and unaccountable bureaucracies—the very foundations for ObamaCare.
Hughes's great constitutional mistake was made for
nothing. While many historians and constitutional scholars have referred to
his abrupt and unprincipled about-face as "the switch in time that saved
nine," the court-packing plan was wildly unpopular right from the start. It
went nowhere in the heavily Democratic Congress. Moreover, further New Deal
initiatives stalled in Congress after the congressional elections in 1938.
Justice Roberts too may have sacrificed the
Constitution's last remaining limits on federal power for very little—a
little peace and quiet from attacks during a presidential election year.
Given the advancing age of several of the justices,
an Obama second term may see the appointment of up to three new Supreme
Court members. A new, solidified liberal majority will easily discard
Sebelius's limits on the Commerce Clause and expand the taxing power even
further. After the Hughes court switch, FDR replaced retiring Justices with
a pro-New Deal majority, and the court upheld any and all expansions of
federal power over the economy and society. The court did not overturn a
piece of legislation under the Commerce Clause for 60 years.
If a Republican is elected president, he will have
to be more careful than the last. When he asks nominees the usual question
about justices they agree with, the better answer should once again be
Scalia or Thomas or Alito, not Roberts.
On November 22, 2009 CBS Sixty Minutes aired a video featuring experts
(including physicians) explaining how the single largest drain on the Medicare
insurance fund is keeping dying people hopelessly alive who could otherwise be
allowed to die quicker and painlessly without artificially prolonging life on
ICU machines.
"The Cost of Dying,"CBS Sixty Minutes Video, November 22, 2009
---
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
What is hypocritical is that most families only want to keep Granny alive
only when Medicare will pay. The instant Granny's estate will have to bear the
cost these hypocrites instantly agree to pull Granny off life support.
What is really sad is the way Republicans are standing in the way of making
rational cost-benefit decisions about dying by exploiting the "Kill Granny"
political strategy aimed at killing a government option in health care reform.
See the "Kill Granny" strategy at ---
www.defendyourhealthcare.us
White House judge-pickers sometimes ask prospective
nominees about their favorite Supreme Court justice. The answers can reveal
a potential judge's ideological leanings without resorting to litmus tests.
Republican presidential candidates similarly promise to appoint more judges
like so-and-so to reassure the conservative base.
Since his appointment to the high court in 2005,
the most popular answer was Chief Justice John Roberts. But that won't
remain true after his ruling on Thursday in NFIB v. Sebelius, which upheld
President Barack Obama's signature health-care law.
Justice Roberts served in the Reagan Justice
Department and as a White House lawyer before his appointment to the D.C.
Circuit Court of Appeals and then to the Supreme Court by President George
W. Bush. Yet he joined with the court's liberal wing to bless the greatest
expansion of federal power in decades.
Conservatives are scrambling to salvage something
from the decision of their once-great judicial hero. Some hope Sebelius
covertly represents a "substantial victory," in the words of conservative
columnist George Will.
After all, the reasoning goes, Justice Roberts's
opinion declared that the Constitution's Commerce Clause does not authorize
Congress to regulate inactivity, which would have given the federal
government a blank check to regulate any and all private conduct. The court
also decided that Congress unconstitutionally coerced the states by
threatening to cut off all Medicaid funds if they did not expand this
program as far as President Obama wants.
All this is a hollow hope. The outer limit on the
Commerce Clause in Sebelius does not put any other federal law in jeopardy
and is undermined by its ruling on the tax power (discussed below). The
limits on congressional coercion in the case of Medicaid may apply only
because the amount of federal funds at risk in that program's expansion—more
than 20% of most state budgets—was so great. If Congress threatens to cut
off 5%-10% to force states to obey future federal mandates, will the court
strike that down too? Doubtful.
Worse still, Justice Roberts's opinion provides a
constitutional road map for architects of the next great expansion of the
welfare state. Congress may not be able to directly force us to buy electric
cars, eat organic kale, or replace oil heaters with solar panels. But if it
enforces the mandates with a financial penalty then suddenly, thanks to
Justice Roberts's tortured reasoning in Sebelius, the mandate is transformed
into a constitutional exercise of Congress's power to tax.
Some conservatives hope that Justice Roberts is
pursuing a deeper political game. Charles Krauthammer, for one, calls his
opinion "one of the great constitutional finesses of all time" by upholding
the law on the narrowest grounds possible—thus doing the least damage to the
Constitution—while turning aside the Democratic Party's partisan attacks on
the court.
The comparison here is to Marbury v. Madison
(1803), where Chief Justice John Marshall deflected President Thomas
Jefferson's similar assault on judicial independence. Of the Federalist
Party, which he had defeated in 1800, Jefferson declared: "They have retired
into the judiciary as a stronghold. There the remains of federalism are to
be preserved and fed from the treasury, and from that battery all the works
of republicanism are to be beaten down and erased." Jeffersonians in
Congress responded by eliminating federal judgeships, and also by impeaching
a lower court judge and a Supreme Court judge.
In Marbury, Justice Marshall struck down section 13
of the Judiciary Act of 1789, thus depriving his own court of the power to
hear a case against Secretary of State James Madison. Marbury effectively
declared that the court would not stand in the way of the new president or
his congressional majorities. So Jefferson won a short-term political
battle—but Justice Marshall won the war by securing for the Supreme Court
the power to declare federal laws unconstitutional.
While some conservatives may think Justice Roberts
was following in Justice Marshall's giant footsteps, the more apt comparison
is to the Republican Chief Justice Charles Evans Hughes. Hughes's court
struck down the centerpieces of President Franklin Roosevelt's early New
Deal because they extended the Commerce Clause power beyond interstate trade
to intrastate manufacturing and production. Other decisions blocked
Congress's attempt to delegate its legislative powers to federal agencies.
FDR reacted furiously. He publicly declared: "We
have been relegated to a horse-and-buggy definition of interstate commerce."
After winning a resounding landslide in the 1936 elections, he responded in
February 1937 with the greatest attack on the courts in American history.
His notorious court-packing plan proposed to add six new justices to the
Supreme Court's nine members, with the obvious aim of overturning the
court's opposition to the New Deal.
After the president's plan was announced, Hughes
and Justice Owen J. Roberts began to switch their positions. They would vote
to uphold the National Labor Relations Act, minimum-wage and maximum-hour
laws, and the rest of the New Deal.
But Hughes sacrificed fidelity to the
Constitution's original meaning in order to repel an attack on the court.
Like Justice Roberts, Hughes blessed the modern welfare state's expansive
powers and unaccountable bureaucracies—the very foundations for ObamaCare.
Hughes's great constitutional mistake was made for
nothing. While many historians and constitutional scholars have referred to
his abrupt and unprincipled about-face as "the switch in time that saved
nine," the court-packing plan was wildly unpopular right from the start. It
went nowhere in the heavily Democratic Congress. Moreover, further New Deal
initiatives stalled in Congress after the congressional elections in 1938.
Justice Roberts too may have sacrificed the
Constitution's last remaining limits on federal power for very little—a
little peace and quiet from attacks during a presidential election year.
Given the advancing age of several of the justices,
an Obama second term may see the appointment of up to three new Supreme
Court members. A new, solidified liberal majority will easily discard
Sebelius's limits on the Commerce Clause and expand the taxing power even
further. After the Hughes court switch, FDR replaced retiring Justices with
a pro-New Deal majority, and the court upheld any and all expansions of
federal power over the economy and society. The court did not overturn a
piece of legislation under the Commerce Clause for 60 years.
If a Republican is elected president, he will have
to be more careful than the last. When he asks nominees the usual question
about justices they agree with, the better answer should once again be
Scalia or Thomas or Alito, not Roberts.
Worse, in doing so, he may have read any
constitutional limit on Congress out of the Constitution while pretending to
do the opposite. Congress cannot compel you to do anything Congress wishes,
but it can impose taxes on you until you finally have no rational
alternative but to do whatever Congress wishes.
History will judge whether Mr. Roberts saved the
reputation of the court or lost his nerve. Many conservatives obviously
suspect the latter. Resolved: The government cannot make you eat broccoli,
though it may levy a non-broccoli-eating tax on any who refuse.
Yet he may also think—and would not be wrong to
think—that ObamaCare is doomed in any case. His opinion makes clearer than
ever that ObamaCare is a tax program—throwing more tax dollars at an
unreformed health-care system. ObamaCare is a huge new entitlement in a
nation laboring under commitments it already can't afford. Those who gripe
that he just authorized a vast expansion of the welfare state haven't
reckoned with this fiscal reality principle.
What's more—and save us your constitutional
brickbats—the mandate's survival could actually be a convenience to those
who remain seriously interested in fixing health care.
GOPers, including Mitt Romney, immediately adopted
"repeal" as their mantra. But repealing ObamaCare would just leave us with
the health-care system we have, which is already ObamaCare in many
respects—an unsustainable set of subsidies bankrupting the nation.
The solution is a tweak. Republicans already are
lip-committed to a national health-insurance charter that allows insurers to
design their own policies and market them across state lines. Republicans
are also lip-committed to a tax reform to equalize the tax treatment of
health care whether purchased by individuals or by employers on behalf of
individuals.
Now just modify the Affordable Care Act so buying
any health policy authorized by the new charter, no matter how minimalist,
satisfies the employer and individual mandate.
What would follow is a boom in low-cost,
high-deductible plans that leave individuals in charge of managing most
their ordinary health-care costs out of pocket. Because it would be cheap,
millions who would opt not to buy coverage will buy coverage. Because it
will be cheap, companies will direct their low-wage and entry-level
employees to this coverage.
Now these workers will be covered for serious
illness or injury, getting the rest of us off the hook. As they grow older,
wealthier and start families, they will choose more extensive but still
rationally limited coverage. Meanwhile, the giant subsidies ObamaCare would
dish out to help the middle class afford ObamaCare's gold-plated mandatory
coverage would be unneeded.
With consumers shouldering a bigger share of health
expenses directly, hospital and doctors would discover the advantages of
competing on price and quality. This way lies salvation. In the long run,
whatever share of GDP society decides to allocate to health care, it will
get its money's worth—the fundamental problem today.
Perhaps a not-discreditable sense of the political
moment lies behind the chief justice's opinion after all. The court's job,
he wrote, is not to "protect the people from the consequences of their
political choices."
He may have meant: The chief justice's job is to
get the court out of the way while the body politic still remains suspended
between recognizing the unsustainabilty of the current welfare model and
deciding what to do about it.
This was always the fatal problem of ObamaCare.
Reality could not have instructed President Obama more plainly: The last
thing we needed, in a country staggering under deficits and debt, a sluggish
economy and an unaffordable entitlement structure, was a new Rube Goldberg
entitlement. The last thing we needed was ObamaCare. The nation and the
times were asking Mr. Obama to reform health care, not to double-down on
everything wrong with the current system.
Even with this week's Court success, he failed—and
it's not as if there wasn't a deep well of policy understanding in
Washington that he could have drawn on to take the country in a better
direction. Regardless of any Supreme Court ruling, reality will pass its own
judgment on the Affordable Care Act and it won't be favorable.
Reigniting a debate about the bottom line for
President Barack Obama's health care law, a leading conservative economist
estimates in a study to be released Tuesday that the overhaul will add at
least $340 billion to the deficit, not reduce it.
Charles Blahous, who serves as public trustee
overseeing Medicare and Social Security finances, also suggested that
federal accounting practices have obscured the true fiscal impact of the
legislation, the fate of which is now in the hands of the Supreme Court.
Officially, the health care law is still projected
to help reduce government red ink. The Congressional Budget Office, the
government's nonpartisan fiscal umpire, said in an estimate last year that
repealing the law actually would increase deficits by $210 billion from 2012
to 2021.
The CBO, however, has not updated that projection.
If $210 billion sounds like a big cushion, it's not. The government has
recently been running annual deficits in the $1 trillion range.
The White house dismissed the study in a statement
late Monday. Presidential assistant Jeanne Lambrew called the study "new
math (that) fits the old pattern of mischaracterizations" about the health
care law.
Blahous, in his 52-page analysis released by George
Mason University's Mercatus Center, said, "Taken as a whole, the enactment
of the (health care law) has substantially worsened a dire federal fiscal
outlook.
"The (law) both increases a federal commitment to
health care spending that was already unsustainable under prior law and
would exacerbate projected federal deficits relative to prior law," Blahous
said.
The law expands health insurance coverage to more
than 30 million people now uninsured, paying for it with a mix of Medicare
cuts and new taxes and fees.
Blahous cited a number of factors for his
conclusion:
- The health care's law deficit cushion has been
reduced by more than $80 billion because of the administration's decision
not to move forward with a new long-term care insurance program that was
part of the legislation. The Community Living Assistance Services and
Supports program raised money in the short term, but would have turned into
a fiscal drain over the years.
- The cost of health insurance subsidies for
millions of low-income and middle-class uninsured people could turn out to
be higher than forecast, particularly if employers scale back their own
coverage.
- Various cost-control measures, including a tax on
high-end insurance plans that doesn't kick in until 2018, could deliver less
than expected.
The decision to use Medicare cuts to finance the
expansion of coverage for the uninsured will only make matters worse,
Blahous said. The money from the Medicare savings will have been spent, and
lawmakers will have to find additional cuts or revenues to forestall that
program's insolvency.
Under federal accounting rules, the Medicare cuts
are also credited as savings to that program's trust fund. But the CBO and
Medicare's own economic estimators already said the government can't spend
the same money twice.
Rewind to 2009. The fight over ObamaCare is raging,
and a few news outlets report that something looks ethically rotten in the
White House. An outside group funded by industry is paying the former firm
of senior presidential adviser David Axelrod to run ads in favor of the
bill. That firm, AKPD Message and Media, still owes Mr. Axelrod money and
employs his son.
The story quickly died, but emails recently
released by the House Energy and Commerce Committee ought to resurrect it.
The emails suggest the White House was intimately involved both in creating
this lobby and hiring Mr. Axelrod's firm—which is as big an ethical no-no as
it gets.
Mr. Axelrod—who left the White House last
year—started AKPD in 1985. The firm earned millions helping run Barack
Obama's 2008 campaign. Mr. Axelrod moved to the White House in 2009 and
agreed to have AKPD buy him out for $2 million. But AKPD chose to pay Mr.
Axelrod in annual installments—even as he worked in the West Wing. This
agreement somehow passed muster with the Office of Government Ethics, though
the situation at the very least should have walled off AKPD from working on
White-House priorities.
It didn't. The White House and industry were
working hand-in-glove to pass ObamaCare in 2009, and among the vehicles
supplying ad support was an outfit named Healthy Economy Now (HEN). News
stories at the time described this as a "coalition" that included the
Pharmaceutical Research and Manufacturers of America (PhRMA), the American
Medical Association, and labor groups—suggesting these entities had started
and controlled it.
House emails show HEN was in fact born at an April
15, 2009 meeting arranged by then-White House aide Jim Messina and a chief
of staff for Democratic Sen. Max Baucus. The two politicos met at the
Democratic Senatorial Campaign Committee (DSCC) and invited representatives
of business and labor.
A Service Employees International Union attendee
sent an email to colleagues noting she'd been invited by the Baucus staffer,
explaining: "Also present was Jim Messina. . . . They basically want to see
adds linking HC reform to the economy. . . . there were not a lot of
details, but we were told that we wd be getting a phone call. well that call
came today."
The call was from Nick Baldick, a Democratic
consultant who had worked on the Obama campaign and for the DSCC. Mr.
Baldick started HEN. The only job of PhRMA and others was to fund it.
Meanwhile, Mr. Axelrod's old firm was hired to run
the ads promoting ObamaCare. At the time, a HEN spokesman said HEN had done
the hiring. But the emails suggest otherwise. In email after email, the
contributors to HEN refer to four men as the "White House" team running
health care. They included John Del Cecato and Larry Grisolano (partners at
AKPD), as well as Andy Grossman (who once ran the DSCC) and Erik Smith, who
had been a paid adviser to the Obama presidential campaign.
In one email, PhRMA consultant Steve McMahon calls
these four the "WH-designated folks." He explains to colleagues that Messrs.
Grossman, Grisolano and Del Cecato "are very close to Axelrod," and that
"they have been put in charge of the campaign to pass health reform." Ron
Pollack, whose Families USA was part of the HEN coalition, explained to
colleagues that "the team that is working with the White House on
health-care reform. . . . [Grossman, Smith, Del Cecato, Grisolano] . . .
would like to get together with us." This would provide "guidance from the
White House about their messaging."
According to White House visitor logs, Mr. Smith
had 28 appointments scheduled between May and August—17 made through Mr.
Messina or his assistant. Mr. Grossman appears in the logs at least 19
times. Messrs. Del Cecato and Grisolano of AKPD also visited in the spring
and summer, at least twice with Mr. Axelrod, who was deep in the health-care
fight.
A 2009 PhRMA memo also makes clear that AKPD had
been chosen before PhRMA joined HEN. It's also clear that some contributors
didn't like the conflict of interest. When, in July 2009, a media outlet
prepared to report AKPD's hiring, a PhRMA participant said: "This is a big
problem." Mr. Baldick advises: "just say, AKPD is not working for PhRMA."
AKPD and another firm, GMMB, would handle $12 million in ad business from
HEN and work for a successor 501(c)4.
A basic rule of White House ethics is to avoid even
the appearance of self-dealing or nepotism. If Mr. Axelrod or his West Wing
chums pushed political business toward Mr. Axelrod's former firm, they
contributed to his son's salary as well as to the ability of the firm to pay
Mr. Axelrod what it still owed him. Could you imagine the press frenzy if
Karl Rove had dome the same after he joined the White House?
Soon the U.S. Supreme Court will rule on the
constitutionality of the Affordable Care Act. I am not a lawyer, or an
expert on the Constitution. But as the chairman and CEO of a major health
plan, I had a ringside seat to the entire health-care reform process. After
much reflection, I have concluded that the federal individual mandate, which
requires all Americans to purchase health insurance starting in 2014, will
not be upheld.
I don't say this lightly, as I have long been a
vocal advocate of getting and keeping every American covered. As a society,
we have a moral obligation to ensure everyone has access to affordable
health care. We must find a way to cover those who are no longer healthy but
need care.
A workable solution used by many states is a
high-risk insurance pool funded by broad-based taxes. But Congress and the
president chose to require health-insurance companies to guarantee
issue—that is, to insure anyone at anytime.
This approach encourages people to only purchase
insurance when care is needed. Insurance does not work if you only pay two
months of premiums and receive hundreds of thousands of dollars of health
care. This is the equivalent of getting a free ride. Under such a system,
consumers would end up paying more to offset the added costs of free riders.
Insurance would soon become unaffordable.
Once the government mandates guaranteed issue, then
a second mandate is required for individuals to purchase and maintain
insurance. My early support for an individual mandate had always been
grounded in this companion solution, supported by broadly funded subsidies
for lower-income Americans.
Yet, as I studied the arguments for and against the
individual mandate, it became clear to me that the legislation raises
serious constitutional concerns.
For starters, the legislative process that produced
the Act was driven by partisan politics, and traditional oversight
mechanisms that would have facilitated bipartisan and reasoned policy
development were discarded in favor of rapid enactment. Several structural
flaws emerged as a result. For example, the mandate should have been framed
as a traditional tax—a move that could have bolstered the Act's
constitutionality.
Most seriously, Congress insisted on describing
personal inactivity—in this case, the failure to purchase insurance—as
interstate commerce within its regulatory reach. Americans were alarmed,
rightly, that this could empower future legislatures to mandate that
citizens engage in activities none of us would think reasonable today.
Should the Act or part of it be overturned by the
high court, I believe many of the consumer-friendly aspects already
implemented will be adopted by the industry or quickly find their way into
new legislation.
The federal government should encourage rather than
micromanage market reform in all 50 states. Since health care is local,
private-sector innovation in conjunction with state-level reform of the
individual and small-group markets is a better approach.
But no matter how the Supreme Court rules, we still
need bipartisan solutions that work for all Americans. One benefit of the
past two years has been the vigorous public policy discussion that we should
have had prior to passing the legislation—and a recognition that the core
problems are health-care cost and value. Simply put, we must create more
value for consumers by improving the quality and long-term affordability of
health care.
The private sector is hard at work creating new
ways to deliver health care. Health plans are collaborating with hospital
systems to develop innovative accountable care organizations that provide
physicians with incentives to cooperate and enhance patient outcomes.
Hospitals are encouraging physicians to improve the accuracy and quality of
patient data, enhancing clinical decision-making to improve the quality of
care.
Health plans and employers are cooperating on
decision-support tools to help employees better understand their conditions
and choices. These tools are making quality and costs more transparent,
encouraging employees to make better decisions. Finally, employers are
implementing condition-management programs to help employees manage chronic
illnesses such as diabetes and hypertension. They are also investing in
on-site clinics, value-based health plans to increase medication adherence
and incentive-based wellness programs.
As the law continues to evolve, we must not let
politics impede our collective efforts to reinvent American health care.
One detail revealed by Tuesday's debt forecast is
that there's another budget gimmick that makes it seem as if ObamaCare costs
less than it really will, and the ruse deserves more scrutiny than it's
received. Who was it who said we need to pass the bill to find out what's in
it?
The Congressional Budget Office explained clearly
for the first time that the Affordable Care Act's subsidies aren't indexed
over the long term. Indexation is the standard practice that adjusts
policies so they are constant over time as the value of the dollar and the
cost of living change.
Social Security payments, for example, rise
automatically to preserve their purchasing power. When Congress created the
Alternative Minimum Tax (AMT) in 1969 to target 21 millionaires, it didn't
index its income brackets, which is why it now hits the middle class.
ObamaCare's insurance subsidies are like an AMT in
reverse. People making up to 400% of the poverty line—or about $96,000 for a
family of four in 2016—are eligible for refundable tax credits to offset the
premiums and cost-sharing of their government-approved health plans. The
system is insanely complicated, but the amounts of the tax credits vary by
how much people earn and rise over time so that people never contribute more
than a certain share of their paycheck to health care.
Through 2018, the subsidies are indexed to grow in
tandem with incomes and health-care costs. When premiums follow their
historical pattern of rising faster than income, the subsidies grow by more
too so that the individual out-of-pocket percentage is constant year to
year. So far, so routine.
But then in 2019, ObamaCare's drafters slip in what
they euphemize as "additional indexing." According to this new technical
formula, the government is never allowed to spend more than 0.504% of the
economy on subsidies. If normal indexing applied, CBO expects that the
subsidies would blow through the GDP cap in 2022 and keep climbing. But as a
result of the additional indexing, and as more and more people flood into
ObamaCare, every individual will get a smaller piece of the subsidy pie,
which will offset less and less of premiums.
It sounds like great news for taxpayers—the
incredible shrinking entitlement. The problem is that CBO doesn't think
Congress will make the benefits less generous as scheduled, and the pity is
that's probably right. Washington rarely if ever takes away entitlements
(e.g., the political firedrill when seniors decide Social Security's
cost-of-living increases are too small). CBO's euphemism is that the
additional indexing "might be difficult to sustain over a long period."
Therefore in its alternative fiscal scenario, CBO
assumes that Congress will suspend the indexing change every year, just as
it passes an annual "patch" to prevent AMT bracket creep. The upshot is that
billions of dollars are not counted as part of the formal budget—one more
reason that, after ObamaCare, federal bookkeeping is a worthless guide to
future spending.
On paper, Medicare, Medicaid, the Affordable Care
Act and other government health programs will consume 9.6% of GDP in 25
years, up from 5.4% today. But then count the indexing ruse, other ObamaCare
budget gimmicks like Medicare "cuts" to hospitals that CBO doesn't think
will happen, and the Medicare formula that says doctor payments will plunge
next year by 27%, which President Obama promised to fix but didn't. In that
case government health care will hit 10.4% of GDP in 2037.
Almost 1% of the economy is a lot of money. And
it's part of the epic deception that was necessary to pass this
not-so-shrinking entitlement, as Americans continue to discover.
Ernst & Young's annual outside audit of the HHS
balance sheet last November was considered a triumph because several material
weaknesses were downgraded merely to significant deficiencies. But on a
"day-to-day or even monthly basis" HHS cannot accurately track its spending,
according to the audit. The agency is in violation of numerous federal
accounting rules written specifically for the bureaucracy, to say nothing of the
financial reporting required of public companies.
"Fannie Med: Health and Human Services gets into the venture capital
game," The Wall Street Journal, June 4, 2012 ---
http://online.wsj.com/article/SB10001424052702303360504577408150150837834.html#mod=djemEditorialPage_t
Perhaps you thought that the Affordable Care Act is
all about making insurance more affordable. Too bad no one told Americans
that the law also turned the Health and Human Services Department into a
giant venture capital investor for health care. This won't turn out well.
Awash in ObamaCare dollars, HHS has a growing
investment portfolio that includes everything from new insurance companies
to health-care start-ups to information technology. Secretary Kathleen
Sebelius is rushing out loans and subsidies like nobody's business in case
the Supreme Court overturns the law or Mitt Romney wins.
"We're moving forward with implementing this law,
including moving forward with this very important commitment by the
President, by the Administration, to community health centers and the people
they serve," said senior White House aide Cecelia Munoz on a recent
conference call with reporters. She was referring to $728 million in seed
money for new clinics that HHS dispensed last month.
HHS already makes more grants than all other
agencies combined, and it is the purchaser of health care for about one of
three Americans via Medicare, Medicaid or both. The problem is that HHS
spends its money—$788 billion for entitlements in 2012 and another $78
billion to run HHS's 300-odd programs—so badly.
Ernst & Young's annual outside audit of the HHS
balance sheet last November was considered a triumph because several
material weaknesses were downgraded merely to significant deficiencies. But
on a "day-to-day or even monthly basis" HHS cannot accurately track its
spending, according to the audit. The agency is in violation of numerous
federal accounting rules written specifically for the bureaucracy, to say
nothing of the financial reporting required of public companies.
The HHS inspector general revealed this year that
his team can barely monitor HHS because its staff is too busy chasing the
criminals exploiting HHS's incompetence. Experts disagree about how much is
stolen from taxpayers through entitlement fraud—the Government
Accountability Office puts it at $48 billion annually—but one sign of the
problem is that Medicare allows doctors (or "doctors") to register for
billing privileges as "other."
One particular ObamaCare boondoggle that needs
fly-specking is the HHS decision to finance nonprofit insurance companies
with up to $7.25 billion in ultra-low-cost loans. These co-ops were a
consolation prize for liberals after Democratic opposition killed the
government-run public option, and the co-ops are supposed to be managed by
and for consumers. But it turns out that running an insurance company is
hard for amateurs who can't attract private financing.
HHS officially estimates that the default rate on
the loans will hit between 35% and 40%, which would be bad enough. But White
House budget documents show that HHS expects to lose $3.1 billion of the
$3.4 billion appropriated so far—which implies a default rate of 91%. The
lack of accountability to shareholders or capital markets may help explain
this propensity for failure.
Another problem is the way HHS chose to structure
the co-op loans. To protect the insured, states require insurers to maintain
reserves in the event they go bankrupt—and debts that are supposed to be
repaid are viewed as liabilities. To end run these solvency requirements,
HHS is issuing "surplus notes" that subordinate the taxpayer to everyone
else for repayment if a co-op fails.
That seems likely, given the challenges of building
a provider network and attracting members when expertise in such matters is
legally prohibited under HHS rules. Any organization that wrote insurance
policies prior to 2009—as it were, the pre-existing insurers of the Bush
era—is barred from applying for loans or any significant role in the
operations of a co-op. So the co-ops can't benefit from the business
experience that might give them a chance to succeed.
On Friday House Republicans released more documents
that expose the collusion between the health-care industry and the White
House that produced ObamaCare, and what a story of crony capitalism it is.
If the trove of emails proves anything, it's that the Tea Party isn't angry
enough.
Over the last year, the Energy and Commerce
Committee has taken Nancy Pelosi's advice to see what's in the Affordable
Care Act and how it passed. The White House refused to cooperate beyond
printing out old press releases, but a dozen trade groups turned over
thousands of emails and other files. A particular focus is the drug lobby,
President Obama's most loyal corporate ally in 2009 and 2010.
The business refrain in those days was that if
you're not at the table, you're on the menu. But it turns out Big Pharma was
also serving as head chef, maître d'hotel and dishwasher. Though some parts
of the story have been reported before, the emails make clear that ObamaCare
might never have passed without the drug companies. Thank you, Pfizer. ***
The joint venture was forged in secret in spring
2009 amid an uneasy mix of menace and opportunism. The drug makers worried
that health-care reform would revert to the liberal default of price
controls and drug re-importation that Mr. Obama campaigned on, but they also
understood that a new entitlement could be a windfall as taxpayers bought
more of their products. The White House wanted industry financial help and
knew that determined business opposition could tank the bill.
Initially, the Obamateers and Senate Finance
Chairman Max Baucus asked for $100 billion, 90% of it from mandatory
"rebates" through the Medicare prescription drug benefit like those that are
imposed in Medicaid. The drug makers wheedled them down to $80 billion by
offsetting cost-sharing for seniors on Medicare, in an explicit quid pro quo
for protection against such rebates and re-importation. As Pfizer's then-CEO
Jeff Kindler put it, "our key deal points . . . are, to some extent, as
important as the total dollars." Mr. Kindler played a more influential role
than we understood before, as the emails show.
Thus began a close if sometimes dysfunctional
relationship with the Pharmaceutical Research and Manufacturers of America,
or PhRMA, as led by Billy Tauzin, the Louisiana Democrat turned Republican
turned lobbyist. As a White House staffer put it in May 2009, "Rahm's
calling Nancy-Ann and knows Billy is going to talk to Nancy-Ann tonight.
Rahm will make it clear that PhRMA needs a direct line of communication,
separate and apart from any coalition." Nancy-Ann is Nancy-Ann DeParle, the
White House health reform director, and Rahm is, of course, Rahm.
Terms were reached in June. Mr. Kindler's chief of
staff wrote a memo to her industry colleagues explaining that "Jeff would
object to me telling you that his communication skills and breadth of
knowledge on the issues was very helpful in keeping the meeting productive."
Soon the White House leaked the details to show that reform was making
health-care progress, and lead PhRMA negotiator Bryant Hall wrote on June 12
that Mr. Obama "knows personally about our deal and is pushing no agenda."
But Energy and Commerce Chairman Henry Waxman then
announced that he was pocketing PhRMA's concessions and demanding more,
including re-importation. We wrote about the double-cross in a July 16, 2009
editorial called "Big Pharma Gets Played," noting that Mr. Tauzin's
"corporate clients and their shareholders may soon pay for his attempt to
get cozy with ObamaCare."
Mr. Hall forwarded the piece to Ms. DeParle with
the subject line, "This sucks." The duo commiserated about how unreasonable
House Democrats are, unlike Mr. Baucus and the Senators. The full exchange
is among the excerpts from the emails printed nearby.
Then New York Times reporter Duff Wilson wrote to a
PhRMA spokesman, "Tony, you see the WSJ editorial, 'Big Pharma Gets Played"?
I'm doing a story along that line for Monday." The drug dealers had a
problem.
The White House rode to the rescue. In September
Mr. Hall informed Mr. Kindler that deputy White House chief of staff Jim
Messina "is working on some very explicit language on importation to kill it
in health care reform. This has to stay quiet."
PhRMA more than repaid the favor, with a $150
million advertising campaign coordinated with the White House political
shop. As one of Mr. Hall's deputies put it earlier in the minutes of a
meeting when the deal was being negotiated, "The WH-designated folks . . .
would like us to start to define what 'consensus health care reform' means,
and what it might include. . . . They definitely want us in the game and on
the same side."
In particular, the drug lobby would spend $70
million on two 501(c)(4) front groups called Healthy Economy Now and
Americans for Stable Quality Care. In July, Mr. Hall wrote that "Rahm asked
for Harry and Louise ads thru third party. We've already contacted the
agent."
Mr. Messina—known as "the fixer" in the West
Wing—asked on December 15, 2009, "Can we get immediate robo calls in
Nebraska urging nelson to vote for cloture?" Ben Nelson was the last
Democratic holdout toward the Senate's 60-vote threshold, and, as Mr.
Messina wrote, "We are at 59, we have to have him." They got him.
At least PhRMA deserves backhanded credit for the
competence of its political operatives—unlike, say, the American Medical
Association. A thread running through the emails is a hapless AMA lobbyist
importuning Ms. DeParle and Mr. Messina for face-to-face meetings to discuss
reforming the Medicare physician payment formula. The AMA supported
ObamaCare in return for this "doc fix," which it never got.
"We are running out of time," this lobbyist,
Richard Deem, writes in October 2009. How can he "tell my colleagues at AMA
headquarters to proceed with $2m TV buy" without a permanent fix? The
question answers itself: It was only $2 million. ***
Mr. Waxman recently put out a rebuttal memo
dismissing these email revelations as routine, "exactly what Presidents have
always done to enact major legislation." Which is precisely the point—the
normality is the scandal. In 2003 PhRMA took a similar road trip with the
Bush Republicans to create the Medicare drug benefit. That effort included
building public support by heavily funding a shell outfit called Citizens
for a Better Medicare.
Of course Democrats claim to be above this kind of
merger of private profits and political power, as Mr. Obama did as a
candidate. "The pharmaceutical industry wrote into the prescription drug
plan that Medicare could not negotiate with drug companies," he said in
2008. "And you know what? The chairman of the committee who pushed the law
through"—that would be Mr. Tauzin— "went to work for the pharmaceutical
industry making $2 million a year."
One of the enduring mysteries of President Obama's
health law is how its spending constraints and payroll tax hikes on high
earners can be used to shore up Medicare finances and at the same time pay
for a massive new entitlement program. Isn't this double counting?
The short answer is: Yes, it is. You can't spend
the same money twice. And so, thanks to the new health law, federal deficits
and debt will be hundreds of billions of dollars higher in the next decade
alone.
Here's how it works. When Congress considers
legislation that alters taxes or spending related to Medicare's Hospital
Insurance Trust Fund, the changes are recorded not just on the Hospital
Insurance Trust Fund's books, but also on Congress's "pay-as-you-go"
scorecard.
The "paygo" requirement is supposed to force
lawmakers to find "offsets" for new tax cuts or entitlement spending, and
thus protect against adding to future federal budget deficits. Putting the
Medicare payroll tax hikes and spending constraints on the "pay-as-you-go"
ledger was instrumental in getting the health law through Congress, because
doing so fostered a widespread misperception that the law would reduce
future deficits.
But the same provisions add to the Hospital
Insurance Trust Fund's reserves, which expands Medicare's spending
authority. Medicare can only pay full benefits so long as its trust fund has
sufficient reserves to meet these obligations. If the trust fund has
insufficient resources, then spending must be cut automatically to ensure
the fund does not go into deficit. The health law's Medicare provisions
prevent these spending cuts from taking place for several more years.
In short, the scoring convention is not widely
understood and thus obscures the double-counting.
Perhaps the easiest way to understand this is to
look at Social Security. If we generate $1 in savings within that program,
then that's $1 that Social Security can spend later. If we also claimed this
same $1 to finance a new spending program, we would clearly be adding to the
total federal deficit. There has long been bipartisan understanding of this
aspect of Social Security, which is why Congress's paygo rules prohibit
using Social Security savings as an offset to pay for unrelated federal
spending.
No such prohibition exists in the budget process
against committing Medicare savings simultaneously to Medicare and to pay
for a new federal program. It's this budget loophole, unique to Medicare,
that gives the health law's spending constraints and payroll tax hikes the
appearance of reducing federal deficits. But it is appearance, not reality.
If you have only $1 of income and are obliged to pay a dollar each to two
different recipients, then you will have to borrow another $1. This is
effectively what the health law does. It authorizes far more in spending
than it creates in savings.
How much more? Charles Blahous's study, "The Fiscal
Consequences of the Affordable Care Act," published last month by the
Mercatus Center, found that the health law would add over $340 billion to
federal deficits over the next 10 years. Over the longer term, deficits
would run into the trillions.
Medicare spending cuts and tax increases have
always been double-counted—recorded both on the paygo scorecard and added to
the Hospital Insurance Trust Fund. No budgetary rules were bent. But the
fiscal stakes in the Affordable Care Act are extraordinarily high. The
health law's Medicare hospital insurance spending cuts and tax hikes are now
claimed to have eliminated most of the program's medium- and long-term
deficits—even as they have also paved the way for the most expensive
entitlement expansion in a generation.
This blog post is written with Pepijn Veling,
Utrecht University, Netherlands.
There is a general consensus that U.S. healthcare
needs major reform. Can
reverse
innovation — innovations originating from poor
countries — provide one important answer? Most definitely.
In the U.S., the approach is to spend more money on
major technological advances and come up with innovative products and
solutions. In poor countries, the innovation paradigm is just the opposite:
spend less and innovate new business models. Poor countries face severe
resource constraints. They just cannot afford to spend a lot. Constraints
need not be limiting, they can actually be liberating.
The ultra low-cost, high-quality prostheses
innovation of
Dr. Therdchai Jivacate and the
Prostheses Foundation of Thailand is an inspiring
example of this. Over the years, they have developed and delivered over
25,000 affordable and appropriate artificial legs to amputees in remote
areas of Thailand and surrounding countries. In the U.S., an artificial leg
costs about $10,000 and the delivery time is 7-10 days. The Prostheses
Foundation of Thailand is able to do it for less than $100, about 1% of the
U.S. cost, and their delivery time is 1-3 days.
Though Dr. Jivacate spent four years as a resident
of physical medicine and rehabilitation in Northwestern University, he
understood that conventional artificial legs were unaffordable and
inappropriate for the majority of Thai amputees. There are several reasons.
First, customers in rural Thailand simply cannot afford to pay a high price.
For the poor making $2 a day, a $10,000 product would require 5,000 days of
income. (With 200 working days a year, that amounts to an incredible 50
years). Second, the context and functional requirements for amputees in
Thailand are vastly different from those in the U.S. Thai people do many of
their daily activities with bare feet, sitting squat on the floor or
cross-legged, and many work in wet paddy fields. Furthermore, while many
roads in the U.S. are paved, Thai people walk on uneven roads. Finally, the
expensive artificial legs are only available in Bangkok, thus making it
virtually inaccessible to the rest of the population.
Dr. Jivacate defined the most essential customer
problem: to be able to walk without pain. He set out to develop a solution.
His mission was not just to reduce costs — but to shift the
price-performance paradigm. Actually, the artificial leg has to be
higher-quality than in the U.S. to meet the more demanding functional
requirements in Thailand, yet it has to be ultra low-cost. How did he
achieve such an impossible goal?
There are two major cost drivers in an artificial
leg — raw material cost and the cost of technicians.
Dr. Jivacate realized that he could not achieve his goal with expensive
materials such as titanium, which is used in rich countries. One of his
technological breakthroughs was to make artificial legs from recycled
plastic yogurt bottles. These artificial limbs were extremely cheap. Raw
material cost was close to zero since he used waste. More importantly, the
limbs were lightweight, durable and comfortable. Dr. Jivacate converted
waste into wealth.
He also knew that professionally-skilled
technicians were in short supply and too expensive to hire. Dr. Jivacate
therefore instituted training programs for those amputees who showed a
special interest in the fitting process. He hired amputees as technicians to
do the fitting and help with rehabilitation and training with new patients.
This approach had several benefits. First, it dramatically reduced costs.
Second, the amputee-technicians approached their work with passion since
they personally benefited from the product. Third, it stimulated the demand
for the product since these technicians could credibly convince patients
that the product works. Fourth, it improved quality since Dr. Jivacate's
technicians understood, based on personal experience, how to fit the
prosthetic leg without pain and discomfort. Dr. Jivacate's technicians were
thus most customer-centric. Fifth, they understood customer feedback, which
led to continuous process improvements. Sixth, it created an instant empathy
and a high degree of trust between the amputee-technicians and the patients.
Finally and most importantly, it created much-needed job opportunities for
the poor.
He also re-invented the delivery model. Patients in
remote areas of Thailand could not afford to travel to clinics in an urban
setting. So, Dr. Jivacate innovated highly-efficient mobile clinics and 27
satellite workshops in local areas. Between 1992 and 2011, the mobile units
have made more than 115 trips serving over 16,000 amputees. It has recently
broken the Guinness Book of World Records by serving 864 amputees in 13
days.
Finally, Dr. Jivacate tailored the devices to meet
unique local needs — for instance, he custom-built artificial legs
specifically for farmers who worked in wet fields.
Originally targeting the poor, continuous
innovations have drastically improved the quality of the artificial legs
over time (ISO certificates pending). The limbs are now also used by more
affluent amputees in Thailand and in other neighboring countries such as
Indonesia, Malaysia, Laos, and Burma.
In addition to treating humans, Dr. Jivacate
fabricated
a
prosthetic leg for Baby Mosha, a 7 month-old
elephant, who was injured in a landmine in 2009 — a remarkable medical
achievement captured in the award winning documentary film
The Eyes of
Thailand.
If we can make an artificial leg for an elephant for less than $100, why
does a less complicated procedure for humans have to cost $10,000?
Continued in article
Comment at the end of the article by SVNert
Interesting article, although not particularly any
new insight. :) As a patient with emergency needs and proper insurance
coverage, it is better to be in the US (maybe Japan or UK are also good
places to be....) As a patient with some wealth and no insurance and in need
of emergency care, India (and some other countries) would be good places to
be ... although in India pre-op/post-op care is currently lacking and slowly
improving.
In my opinion, short of socialized care, even these
two diametrically opposite US/India situations are primarily driven by
capitalism - of course the parameters of population, disposable wealth etc
etc will play into the equation.
Whereas lawyers 'run' the US healthcare, countries
like India seem to be driven by patient processing factories, and as
factories, economies of scale and low cost come into play, whether its the
services or locally copied/invented devices/systems. From device
(software/hardware/materials etc) invention perspective, the new generation
of technological advances and scientific discoveries surely will make some
of these innovations cheaper - a lot cheaper.
Comment from Ned Keit-Pride
You do not seem to account for the crippling
malpractice insurance costs of most healthcare providers in the US. It is
these costs and the fact that their transactions are largely with insurance
companies rather than patients that drive much of what physicians charge
here. Until healthcare services are sold more directly to patients, I
believe comparing the relative practices of US and Indian physicians to be
very apples-to-oranges.
The
St. Petersburg Times takes a look at the cost of
insurance in Canada for health care providers.
A neurosurgeon in Miami pays about $237,000 for medical malpractice
insurance. The same professional in Toronto pays about $29,200, reports
Susan Taylor Martin.
A Canadian orthopedic surgeon pays just over $10,000 for coverage that
costs a Miami physician $140,000. An obstetrician in Canada pays $36,353 for
insurance, while a Tampa Bay obstetrician pays $98,000 for medical
malpractice insurance.
Why the difference?
In the U.S., private for-profit insurance companies extend medical
malpractice coverage to doctors.
In Canada, physicians are covered through
membership in a nonprofit. The
Canadian Medical Protective Association
offers substantially reduced fees for the same coverage, especially
considering that their payout is limited by caps in Canada just as in some
U.S. states.
In 1978, the Canadian Supreme Court limited pain
and suffering awards to just over $300,000, circumventing the opportunity
for a jury to decide on an award depending on the case before them.
Canadian Medical Protective Association
Here’s how it works.
Fees for membership vary depending on the region of the country in which
the doctor works and their specialty. All neurosurgeons in Ontario will pay
the same, for example. The number of claims they have faced for medical
malpractice does not figure into their premium
"We don't adjust our fees based on individual
experience; it's the experience of the group,'' says Dr. John Gray, the
executive director, "That's what the mutual approach is all about, and it
helps keep the fees down for everyone,” he tells the
St. Petersburg Times.
If a doctor is sued, the group pays the claim and
provides legal counsel.
In the U.S., the push has been on for limiting claims, no matter how
egregious the medical malpractice. President Obama was booed in June when,
before the American Medical Association, he said he would not limit a
malpractice jury award.
"We got a crazy situation where Obama is talking
about the cost of medicine but he said, 'I don't believe in caps,' "
complains Dr. Dennis Agliano, past president of the
Florida Medical
Association. "If you don't have caps, the sky's
the limit and there's no way to curtail those costs.''
But the importance of limiting jury awards may not play into the big
picture on health care reform.
Malpractice lawsuits amount to
less than one percent of both the Canadian and the
U.S. healthcare system, meanwhile between 44,000 and 98,000 Americans die
each year due to medical errors in hospitals alone, while 16 times as many
suffer injuries without receiving any compensation, reports the group
Americans for Insurance Reform.
Major Difference
In Canada, an injured patient is often required to pay for the initial
investigation into his case. In the U.S. the contingency fee basis, usually
in the range of 30 percent, allows the injured party to proceed without a
financial downside.
In both the U.S. and Canada, the definition of medical negligence is that
a duty of care was owed to the patient by the physician, there was a breach
h of the standard of care and the patient suffered harm by the physician’s
failure to meet that standard of care.
A bad outcome in itself is not the basis of a lawsuit.
The Canadian Medical Protective Association insures virtually all of the
country’s 76,000 doctors, as opposed to the U.S. where private for-profit
insurance companies cover physicians for medical malpractice.
In Canada, the median damaged paid in 2007 was $91,999 and judgments
favored patients 25 times, doctors 70 times.
In the U.S., many physician groups are requiring
patients to waive their rights to a jury trial, even though malpractice
litigation accounts for just 0.6 percent of healthcare costs.
Public Citizen,
the consumer group, charges that the facts don’t
warrant the “politically charged hysteria surrounding medical malpractice
litigation.”
For the third straight year,
medical malpractice payments were at record lows
finds the group in a study released this month. The decline, however, is
likely due to fewer injured patients receiving compensation, not improved
health safety.
2008 saw the lowest number of medical malpractice
payments since the federal government’s
National
Practitioner Data Bank began compiling malpractice
statistics. In 2008, payments were 30.7 percent lower than averages recorded
in all previous years.
In the report titled,
The 0.6 Percent Bogeyman, the nonprofit watchdog
group states, “between three and seven Americans die from medical errors for
every 1 who receives a payment for any type of malpractice claim.”
Public Citizen previously reported that about
five percent of doctors are responsible for half
of the medical malpractice in the U.S. that can result in permanent injury
or death. #
In his parade of Republican horribles, President
Obama poured special scorn this week on the idea of handing Medicaid to the
states with a fixed annual federal payment. He says it wouldn't save money
without hurting "poor children" and "middle-class families who have children
with autism and Down's Syndrome." Someone needs to tell Mr. Obama about the
results of Medicaid reform in Rhode Island.
The experiment dates to the final days of the Bush
Administration, when Health and Human Services granted a Global Consumer
Choice Waiver exempting Rhode Island from many of Medicaid's federal rules
and mandates. The state used it to move to managed care from traditional fee
for service, in return for accepting a spending cap over five years of $12.1
billion, including federal matching payments.
How's that working out? Well, a study released late
last year by the Lewin Group, a consulting firm, found that the Ocean
State's reform with a federal waiver has been "highly effective in
controlling Medicaid costs" and improving "access to more appropriate
services."
Rhode Island's Medicaid spending, which had been
projected to reach $3.8 billion, came in at $2.7 billion for the 18 months
following the introduction of the waiver, according to Rhode Island's Office
of Health and Human Services. The state benefited in part from one-time
stimulus money, but it also saved money from such reforms as better case
management by private insurers and competitive bidding for health-care
providers.
For example, Lewin examined the state's shift to
home and community-based care from nursing homes for long-term care
patients. Lewin found the reform helped save $35.7 million over three years,
$15 million in 2010 alone.
The Lewin study also "found evidence of lower
emergency room utilization and improved access to physician services" from
"care management programs" for Medicaid patients with asthma, diabetes,
heart problems and mental health disorders. Emergency room care is a major
driver of Medicaid costs.
The total savings from all of Rhode Island's
reforms were more than $55 million—a big deal in such a small state.
According to an analysis by Gary Alexander, who ran the Medicaid program in
Rhode Island when the federal waiver was granted and who now serves as the
Secretary of Public Welfare in Pennsylvania, if these savings were
extrapolated for all 50 states, they would exceed $200 billion in lower
Medicaid costs over the next decade.
These findings contradict predictions from liberal
critics like the Center on Budget and Policy Priorities, which in 2008
called the Rhode Island waiver a "radical" and "perilous" plan that would
hurt the poor. On quality of care, Lewin found that the waiver ensures that
"Medicaid members in Rhode Island receive the right services, at the right
time, in the right setting." In other words, Down Syndrome children are not
roaming the streets of Woonsocket.
Not every Rhode Island idea has worked, and critics
say some reforms may not be applicable to larger, more diverse, and less
population-dense states like Texas. Perhaps so. But that's why letting 50
states tailor their own service-delivery reforms is the best model for
controlling a program that cost the feds and states a combined $404 billion
in fiscal 2010. State experimentation is how welfare was reformed so
successfully in the 1990s.
Our guess is that President Obama's real objection
to Medicaid black grants is political. He doesn't want Washington to lose
control. He and most Democrats want to use Medicaid to cover as many people
as possible as a way to pave the road to single-payer national health care.
It's no accident that ObamaCare was written to add about 15 million more
people to the Medicaid rolls, most of whom will be middle-income earners.
The nation's governors are looking at this imminent
new burden in horror, and more than half of them have signed a letter
pleading with the Obama Administration to give them less Medicaid money in
exchange for fewer rules and mandates. Medicaid now costs the states $159
billion a year. Without reform the federal cost will double to $587 billion
in 2021 from $274 billion last year, according to the Congressional Budget
Office.
If the Obama Administration won't grant more
waivers, then Republicans ought to investigate the Rhode Island results and
educate the voters during this election campaign.
A Historic and Dysfunctional Alternative to Expensive Malpractice Claims
Last Friday afternoon, Wang Hao, a young internist
at the First Affiliated Hospital of Harbin Medical University in northeast
China, was brutally murdered by a disgruntled patient. It was a spectacular
crime, but it was not an unusual one: Violence against doctors, including
murder, is commonplace and reportedly increasing. In 2006, the last year for
which detailed records on patient-doctor violence was reported publicly
(including violence perpetrated by patient family members and friends), the
Chinese Ministry of Health stated that 5,519 medical personnel had been
“injured” in disputes -- a substantial increase over previous years. And on
March 29, the China Daily cited an “official source” who said that in 2010,
17,000 violent incidents took place, affecting roughly 70 percent of all
public hospitals in China.
Why so much violence against one of the caring
professions? Chinese media, and microblogs, are filled with theories.
In 2007, Xinhua, the state-owned news agency,
explained it as a function of “patients' families and friends [becoming]
more likely to use violence to vent their rage over hospital errors.”
There’s some truth to that. China lacks a credible and independent medical
malpractice system to determine compensation for medical errors. But that’s
just the beginning. The more critical issue relates to the comically low
compensation medical professionals receive (the starting salary for a doctor
is around $500 per month). To supplement their income, they legally receive
commissions on prescriptions and medical services. On Thursday, Shanghai
media reported that the city’s doctors also commonly notify funeral homes of
impending patient deaths in exchange for kickbacks.
Chinese patients often enter a hospital prepared to
pay bribes for the care that they need. I’ve personally witnessed a “tip”
handed to a doctor in advance of a surgical procedure at a top Shanghai
hospital. They can also be tricked into undergoing unnecessary but
revenue-generating procedures. Three years ago, for instance, at another
Shanghai hospital, I was told I should get a CT scan so as to better
understand the causes of a sinus infection, and then asked to purchase a
Percocet prescription to manage my pain. I didn’t need either. Combine this
norm, however, with crowded waiting rooms, high and expensive hurdles to see
specialists, and a pointed lack of means to civilly contest malpractice and
one can see why resentment against the Chinese medical profession has boiled
for decades.
Last Friday’s murder, even in the context of other
Chinese patient-doctor murders, doesn’t reveal much about the scale of
patient bitterness in China. That proof is provided by an astonishing online
poll posted by People’s Daily, the official mouthpiece of the Chinese
Communist Party, a few hours after news of the murder went viral in China.
The now deleted survey (posted as an attachment to this article) asked
readers to express their feelings about Wang Hao’s murder by clicking on
emoticons symbolizing feelings ranging from anger (a red fuming face) to
happiness (a yellow smiley face). Shockingly, of the first 6,161 readers to
respond to the poll, 4,018 --- 65 percent -- chose happiness. Anger came in
a distant second with 14 percent. The third choice, sadness (a teary, yellow
face) received 6.8 percent.
Continued in article
Jensen Question
What do extreme alternatives of violence versus multi-million dollar malpractice
recovery claims have in common?
Answer
Both can lead to physicians and hospitals refusing high risk medical services.
For example, when Romney Care was implemented in Massachusetts it made
obstetrics unprofitable to hospitals having to bear enormous expenses of
obstetrics malpractice insurance. It's common for courts to pass on costly
judgments in sympathy for parents who had a defective baby even though the
hospitals and doctors did nothing wrong. As a result of not being able to cover
expenses of malpractice insurance and lawsuit risks, quite a few hospitals in
Massachusetts closed down their obstetrics services. They would probably do the
same under risk of being damaged by disgruntled Chinese parents.
While the U.S. health care system is not yet on
life support, it remains a fragmented and unwieldy structure whose rising
costs bear little relation to improvements in access or quality. This is
despite the introduction of patient management programs, some restructuring
of insurance models and efforts to adjust incentives for decision making all
across the care continuum.
But during the keynote presentations and panel
discussions at Wharton's 18th Annual Health Care Business
Conference titled, "Innovation in a Changing Health Care Environment," the
emphasis was on solutions. Participants analyzed some of the ways that
individual companies are digging deep into the system to come up with
approaches that rely on new technology, new business models and new
marketing strategies.
Two keynote speeches served as thematic bookends to
the day's discussions. The morning kickoff keynote by Glenn D. Steele Jr.,
president and CEO of Geisinger Health System, defined the scope of the
problem in dollars and disease. Steele focused on the inverse relationship
between cost and quality, citing several studies that found that more than
50% of health care spending in the U.S. is wasted or actually harmful. The
conference ended with a keynote by Robert Pearl, president and CEO of The
Permanente Medical Group, who stated that the survival of the U.S. depends
on reining in health care costs. He challenged the audience to save the
country from economic collapse by redesigning how health care is delivered
and paid for.
Overall, conference presenters provided a
ground-level view of what some of the problems, and solutions, look like in
this transformative time.
Strategizing for Survival
The cost of health care is directly related to our
larger national economic health, as noted by Pearl. "Our problems go back 40
years.... Costs have been rising 7% to 8% a year; health care is 18% of GDP
this year, and it is set to double again, to 36% of GDP, by 2030.... That
leaves no money for education, infrastructure, police and fire." The current
players, he added, are strategizing for survival today because the
trajectory is unsustainable, and change will come. "Currently, we are
fragmented, piecemeal, paper-based and leaderless."
According to David Jones, Jr., chairman and
managing director of Chrysalis Ventures, a private equity and venture
capital firm, the days for tinkering around the edges are gone. "The
provider side re-engineering is doomed to failure because of a fundamental
governance problem. You heard in the keynote this morning that 40% to 50% of
the money spent is useless or actually harmful to outcomes. All of the
change initiatives are focused on solving it in an incremental way."
Jones described that as a "pants-on-fire
problem.... I don't think there is a possibility in the world that a bunch
of ungovernable non-profits with no motivation to change quickly will go
after that problem. I think the solution ultimately -- like the Greek
[economic bail-out] solution or the GM solution -- is that you must have
restructuring in the traditional financial sense. Everyone talks about
hospitals going bankrupt because of politics. That is nonsense. Bankruptcy
is a restructuring, and the system is going to change dramatically."
This urgency, and a new economy driven by
information technology, have created an environment in which change is
happening no matter what laws are passed or what the courts uphold or
overturn, conference participants stated.
"Good regulations, bad regulations: Change has
thrown the pickup sticks into the air, and they will come down in other
ways," Jones said. "The iPhones have taken over the world. More than 80% of
doctors use an iPhone or a smartphone. You can't wall off change. The health
plans are changing fast. As a venture capitalist, that is exciting stuff."
Aetna CEO Mark Bertolini told the conference that
his firm is evolving into a health technology company with a big insurance
vehicle attached. Bertolini discussed Aetna's competitors' similar
investments in electronic health record software that is transforming the
nature of the health insurance industry. "UnitedHealth recently announced
its Optum healthcare cloud which is meant to be a collaboration platform.
It's not Epic, it's not Cerner, it's not McKesson [referring to some of the
dominant electronic health record software companies]. It's got a lot of
resources behind it; it's got a lot of cash flow, and I think it's worth
watching."
Jones of Chrysalis also referred to insurance
company investments in software that are changing the way patients are cared
for. As an example, he cited Humana's platform called Vitality, an incentive
system to encourage individuals to make good choices about eating,
exercising and other health issues. While the problems remain, solutions are
starting to emerge either through creative new business models,
technological advances or creative patient engagement initiatives, he said.
Recovering Costs
According to Jones, Congress did not offer true
health reform with the passage of the Patient Protection and Affordable Care
Act, but instead offered health insurance reform that will address how
consumers pay for health care. "Health insurance is a dysfunctional,
shrinking market on the private side. Plans aren't changing voluntarily;
they are changing because their old business model was crushed and
destroyed. We are getting rid of the chokehold that insurance brokers have
on health care. An 8% to 12% commission goes to Joe Box-of-Donuts," he said,
referring to the fact that health insurance brokers get a commission that is
built into the cost of the price of health insurance. The regional health
insurance exchanges (HIEs) that have been established under the Affordable
Care Act eliminate health insurance brokers -- and their commissions - and
allow patients to buy insurance directly from a pool of health plans, Jones
added. "The health exchanges will drive out that cost and will focus on
brand value."
By eliminating the insurance brokers -- the middle
men in the system -- patients will focus on the value of the insurance
product and choose a tool that works for their situation out of a menu of
options offered through a health insurance exchange, Jones said. As direct
consumers of health insurance, he added, patients will be required to ascend
a learning curve about their options.
According to John Keith, a principal at Deloitte,
"No matter how exchanges evolve, when consumers start looking at their local
networks and what they are getting for their dollar, there will be chaos for
a few years. There will be a period of adjustment as people realize they are
responsible for those costs, and that will drive change down the road."
Providers and suppliers will compete for business
in this new paradigm, where cost and quality are expected to be in
alignment, said Keith. "This is truly an opportunity for real change. ACOs
(Accountable Care Organizations) aren't anything new," Keith added,
referring to the outcomes-based payment system being piloted by Medicare as
mandated in the Patient Protection and Affordable Care Act. "Bundled payment
systems have been around since DRGs (Diagnosis Related Groups), and there
have been lots of revolutions, like HMOs (Health Maintenance Organizations).
They all resulted in very minimal change. Fee for service abhorred
information, but economic duress is causing price pressure, and it opens the
door to an industry focused on value, and demands collaborative tools. We're
going from a feudal system to a Renaissance."
Response to Consumers
Consumers as patients are still at the nexus of
change, either as they gravitate toward providers who are convenient and
effective, or as they learn to manage the health dollars that are spent, if
not directly out of pocket, then on their behalf either by an employer or a
government program, conference participants suggested. "People will behave
like they do in normal consumer markets," said Ashish Kaura, a partner at
Booz & Company. "What are the cornerstones of the consumer markets? Three
things: One is value in product design, which is standardization and driven
by what most people need. Two is simplicity: It must be easy to navigate to
get the information you need. You don't want to spend five hours on the
phone. Three is trust: The biggest value for payers today is trust."
Permanente's Pearl also noted the influence of
consumers on the direction of health care. Consumer demands will need to
drive innovation, since the current uncertainty in the regulatory and
financial environment has many investors waiting on the sidelines for a
clear signal, he said. "Find a single business able to achieve success if
R&D and finance are fighting each other."
According to David Kirchoff, president and CEO of
Weight Watchers, products like Weight Watchers' online tracking system --
which engages patients in their ongoing care -- have succeeded because they
work: Patients use them, they get results and tackling obesity bends the
cost curve down in a host of related diseases, especially diabetes.
"The challenges of obesity are complicated to
solve," he added. "People have difficult choices surrounded by a sea of
temptations. What's at stake? The future of the health care system. There is
a strong link between obesity and diabetes. If you have a BMI (Body Mass
Index) over 30, you are 500% more likely to have diabetes." Today, 10% of
Americans have diabetes, he says. "By 2050, it is expected to be one-third.
This is not a vanity [issue]. This is a health condition that is a function
of the choices we make in our daily lives."
Ultimately, providers and suppliers -- the
pharmaceutical and medical device companies -- will be required to prove
their value in the marketplace or face extinction, according to conference
panelists. Payment systems continue to move at accelerated speed toward a
value-based model with payment for quality and outcomes, and move away from
a fee-based system that simply pays for individual services or products for
which there is no proof of efficacy. Due to this proof-of-concept
stringency, the pharmaceutical sector is financially riskier than it used to
be, but there is still opportunity. That means bio-pharmaceutical investors
are keeping their wallets buttoned until later in the clinical trial
process, panelists said during a discussion about the risks of biopharma
investment.
Luke Duster, a principal at Capital Royalty, a
private equity firm providing royalty-based financing to health care
companies, reported that "last year, there were $90 billion in royalties
[paid to biopharma investors]. There are late stage investment
opportunities, but smaller companies are starved for cash flow because there
is less investment in early stage. We are still raising capital, but only
raising one-third as much as [we did] at the peak. Only the strongest are
surviving."
Duster said he sees more cooperation between the
FDA and industry to move products through the pipeline. He identified drugs
with companion diagnostics as a growth area. Companion diagnostics represent
an opportunity in that market segment because the diagnostic test identifies
genetic markers and so takes the guesswork out of whether the drug will be
effective in a particular patient with an identifiable genetic mutation.
This assures outcomes and, by extension, guarantees the value of the product
to the payer. In companion diagnostics, a genetic test is developed to
identify whether a patient has a particular marker that indicates a specific
drug will work in that patient -- thus the name "companion diagnostic" --
because the diagnostic is tied directly to the efficacy of one particular
pharmaceutical product.
As to the role the FDA is playing in creating a
risk-averse pharmaceutical sector, Ronald W. Lennox, a partner with CHL
Medical Partners, a venture capital firm that focuses on seed and
early-stage companies in the medical sector, said it is the FDA's own
aversion to clinical risk that is trickling down to investors. "FDA
approvals ought to be a balance of risk and benefit. If one million people
benefit from a drug, how many shouldn't? Are we willing to risk one adverse
event? We are tilting toward no adverse events at all, with little regard to
patients who will benefit. Partly it is because of the litigious U.S.
population and partly because we have trials on a small population and we
try to extrapolate from 2,000 clinical trial patients to millions of
patients. That is hard to do."
Finding that Magic Mix of Providers
Panelists discussed the way that transformed
payment models based on outcomes are half of a solution; it is incumbent on
providers to transform what the payers are paying for. Moving from a fee for
service system where a product or service is paid because it was delivered
to an individual patient, to an outcomes-based value model -- where the
payment is determined by overall performance delivered at a population level
-- requires systems to generate the metrics to support reimbursement,
panelists noted.
Emad Rizk, president of McKesson Health Solutions,
talked about what that looks like from a provider's perspective. "Down here
at the execution level, it is ugly. So let's just look at where delivery
systems can go. Supposedly, you have managed populations, which means you
have to have the data. You have to stratify; you have to put processes
together to intervene, measure outcomes and then demonstrate those outcomes.
Then you have to go show the payer that you did it.
Continued in article
Hi Zafar,
By now I'm used to your innuendos and insults of my intelligence. My issue with
medical malpractice lawyers has zero to do with political party affiliation. I
have two issues with lawyers. One is political in the sense that they
traditionally vote in laws favorable to themselves whenever they dominate state
and federal legislatures --- which most of the time.
My second issue with medical malpractice lawyers is that they prefer to work on
a contingency fee basis in the punitive damages legal lottery. These same
lawyers then play to the sympathies of judges and/or juries to award
multimillion dollar sympathy settlements even when the medical service providers
did absolutely nothing wrong. This, in turn, unfairly damages their reputations
and in some instances drives them out of the medical service business such as
when obstetricians either quit altogether or drop obstetrics from their OB/GYN
combined practices.If you want one absurd case with a lot of skin in the game
(even the plaintiff's lawyer conceded the initial $60 million awarded for loose
skin was absurd) go to
http://www.chicagomedicalmalpracticelawyerblog.net/2011/08/court-lowers-60-million-medica.html
The above two issues is at the heart of my disagreement with lawyers.
Firstly, lawyer-legislators made the legal system so complicated that in order
to file a malpractice claim into the legal system you need to employ a lawyer.
Secondly, the lawyers prefer to be paid on a contingency fee bases such that in
states like Texas that took the punitive damage legal lottery out of malpractice
lawsuits, the lawyers must now charge on an hourly basis rounded upward by the
week.
Insert Figure 1
When the lawyers charge on an hourly basis instead of playing a legal lottery,
this hurts poor people who cannot afford even a few hours of law firm time.
Hence, when the punitive damage, contingency fee lottery was taken out of the
equation by constitutional amendment in Texas, many poor people cannot afford to
file medical malpractice lawsuits.
Here's where I differ from Jagdish
I differ from Jagdish on the basis of who determines the settlements. In Finland
and other parts of Europe, professional medical boards determine the settlements
rather than the legal system.
Jagdish wants to leave lawyers in the malpractice claims business either on a
contingency fee or hourly fee basis. I want to cut lawyers and the legal system
out of the claims filing process and have the medical system deal directly with
malpractice claims, thereby making it possible for poor people to file claims
even when the state or nation does not have a punitive damages legal lottery.
My model is the malpractice claims process that modifies the Canadian process
In both Texas and Canada the punitive damages are severely capped to a point
that the punitive damages legal lottery is taken out of the equation. But both
systems require even poor people to pay up front investigation costs and filing
fees.
I think investigation and filing fees should be paid for by the medical system
as a shared cost spread among all medical service billing fees (which in Canada
ultimately spreads it among taxpayers). There should be no up front cost for
filing a claim, although the system might impose penalties of some sort for
claims found to be fraudulent or frivolous.
This is not entirely the way it works in Canada at the moment.
The
St. Petersburg Times takes a look at the cost of
insurance in Canada for health care providers.
A neurosurgeon in Miami pays about $237,000 for medical malpractice
insurance. The same professional in Toronto pays about $29,200, reports
Susan Taylor Martin.
A Canadian orthopedic surgeon pays just over $10,000 for coverage that
costs a Miami physician $140,000. An obstetrician in Canada pays $36,353 for
insurance, while a Tampa Bay obstetrician pays $98,000 for medical
malpractice insurance.
Why the difference?
In the U.S., private for-profit insurance companies extend medical
malpractice coverage to doctors.
In Canada, physicians are covered through
membership in a nonprofit. The
Canadian Medical Protective Association
offers substantially reduced fees for the same coverage, especially
considering that their payout is limited by caps in Canada just as in some
U.S. states.
In 1978, the Canadian Supreme Court limited pain
and suffering awards to just over $300,000, circumventing the opportunity
for a jury to decide on an award depending on the case before them.
Canadian Medical Protective Association
Here’s how it works.
Fees for membership vary depending on the region of the country in which
the doctor works and their specialty. All neurosurgeons in Ontario will pay
the same, for example. The number of claims they have faced for medical
malpractice does not figure into their premium
"We don't adjust our fees based on individual
experience; it's the experience of the group,'' says Dr. John Gray, the
executive director, "That's what the mutual approach is all about, and it
helps keep the fees down for everyone,” he tells the
St. Petersburg Times.
If a doctor is sued, the group pays the claim and
provides legal counsel.
In the U.S., the push has been on for limiting claims, no matter how
egregious the medical malpractice. President Obama was booed in June when,
before the American Medical Association, he said he would not limit a
malpractice jury award.
"We got a crazy situation where Obama is talking
about the cost of medicine but he said, 'I don't believe in caps,' "
complains Dr. Dennis Agliano, past president of the
Florida Medical
Association. "If you don't have caps, the sky's
the limit and there's no way to curtail those costs.''
But the importance of limiting jury awards may not play into the big
picture on health care reform.
Malpractice lawsuits amount to
less than one percent of both the Canadian and the
U.S. healthcare system, meanwhile between 44,000 and 98,000 Americans die
each year due to medical errors in hospitals alone, while 16 times as many
suffer injuries without receiving any compensation, reports the group
Americans for Insurance Reform.
Major Difference
In Canada, an injured patient is often required to pay for the initial
investigation into his case. In the U.S. the contingency fee basis, usually
in the range of 30 percent, allows the injured party to proceed without a
financial downside.
In both the U.S. and Canada, the definition of medical negligence is that
a duty of care was owed to the patient by the physician, there was a breach
h of the standard of care and the patient suffered harm by the physician’s
failure to meet that standard of care.
A bad outcome in itself is not the basis of a lawsuit.
The Canadian Medical Protective Association insures virtually all of the
country’s 76,000 doctors, as opposed to the U.S. where private for-profit
insurance companies cover physicians for medical malpractice.
In Canada, the median damaged paid in 2007 was $91,999 and judgments
favored patients 25 times, doctors 70 times.
In the U.S., many physician groups are requiring
patients to waive their rights to a jury trial, even though malpractice
litigation accounts for just 0.6 percent of healthcare costs.
Public Citizen,
the consumer group, charges that the facts don’t
warrant the “politically charged hysteria surrounding medical malpractice
litigation.”
For the third straight year,
medical malpractice payments were at record lows
finds the group in a study released this month. The decline, however, is
likely due to fewer injured patients receiving compensation, not improved
health safety.
2008 saw the lowest number of medical malpractice
payments since the federal government’s
National
Practitioner Data Bank began compiling malpractice
statistics. In 2008, payments were 30.7 percent lower than averages recorded
in all previous years.
In the report titled,
The 0.6 Percent Bogeyman, the nonprofit watchdog
group states, “between three and seven Americans die from medical errors for
every 1 who receives a payment for any type of malpractice claim.”
Public Citizen previously reported that about
five percent of doctors are responsible for half
of the medical malpractice in the U.S. that can result in permanent injury
or death. #
One heavily-scrutinized part of the ACA reads that
subsidies should be given to healthcare recipients who are enrolled "through
an Exchange established by the State". Some have read this to mean that
subsidies can be given only in states that have chosen to create their own
healthcare exchanges, and do not use the federal exchange, while the Obama
administration says that the wording applies to all states. This dispute is
currently part of an ongoing series of lawsuits referred to collectively as
King v. Burwell. In July 2014, two separate
recordings of Gruber, both from January 2012, surfaced in which he seemed to
contradict the administration's position.[5]
In one, Gruber states, in response to an audience question, that "if you’re
a state and you don’t set up an exchange, that means your citizens don’t get
their tax credits",[21]
while in the other he says, "if your governor doesn't set up an exchange,
you're losing hundreds of millions of dollars of tax credits to be delivered
to your citizens."[22]
When these recordings emerged, Gruber called these statements mistaken,
describing them as "just a speak-o — you know, like a typo".[21]
In November 2014, a series of four videos emerged
of Gruber speaking at different events, from 2010 to 2013, about ways he
felt the ACA was misleadingly crafted and marketed to get the bill passed;
in several of these videos he specifically refers to American voters as
ill-informed and "stupid." In the first, most widely-publicized video taken
at a panel discussion about the ACA at the
University of Pennsylvania in October 2013, Gruber
said the bill was deliberately written "in a tortured way" to disguise the
fact that it creates a system by which "healthy people pay in and sick
people get money." He said this obfuscation was needed due to "the stupidity
of the American voter" in ensuring the bill's passage. Gruber said the
bill's inherent "lack of transparency is a huge political advantage" in
selling it.[23]
The comments caused significant controversy.[24][25][26][27][28]
In two subsequent videos, Gruber was shown talking about the decision (which
he attributed to
John Kerry) to have the bill tax insurance
companies instead of patients, which he called fundamentally the same thing
economically but more palatable politically. In one video, he stated that
"the American people are too stupid to understand the difference" between
the two approaches, while in the other he said that the switch worked due to
"the lack of economic understanding of the American voter."[29]
In another video, taken in 2010, Gruber
expressed doubts that the ACA would significantly reduce health care costs,
though he noted that lowering costs played a major part in the way the bill
was promoted.[30]
After Massachusetts, California came calling.
So did Connecticut, Delaware, Kansas, Minnesota, Oregon, Wisconsin and
Wyoming.
They all wanted
Jonathan Gruber, a numbers wizard at
M.I.T., to help them figure out how to fix their
health care systems, just as he had helped Mitt Romney overhaul health
insurance when he was the Massachusetts governor.
Then came the call in 2008 from President-elect
Obama’s transition team, the one that officially turned this stay-at-home
economics professor into Mr. Mandate.
Mr. Gruber has spent decades modeling the intricacies
of the health care ecosystem, which involves making predictions about how
new laws will play out based on past experience and economic theory. It is
his research that convinced the Obama administration that
health care reform could not work without
requiring everyone to buy insurance.
And it is his work that explains why
President Obama has so much riding on the three
days of
United States Supreme Court hearings, which ended
Wednesday, about the constitutionality of the mandate. Questioning by the
court’s conservative justices has suggested deep skepticism about the
mandate, setting off waves of worry among its backers — Mr. Gruber included.
“As soon as I started reading the dispatches my
stomach started churning,” Mr. Gruber said of the arguments on Tuesday,
while taking a break from quizzing his son for a biology test. “Losing the
mandate means continuing with our unfair individual insurance markets in a
world where employer-based insurance is rapidly disappearing.”
Mr. Gruber, 46, hates traveling without his wife and
three children, so he is tracking the case from his home in Lexington, Mass.
There he crunches numbers and advises other states on health care, in
between headbanging at Van Halen concerts with his 15-year-old son and
cuddling with the family’s eight parrots. (His wife, Andrea, volunteers at a
bird rescue center.)
If the court rules against the mandate, Mr. Gruber
says he believes the number of newly insured Americans could fall to eight
million from the projected 32 million. He insists that without a mandate,
the law will result in a terrible spiral: only relatively sick Americans
will choose to get insurance, leading premium prices to rise and causing the
healthier of even those sick people to drop their insurance, sending prices
higher and higher.
Some other economists quibble, though, with Mr.
Gruber’s pessimistic assessment.
“My general thought about the mandate is if insurance
is affordable and accessible, most people will buy it anyway,” said David
Cutler, an economist at Harvard and longtime collaborator of Mr. Gruber’s.
Others, like Paul Starr, a Princeton sociologist, say
they believe Mr. Gruber’s work does not account for how hard it will be to
enforce the mandate.
“There is this groupthink about how important the
mandate is,” Mr. Starr says. “Most people don’t understand or won’t
acknowledge how weak the enforcement mechanism is.”
Mr. Starr said he thought Mr. Gruber in particular was
overstating the effectiveness of the mandate because “it’s his baby.”
That said, it is difficult for too many other experts
to categorically refute Mr. Gruber’s work, since he has nearly cornered the
market on the technical science behind these sorts of predictions. Other
models exist — built by nonprofits like the
RAND Corporation or
private consultancies like the
Lewin Group — but they all use Mr. Gruber’s work
as a benchmark, according to Jean Abraham, a health economist at the
University of Minnesota and former senior economist in both the Obama and
George W. Bush administrations.
“He’s brought a level of science to an issue that
would otherwise be just opinion,” Mr. Cutler says. “He’s really the only
person who has been doing all this careful modeling for so long. He’s the
only person you can go to for that kind of thing, which is why the White
House reached out to him in the first place.”
Mr. Obama had made health care reform a cornerstone of
his campaign, and wanted to announce a credible proposal quickly after
taking office. But members of the Obama administration’s transition team
said they had inherited an executive branch that had vastly underinvested in
modeling research on health care, especially compared to the technical
modeling that had been done in areas like tax policy.
“Creating a good model from scratch would have taken
months, maybe years,” said Lawrence H. Summers, who was the director of
President Obama’s National Economic Council and had advised Mr. Gruber on
his dissertation when they were at Harvard.
Mr. Gruber had already spent years researching
government mandates, starting with his 1991 dissertation about how mandated
employer benefits cut into workers’ wages.
He also did similar analyses, on a broader range of
public policies for the Treasury Department in the Clinton administration
from 1997-98. He was recruited by Mr. Summers, who was then deputy secretary
of Treasury.
Then in 2001, after returning to M.I.T., Mr. Gruber
received an e-mail from Amy Lischko, who was then an assistant commissioner
in the Massachusetts healthy policy department under then-Gov. Jane M.
Swift, a Republican.
She was familiar with his work, and contracted him to
model some potential ways that Massachusetts could expand health insurance
coverage.
“He certainly wasn’t as well known then as he is now
in the health care arena,” said Ms. Lischko, now a professor at Tufts
University School of Medicine. “We couldn’t exactly kick the tires on these
kinds of models back then, but we knew he had done work on simulations
before.”
Mr. Gruber calls himself a “card-carrying Democrat.”
He and his wife host a “great quadrennial Democratic victory party” whether
or not the Democratic candidate wins, he said. But given his reputation and
relatively rare expertise, he still ended up working for two Republican
governors in Massachusetts.
When Mr. Romney succeeded Ms. Swift in 2003, he
proposed using an individual mandate to help the state achieve universal
health care coverage. Mr. Gruber was again brought in to analyze the idea,
which he had not formally modeled before.
“Romney saw it as a traditional Republican moral issue
of personal responsibility, getting rid of the free riders in the system,
not as much of an economic issue,” Mr. Gruber said. “Not only were the
Republicans for it, the liberals hated it. People forget that.”
Mr. Obama had vehemently opposed an individual mandate
before his election in 2008.
After the Massachusetts plan passed in 2006, Arnold
Schwarzenegger, then the Republican governor of California, invited Mr.
Gruber to Sacramento to help model a similar proposal.
“That was awesome,” Mr. Gruber says, his eyes widening
at the memory. “I got to see the sword from Conan the Barbarian.”
The California proposal fell apart, but soon Mr.
Gruber had a little cottage industry helping states model potential health
system changes. He also serves on the Massachusetts board that oversees the
state’s new health care exchanges.
Along with these credentials, Mr. Gruber’s position as
an adviser to the influential Congressional Budget Office also left him
perfectly positioned to advise the White House on health reform.
“The most important arbiter of everything was the
C.B.O.,” said Neera Tanden, who was a senior adviser for health reform at
the Department of Health and Human Services.
The C.B.O.’s assessment of a bill’s efficacy and costs
strongly influences political debate, but the office does not publicly
reveal how it calculates those numbers.
“We knew the numbers he gave us would be close to
where the C.B.O. was likely to come out,” Ms. Tanden said. She was right.
After Mr. Gruber helped the administration put
together the basic principles of the proposal, the White House lent him to
Capitol Hill to help Congressional staff members draft the specifics of the
legislation.
This assignment primarily involved asking his graduate
student researchers to tweak his model’s software code. It was also almost
entirely conducted from his home office, while his children were at school
and then after they had gone to bed.
“If I wanted to be in Washington, I’d have taken a job
in Washington,” he said. “I wanted to be around for my family.”
Even though he was brought in by the White House,
Congressional staff members from both parties trusted him because he was
seen as an econometric wonk, not a political agent. But soon his very
involvement with the bill caused questions about his objectivity to be
raised in the news media.
During and after the bill’s slog through Congress, he
frequently spoke with reporters and wrote opinion pieces supporting the
Affordable Care Act but did not always mention his role in helping to devise
it.
He says he regrets not being more upfront about his
involvement with the administration. But he does not apologize for publicly
advocating the legislation, and continuing to do so — including through a
comic book he wrote to explain the law.
“Yes, I want the public to be
informed by an objective expert,” he says.“But the thing is, I know more about this law than any
other economist.”
While the U.S. health care system is not yet on
life support, it remains a fragmented and unwieldy structure whose rising
costs bear little relation to improvements in access or quality. This is
despite the introduction of patient management programs, some restructuring
of insurance models and efforts to adjust incentives for decision making all
across the care continuum.
But during the keynote presentations and panel
discussions at Wharton's 18th Annual Health Care Business
Conference titled, "Innovation in a Changing Health Care Environment," the
emphasis was on solutions. Participants analyzed some of the ways that
individual companies are digging deep into the system to come up with
approaches that rely on new technology, new business models and new
marketing strategies.
Two keynote speeches served as thematic bookends to
the day's discussions. The morning kickoff keynote by Glenn D. Steele Jr.,
president and CEO of Geisinger Health System, defined the scope of the
problem in dollars and disease. Steele focused on the inverse relationship
between cost and quality, citing several studies that found that more than
50% of health care spending in the U.S. is wasted or actually harmful. The
conference ended with a keynote by Robert Pearl, president and CEO of The
Permanente Medical Group, who stated that the survival of the U.S. depends
on reining in health care costs. He challenged the audience to save the
country from economic collapse by redesigning how health care is delivered
and paid for.
Overall, conference presenters provided a
ground-level view of what some of the problems, and solutions, look like in
this transformative time.
Strategizing for Survival
The cost of health care is directly related to our
larger national economic health, as noted by Pearl. "Our problems go back 40
years.... Costs have been rising 7% to 8% a year; health care is 18% of GDP
this year, and it is set to double again, to 36% of GDP, by 2030.... That
leaves no money for education, infrastructure, police and fire." The current
players, he added, are strategizing for survival today because the
trajectory is unsustainable, and change will come. "Currently, we are
fragmented, piecemeal, paper-based and leaderless."
According to David Jones, Jr., chairman and
managing director of Chrysalis Ventures, a private equity and venture
capital firm, the days for tinkering around the edges are gone. "The
provider side re-engineering is doomed to failure because of a fundamental
governance problem. You heard in the keynote this morning that 40% to 50% of
the money spent is useless or actually harmful to outcomes. All of the
change initiatives are focused on solving it in an incremental way."
Jones described that as a "pants-on-fire
problem.... I don't think there is a possibility in the world that a bunch
of ungovernable non-profits with no motivation to change quickly will go
after that problem. I think the solution ultimately -- like the Greek
[economic bail-out] solution or the GM solution -- is that you must have
restructuring in the traditional financial sense. Everyone talks about
hospitals going bankrupt because of politics. That is nonsense. Bankruptcy
is a restructuring, and the system is going to change dramatically."
This urgency, and a new economy driven by
information technology, have created an environment in which change is
happening no matter what laws are passed or what the courts uphold or
overturn, conference participants stated.
"Good regulations, bad regulations: Change has
thrown the pickup sticks into the air, and they will come down in other
ways," Jones said. "The iPhones have taken over the world. More than 80% of
doctors use an iPhone or a smartphone. You can't wall off change. The health
plans are changing fast. As a venture capitalist, that is exciting stuff."
Aetna CEO Mark Bertolini told the conference that
his firm is evolving into a health technology company with a big insurance
vehicle attached. Bertolini discussed Aetna's competitors' similar
investments in electronic health record software that is transforming the
nature of the health insurance industry. "UnitedHealth recently announced
its Optum healthcare cloud which is meant to be a collaboration platform.
It's not Epic, it's not Cerner, it's not McKesson [referring to some of the
dominant electronic health record software companies]. It's got a lot of
resources behind it; it's got a lot of cash flow, and I think it's worth
watching."
Jones of Chrysalis also referred to insurance
company investments in software that are changing the way patients are cared
for. As an example, he cited Humana's platform called Vitality, an incentive
system to encourage individuals to make good choices about eating,
exercising and other health issues. While the problems remain, solutions are
starting to emerge either through creative new business models,
technological advances or creative patient engagement initiatives, he said.
Recovering Costs
According to Jones, Congress did not offer true
health reform with the passage of the Patient Protection and Affordable Care
Act, but instead offered health insurance reform that will address how
consumers pay for health care. "Health insurance is a dysfunctional,
shrinking market on the private side. Plans aren't changing voluntarily;
they are changing because their old business model was crushed and
destroyed. We are getting rid of the chokehold that insurance brokers have
on health care. An 8% to 12% commission goes to Joe Box-of-Donuts," he said,
referring to the fact that health insurance brokers get a commission that is
built into the cost of the price of health insurance. The regional health
insurance exchanges (HIEs) that have been established under the Affordable
Care Act eliminate health insurance brokers -- and their commissions - and
allow patients to buy insurance directly from a pool of health plans, Jones
added. "The health exchanges will drive out that cost and will focus on
brand value."
By eliminating the insurance brokers -- the middle
men in the system -- patients will focus on the value of the insurance
product and choose a tool that works for their situation out of a menu of
options offered through a health insurance exchange, Jones said. As direct
consumers of health insurance, he added, patients will be required to ascend
a learning curve about their options.
According to John Keith, a principal at Deloitte,
"No matter how exchanges evolve, when consumers start looking at their local
networks and what they are getting for their dollar, there will be chaos for
a few years. There will be a period of adjustment as people realize they are
responsible for those costs, and that will drive change down the road."
Providers and suppliers will compete for business
in this new paradigm, where cost and quality are expected to be in
alignment, said Keith. "This is truly an opportunity for real change. ACOs
(Accountable Care Organizations) aren't anything new," Keith added,
referring to the outcomes-based payment system being piloted by Medicare as
mandated in the Patient Protection and Affordable Care Act. "Bundled payment
systems have been around since DRGs (Diagnosis Related Groups), and there
have been lots of revolutions, like HMOs (Health Maintenance Organizations).
They all resulted in very minimal change. Fee for service abhorred
information, but economic duress is causing price pressure, and it opens the
door to an industry focused on value, and demands collaborative tools. We're
going from a feudal system to a Renaissance."
Response to Consumers
Consumers as patients are still at the nexus of
change, either as they gravitate toward providers who are convenient and
effective, or as they learn to manage the health dollars that are spent, if
not directly out of pocket, then on their behalf either by an employer or a
government program, conference participants suggested. "People will behave
like they do in normal consumer markets," said Ashish Kaura, a partner at
Booz & Company. "What are the cornerstones of the consumer markets? Three
things: One is value in product design, which is standardization and driven
by what most people need. Two is simplicity: It must be easy to navigate to
get the information you need. You don't want to spend five hours on the
phone. Three is trust: The biggest value for payers today is trust."
Permanente's Pearl also noted the influence of
consumers on the direction of health care. Consumer demands will need to
drive innovation, since the current uncertainty in the regulatory and
financial environment has many investors waiting on the sidelines for a
clear signal, he said. "Find a single business able to achieve success if
R&D and finance are fighting each other."
According to David Kirchoff, president and CEO of
Weight Watchers, products like Weight Watchers' online tracking system --
which engages patients in their ongoing care -- have succeeded because they
work: Patients use them, they get results and tackling obesity bends the
cost curve down in a host of related diseases, especially diabetes.
"The challenges of obesity are complicated to
solve," he added. "People have difficult choices surrounded by a sea of
temptations. What's at stake? The future of the health care system. There is
a strong link between obesity and diabetes. If you have a BMI (Body Mass
Index) over 30, you are 500% more likely to have diabetes." Today, 10% of
Americans have diabetes, he says. "By 2050, it is expected to be one-third.
This is not a vanity [issue]. This is a health condition that is a function
of the choices we make in our daily lives."
Ultimately, providers and suppliers -- the
pharmaceutical and medical device companies -- will be required to prove
their value in the marketplace or face extinction, according to conference
panelists. Payment systems continue to move at accelerated speed toward a
value-based model with payment for quality and outcomes, and move away from
a fee-based system that simply pays for individual services or products for
which there is no proof of efficacy. Due to this proof-of-concept
stringency, the pharmaceutical sector is financially riskier than it used to
be, but there is still opportunity. That means bio-pharmaceutical investors
are keeping their wallets buttoned until later in the clinical trial
process, panelists said during a discussion about the risks of biopharma
investment.
Luke Duster, a principal at Capital Royalty, a
private equity firm providing royalty-based financing to health care
companies, reported that "last year, there were $90 billion in royalties
[paid to biopharma investors]. There are late stage investment
opportunities, but smaller companies are starved for cash flow because there
is less investment in early stage. We are still raising capital, but only
raising one-third as much as [we did] at the peak. Only the strongest are
surviving."
Duster said he sees more cooperation between the
FDA and industry to move products through the pipeline. He identified drugs
with companion diagnostics as a growth area. Companion diagnostics represent
an opportunity in that market segment because the diagnostic test identifies
genetic markers and so takes the guesswork out of whether the drug will be
effective in a particular patient with an identifiable genetic mutation.
This assures outcomes and, by extension, guarantees the value of the product
to the payer. In companion diagnostics, a genetic test is developed to
identify whether a patient has a particular marker that indicates a specific
drug will work in that patient -- thus the name "companion diagnostic" --
because the diagnostic is tied directly to the efficacy of one particular
pharmaceutical product.
As to the role the FDA is playing in creating a
risk-averse pharmaceutical sector, Ronald W. Lennox, a partner with CHL
Medical Partners, a venture capital firm that focuses on seed and
early-stage companies in the medical sector, said it is the FDA's own
aversion to clinical risk that is trickling down to investors. "FDA
approvals ought to be a balance of risk and benefit. If one million people
benefit from a drug, how many shouldn't? Are we willing to risk one adverse
event? We are tilting toward no adverse events at all, with little regard to
patients who will benefit. Partly it is because of the litigious U.S.
population and partly because we have trials on a small population and we
try to extrapolate from 2,000 clinical trial patients to millions of
patients. That is hard to do."
Finding that Magic Mix of Providers
Panelists discussed the way that transformed
payment models based on outcomes are half of a solution; it is incumbent on
providers to transform what the payers are paying for. Moving from a fee for
service system where a product or service is paid because it was delivered
to an individual patient, to an outcomes-based value model -- where the
payment is determined by overall performance delivered at a population level
-- requires systems to generate the metrics to support reimbursement,
panelists noted.
Emad Rizk, president of McKesson Health Solutions,
talked about what that looks like from a provider's perspective. "Down here
at the execution level, it is ugly. So let's just look at where delivery
systems can go. Supposedly, you have managed populations, which means you
have to have the data. You have to stratify; you have to put processes
together to intervene, measure outcomes and then demonstrate those outcomes.
Then you have to go show the payer that you did it.
March is an important month in the ongoing saga of
President Obama’s abject policy failures. First, Chevrolet announced that
it would temporarily cease production of the president’s much-touted car for
the green economy, the Chevy Volt. Second, the U.S. Supreme Court will hear
the state-led challenge to the president’s health care legislation. And
while “ObamaCar” and ObamaCare may seem like unrelated topics, in this case
they have at least three elements in common.
Both were sold as a key to creating jobs
and economic growth. Only last year the president
predicted that there
would be 1 million electric cars on U.S. roads by 2015—just three years
away. And New York Senator Chuck Schumer doubled down on that
economic vision: “We
need a business model based on cars of the future, and we already know what
that future is: the plug-in hybrid electric car.”
Similarly, Obama defended his takeover of the
health care system by
proclaiming, “We must
lay a new foundation for future growth and prosperity, and a key pillar of a
new foundation is health insurance reform.” Speaker Nancy Pelosi saw health
reform as a
jobs factory: “In its
life [health care reform] will create 4 million jobs, 400,000 jobs almost
immediately.”
Well, that economic wave of the future can wave
goodbye. Green energy isn’t creating jobs and boosting the economy.
Indeed, many green energy companies are cutting back, laying off or closing
down—even with billions of dollars in taxpayer subsidies.
Meanwhile, oil and gas production—the left’s
biggest nightmare—is resurgent, and the U.S. is once again becoming a global
leader in energy production. Several
state economies are booming because of the energy
explosion, with low unemployment and high wages—everything the president
promised from the green economy, but has failed to deliver.
However, left unrepealed the health care law
probably will create jobs—government jobs! Thousands of new government
employees will be added to the federal payroll to manage the millions of
people put in the government-run Medicaid program, and IRS agents to ensure
Americans are buying ObamaCare, or slap them with a penalty if they don’t.
The government has heavily subsidized both.
Neither Obama’s green energy or universal health care visions would work
without pumping in billions of taxpayer dollars—and they probably won’t work
even with the subsidies.
The administration has created an $80 billion
clean-energy investment program to subsidize green companies—$5
billion just for electric cars—many of
which, as the Washington Post recently
reported, also happen
to be big Obama donors. And did I mention bonuses? ABC News
reports that Beacon
Power Corp. of Massachusetts “paid cash bonuses of $259,285 to three
executives in part due to progress made on the $43 million energy loan …
Last October, Beacon Power filed for Chapter 11 bankruptcy.”
Hmmm, so our taxes paid big bonuses based in part
on executives’ success in siphoning off our taxes from the Obama
administration.
But green energy subsidies are chump change when it
comes to the federal dollars Obama will pour down the health care drain.
Official figures calculated a cost of about
$1 trillion over 10 years, both from new taxes and
robbing from Medicare. But if you can find a federal official who tells the
truth, such as Medicare Chief Actuary Richard Foster, you’ll discover that
Democrats way
underestimated the costs.
Continued in article
The Amish are exempt from the entire health care reform law.
Catholics are not exempt.
The Amish are exempt from the entire health care
reform law. So are members of Medi-Share, a program of Christian Care
Ministry. Yet, when the Catholic Church asks for a religious exemption from
just one regulation issued under the law – the mandate that all employers,
including religious institutions, must pay for sterilization and
contraceptives, including abortion-inducing drugs – the Administration
balks.
The government respects the First Amendment that
guarantees the right to freely exercise one’s religious beliefs, but only to
a point. In the health care law it picks and chooses which beliefs it
respects. The Amish do not believe in insurance, and the government
understands. Christian Care Ministry believes people should form a religious
community and pay medical bills for one another, and the government says
okay. Yet when the Catholic Church opposes being forced to pay for services
that violate its beliefs, the Administration says “tough.”
What is so special about this mandate that it
cannot be touched? It was added after Congress passed the health care law
and offers no exemption for religious charitable or educational
institutions. It will not accept Catholic charities and schools as
“religious enough” unless they hire only Catholics, serve only Catholics,
have the narrow tax exempt status granted to houses of worship, and teach
religion as their purpose. Amazingly, this mandate has more force than the
overall health care law. In fact recent regulations allow states to decide
which “essential health benefits” to require in health plans, such as
hospitalization, prescription drugs and pediatric services. At the same
time, all insurance plans must include the objectionable services mentioned
above. Here federal law trumps state law and threatens to fine into
submission institutions that dare oppose it. The going rate is at least $100
per day per employee.
What has the government got against the Catholic
Church? Has it forgotten the contributions the church has made to the poor
and needy for centuries?
Catholic elementary and secondary schools provide
the only real alternative to public schools in many parts of the nation.
Catholic colleges offer outstanding education, be it at the university or
the community college. The contribution has a long history, back to 1789
when Georgetown University was founded by the Jesuits. Yet under the health
care law, if these schools and colleges wish to remain faithful to their
religious principles the government will fine them into submission. There’s
a thank-you note.
Many Catholic hospitals were founded by religious
orders of women, and today one out of six persons seeking hospital care in
the United States goes to a Catholic hospital. Until now, religious
background of the patient has not been an issue. “Where does it hurt?” is
the first question, not “Where is your baptismal certificate?” This approach
threatens to deny hospitals any real protection as “religious employers”
under the new rule. Yet their Catholicity means many of these hospitals have
an added benefit. At Providence Hospital in Washington, DC, for example,
patients not only get medical care, they can get clothing too if they need
it. It comes through the Ladies of Charity, an auxiliary of the Daughters of
Charity who founded the hospital in 1861. Catholic social service agencies,
including adoption and foster care agencies, parish food banks, and soup
kitchens, meet human concerns. Services depend on need, not creed. Church
sponsorship means the services have a little extra, be they volunteers from
parishes, financial donations through diocesan appeals, or the dedication
that comes from working for God as well as paycheck.
Continued in article
"Will Employers Undermine Health Care Reform by Dumping Sick Employees?"
by Amy Monahan and Daniel Schwarcz, Virginia Law Review 125 (2011) ---
http://www.virginialawreview.org/articles.php?article=321
Thank you Paul Caron for the heads up.
This Article argues that federal health care reform
may induce employers to redesign their health plans to encourage high-risk
employees to opt out of employer-provided coverage and instead acquire
coverage on the individual market. It shows that such a strategy can reduce
employer health care expenditures without substantially harming either
high-risk or low-risk employees. Although largely overlooked in public
policy debates, employer dumping of high-risk employees may threaten the
sustainability of health care reform. In particular, it potentially exposes
individual insurance markets and insurance exchanges to adverse selection
caused by the entrance of a disproportionately high-risk segment of the
population. This risk, in turn, threatens to indirectly increase the cost to
the federal government of subsidizing coverage for qualified individuals and
to exempt more individuals from complying with the so-called individual
mandate. The Article concludes by offering several potential solutions to
the threat of employer dumping of high-risk employees.
Jensen Comment
Since it's illegal to dump sick employees without justifiable reasons, the
impact of Health Care Reform may be to both increase the number of law suits and
increase the number of hurdles that employees must surmount to obtain and keep
jobs. For example, factory employees and store clerks must be able to stand
without a break for x minutes, diabetic and epileptic bus and taxi drivers may
be dropped at the first episode of unconsciousness, drug testing may become more
common, Mental health patients may be particularly vulnerable to dismissal.
Then there is an even bigger risk that employers will drop health coverage of
all employees
McKinsey & Co. made itself the White House's public
enemy number—well, we've lost count—after releasing a survey last month
showing that nearly one in three businesses may drop insurance coverage as a
result of the new health-care law. The real offense of the management
consultants seems to be accurately portraying reality.
Consider a suggestive new survey to be released
today by the National Federation of Independent Business, the trade group
for small businesses. William Dennis, a senior research fellow who has
conducted the study for 35 years, reports that 57% of a cross-section of
companies that employ 50 or fewer workers and offer coverage may stop doing
so. Look out below.
About two of five small companies sponsor
insurance—a share that, according to NFIB, has on net held mostly stable or
declined very slightly since the passage of the Affordable Care Act. Yet 12%
of these companies—one of eight—have either had their plans cancelled or
have been told that they will be in the future. This churn in the private
small-group market is a direct result of ObamaCare's new rules and
mandates—but a far larger destabilization could be in the offing, what Mr.
Dennis calls "the flight to the exchanges."
Those would be the dispensaries of heavily
subsidized insurance, and the NFIB finds that 26% of small businesses today
sponsoring insurance are "very likely" to drop it should their employees
start to flood government coverage. Another 31% of the 750 firms surveyed
report they are "somewhat likely."
Small-business workers are eligible for exchange
subsidies even if they can get job-based coverage. The incentive is for them
to take it—given that the new government payments will be so generous,
small-group coverage is generally costly and the insurance tax break for
employers usually doesn't go very far when the employer is small.
If enough workers split, in other words, private
coverage will soon erode and cease to exist as an option. Meanwhile,
start-ups are constantly entering and exiting the market, and the ones with
fewer benefits and liabilities will gain a competitive advantage. Businesses
with fewer than 50 employees also aren't subject to any "play or pay"
penalties. As Mr. Dennis put it in an interview, "Once you pull the string,
everything may unravel."
ObamaCare's partisans claim none of this will
happen because of the social norm theories of behavioral economics.
Businesses offer insurance to attract workers, the thinking goes, and it's
the right thing to do. But that assumes utter irrationality—that workers
won't take a cheaper deal when they see it and businesses won't try to
compete against their rivals.
Americans may not be familiar with the medical
innovation called negative pressure wound therapy, though it has helped
hundreds of thousands of patients with complex or chronic injuries like
burns or diabetic ulcer complications that could never heal on their own.
Now President Obama's Medicare team is about to severely damage this field,
and many others too—all in the name of reforming how the entitlement pays
for care.
Last week a Medicare competitive-bidding program
went live in 91 metro regions—nearly all the U.S. population—for what's
known as durable medical equipment. That bureaucratic jargon covers advanced
devices like wound therapy, respiratory assist equipment for people who
can't breathe, and feeding tube systems for people who can't eat. It also
lumps in things like walkers, scooters and "support surfaces." Those would
be beds.
The good intentions of this saga date to 2003, when
Congress in a fit of sanity ended Medicare's price controls in favor of
auctions. Both political parties soon rebelled when oxygen tank suppliers,
scooter stores and such in their home districts started whining about being
asked to compete on market prices, rather than plod along with the
guaranteed revenue of the fee schedule. But the much deeper problem is that
Medicare cooked up an auction process that defies all economic sense.
Normally when the government wants to buy
something, it asks companies how much they can provide and to name their
price. Winners are selected from the lowest bid up until the government has
what it needs at the lowest possible cost, and thereby finds competitive
equilibrium prices.
Under Medicare's highly unusual version of
competitive bidding, it will pay the winners the median price of all the
winning bids, rather than using the clearing price. Bids are also for some
reason nonbinding.
This matters because it creates incentives for
unscrupulous third-party companies to make low-ball "suicide bids." If the
median price shakes out high enough, they automatically win the contract,
buy the medical products from manufacturers and turn a profit. If it isn't,
they can dump the contract since bidding involves no commitment.
Medicare will then offer the contract at the median
price to the honest companies that have made bids aligned with their true
costs, and they can take it or leave it. Medicare benefits because the
median prices will be biased below the clearing price—in other words, the
"auction" is merely another way of generating arbitrary below-cost price
controls.
The Bush Administration road-tested this scheme in
2008 with pilot projects in nine cities. For illustration let's return to
negative pressure wound therapy, a technique that involves a sealed dressing
attached to a vacuum pump to prevent infection and improve recovery.
Patients can recuperate at home but require 24/7 clinical and safety
support, typically provided by the device's maker. Advanced wound treatment
is far more complex than, say, a cane.
In 2008, only 17 of the 88 winning bidders bothered
to supply wound therapy devices. Only 10 of them had any actual expertise in
how the technology is used or in patient support. The supply crisis was so
deep that for several weeks no Medicare patients in two of the cities could
receive this treatment at home, and the government threw out the entire
program and said it would retool competitive bidding.
Yet by one estimate, a 2011 reprise had roughly
one-fifth of the bids going to companies that were on credit hold with
device manufacturers—i.e., they couldn't buy if they wanted to. Medicare,
meanwhile, boasts that it will reduce prices for durable medical equipment
by 35% and "save" taxpayers $28 billion. All it is really doing is rewarding
the fly-by-night operators while harming innovative companies and ultimately
patients.
The current nationwide rollout has no substantive
revisions from the failed pilots, despite the objections of 244 economists
and auction scientists led by the University of Maryland's Peter Cramton.
The consensus of basically everyone who knows anything about auctions is
that the no-risk bids and median pricing are idiotic and designed for
failure.
At a December meeting, a coalition of device makers
and professional clinical groups even accepted these flaws but begged
Medicare deputy administrator Jonathan Blum merely to accredit wound therapy
bidders. He refused to apply any such basic quality control standards. The
Administration does not care.
The larger tragedy is that market methods like
auctions are the only way to rationalize the entitlement state. They're at
the core of the reform ambitions of Paul Ryan and Ron Wyden—and they're
already tough enough to achieve given the resistance of the providers that
want more of Medicare's money. This fiasco turns on 1.4% of Medicare's
annual spending, yet it risks discrediting competitive bidding for good.
The crisis in health care is manageable - without the radical, extreme
measures passed in the Affordable Care Act.
USA Today reports that just 5% of patients account
for 50% of health care spending. And just 1% account for 22% of the
spending.
That's about $90,000
per person, according to the Agency for Healthcare Research and Quality.
U.S. residents spent $1.26 trillion that year on health care.
Five percent
accounted for 50% of health care costs, about $36,000 each, the report
said.
The report's findings
can be used to predict which consumers are most likely to drive up
health care costs and determine the best ways to save money, said Steven
Cohen, the report's lead author.
While the report
showed how a tiny segment of the population can drive health care
spending, the findings included good news. In 1996, the top 1% of the
population accounted for 28% of health care spending.
"The actual
concentration has dropped," Cohen said. "That's a big change."
About one in five
health care consumers remained in the top 1% of spenders for at least
two consecutive years, the report showed. They tended to be white,
non-Hispanic women in poor health; the elderly; and users of publicly
funded health care.
Other studies have shown that most of this spending is on "end of life" care
- that is, patients who have very little chance of recovery but who have
numerous hospital stays and even surgeries that don't extend life, but deal
with unrelated symptoms to their primary disease. Someone dying of heart
disease getting a kidney transplant, for instance.
The question is how to manage our eventual demise in a compassionate, but
reasonable manner? One thing for sure - government doesn't have the answer
to that. Only families and their physicians should be involved in those
decision.
Of course, insusrance companies will get involved and are likely to balk at
paying for more and more treatments at this stage of life. But we can sue
insurance companies if they refuse to
pay for a necessary procedure. We can't sue the government.
In fact, the decisions of the government when it comes to
Medicare spending will be above and
beyond any legal review. Mona Charen:
All decisions about
controlling Medicare costs will be decided by the Independent Payment
Advisory Board (IPAB).
IPAB is a new thing
in American government. Unlike most other boards and commissions, the
panel's 15 members (appointed by the president and approved by the
Senate) need not be bipartisan. Also unlike other boards, commissions,
and federal agencies, the IPAB's decisions are virtually unreviewable.
IPAB doesn't have to adhere to the notice and comment rules of federal
agencies, which permit citizens to respond to proposed rule-makings.
IPAB dictates automatically become law unless Congress itself
intervenes. Ah, but they've thought of that and made it virtually
impossible. The law prescribes that Congress has a limited period of
time in which it can modify IPAB rulings and then it must do so by a
three-fifths majority. Even ratifying treaties and proposing amendments
to the Constitution require only two-thirds majorities. As for the
courts, forget it. The judiciary is forbidden to review IPAB decisions.
The really bizarre
part, reminiscent of the "I wouldn't do that, Dave" scene in 2001: A
Space Odyssey, is that Congress can only repeal IPAB itself under strict
conditions. Clint Bolick of the Goldwater Institute explains:
"Under the statute, any bill to repeal IPAB must
be introduced within the one-month period between January 1 and February
1, 2017. If introduced, it must be enacted by a three-fifths
super-majority no later than August 15, 2017. If passed, the IPAB repeal
will not become effective until 2020 - leaving an out-of-control agency
in operation for three years after Congress votes to abolish it."
Medicaid is America’s single biggest health
programme. This year roughly one in five Americans will be covered by Medicaid
for a month or more. It gobbles more federal and local money than any state
programme, other than education. Costs will rise even more when Barack Obama’s
health-care reform expands the programme by easing eligibility rules in 2014.
Congress’s “supercommittee” is already considering cuts. However, there are more
immediate pressures behind the present drive for change.
"Health Care: A new prescription for the poor: America is
developing a two-tier health system, one for those with private insurance, the
other for the less well-off," The Economist, October 8-14, 2011 ---
http://www.economist.com/node/21531491
“IT’S time for Dancing with the Stars!”, a woman
announces enthusiastically. At this New York health centre, wedged between
housing projects to the east and Chinatown to the west, “dancing with the
stars” means dancing with a physical therapist. An old man stands up with a
nurse and begins a determined samba.
Comprehensive Care Management (CCM), which runs
this centre, tries to keep old people active. To do so, explains Joseph
Healy, the chief operating officer, is in the company’s best interest. The
government pays CCM a capped rate for the care of its members. If someone
gets sick, his health costs rise and the company’s margin shrinks. Mr Healy
argues that the system is the best way to provide good care at a low cost.
Increasingly others seem to agree.
Medicaid, America’s health programme for the poor,
is in the process of being transformed. Over the next three years, New York
will move its entire Medicaid population into “managed care”, paying
companies a set rate to tend to the poor, rather than paying a fee for each
service. New York is not alone. States from California to Mississippi are
expanding managed care. It is the culmination of a steady shift in the way
most poor Americans receive their health-care treatment.
Medicaid is America’s single biggest health
programme. This year roughly one in five Americans will be covered by
Medicaid for a month or more. It gobbles more federal and local money than
any state programme, other than education. Costs will rise even more when
Barack Obama’s health-care reform expands the programme by easing
eligibility rules in 2014. Congress’s “supercommittee” is already
considering cuts. However, there are more immediate pressures behind the
present drive for change.
Enrolment in Medicaid jumped during the downturn,
from 42.7m in December 2007 to 50.3m in June 2010. Mr Obama’s stimulus bill
helped to pay for some of this, but that money has dried up. Faced with
gaping deficits, some desperate governors slashed payments to hospitals and
doctors, or refused to pay for trips to the dentist or oculist. But much the
most important result has been structural: the expansion of managed care.
States have dabbled in managed care for decades.
The trend accelerated in the 1990s, with the share of Medicaid patients
under this form of care reaching 72% by 2009. Now, however, there is a
strong push for the remainder. States that did not have managed care, such
as Louisiana, are introducing it. Other states are extending it to people
previously deemed off limits: California and New York, for example, are
moving the elderly and disabled into that system of care. Texas is targeting
more than 400,000 Medicaid beneficiaries in the Rio Grande Valley. Local
politicians had resisted the move, nervous that care might deteriorate. But
the yawning deficit meant that they were overruled.
The result is a country with two distinct tiers of
health care. Most Americans with private insurance are still horrified by
thoughts of health-management organisations and prefer to pay fees for each
medical service. For the poor, managed care is becoming the norm.
Advocates of managed care have high expectations.
First, they hope that it will make costs more predictable. Second, they
believe that the change will improve patients’ health. In managed care, a
patient has a network of doctors and specialists. If the programme works
properly, doctors can monitor all aspects of care, in contrast to the
fragmented fee-for-service system. The contracts that states have with firms
can set standards for quality. Texas, for instance, will cut 5% from a
company’s payment if it does not meet what is required.
The next step is to integrate care for those
eligible for both Medicaid and Medicare, the federal programme for the old.
These “duals” account for almost 40% of Medicaid’s costs and just 15% of its
population. “If managed care can really deliver better care than
fee-for-service”, says Diane Rowland, chair of the commission that advises
Congress on Medicaid, “this is the population that could prove it.”
But some, such as Norma Vescovo, are sceptical. As
the head of the non-profit Independent Living Centre of Southern California
(ILCSC), Ms Vescovo serves Medicaid patients with severe health problems.
Over the years she has often sued California on policies that she thinks
will hurt her vulnerable clients. On October 3rd her case moved to the
Supreme Court.
The outcome of Douglas v Independent Living Centre
will have profound implications for the future of Medicaid. Ms Vescovo’s
suit concerns cuts to hospitals and doctors. But the case will also guide
the course of managed care. If ILCSC and its co-plaintiffs win, private
groups will continue to be able to challenge states on policies they think
violate federal Medicaid law. Ms Vescovo, who argues that California’s
payment cuts would eviscerate her clients’ access to services, worries that
under managed care the disabled might not be able to see the specialists
they need.
The question is how to supervise the experiments
with managed care that are being carried out in various states. To date,
Medicaid beneficiaries have been able to challenge the states in court.
However, if the Supreme Court rules against ILCSC, that avenue will be
closed. The Centres for Medicare and Medicaid Services (CMS) technically can
intervene if states do not provide proper access to care. In reality, CMS
has few tools to do so.
Continued in article
Jensen Comment
Actually various nations like Germany have a two-tier health system where those
who can afford it supplement the national health care program with private
insurance.
February 8, 2010 message from a friend in Germany
Hello Bob and Erika,
as it is Super Bowl Sunday I am sitting here
reminiscing about my time in the US, and, of course, thinking about the
people that I met. So I’m sending you an email as I am waiting for the Super
Bowl to come on in about an hour. Once again they will show the big game on
German TV. I have to take the rest of my vacation time from last year until
the end of March of this year, so I decided to take tomorrow off to get rid
of some of the vacation time (I have done this almost every year since I
came back from the US, and two years ago I was even so lucky to be in the US
for the Patriots-Giants Super Bowl, the greatest Super Bowl I have seen). So
I am still quite busy at work, and still enjoy what I do very much. Since I
am in an energy-related field, I am so to speak ‘part of’ this huge ‘push’
(for lack of a better word) that is going on towards renewable energy right
now. Even though superconducting power cables are not a renewable energy
source but rather one form of transmitting energy , there is a lot of
interest in the technology right now. Taking a day off tomorrow turned out
to be a good choice, as all public transportation workers in the city of . .
. will be on strike, so I would have had to take the car to get to
work.
I hope you are doing well in the mountains of New
Hampshire, which I assume didn’t get hammered by the snowstorm the last few
days, but are covered in snow anyway. I am reading Bob’s emails with great
interest, especially regarding the banking situation and the health
insurance situation. These are also two significant issues over here (you
could actually argue that the strike tomorrow has a little to do with the
bank bailout, see below….).
The new German government is trying to reform our
health care system. Medical care in Germany is probably among the best in
the world, and costs are quite high (so I guess it’s quite similar to the US
in these manners…). We have this system of public option insurance, which
covers ~ 80% of the population, and private insurance, which covers almost
everyone else (except for the few percent that fall through the cracks). In
any case, the underlying idea of the system is not so bad, but the
administration is so complex that a) only the Germans could come up with it
and b) only the Germans can run it without going nuts. What is interesting
is that Germany is one of only a few countries in Europe that has this
private insurance option, most have only the public option (or so I read in
an article recently, I am not the expert on health insurance). The public
option insurance had to curtail what they reimburse quite a bit in recent
years to cut costs, so more and more people try to get into private
insurance. This, however, is not so easy: You have to earn a certain amount
of money, and the insurance companies can deny coverage or exclude certain
pre-existing conditions. (I have pre-existing conditions, so for me private
insurance would be almost useless, as they would exclude these conditions,
or rack up my premiums, or both). Plus, my wife (while she is not working,
when she is working she will be covered herself again, and have to pay the
premium (percentage of income))) and kid are covered with no additional
premium in the public option, so it is always a safe bet, despite the fact
that it may not pay for all the treatments the private insurance pays for
(they generally pay for everything that is medically necessary though, even
quite complex and costly procedures). So in any case, if you are interested
I can tell you a bit more about health insurance in Germany. (There is
actually another similarity between Germany and the US: With Germany being
the biggest economy in Europe, medication costs a lot more here than in
neighboring countries (or so I’ve read), which to me seems similar to the
US/Canada medication cost issue).
As I said before, there will be a strike here in .
. . tomorrow as the greedy public works employees (part of which are
the transportation workers) show little solidarity to all the poor bankers
bailed out by government funds. Since German governments (state and federal)
had to fund the solidarity fund for starving bankers to keep them from
bankruptcy and local governments have lower tax receipts due to the economic
crisis, there is very little money for pay raises for public works
employees, which, of course, should be happy to have a job and be able to
collect a paycheck. (But thanks to the banks and the great work the bankers
do, they all have jobs (except for the ones that got laid off, of course,
but hey, if we laid off some bankers or let their banks go belly up, more
people doing real work would be sure to get laid off too, because it’s a
trickle-down economy, as we all know)). Collecting a paycheck is obviously
something the greedy workers couldn’t do if it wasn’t for banks having money
(and handing it out via ATMs, and central banks printing as much of it as is
necessary, or maybe even more), which goes to show that there is a true lack
of solidarity from the general public towards the poor starving bankers
bailed out by government funds.
So the poor bankers will have a hard time driving
their BMWs and Mercedes to work tomorrow, as the roads will be clogged up by
the cheap and smelly cars of people that would otherwise take public
transportation to work (I assume that everyone that can take the day off
will do so, just like I do. People were actually advised to take the day off
if they can). Maybe I should check the newspaper again to make sure there
isn’t an impromptu bank holiday tomorrow, after all, when bankers do so much
good for us year-round they shouldn’t have to suffer through such a rough
commute to work because of some greedy workers going on strike.
In any case, I would normally ride my bike to work
if it wasn’t for this rather rough winter, which for me is the latest piece
of evidence that global warming is maybe not all it’s cracked up to be. It’s
pretty reasonable to assume that human activity has an influence on climate,
obviously, but when almost every seasonal forecast is dead wrong, it’s hard
to se how the source can be believed to be correct in forecasts over many
decades. In any case, I hope to be able to live to see, and wouldn’t be
surprised if indeed it gets warmer, but I wouldn’t be shocked if it gets
colder or stays the same either). Nonetheless, energy efficiency and
renewable energy development is a reasonable thing to shoot for anyway,
whether there is global warming or not… http://network.nationalpost.com/np/blogs/fpcomment/archive/2010/01/17/lawrence-solomon-bbc-drops-top-ipcc-source-for-climate-change-data.aspx
So the Hadley center in Britain predicted a winter
with mild temperatures, but this may end up being the coldest winter in
central-northern Europe in 30 years. We’ve had snow on the ground since
mid-December, and the 15 day forecast right now has not a single day with a
daytime high above freezing… (nonetheless, every now and then we have a day
that is slightly above freezing, which usually leads to some melting of the
snow and ice on the ground, and subsequently even more treacherous road
conditions). The local governments were woefully unprepared for this winter,
which is certainly not surprising when you are being told to expect a milder
than normal winter. The road crews didn’t clear the roads properly in
mid-December (probably assuming, like everyone else, including me, that this
was going to melt rather quickly), and so we’ve had a mess on the ground
ever since. I haven’t ridden my bike in 8 weeks now.
I am still traveling to Norway quite a bit, and I
thoroughly enjoy these trips. I also travel to the US, but only maybe once
or twice a year; I was in Tucson last June. I really enjoy these trips also,
I am quite lucky that I get to go on business trips to the US as I really
enjoy spending time there. Business trips to places you’d like to visit
anyway are not such a bad thing. (Of course, at work I am trying to not let
on that I enjoy business trips, but I think they have me figured out
anyway…. Luckily my wife puts up with it too). Whenever I travel to the US,
I wonder how my life would be had I stayed there six years ago. In any case,
now I am a happily married man with a house and a kid, which you can see in
the attached pictures.
Second Message on February 15, 2010 from my friend in Germany
Hi Bob,
the longer I am living in Germany again the
stranger Germans seem to me. In any case, to understand the German attitude
to health insurance I think it is important to bear in mind Bismarck's
social legislation (
http://en.wikipedia.org/wiki/Otto_von_Bismarck#Bismarck.27s_social_legislation
)
and the German mind in general. Germans are a rather risk-averse bunch that
believes that things are likely to get worse rather than better.
I have recently come across a few articles on
health insurance in Germany that essentially say that the private insurance
is facing problems, or rather private insurance is jacking up the rates for
two reasons: Private insurers pay more for the same services than the public
insurance option (except for their basic tariffs) does: there is a so-called
multiplier which says what you can charge for a given procedure when charged
to private insurance. I have seen the factor of 2.3 used, but the way
doctors can charge for their services in Germany is rather difficult to
grasp for me so this factor of 2.3 may or may not be the multiple of what a
public option insured person is charged. The higher pay for the same
services is one of the reasons privately insured people have shorter waiting
times in doctor's offices.
The second reason for higher rates seems to be that
privately insured patients do not care how much a procedure costs, as soon
as they are above the co-pay limit (often there is a co-pay limit of a few
hundred euros or so a year, above that there is no co-payment anymore for
privately insured people). (There is an upper limit on how much a doctor can
spend on average for publicly insured people, but I am not sure how much of
a deterrent this is for a doctor to prescribe what is necessary).
In any case, recently it has been argued that the
medical doctors are now charging private insurance patients more to make up
for what they do not get from the publicly insured people.
So the issue of public health insurance in Germany
remains an interesting one, and, as everywhere else, rates are likely to
rise.....
Regards,
XXXXX
Health Insurance in Germany ---
http://www.toytowngermany.com/wiki/Health_insurance
Note that pre-existing conditions drive up the private insurance rates for
individuals.
Private insurance often leads to preferential treatment from physicians and
hospitals.
My friend also tells me that having private insurance is somewhat of a status
symbol in Germany.
How can intelligence agencies improve
accountability and forecasting accuracy? Can hospitals become more efficient
through vertical integration with home health agencies and nursing homes? Do
taxpayers fully understand how the expansion of health care will be
financed? Wharton professors
Philip Tetlock and
Barbara Mellers;
Guy David and
Evan Rawley; and
Mark Pauly, respectively, examine these issues --
and what they mean for business -- in recent research articles.
Helping Intelligence Agencies -- and
Companies -- Avoid the Blame Game
When business leaders fail to make accurate
forecasts, profitability is at risk. When intelligence agencies miss the
mark on their predictions, however, the results can be far worse. In a new
analysis of behavior in the intelligence community, with implications for
business managers, Wharton management professor
Philip E. Tetlock and Wharton marketing professor
Barbara A. Mellers present a framework to improve accountability and
forecasting accuracy, particularly in a politically polarized climate.
In their article, "Intelligent
Management of Intelligence Agencies: Beyond Accountability Ping-Pong,"
published in the September 2011 edition of
American Psychologist, the authors note that forecasts by intelligence
organizations frequently are open to harsh criticism for either
underreporting potential danger or overreacting to threats that never
materialize. A clear recent example of underreporting would be the September
11, 2011, terrorist attacks on the United States, Tetlock says. At the other
extreme, he points to reports -- which later proved to be unfounded -- that
Iraq had developed weapons of mass destruction.
"The intelligence community is often whipsawed
between these conflicting criticisms," says Tetlock. "The question is: Is it
possible in this kind of political environment to learn anything beyond
avoiding the last mistake?" The authors propose three steps to end the
"blame game" in intelligence predictions and improve accountability and
intelligence forecasting.
First, the authors argue that intelligence agencies
and constituents in government and throughout society need to come together
and agree to put an end to bitter, often ideologically driven, assignment of
blame. Tetlock suggests that "thoughtful moderates" with a long-term view of
policy will need to drive this part of the process, especially during
periods of deep division.
Next, intelligence agencies need to step up and
agree to have their forecasting assessed on clear metrics. Tetlock says that
meaningful forecasts could result from reports that put a hard number on
predictions. For example, analysts could be required to put specific
percentage odds on the likelihood that a coup, or uprising in a given
country, would occur in a certain period of time. Agencies would amass large
databases of predictions that could, over time, be reviewed to assess which
were accurate and why.
Finally, in the authors' view, intelligence groups
and their overseers should acknowledge that ideology plays a part in
forecasting. "If you want ... the left and right to hold back their fire on
unfair criticism, the best way to do that is to reassure people on the left
and the right that their points of view are at least being used in the
prediction process," Tetlock notes.
Continued in article
The Wall Street Journal, in an investigational piece
(December 20, 2010), reported that five spine surgeons at Norton Hospital in
Louisville, Kentucky, who performed the third-most spinal fusions of Medicare
patients in the country, had received more than $7 million in “royalties” from
Medtronic, the nation’s biggest manufacturer of spinal implants.
"Physician Payment Sunshine Act Signals New Dawn for Compliance," by
Joseph J. Feltes, MD News, November 14, 2011 ---
http://www.mdnews.com/news/2011_11/05737_novdec2011_physician-payment-sunshine
Once upon a time, physicians and their families
used to be able to enjoy exotic cruises sponsored by pharmaceutical
companies where their only obligation, it seems, was to sign in briefly at
sparsely attended meetings before embarking on offshore adventures. It’s
been awhile since the sun slowly set on the wake of the last ship’s
sybaritic junket.
Today, the Federal Physician Payment Sunshine Act —
part of national healthcare reform — signals a new dawn of transparency,
compliance obligations, and regulatory scrutiny. Beginning January 1, 2012,
manufacturers of drugs, devices, biologicals or medical supplies, covered by
Medicare, Medicaid or other federal healthcare program, must report to the
Department of Health and Human Services all payments or transfers of value
they make to physicians or teaching hospitals.
The Sunshine Act applies to payments or transfers
of value covering a broad array of activities, including: consulting fees;
compensation for services other than consulting; honoraria; gifts;
entertainment; food; travel (including specified destinations); education
and research; charitable contributions; royalties or licenses; current or
prospective ownership or investment interests (other than through publicly
traded securities or mutual funds); direct compensation for serving as
faculty or as a speaker for medical education programs; grants; or falling
within the catchall “any other nature of payment or other transfer of value
as defined by the Secretary of HHS.” Additionally, if the payment or
transfer of value relates to marketing, education, or research which
pertains to a covered drug, biological, device or supply, that also must be
reported, along with the name of the covered product.
Remaining outside the aura are certain excluded
items that need not have to be reported, such as the transfer of items
having a value of less than $10 (unless the items exceed an annual aggregate
of $100); product samples for patient use not intended to be sold;
educational materials that directly benefit patients or are intended for
patient use; the loan of a covered device for 90 days or less for evaluation
purposes; items or services provided under a contractual warranty; certain
discounts and rebates; and in-kind items used to provide charity care, to
name a few.
Covered manufacturers must disclose to the
Secretary in electronic form the name of the physician (or teaching
hospital); the physician’s business address, specialty and National Provider
Identifier; the amount of payment or value of transfer; the dates on which
payments or transfers are made; a description of whether payment or transfer
was made in cash or cash equivalents, in-kind items or services, or stocks
or stock options. This information will be stored in a database.
While the burden of reporting rests with covered
manufacturers, access to and use of the electronic information stored in the
database can be accessed by the media, consumers, the Office for Inspector
General, and by prosecutors. That could pose potential liability risk to
physicians for non-compliance with federal Anti-Kickback (illegal
remuneration), the Stark laws (financial interest), or the False Claims Act
(ill-gotten gain). It also could create potential reputational damage —
fairly or unfairly — if it were to appear that research was flawed or a
physician’s choice of drug was influenced by payments or other transfers of
value.
The Wall Street Journal, in an investigational
piece (December 20, 2010), reported that five spine surgeons at Norton
Hospital in Louisville, Kentucky, who performed the third-most spinal
fusions of Medicare patients in the country, had received more than $7
million in “royalties” from Medtronic, the nation’s biggest manufacturer of
spinal implants.
The WSJ indicated that it had “mined” certain
Medicare databases as the source of its exposé. The new Sunshine Act likely
will eliminate the need to dig deeply, since the information will be
collected in one database, there for the picking. Critics of the law,
including Thomas Peter Stossel, MD, Professor of Medicine at Harvard Medical
School, objects that the term “Sunshine” carries with it the “implicit aura
of corruption,” which indeed is unfortunate.
Now that one of ObamaCare's major new benefit
programs has been scrapped, liberals are trying to make stone soup by
claiming that the Obama Administration merely committed an act of "good
government." They claim that when this long-term care insurance program
proved to be unworkable, the Administration conceded as much, and now it's
gone. So let's review the evidence, not least because it so perfectly
illustrates the recklessness that produced the Affordable Care Act.
When Democrats were pasting it together in 2009 and
2010, the immediate attraction of the program known by the acronym Class was
that its finances could be gamed to create the illusion that a new
entitlement would reduce the deficit. Ending the complicated Class budget
gimmick erases the better part of ObamaCare's purported "savings," but it's
also worth focusing on the program's long-run political goals.
For decades Democrats have been trying to put
government on the hook for middle-class costs like home health services
($1,800 a month on average) and nursing homes ($70,000 to $80,000 per year).
On paper, Class was supposed to be like normal insurance, funding benefits
through premiums with no subsidy. But since the budget gimmick and the
program's larger structure meant that premiums could never cover benefits,
Democrats were trying to force a future Congress to prevent a Class
bankruptcy using taxpayer dollars.
As the costs to the federal fisc continued to
climb, the Democratic gambit was that Class would gradually morph into
another part of Medicare. Insurance depends on younger, healthier people
signing up to cross-subsidize the older and sicker, but under the Class
program as written almost all of its enrollees would soon also be
beneficiaries.
So to fix this "adverse selection," the plan was
for Congress to eventually make participation mandatory, with the so-called
premiums converted into another payroll tax and the benefits into another
entitlement. Former White House budget director Peter Orszag has been
writing that the long-term care insurance market can't function without a
mandate, while HHS Secretary Kathleen Sebelius declined to rule one out at a
Senate hearing in February. Now they tell us.
The only reason the Health and Human Services
Department pre-emptively called off this scheme is that former New Hampshire
Senator Judd Gregg succeeded in inserting a proviso that required the Class
program's reality to match Democratic promises as a matter of law. If HHS
couldn't provide "an actuarial analysis of the 75-year costs of the program
that ensures solvency throughout such 75-year period," it couldn't be
legally implemented.
In other words, HHS had to prove that the Class
program wouldn't go broke the way it was designed to—and actuarial analysis
is a matter of math, not politics. In a 48-page report that HHS submitted to
Congress Friday, the department concedes that it is literally impossible to
create any kind of long-term care program under the law's statutory text in
which revenues match expenditures. Such a plan would cost as much as $3,000
per month, which no one would ever buy.
The HHS gnomes even considered "features deviating
from or going beyond a plain reading of the statutory language" that its
lawyers didn't think could pass legal muster, and they still couldn't avoid
violating the known laws of mathematics despite 19 months of trying. HHS
lawyers also said the government would have to warn enrollees that the
promised benefits weren't contracts and could be abrogated to "dispel any
claims that the Class program had misled the public or had encouraged
reliance on its programs under false pretenses."
Last week, a report from a Republican working group
revealed that
administration officials, in the rush to pass Obamacare, ignored internal
warnings from government experts about the fiscal sustainability of a
long-term care insurance entitlement program included in the health reform
law. Throughout the health care debate, officials within the Centers for
Medicare and Medicaid Services, as well as the Health and Human Services
Department, repeatedly warned that the CLASS Act would be a fiscal disaster.
Yet, the final version of Obamacare not only included the CLASS Act; it even
counted CLASS as a cost-saving measure.
Now, the Republicans behind the report want to know
how high the warnings reached: Was HHS Secretary Kathleen Sebelius, for
example, aware of the concerns about CLASS even before Obamacare passed?
Amid rumors the administration might reassign CLASS personnel or close the
CLASS office entirely, they also want to know what
the administration plans to do moving forward to ensure — if the CLASS
program is, in fact, implemented — that the program is sustainable.
To that end, House Oversight Committee Chairman
Darrell Issa (R-Calif.) and House Energy and Commerce Committee Chairman
Fred Upton (R-Mich.), along with key drivers Sens. Jeff Sessions (R-Ala.),
John Thune (R-S.D.) and others, today sent a
letter to Sebelius asking her to clarify how many
people have been reassigned or asked to leave the CLASS office, to put
forward a plan to make CLASS sustainable if the program is going to be
implemented and to divulge when concerns about CLASS were first made known
to her and what steps she took to address them.
. . .
As Sessions explained in a statement, the central
question is “whether a deliberate effort was made by administration
officials to conceal CLASS’s true cost in order to advance the president’s
agenda. Accountability goes to the top. Lawmakers and the American people
deserve to know when internal concerns over CLASS were first communicated to
Secretary Sebelius and what, if any, actions she took to address them. Out
of control government spending is threatening our nation’s future, making a
prompt and thorough explanation all the more imperative.”
Thune said it appears the administration sought to
uphold its own agenda with the inclusion of the CLASS Act in the PPACA.
“Our recent Congressional investigation revealed
that the Obama Administration ignored repeated warnings about the fiscal
insolvency of the CLASS Act in the effort to score a political win with the
passage of the new health care law,” he said. “The time is long overdue for
Secretary Sebelius to come forward with more details on what the
administration knew about the insolvency of the program, when they knew
about it, and how they propose to remedy this fiscal disaster for taxpayers.
The American people deserve to know more about this massive new entitlement
program.”
In the meantime, you can bet that, if Sebelius
doesn’t provide adequate answers, the calls for a CLASS Act repeal will grow
ever louder. In fact, the Senate Appropriations Committee has already
decided not to fund implementation of the Act.
Update: Because of a scheduling
error, this post appeared briefly on the HotAir.com homepage at around 11:25
a.m. ET today. At the time, the letter had not yet been sent to Secretary
Sebelius. The post above is essentially unchanged, but the second and third
paragraphs have been updated to include information that recently emerged
that the administration might shuffle CLASS personnel.
"The Preferential Treatment of Employer-Provided Health Care," by Paul
Caron, TaxProf Blog, September 17, 2011 ---
http://taxprof.typepad.com/
This Note argues that the current treatment of
employer-provided health insurance is inequitable and needs reform in
order to drive down overall health care costs and to provide revenue for
other provisions of the ACA (or for a replacement, should repeal be
successful), or alternatively, to help bring down the budget deficit.
Part II examines the history and scope of the exclusion, as well as the
rationales advanced prior to its adoption. Part III studies criticisms
of the exclusion to understand better the weaknesses of the current
system, including job lock, excess insurance, and loss of revenue. Part
IV evaluates some of the proposals for changing the current exclusion,
including those proposed by members of Congress and by outside policy
groups. Some of these proposals include repealing the exclusion, capping
the exclusion based on income or value of the insurance policy, and
providing new tax incentives altogether. Part V argues that the best
option for reforming this flawed system is to cap the exclusion based on
income and the cost of the insurance plan. A cap on the exclusion would
accomplish the dual objectives of bringing overall health care costs
down and providing necessary revenue to finance other provisions of the
ACA or its replacement, or alternatively, to reduce the deficit. In
addition, a cap would not create some of the drawbacks of the other
proposals
The U.S. health care sector is experiencing a
time of enormous change and uncertainty. Although President Obama's health
care reform plan was signed into law last year, several legal challenges to
the legislation are working their way through the courts. Questions also
remain about whether the law will deliver on its promises of greater access
to care and stricter containment of soaring health care costs.
Meanwhile, the pharmaceutical industry is also
dealing with a period of insecurity, with generic markets soon opening up
for some of the world's best-selling drugs. And although the health care
sector is one of the few employment bright spots in a stagnant job market,
questions arise as to whether it is in danger of becoming too bloated.
Wharton health care management professors
Arnold Rosoff,
Patricia Danzon,
Lawton Burns and
Mark Pauly discussed
their research on these issues and others during a recent presentation to
incoming health care MBA students.
Politics over Policy?
After decades of debate over national health care
reform, Wharton legal studies and health care management professor Arnold
Rosoff warned that struggles over the Affordable Care Act (ACA), signed into
law by President Obama in March 2010, may be far from over. It is uncertain
whether the reform legislation, which was passed in a greatly compromised
form after years of "partisan wrangling," can deliver on its promises of
cost containment and expanded access to health care for the uninsured,
Rosoff noted. "But before we get to that, we have to ask, 'Will ACA even
stay on the books?'"
Did you know that an estimated
one of every three uninsured people in this
country is eligible for a government program (mainly Medicaid or a state
children’s health insurance plan), but has not signed up?
Either they haven’t bothered to sign up or they did
bother and found the task too daunting. It’s probably some combination of
the two, and if that doesn’t knock your socks off, you must not have been
paying attention to the health policy debate over the past year or so.
Put aside everything you’ve heard about Obama Care
and focus on this bottom line point: going all the way back to the
Democratic presidential primary, Obama Care was always first and foremost
about insuring the uninsured. Yet at the end of the day, the new health law
is only going to insure about 32 million more people out of more than 50
million uninsured. Half that goal will be achieved by new enrollment in
Medicaid. But if you believe the Census Bureau surveys, we could enroll just
as many people in Medicaid by merely signing up those who are already
eligible!
What brought this to mind was a series of
editorials by
Paul Krugman and
Health Affairs blog and at
my blog) asserting that government is so much more
efficient than private insurers. Can you imagine Aetna or UnitedHealth Care
leaving one-third of its customers without a sale, just because they
couldn’t fill out the paperwork properly? Well that’s what Medicaid does,
day in and day out.
Put differently, half of everything Obama Care is
trying to do is necessary only because the Medicaid bureaucracy does such a
poor job — not of selling insurance, but of giving it away for free!
Writing in
Health Affairs the other day, health policy
guru Alain Enthoven and health care executive Leonard Schaeffer revealed
some of the gory details of what people encounter when they do try to sign
up for free health insurance from Medi-Cal (California Medicaid) in the San
Diego office:
Fortunately, we can change this state of affairs.
And the remedy does not require medical science breakthroughs or top-down
governmental regulation. It simply requires a new way to accurately measure
costs and compare them with outcomes. Our approach makes patients and their
conditions—not departmental units, procedures, or services—the fundamental
unit of analysis for measuring costs and outcomes. The experiences of
several major institutions currently implementing the new approach—the Head
and Neck Center at MD Anderson Cancer Center in Houston, the Cleft Lip and
Palate Program at Children’s Hospital in Boston, and units performing knee
replacements at Schön Klinik in Germany and Brigham & Women’s Hospital in
Boston—confirm our belief that bringing accurate cost and value measurement
practices into health care delivery can have a transformative impact.
Continued in article (for a fee)
Jensen Comment
The article does not address all aspects of the cost of healthcare, including
the enormous cost of fraud in all aspects of healthcare from the funding of
unneeded medical procedures to phony medical equipment invoices to substandard
medications to medical services for people not eligible for funding of such
services such as undocumented aliens who enter this country for the purpose of
free obstetrics and other types of medical services.
There is also the cost of malpractice insurance which is often ten times what
it is in Canada because of differences between how malpractice claims are
processed in Canada versus the United States (where 80% of the world's lawyers
practice).
McKinsey & Co. made itself the White House's public
enemy number—well, we've lost count—after releasing a survey last month
showing that nearly one in three businesses may drop insurance coverage as a
result of the new health-care law. The real offense of the management
consultants seems to be accurately portraying reality.
Consider a suggestive new survey to be released
today by the National Federation of Independent Business, the trade group
for small businesses. William Dennis, a senior research fellow who has
conducted the study for 35 years, reports that 57% of a cross-section of
companies that employ 50 or fewer workers and offer coverage may stop doing
so. Look out below.
About two of five small companies sponsor
insurance—a share that, according to NFIB, has on net held mostly stable or
declined very slightly since the passage of the Affordable Care Act. Yet 12%
of these companies—one of eight—have either had their plans cancelled or
have been told that they will be in the future. This churn in the private
small-group market is a direct result of ObamaCare's new rules and
mandates—but a far larger destabilization could be in the offing, what Mr.
Dennis calls "the flight to the exchanges."
Those would be the dispensaries of heavily
subsidized insurance, and the NFIB finds that 26% of small businesses today
sponsoring insurance are "very likely" to drop it should their employees
start to flood government coverage. Another 31% of the 750 firms surveyed
report they are "somewhat likely."
Small-business workers are eligible for exchange
subsidies even if they can get job-based coverage. The incentive is for them
to take it—given that the new government payments will be so generous,
small-group coverage is generally costly and the insurance tax break for
employers usually doesn't go very far when the employer is small.
If enough workers split, in other words, private
coverage will soon erode and cease to exist as an option. Meanwhile,
start-ups are constantly entering and exiting the market, and the ones with
fewer benefits and liabilities will gain a competitive advantage. Businesses
with fewer than 50 employees also aren't subject to any "play or pay"
penalties. As Mr. Dennis put it in an interview, "Once you pull the string,
everything may unravel."
ObamaCare's partisans claim none of this will
happen because of the social norm theories of behavioral economics.
Businesses offer insurance to attract workers, the thinking goes, and it's
the right thing to do. But that assumes utter irrationality—that workers
won't take a cheaper deal when they see it and businesses won't try to
compete against their rivals.
Because of these challenges, college
administrators, like employers in other fields, are weighing the advantages
and disadvantages of dropping coverage for some or all employees once
several provisions of the Patient Protection and Affordable Care Act, the
health care overhaul legislation passed by Congress in 2010, goes into
effect in 2014.
"I don't think we're going to be able to provide
that lifetime security like we used to," said Brad Kimler, executive vice
president of benefits consulting at Fidelity Investments, during a
presentation at the annual conference of the National Association of College
and University Business Officers. "And I don't think it's realistic to
expect that."
A recent
Inside Higher Ed survey of business officers
found that a large percentage of business officers,
particularly at private universities and public baccalaureate institutions,
listed health care liability as one of the most significant challenges of
the next two to three years. Despite that concern, the question of how to
manage these costs seems often to be going unaddressed. The CUPA-HR survey
found that only a quarter of responding institutions had developed a
strategy for what their health care benefits should be in three years.
The major question that hangs over administrators
about upcoming health benefits decisions involves the components of the
health care overhaul law that go into effect in 2014, notably the
requirement that companies offer a reasonable level of health care benefits
to their employees. Companies with more than 50 employees that don't offer
health benefits will have to pay a penalty of $2,000 per worker. Individuals
who do not not receive health benefits from their employers will receive
income-indexed premium and out-of-pocket cost-sharing subsidies, enabling
them to obtain private coverage they would not be able to afford on the
current market. These options will be available in state or regional health
care "exchanges."
It might be cheaper for employers, including
colleges and universities, to pay the penalties and forgo whatever tax
breaks come with offering employer-supported health benefits than to
continue to provide benefits. "As a result, whether to offer ESI
[employer-sponsored insurance] after 2014 becomes mostly a business
decision," states a
much-discussed survey conducted by
McKinsey and Company,
a management consulting firm. "Employers will have to
balance the need to remain attractive to talented workers with the net
economics of providing benefits -- taking into consideration all the
penalties and tax advantages of offering or not offering any given level of
coverage," the report states.
That survey found that 30 percent of employers will
definitely or probably stop offering employer-sponsored coverage, a
significantly higher percentage than the 7 percent of employers that the
Congressional Budget Office predicted. Among employers who are well-versed
in the law, the proportion increases to 50 percent, and 60 percent said they
would pursue alternatives, the McKinsey survey found.
The report did not break down respondents by field,
but did note it would be unlikely for only one company in a given field to
dramatically alter its plans. Higher education institutions, on average,
tend to be more generous with benefits than other types of employers, so the
sector as a whole might see few shifts after the new provisions go into
effect.
Getting out of the employer-supported health
benefit game could be economically viable for some employers, but it could
also be beneficial to employees. The McKinsey study notes that "because of
the subsidies, many low-income employees will be able to obtain better
health coverage, for less out of pocket, on an exchange than from their
employer."
Aside from the economic decision, colleges and
universities are also going to have weigh the cost of health benefits as a
recruiting and retention tool. Kyle Cavanaugh, vice president for human
resources at Duke University, said his institution would be hard-pressed to
abandon its plan for that reason. "Faculty and staff tell us that one of the
most significant things they value in working here is the health care plan
we provide," he said. "The plan is highly valued, and because of that, we
would have to very seriously weigh the cost of continuing to provide that."
But he noted that it is too early in the process to
know what the exchange system will look like and therefore to actually make
a judgment on that front. Most states have not even begun to design the
health care exchanges (some have even said outright that they will not
create them). A lot of politics remain between now and 2014, administrators
say, including major deals regarding national spending and a presidential
election.
Because so many factors will go into a college or
university's decision on whether to abandon or modify its plans in three
years, Cavanaugh stressed that institutions should be gathering and
analyzing their data now. "Health care benefits have to, now more than ever,
be managed in a strategic way," he said. "The combination of costs, faculty
and staff expectations, and the ongoing evolution of national health care
reform drive the need to be looking at this from a strategic standpoint."
Doing so could also show returns in the short term,
if colleges find ways to drive down costs and measure the effectiveness of
different programs. Cavanaugh said his college has found savings by
increasing the use of generic drugs. By tracking conditions associated with
avoidable and repeat hospital admissions, the university has also been able
to work with providers to lower admissions. While Duke's costs have still
gone up, Cavanaugh said they have been below the national average for the
past few years.
CUPA's survey did find some notable widespread
efforts to contain health care costs. More than 60 percent of colleges in
CUPA-HR's survey said they offered wellness programs, but participation of
employees at colleges was less than 20 percent at many institutions.
The survey also found the highest percentage of
respondents providing same-sex domestic partner benefits -- 56 percent --
since the survey began. That is a significant increase from the 37 percent
of respondents who reported offering same-sex benefits in
2005.
In a landmark government effort to drive American
health care into the information age, the February 2009 stimulus bill
earmarked about $30 billion in incentives for doctors and hospitals who
install electronic medical records—paying up to $63,750 to individual
physician and millions to hospitals.
Now comes the tough part: implementing "EMRs" and
proving they really can reduce medical errors or get doctors to keep better
track of chronically ill people. As National Coordinator for Health IT,
Farzad Mostashari coordinates federal efforts to promote adoption of EMRs
and to prod reluctant hospitals to share patient data.
Mostashari was recruited to take over the federal
effort in February, after leading a patient-records initiative as an
assistant health commissioner in New York City. He spoke with Technology
Review's chief correspondent, David Talbot, about when we'll start
seeing evidence that the technology is working.
TR: What problems are we attacking
with this huge medical IT outlay?
Mostashari: Start with "First, do no harm." Right
now we do harm to patients through health care. The estimates,
conservatively, are 100,000 to 200,000 people killed each year by things
like hospital-acquired infections and adverse drug events. Electronic
medical records provide an opportunity to create standardized protocols, to
provide decision-support and reminders for doctors, and to tell them about
the patient's medications and drug allergies, as well as any dangerous drug
interactions, at the point of care. Those are all proven interventions.
What else can software do besides cut back
on accidental hospital deaths?
All too often, people come into the doctor's office
with high blood pressure which will kill them from stroke or heart attack,
but the patient is complaining about something else. Doctors can get
distracted and not pay attention to the most important thing—which might be
that the patient's blood pressure is out of control, or the flu shot that
hasn't been given. Electronic records can make it easy to provide these
reminders. It can also make a list of patients who have not come
in, who have high blood pressure or diabetes, and must be seen.
Why is the health care industry so far
behind other industries?
Unfortunately, the business case often has not been
strong enough to support adoption and use of electronic records. But we
have now reached a point where the incentives are turning the other way—with
greater emphasis on paying for outcomes and value rather than volume.
Bring us up to date since February 2009,
when the bill passed. What is the progress to date on getting the IT
installed?
The ice has broken after decades of talk. Back in
2009, only 10 percent of hospitals and 20 percent of primary care providers
used basic EMRs. Within a year, the doctors went from 20 percent to 30
percent. I expect it to get to 40 percent this year. We have about 10,000
new providers a month registering for incentives. About $400 million has
gone out in payments already, and is expected to hit the $1 billion mark by
early 2012.
But this is more than installing software—it's
about a concept called "meaningful use." The health IT incentive payments
are predicated on very specific criteria. For example, the electronic health
record must contain blood pressure readings, height and weight, lab data,
the patient's problem list, and allergies; the patients' preferred language
will be recorded; and the system must have a whole series of functionalities
around sharing information with] patients and public health agencies.
Washington is struggling to make a deal that will
couple an increase in the debt ceiling with a long-term reduction in
spending. There is no reason for the players to make their task seem even
more Herculean than it already is. But we should be prepared for upward
revisions in official deficit projections in the years ahead—even if a deal
is struck. There are at least three major reasons for concern.
First, a normalization of interest rates would
upend any budgetary deal if and when one should occur. At present, the
average cost of Treasury borrowing is 2.5%. The average over the last two
decades was 5.7%. Should we ramp up to the higher number, annual interest
expenses would be roughly $420 billion higher in 2014 and $700 billion
higher in 2020.
The 10-year rise in interest expense would be $4.9
trillion higher under "normalized" rates than under the current cost of
borrowing. Compare that to the $2 trillion estimate of what the current
talks about long-term deficit reduction may produce, and it becomes obvious
that the gains from the current deficit-reduction efforts could be wiped out
by normalization in the bond market.
To some extent this is a controllable risk. The
Federal Reserve could act aggressively by purchasing even more bonds, or
targeting rates further out on the yield curve, to slow any rise in the cost
of Treasury borrowing. Of course, this carries its own set of risks, not the
least among them an adverse reaction by our lenders. Suffice it to say,
though, that given all that is at stake, Fed interest-rate policy will
increasingly have to factor in the effects of any rate hike on the fiscal
position of the Treasury.
The second reason for concern is that official
growth forecasts are much higher than what the academic consensus believes
we should expect after a financial crisis. That consensus holds that
economies tend to return to trend growth of about 2.5%, without ever
recapturing what was lost in the downturn.
But the president's budget of February 2011
projects economic growth of 4% in 2012, 4.5% in 2013, and 4.2% in 2014. That
budget also estimates that the 10-year budget cost of missing the growth
estimate by just one point for one year is $750 billion. So, if we just grow
at trend those three years, we will miss the president's forecast by a
cumulative 5.2 percentage points and—using the numbers provided in his
budget—incur additional debt of $4 trillion. That is the equivalent of all
of the 10-year savings in Congressman Paul Ryan's budget, passed by the
House in April, or in the Bowles-Simpson budget plan.
Third, it is increasingly clear that the long-run
cost estimates of ObamaCare were well short of the mark because of the
incentive that employers will have under that plan to end private coverage
and put employees on the public system. Health and Human Services Secretary
Kathleen Sebelius has already issued 1,400 waivers from the act's
regulations for employers as large as McDonald's to stop them from dumping
their employees' coverage.
But a recent McKinsey survey, for example, found
that 30% of employers with plans will likely take advantage of the system,
with half of the more knowledgeable ones planning to do so. If this survey
proves correct, the extra bill for taxpayers would be roughly $74 billion in
2014 rising to $85 billion in 2019, thanks to the subsidies provided to
individuals and families purchasing coverage in the government's insurance
exchanges.
Underestimating the long-term budget situation is
an old game in Washington. But never have the numbers been this large.
There is no way to raise taxes enough to cover
these problems. The tax-the-rich proposals of the Obama administration raise
about $700 billion, less than a fifth of the budgetary consequences of the
excess economic growth projected in their forecast. The whole $700 billion
collected over 10 years would not even cover the difference in interest
costs in any one year at the end of the decade between current rates and the
average cost of Treasury borrowing over the last 20 years.
The White House routinely tries to intimidate its
health-care critics, but the campaign against McKinsey & Co. is something
else. The management consultants attempted to find out how U.S. business
will respond to the government restructuring of 17.3% of the economy,
Democrats don't like the results, and so McKinsey must pay with its
reputation.
The firm's sin was to canvass some 1,300 companies
and report that nearly a third will "definitely" or "probably" stop offering
insurance to employees after 2014, dumping them instead into ObamaCare's
subsidized exchanges. McKinsey conducted the survey as part of its routine
market research.
Democrats immediately blasted the results, attacked
McKinsey's integrity and demanded that it release its methodology and full
responses. Nancy-Ann DeParle, the deputy chief of staff who is running
ObamaCare from the White House, was withering. Senate Finance Chairman Max
Baucus chimed in with questions like "Who are your biggest clients? Do you
expect McKinsey & Co. to benefit financially from the results of this
survey?"
So this week McKinsey opened its books, and what do
you know, the survey was rigorous. Respondents were a representative
cross-section of businesses of many sizes and across industries and regions,
and the questions were impartial.
Ms. DeParle and others claimed vindication because
McKinsey conceded it was not a "predictive economic analysis," while
forecasters like the Congressional Budget Office think the law will have
little effect on employer coverage. In other words, an analysis of business
attitudes in the real world is less credible than CBO's macroeconomic models
that depend on undisclosed assumptions. These are the same models that claim
the stimulus "created or saved" millions of jobs.
The furor says less about McKinsey than about the
politically damaging reality of the new law. As the McKinsey survey shows in
detail, many businesses may be better off if they drop coverage and pay
workers slightly more to compensate for fewer benefits, along with paying
the new penalty for not providing insurance. Many workers earning up to
$102,000 may also be better off because the ObamaCare subsidies are so much
larger than the current tax break for employer coverage.
As more people partake of "free" health care,
taxpayer costs will explode. Consumers will gradually lose the choice and
quality of private insurance for the politically mandated policies that will
be offered in most exchanges. Increasing the share of the insurance market
operating under Washington command and control will increase costs and
distortions in the health markets.
McKinsey's study merely echoes what economist Doug
Holz-Eakin has also been shouting from the rafters about ObamaCare's impact
on private coverage. Ditto for Eugene Steuerle of the Urban Institute. Is
that left-leaning outfit now a GOP mouthpiece too? McKinsey isn't known for
its partisan sympathies, and most top-drawer consulting firms deliberately
avoid the political fray. Clients want intelligence, not controversy.
The White House method is nonetheless to assail
even disinterested analysts as dishonest or motivated by bad faith, and the
habit is especially pronounced against businesses that have something to
lose. Think of the public trashing of the insurers WellPoint and Humana for
accurately describing how costs will soar under the new entitlement, or the
companies like AT&T and Verizon that ObamaCare forced to take huge
writedowns last year.
The fact that the White House feels it must vilify
businesses for telling the truth about ObamaCare shows just how destructive
the law really is.
The White House routinely tries to intimidate its
health-care critics, but the campaign against McKinsey & Co. is something
else. The management consultants attempted to find out how U.S. business
will respond to the government restructuring of 17.3% of the economy,
Democrats don't like the results, and so McKinsey must pay with its
reputation.
The firm's sin was to canvass some 1,300 companies
and report that nearly a third will "definitely" or "probably" stop offering
insurance to employees after 2014, dumping them instead into ObamaCare's
subsidized exchanges. McKinsey conducted the survey as part of its routine
market research.
Democrats immediately blasted the results, attacked
McKinsey's integrity and demanded that it release its methodology and full
responses. Nancy-Ann DeParle, the deputy chief of staff who is running
ObamaCare from the White House, was withering. Senate Finance Chairman Max
Baucus chimed in with questions like "Who are your biggest clients? Do you
expect McKinsey & Co. to benefit financially from the results of this
survey?"
So this week McKinsey opened its books, and what do
you know, the survey was rigorous. Respondents were a representative
cross-section of businesses of many sizes and across industries and regions,
and the questions were impartial.
Ms. DeParle and others claimed vindication because
McKinsey conceded it was not a "predictive economic analysis," while
forecasters like the Congressional Budget Office think the law will have
little effect on employer coverage. In other words, an analysis of business
attitudes in the real world is less credible than CBO's macroeconomic models
that depend on undisclosed assumptions. These are the same models that claim
the stimulus "created or saved" millions of jobs.
The furor says less about McKinsey than about the
politically damaging reality of the new law. As the McKinsey survey shows in
detail, many businesses may be better off if they drop coverage and pay
workers slightly more to compensate for fewer benefits, along with paying
the new penalty for not providing insurance. Many workers earning up to
$102,000 may also be better off because the ObamaCare subsidies are so much
larger than the current tax break for employer coverage.
As more people partake of "free" health care,
taxpayer costs will explode. Consumers will gradually lose the choice and
quality of private insurance for the politically mandated policies that will
be offered in most exchanges. Increasing the share of the insurance market
operating under Washington command and control will increase costs and
distortions in the health markets.
McKinsey's study merely echoes what economist Doug
Holz-Eakin has also been shouting from the rafters about ObamaCare's impact
on private coverage. Ditto for Eugene Steuerle of the Urban Institute. Is
that left-leaning outfit now a GOP mouthpiece too? McKinsey isn't known for
its partisan sympathies, and most top-drawer consulting firms deliberately
avoid the political fray. Clients want intelligence, not controversy.
The White House method is nonetheless to assail
even disinterested analysts as dishonest or motivated by bad faith, and the
habit is especially pronounced against businesses that have something to
lose. Think of the public trashing of the insurers WellPoint and Humana for
accurately describing how costs will soar under the new entitlement, or the
companies like AT&T and Verizon that ObamaCare forced to take huge
writedowns last year.
The fact that the White House feels it must vilify
businesses for telling the truth about ObamaCare shows just how destructive
the law really is.
ObamaCare will lead to a dramatic decline in
employer-provided health insurance—with as many as 78 million Americans
forced to find other sources of coverage.
This disturbing finding is based on my calculations
from a survey by McKinsey & Company. The survey, published this week in the
McKinsey Quarterly, found that up to 50% of employers say they will
definitely or probably pursue alternatives to their current health-insurance
plan in the years after the Patient Protection and Affordable Care Act takes
effect in 2014. An estimated 156 million non-elderly Americans get their
coverage at work, according to the Employee Benefit Research Institute.
Before the health law passed, the Congressional
Budget Office estimated that only nine million to 10 million people, or
about 7% of employees who currently get health insurance at work, would
switch to government-subsidized insurance. But the McKinsey survey of 1,300
employers across industries, geographies and employer sizes found "that
reform will provoke a much greater response" and concludes that the health
overhaul law will lead to a "radical restructuring" of job-based health
coverage.
Another McKinsey analyst, Alissa Meade, told a
meeting of health-insurance executives last November that "something in the
range of 80 million to 100 million individuals are going to change coverage
categories in the two years" after the insurance mandates take effect in
2014.
Many employees who will need to seek another source
of coverage will take advantage of the health-insurance subsidies for
families making as much as $88,000 a year. This will drive up the cost of
ObamaCare.
In a study last year, Douglas Holtz-Eakin, a former
director of the Congressional Budget Office, estimated that an additional 35
million workers would be moved out of employer plans and into subsidized
coverage, and that this would add about $1 trillion to the total cost of the
president's health law over the next decade. McKinsey's survey implies that
the cost to taxpayers could be significantly more.
The McKinsey study, "How US health care reform will
affect employee benefits," predicts that employers will either drop coverage
altogether, offer defined contributions for insurance, or offer coverage
only to certain employees. The study concludes that 30% of employers overall
will definitely or probably stop offering health insurance to their workers.
However, among employers with a high awareness of the health-reform law,
this proportion increases to more than 50%.
The employer incentives to alter or cease coverage
under the health-reform law are strong. According to the study, at least 30%
of employers would gain economically from dropping coverage, even if they
completely compensated employees for the change through other benefit
offerings or higher salaries. That's because they no longer would be
tethered to health-insurance costs that consistently rise faster than
inflation.
Employers should think twice if they believe the
fine for not offering coverage will stay unchanged at $2,000 per worker. "If
many companies drop health insurance coverage, the government could increase
the employer penalty or raise taxes," according to the new study, authored
by McKinsey consultants Shubham Singhal, Jeris Stueland and Drew Ungerman.
The Obama Administration is handing out waivers far
and wide for its health-care bill, but behind the scenes the bureaucracy is
grinding ahead writing new regulations. The latest example is the rule for
Accountable Care Organizations that are supposed to be the crown jewel of
cost-saving reform. One problem: The draft rule is so awful that even the
models for it say they won't participate. ***
The theory for ACOs, as they're known, is that
hospitals, primary-care doctors and specialists will work more efficiently
in teams, like at the Mayo Clinic and other top U.S. hospitals. ACOs are
meant to fix health care's too-many-cooks predicament. The average senior on
Medicare sees two physicians and five specialists, 13 on average for those
with chronic illnesses. Most likely, those doctors aren't coordinating
patient care.
This fragmentation is largely an artifact of
Medicare's price control regime: The classic case study is Duke University
Hospital, which cut the costs of treating congestive heart failure by 40%
but then dumped the integration program because it lost money under
Medicare's fee schedule.
Intelligent liberals now concede this reality but
claim that the government merely needs to devise better price controls. By
changing the way it pays, Medicare under the ACO rule is effectively
mandating a new business model for practicing medicine. The vague
cost-control hope is that ACOs will run pilot programs like Duke's and the
successful ones will become best practices. While the program is voluntary
for now, the government's intention is to make it mandatory in the coming
years.
But what if they had an ACO revolution and no one
showed up? The American Medical Group Association, a trade association of
multispeciality practice groups and other integrated providers, calls the
rule recently drafted by the Department of Health and Human Services "overly
prescriptive, operationally burdensome, and the incentives are too difficult
to achieve." In a survey of its members, 93% said they won't enroll.
The Administration wrote its rule based on an ACO
pilot program that started in 2005 among 10 high-performing physician
groups, including Geisinger Health System and Dartmouth-Hitchcock. All 10
say they have "serious reservations" about the new rule and that without
major revisions "we will be unable to participate." In other words, the
providers that are already closest to being an ACO have rejected the
Administration's handiwork.
And no wonder, since the 429-page rule is a classic
of top-down micromanagement. ACOs will need to comply with a kitchen sink of
65 clinical measures that are meant to produce efficiencies, like reducing
infections or ensuring that patients take their medications after hospital
discharge. If care at an ACO costs less than Medicare predicts it will cost
under the status quo, then the ACO will receive a share of the savings as a
bonus payment. The rule also includes financial penalties if an ACO misses
its targets.
Incredibly, the ACO teams won't know in advance
which patients they're supposed to manage. Seniors will be "retrospectively
assigned" to an ACO at the end of every year, based on an arbitrary
algorithm, for the purposes of calculating costs.
In America's courtrooms, ObamaCare is on trial. A
majority of states have filed lawsuits arguing that its mandate requiring
individuals to purchase health insurance is unconstitutional. But in
Vermont, ObamaCare is about to get a trial of a different sort—a clinical
one.
This coming Thursday, Gov. Peter Shumlin will sign
a bill doing what President Obama and his allies have hoped to do all along:
sell a public insurance option alongside competing private insurance as a
first step toward a single-payer, government-run system. Unlike the
president, Mr. Shumlin has been up-front in his support for single-payer
care, even on the campaign trail last fall. At least he can say he has a
mandate from voters to do what he's doing.
The last time Vermont's health system gained
national attention was in 2004, when Howard Dean, then governor of the
state, ran for president. As governor, Mr. Dean expanded public insurance
eligibility, struggling to get as close to single-payer health care as he
legally could. New regulations pushed out private insurers, reducing
competition. Vermont imposed a guaranteed-issue mandate, which requires
insurers to sell to any applicant, and forced insurers to use community
rating, which requires them to offer the same price to everyone, regardless
of age and health. Both measures also appeared in the final ObamaCare law.
The result? The number of uninsured Vermonters
barely budged. But costs sure moved—in the wrong direction. From 1991 to
2004, according to the Kaiser Foundation, Vermont's health costs grew by
7.6% annually. Across the U.S. comparable costs grew only 5.5% on average.
From 2005 to 2008, in data cited by Dr. William Hsaio, a Harvard consultant
studying this for the state, growth in Vermont's health costs grew 8.2%,
against a national average of 5.7%.
The current governor says his plan is "all about
containing costs," echoing Mr. Obama's absurd claim that increased health
spending would mean lower deficits. Mr. Shumlin can talk about government
health care and savings in the same breath because millions of Americans
still believe the myth that socialized health-care models are immune from
cost inflation.
Yet data from the Organization for Economic
Cooperation and Development show that U.S. health inflation rates are
roughly identical to those seen in European and Canadian systems. From 1990
to 2006, U.S. health costs grew an average of 1.66% faster than the economy
vs. 1.62% for OECD nations.
Socialized medicine advocates say the point is moot
because government-run systems start from a cheaper baseline. That's true,
but that advantage is eroding quickly. A recent paper projected that
Canadian health-care costs were growing so fast that they should consume 19%
of GDP by 2031. The chief author of the paper is David Dodge, Canada's
former deputy minister of health and a former governor of the Bank of
Canada.
Single-payer countries also keep costs below U.S.
levels by rationing care, not by being more efficient. Several weeks ago,
the government-run, government-appointed health authority in the Canadian
city where I was born admitted that a dozen patients died in the last three
years while waiting for routine cardiac surgery. None was classified as an
emergency case. In Canada's system, that made them "elective" surgery
patients, triggering wait times that can delay treatment for weeks or even
months. Yet single-payer activists persistently claim that "death by
rationing" is a myth invented by insurance lobbyists.
In the U.S., Medicare hasn't seen much rationing
yet, because it can rely on a privately funded reserve of resources to meet
surges in demand. Whenever Congress flirts with serious cuts to Medicare
fees, doctors push back. Then, Congress flinches—a sign that the program is
more dependent on the private-sector than its champions admit.
Now Vermont is on course to repeat others'
mistakes. For American liberals, there's no better place to test-run a
public option. But if the new plan doesn't work, Vermont is so small that
government-care supporters can pretend it's the state's fault and not a flaw
in the concept. Darcie Johnston of Vermonters for Health Care Freedom fears
the worst: "the largest tax hike in Vermont history" and a dysfunctional
system.
It's a pity, because Vermont is an ideal place to
run a very different experiment. Health-care policy thinkers are shifting
focus to the potential benefits of a true wellness policy. Your health is as
important to health outcomes as your health insurance, after all. Europeans
have better life expectancy than Americans because they take better care of
themselves on average, not because they get better care in their hospitals.
Through their own lifestyle choices, Vermont
residents already have lower than average obesity levels and below-median
smoking rates. With a more patient-centered insurance market, Vermont
residents could receive, for example, cash incentives to prevent diseases
caused by obesity, tobacco, and other lifestyle choices, all at a fraction
of the cost of future treatments.
Continued in article
Jensen Comment
In this experiment Vermont suffers from a relatively small population over which
to spread health insurance costs for very expensive treatments such as AIDs
medications, organ transplants, premature baby care, and the costs of dying
(especially extended intensive care unit confinements while dying) for patients
not on Medicare. Medical cost In the 2010 census, Vermont only had 630,337
people, many of whom are children and elderly that will not pay medical
insurance premiums in Vermont's public plan ---
http://en.wikipedia.org/wiki/Vermont
Vermont residents also rely heavily on out--of-state medical providers such
as physicians and hospitals in bordering states of New Hampshire (especially the
Dartmouth-Hitchcock Medical Center), Massachusetts (especially in the
metropolitan area of Boston), and Canada. This greatly limits cost containment
initiatives that accompany Vermont's public medical insurance plans.
Hear that? It's the escalating cry of American
employers and workers trying to hold on to their health-care benefits in the
age of stifling Obama health-insurance mandates: Gangway! Gangway! Save me!
Waive me!
ObamaCare refugees first began beating down the
exit doors last October. Waiver-mania started with McDonald's and Jack in
the Box; spread to Dish Networks, hair-salon chain Regis Corp and resort
giant Universal Orlando; took hold among major Big Labor outfits from the
AFL-CIO to the CWA to the SEIU; roped in the nationalized health-care
promoters at the Robert Wood Johnson Foundation; and is now gripping entire
states
The latest to catch the waive? West Coast liberals.
Yes, amid House Democratic Leader Nancy Pelosi's
congressional district, a cluster of San Francisco small businesses is among
the latest waiver recipients. At least two dozen Bay Area companies --
including bars, restaurants, hotels, tourist shops, real-estate and auto
firms -- have secured temporary, one-year reprieves from the federal law.
Another noteworthy waiver winner: Seattle-based
REI. The trendy outdoor-equipment retailer's progressive CEO, Sally Jewell,
appeared with President Obama in 2009 to tout White House health-care-reform
initiatives. Two years later, REI snagged a waiver to protect the health
benefits of a whopping 1,180 workers from the big-government bureaucrats
that Jewell embraced at Obama's roundtable.
To date, the Health and Human Services Department
has granted health-care-law exemptions to more than 3 million workers
covered by more than 1,300 unions, companies and insurers who'd voluntarily
offered low-cost health plans with annual benefits limits.
ObamaCare architects outlawed those private plans
(nicknamed "mini med" plans) in the name of "patients' rights." Without
waivers, the escapees would have had to hike premiums or drop insurance
coverage for mostly low-wage, seasonal and part-time workers.
Among the most recent union affiliates to secure
pardons:
* Teamsters Local 485 Health and Welfare Fund in
Brooklyn
* Detroit and Vicinity Trowel Trades Health and
Welfare Fund
* Communications Workers of America Local 1182
Security Benefits Fund
* CWA Local 1183 Health and Welfare Fund
* Bakers Union and Food Employees Labor Relations
Association Health and Welfare Fund
* SEIU Healthcare Illinois Home Care and Child Care
Fund
* United Food and Commercial Workers San Diego
Employers Health and Welfare Trust
* Welfare Fund of the International Union of
Operating Engineers Local 15, 15A, 15C, 15D AFL-CIO
* United Steelworkers Local 1-0318 Health and
Welfare Trust Fund
* United Association of Journeymen and Apprentices
Local 198 AFL-CIO Health and Welfare Trust
* Teamsters Local 617 Welfare Fund in Ridgefield,
NJ
* Plumbers and Steamfitters Local 60 Health and
Welfare Fund
* New York State Nurses Welfare Plan for New York
City Employed Registered Professional Nurses
Pelosi and the Golden Ticket Administrators in
Washington deny preferential treatment for waiver beneficiaries. But the
stench of waivers-for-favors won't be dispelled until and unless the Obama
administration releases a full list not only of those who won exemptions,
but also of those who applied and were denied.
With San Francisco businesses caught with their
hands in the waiver jar, Pelosi's office could do nothing else but pout: "It
is pathetic," said Pelosi spokesman Drew Hammill, "that there are those who
would be cheering for Americans to lose their minimum health coverage or see
their premiums increase for political purposes."
It is far more pathetic to have cheered, as Pelosi
did on the one-year anniversary of ObamaCare, the law's onerous benefits
limits from which thousands of her own constituents have now been exempted.
Medicaid has plunged Washington state into fiscal
crisis. This fact was recognized by legislators from both sides of the aisle
during a contentious special session that concluded last week. The result
was Senate Bill 5596, a Medicaid block-grant bill.
The block-grant concept was remarkably nonpartisan:
The bill, requiring the state to apply to the federal Department of Health
and Human Services (HHS) for a waiver that would replace its current
Medicaid program with a block grant, passed with unanimous support. On
Tuesday, Gov. Christine Gregoire, previously an opponent of block grants,
signed the bill. Now the waiver request will go to HHS Secretary Kathleen
Sebelius.
A block grant would free state and local officials
from being de facto appendages of the faraway federal government. Just the
latest in the long line of unnecessary federal strings are the costly
"maintenance of effort" requirements imposed by the federal stimulus bill
and ObamaCare. This requirement will add an estimated 176,000 people to our
state's Medicaid rolls by 2013 and prohibit the state from modifying
eligibility rules without risking a loss of all Medicaid funding.
In contrast, SB 5596's authors explain that the
block grant would "allow the state to operate as a laboratory of innovation
for bending the cost curve, preserving the safety net, and improving the
management of care for low-income populations." Rhode Island has had success
under a similar waiver granted in 2009, saving $100 million within the first
18 months. With a block grant, state legislators will have the ability to
alter eligibility and benefits to best serve the unique needs of their
constituents without having to opt out of Medicaid entirely.
The Obama administration has repeatedly claimed that the
health-reform bill it passed last year improved Medicare's finances. Although
you'd never know it from the current state of the Medicare debate—with the
Republicans being portrayed as the Medicare Grinches—the claim is true only
because ObamaCare explicitly commits to cutting health-care spending for the
elderly and the disabled in future years.
Yet almost no one familiar with
the numbers thinks that the planned brute-force cuts in Medicare spending are
politically feasible. Last August, the Office of the Medicare Actuary predicted
that Medicare will be paying doctors less than what Medicaid pays by the end of
this decade and, by then, one in seven hospitals will have to leave the Medicare
system.
But suppose the law is implemented just as it's written.
In that case, according to the Medicare Trustees, Medicare's long-term unfunded
liability fell by $53 trillion on the day ObamaCare was signed.
But at what cost to the elderly? Consider people reaching
the age of 65 this year. Under the new law, the average amount spent on these
enrollees over the remainder of their lives will fall by about $36,000 at
today's prices. That sum of money is equivalent to about three years of
benefits. For 55-year-olds, the spending decrease is about $62,000—or the
equivalent of six years of benefits. For 45-year-olds, the loss is more than
$105,000, or nine years of benefits.
In terms of the sheer dollars involved, the law's
reduction in future Medicare payments is the equivalent of raising the
eligibility age for Medicare to age 68 for today's 65-year-olds, to age 71 for
55-year-olds and to age 74 for 45-year-olds. But rather than keep the system as
is and raise the age of eligibility, the reform law instead tries to achieve
equivalent savings by paying less to the providers of care.
What does this mean in terms of access to health care? No
one knows for sure, but it almost certainly means that seniors will have
difficulty finding doctors who will see them and hospitals who will admit them.
Once admitted, they will enjoy fewer amenities such as private rooms and
probably a lower quality of care as well.
Are there better ways of solving the problem? The graph
nearby shows three proposals, including the new law, and compares them to the
current system. For the past 40 years, real Medicare spending per capita has
been growing about two percentage points faster than real gross domestic product
(GDP) per capita. Since real GDP per capita grows at just about 2%, that means
Medicare is growing at twice the rate of our economy—and is clearly
unsustainable. If nothing is done, we'll see a doubling of the Medicare tax
burden in less than 20 years.
There are currently an array of proposals to slow
Medicare spending to a rate of GDP growth plus 1%. These include a proposal by
President Obama's debt commission, chaired by Bill Clinton's former chief of
staff, Erskine Bowles, and former Sen. Alan Simpson; one by former Clinton
budget director Alice Rivlin and Rep. Paul Ryan (R., Wis.); and another by
former Sen. Pete Domenici and Ms. Rivlin. Unlike the Medicare Trustees, the
Congressional Budget Office (CBO) also scores ObamaCare at GDP plus 1%.
Of greater political interest is the House Republican
budget proposal, sponsored by Mr. Ryan. This proposal largely matches the new
law's Medicare cuts for the next 10 years and then provides new enrollees with a
sum of money to apply to private insurance (premium support). Even though the
CBO assumed premium support would increase with consumer prices (price
indexing), the resolution that House Republicans actually voted for contains no
specific escalation formula. A natural alternative is letting premium support
payments grow at the annual rate of increase in per-capita GDP (GDP indexing).
In light of the heated rhetoric of recent days, it is
worth noting that for everyone over the age of 55, there is no difference
between the amount of money the House Republicans voted to spend on Medicare and
the amount that the Democrats who support the health-reform law voted to spend.
Even for younger people, the amounts are virtually identical with GDP indexing.
The law's spending path depends on making providers pay
for all the future Medicare shortfalls. But since no one can force health-care
providers to show up for work, short of a health-care provider draft this reform
ultimately cannot succeed. The House Republican path, on the other hand, would
make a sum of money available to each senior to choose among competing private
plans—much the way Medicare Advantage provides insurance today for about one out
of every four Medicare beneficiaries.
That's a good starting point. But we believe that a truly
successful overhaul of Medicare will require at least three additional elements.
News item dated May 28, 2041 at
BataviaOnlineNow!, a news site devoted to Western New York: As they have for the
past 30 years, the Democratic faithful in the 26th congressional district turned
last night's Jefferson-Jackson Dinner into an opportunity also to commemorate
Medicare-As-We-Knew-It Salvation Day. Last night's celebration was extra
special, thanks to the presence of Barack Obama. "I just came for the wings,"
quipped the former president. (Nearby Buffalo, N.Y., of course, is the
birthplace of the chicken wing.) On a serious note, Mr. Obama, 79, recalled the
watershed Democratic special election victory of 2011 as a turning .point
in his battle to save Medicare, the health-care program for seniors.
Earlier, dignitaries had visited the Hamburg Regional
Medicare Center, specially unlocked by a janitor for the occasion. Normally the
center is open between noon and 2 p.m. on Saturday to help a trickle of
financially struggling local seniors apply for Medicaid.
The delegation also visited the Greater Hamburg Medical
Megalopolis, adjacent to the Jack Kemp Retirement Community and Country Club.
Many older residents, stopping in for discount knee adjustments or massage
therapy, said they vividly recalled the 2011 congressional election. A high
point was the visit of "Bowzer," of the singing group Sha Na Na, to campaign for
the Democratic winner.
Historians say the race was a nationally watched
referendum on the so-called Ryan Plan, which some critics likened to a plan to
solve Medicare's then-pending bankruptcy by wheeling an elderly woman off a
cliff.
"At the time, Medicare's fiscal shortfalls were very,
very serious," says SUNY Geneseo Prof. DeWayne Wise Srinivasan. "But after
NY-26, it was clear there would be no political will in Washington to address
the problem. The senior lobby and other interest groups were too powerful."
However, that was not the end of the story. After the
upset Democratic win in the 26th, both parties turned to the more politically
palatable job of meeting a clamor from younger workers for tax-law changes to
help them save for their own retirements.
Politicians had inadvertently tapped into a principle
known as Ricardian Equivalence, says Prof. Srinivasan. "Polls showed nobody
under 40 believed that Medicare and Social Security would be around to support
them in retirement. So these younger workers were determined to increase their
own savings to help pay for the long, healthy, active retirements they
envisioned for themselves."
The result was the Tax Reform Act of 2013, which greatly
reduced the burden of taxation on savings, investment and business profits. One
upshot was what economists now call The Long Boom II, a period of unparalleled
prosperity that continues to this day.
Not present for this week's festivities was the victor in
that long-ago congressional race, former Erie County Clerk Kathy Hochul
Democrats will often get irritable when some clingy
philistine refers to ObamaCare as "socialized medicine." It's simply not a
precise phrase for the Patient Protection and Affordable Care Act. In any
event, it's not socialized yet, you ignoramuses! Progress doesn't happen
overnight. No worries, though, recent signs portend that ObamaCare will give
us the state-run plan we proles deserve.
A new study published in McKinsey Quarterly claims
that in 2014, the provisions of ObamaCare will induce 3 in 10 employers to
"definitely or probably" stop offering health coverage to their employees.
And we can only assume the companies have had the good sense not to read the
legislation.
Sure, the president promised we could keep our
insurance if we liked it. But why would you want to be mixed up with
pitiless corporations that focus on profits, anyway? ObamaCare courageously
forces states to implement concocted "exchanges" so that someone much
smarter than you can pick participants, regulate prices and keep an eye on
things. Sounds like a vigorous marketplace. It's only a wonder that more
Americans aren't clamoring for government-run supermarkets, smartphones, and
dating exchanges, as well.
You'll also recall that the un-socialized system
allowed 20, 30, 40 million (please feel free to come up with any number
you'd like; The New York Times won't care) people to go uninsured.
Medicare's chief actuary estimated that 400,000 would sign up for these
high-risk pools before ObamaCare kicked in. The Congressional Budget Office
estimated that the budget would be able to handle 200,000, and others
claimed that the program would need eight times the funding to meet demand.
This was the driving reason for ObamaCare. But as Megan McArdle of The
Atlantic points out, just as with the exchanges, folks have been
standoffish, with only about 18,000 people signing up.
Victory, right? The success of a government handout
is always measured by how little Americans need to use it, right? Well,
judging from the food stamp administration's actions, that would be a big
no. What this probably calls out for is more public service announcements or
a wider net. Hey, we'll just get some toffee-nosed yacht jockeys to offset
the cost.
That's not to say there aren't people out there who
really need support. The president has generously handed out nearly 1,400
ObamaCare waivers to the neediest among us. About 20 percent of them have
been awarded to an upmarket district in San Francisco that, by pure chance,
is represented by Nancy Pelosi. Others, such as the AARP and local unions,
had demanded we pass ObamaCare so they could not take part in it
immediately.
We'll also soon be hearing more about the lawsuits
challenging ObamaCare's individual mandate. Randy Barnett, a professor of
constitutional law at Georgetown University Law Center, recently asked, "If
Congress can impose this economic mandate on the people, what can't it
mandate the people to buy?" Everything and nothing. And that's the beauty of
it.
And let's not forget it was Obama, the newfound
holy savior of Medicare, who pinned the key cost control component of health
care reform on Medicare through his Independent Payment Advisory Board, or
what bitter righties call a rationing board.
A kerfuffle was stirred up last week by a
devastating McKinsey & Company study that concluded up to 78 million
Americans would lose their current health coverage as employers stopped
offering insurance because of President Obama's Patient Protection and
Affordable Care Act.
The report contradicted Mr. Obama's frequent pledge
that under his reform, "if you like your health-care plan, you can keep your
health-care plan." And McKinsey's was at least the fourth such analysis
calling the president's promise into question.
In May 2010, former Congressional Budget Office
(CBO) Director Douglas Holtz-Eakin concluded that employers would drop
coverage for about 35 million Americans because of ObamaCare. A month later,
in June 2010, the National Center for Policy Analysis (NCPA) pegged the
number between 87 million to 117 million. And last November, Allisa Meade, a
McKinsey analyst, told health-insurance company executives that 80 million
to 100 million people might lose their employer-provided health insurance.
Simple economics is the reason. According to the
Kaiser Family Foundation's Employer Health Benefits 2010 Annual Survey, the
annual premium for an average policy last year was $5,049 for a single
worker, with the company picking up roughly $4,150 and the employee the
rest. For a family of four, the total cost was $13,770, with the company
picking up $9,773.
Yet under ObamaCare, businesses can stop providing
health-care coverage, paying a $2,000 per-worker fine instead. For small
businesses, the trade-off is even more attractive: They are given a pass on
the first 50 workers.
Workers losing coverage will be moved into the
"exchange," a government-run marketplace to buy health plans. Those whose
insurance costs were more than a specified share of their income (9.5% in
2014) could get subsidies. The exchange starts in 2014 and is fully
operational by 2016.
Perversely, ObamaCare both drives up the cost of
insurance with mandates and rules while making it attractive for companies
to dump the increasingly more expensive coverage and pay a lesser fine.
There will be huge ramifications for the country's finances if more workers
lose coverage than was estimated.
When Mr. Obama's health-care bill passed in March
2010, the CBO and the congressional Joint Committee on Taxation predicted
that 24 million workers would be covered by the exchange. Of these, nine
million to 11 million would lose their employer-provided coverage, offset by
six million to seven million who would be getting employer-provided
insurance, for a net of three million workers losing company-sponsored
coverage. The CBO said the exchanges would cost $511 billion over
ObamaCare's first decade.
But what if more people are dumped into the
exchange than originally estimated? Costs from the increased subsidies will
explode.
In the United States, health care technology
has contributed to rising survival rates, yet health care spending
relative to GDP has also grown more rapidly than in any other country.
We develop a model of patient demand and supplier behavior to explain
these parallel trends in technology growth and cost growth. We show
that health care productivity depends on the heterogeneity of treatment
effects across patients, the shape of the health production function,
and the cost structure of procedures such as MRIs with high fixed costs
and low marginal costs. The model implies a typology of medical
technology productivity: (I) highly cost-effective “home run”
innovations with little chance of overuse, such as anti-retroviral
therapy for HIV, (II) treatments highly effective for some but not for
all (e.g. stents), and (III) “gray area” treatments with uncertain
clinical value such as ICU days among chronically ill patients. Not
surprisingly, countries adopting Category I and effective Category II
treatments gain the greatest health improvements, while countries
adopting ineffective Category II and Category III treatments experience
the most rapid cost growth. Ultimately, economic and political
resistance in the U.S. to ever-rising tax rates will likely slow cost
growth, with uncertain effects on technology growth.
This paper strikes me as sensible, explanatory, and
non-ideological to the max. It would be nifty if the people who work in
Washington read it, and thought about it, and maybe even acted on it. (And
it would be nifty if the Knicks beat the Celtics too, but I’m not holding my
breath for either outcome …)
Here’s a very good paragraph from the paper:
The science section of a U.S. newspaper
routinely features articles on new surgical and pharmaceutical
treatments for cancer, obesity, aging, and cardiovascular diseases, with
rosy predictions of expanded longevity and improved health functioning (Wade,
2009). The business section, on the other hand, features gloomy reports
of galloping health insurance premiums (Claxton et al.,
2010), declining insurance coverage, and unsustainable Medicare and
Medicaid growth leading to higher taxes (Leonhardt,
2009) and downgraded U.S. debt (Stein, 2006). Not
surprisingly, there is some ambiguity as to whether these two trends, in
outcomes and in expenditures, are a cause for celebration or concern.
And the authors offer good specific examples of
what they built their argument on, noting the …
Myth 1: Health care reform will reduce the deficit.
Fact 1: Health care reform will increase the
deficit.
The Patient Protection and Affordable Care Act
includes many provisions that have nothing to do with health care: the CLASS
act, a student loan overhaul, and many new taxes. These provisions don't
change the health care system. They just raise money to pay for the new law.
Strip them away and the law’s actual health care provisions don't lower the
deficit—they increase it!
The chart below uses data from Congressional Budget
Office (CBO) to clarify the fiscal consequences of health care reform.
. . .
As you can see, from 2012 to 2021, the
Congressional Budget Office estimates that the health care act will reduce
deficits by $210 billion (note that this estimate differs from the widely
cited $143 billion figure used during the lead-up to the passage of the
act). During this same time period, however, the actual health care reform
provisions of the law will increase deficits by $464 billion.
Of course, one should not evaluate the health care
legislation on its fiscal impacts alone. In theory we should get some fiscal
benefits. But the key question is how they net out. Still, no matter what
you think about the benefits of the health care legislation, it is incorrect
to claim that health care reform will save money. It won’t.
Myth 2: The U.S. health care system is a
free-market system.
Fact 2: Roughly half of all U.S. health care is
currently paid for by the government.
. . .
Even in the absence of the health care reform law,
government programs including Medicare and Medicaid already fund almost half
of American health care. Roughly a third of the remaining expenditures are
funded by private insurers—mainly through subsidized and highly regulated
employee plans. Not exactly a free market.
As this chart shows, state and federal entities
make up over half of the health insurance market. Of course, the Patient
Protection and Affordable Care Act will only increase the share of
government involvement in the health care market.
Myth 3: Medicare spending increases life expectancy
for seniors. Reductions in Medicare spending will therefore reduce their
life expectancy.
Fact 3: Increases in life expectancy for seniors
are due to increased access to health care, not to Medicare.
While Medicare spending has certainly decreased
seniors’ out of pocket health care expenses (by 1970, Medicare reduced out
of pocket expenses by an estimated 40 percent relative to pre-Medicare
levels), the program’s effect on mortality is much less clear.
. . .
Continued in article
Questions
Is it possible to eliminate a $1.5 trillion deficit by increasing rates for
taxpayers earning more than $250,000 per year?
Is it possible to eliminate the above deficit by increasing tax rates for all
taxpayers?
Answers
In theory no to Question 1 and yes to Question 2, but in reality, closing the
Federal spending gap with tax rate increases would be a total disaster on the
economy to a point where the government might take in less rather than more tax
revenue.
Firstly the answer is no unless you more than double what the poor and middle
class pay in taxes. And since nearly half the households in the U.S. do not pay
any Federal income tax, Congress would probably have to figure how to squeeze
blood out of turnips. This would have an extremely adverse impact on middle and
lower income families already deep in debt to to pay medical, housing, and
education expenses.
Secondly, the answer is no if you anticipate that most taxpayers that have
any form of savings would probably stampede to invest in tax free alternatives
such as tax free municipal bonds and bond funds. This would be a disaster for
business firms seeking capital.
Thirdly, many taxpayers now paying something into the U.S. Treasury would be
thrown out of work and impact on the economy would be far worse than the Great
Depression of the 1930s.
But if we could wave a magic wand and prevent all the dynamic reactions to
tax rate increases, one solution would look something like this --- keeping in
mind that all of this is pure fantasy since the dynamic reactions really cannot
be prevented. From Paul Caron's TaxProf Blog on April 18, 2011 ---
http://taxprof.typepad.com/
Jensen Comment
Professor Blinder's main criticism is that the Ryan Plan is too long term and
does not do enough to reduce the trillions in deficits over the next decade. But
like most progressives he offers zero hints as to what will be a "better game in
town" to reduce deficits now. Presumably he wants to confiscate the incomes of
people now making over $250,000 per year, but he really doesn't want to discuss
a proposed game plan for tax increases because he secretly knows this will not
be enough to make much difference on the deficits and probably will be highly
dysfunctional in terms of unemployment. Secretly he most likely supports his
Princeton colleague's, Krazy Krugman's, solution of printing dollars to reduce
deficits and pay for my wife's forthcoming very expensive surgery.
Zimbabwe showed Ben Bernanke, Alan Blinder, and Paul Krugman the way to
reduce government deficits. Why can't they convince the rest of us that printing
presses are the answer to deficit reduction?
And, if we keep redefining inflation by taking more and more commodities and
services out of the calculation, things won't look so bad while were printing
$15 trillion dollars for starters.
Eventually, the "Core" CPI might only include empty houses and vacant yachts.
April 20, 2011 reply from Bob Jensen
Hi Louis and Linda,
I probably would never do research on privileged budget items because it is
so complicated and confounded with externalities.
When it comes to government spending, one has to first distinguish those
budget items that are discretionary versus non-discretionary. To do this we
need some type of criterion. One criterion to consider is whether or not a
contract would make the item binding in court. As I mentioned previously
many retirement contracts allow beneficiaries to take breaches of contract
to court, which is why Congress does not mess with cutting military
pensions.
There are, of course, gray zones. Presumably Congress can choose to add
surtaxes to all pensions that it pays, including military pensions and
Social Security. Or it can choose to tax medical benefits that it pays such
as taxes on usage of Veterans Hospitals or taxes and higher deductibles on
Medicare claims.
Another gray area that makes non-discretionary budget items somewhat
discretionary is already being practiced in Medicare. You can keep allowing
less and less for medical services such that claimants can only get cheap
and inferior doctors. For example, the
surgeon who performed my wife's surgeries three and four under Medicare
would not do surgery Number 5 because he stopped accepting any Medicare
patients.This means by law
that he cannot accept patients who are eligible for Medicare even if they
are willing to pay his fees from private funds. May wife had to find another
surgeon in another state.
Under the Romney Care "universal" health insurance plan in Massachusetts,
some hospitals discovered the plan was not paying enough to cover
out-of-pocket expenses, especially malpractice insurance premiums. So those
hospitals dropped the services that had the highest malpractice insurance
premiums. Read that as meaning that those hospitals dropped obstetrics
departments and refused obstetrics services to all women. These women can
still find hospitals that offer such services but the distances are further
and the lines are longer and the services are not nearly as good in many
instances.
Also the outstanding orthopaedic hospital in Boston where my wife now has
spinal surgeries dropped its emergency room services. An externality of
Romney care was reduced medical services for all patients, including those
that have premium medical insurance plans from employers. Those on premium
plans have fewer choices for emergency rooms and trauma centers because of
Romney Care.
There's a huge difference between General Motors and the government when it
comes to budget cutting. General Motors cannot print money and reached a
point where it was impossible to meet pension and health care contracts with
retirees. In that case the bankruptcy court modified the contracts. In the
case of government pensions and medical benefits for retirees, rather than
declare bankruptcy our Federal government will probably just print the money
needed to honor the contracts. Welcome to Zimbabwe.
Our state governments like California are in more of a bind. State
governments might have to declare bankruptcy and have the bankruptcy courts
restructure retirement contracts. At one time Canada came close to losing
its national government in favor of provincial governments that would, among
other things, print their own currencies. This is no longer entirely out of
the question for our 50 states in the United States who would like an option
to print their own currencies.
As far as "privileges" within government budget items deemed discretionary,
the top privileges typically go to public safety. Police, fire, and National
Guard budgets are being cut somewhat but they are protected from enormous
cuts by fears in the minds of voters. As far as Federal government military
budgets are concerned, an extremely expensive item in budgets is for
advanced warfare and defense technology. However, not many voters are
willing to fall behind our enemies on warfare technology, including
technology for blocking communications --- such as when an unnamed
advanced-technology nation allegedly shut down the nuclear centrifuges in
Iran.
Another extremely expensive budget item is our CIA, but not many voters will
accept CIA budget cuts on the premise that "ignorance is bliss."
It's one thing to point out research about tax increases and spending cuts
on a very broad scale, but when it comes to specifics it becomes an
explosive debate that can be political suicide. We now have two choices with
trillions in budget deficits. We can raise taxes and make huge spending
cuts. Or we keep putting off remedies like we've done for the past two
decades at reach a point where it's no longer possible to save the patient.
Some professors in ivory towers might think it is possible to totally
eliminate our international fighting force in favor of a beefed up domestic
police force. But the unfunded expenses of past wars will continue to linger
over our heads. And it's questionable how many terror attacks this nation is
willing to experience with an impotent international fighting force for
prevention of future attacks.
But I really don't want to get into the question of line item budget cuts.
This is also probably too explosive for the AECM in terms of politics. We
can, however, debate broad issues like whether it's possible to tax
ourselves out of trillion dollar deficits with very little serious budget
cutting.
Every Vermonter could sign up for state-financed
health insurance under a bill passed by the House on Thursday that would put
the state on a path to a single-payer health care system by the middle of
this decade.
Senate next
"This bill takes our state one step closer to a
system that ensures that all Vermonters have access to the care they deserve
and contains costs," House Speaker Shap Smith said shortly after the House
passed the bill 92-49.
The measure now goes to the Senate, where it is
expected to pass, but with some possible changes.
Gov. Peter Shumlin, who made single-payer health
care a centerpiece of his gubernatorial campaign last year, also praised the
legislation. He said it would make Vermont "the first state in the country
to make the first substantive step to deliver a health care system where
health care will be a right and not a privilege, where health care will
follow the individual, not be a requirement of the employer, and where we’ll
have an affordable system that contains costs."
Costs are an open question. The bill sets up a
five-member state board to design a benefit package to be called Green
Mountain Care, but doesn’t require the governor to propose a way to pay for
it until 2013. That drew fire from minority Republicans in the House, who
said the hard partof reform -- paying for it -- won’t be tackled until after
Shumlin campaigns for a second two-year term in
. . .
The Shumlin administration and supporters of the
bill need to address numerous uncertainties as the process goes forward. One
concerns the more than 100,000 Vermonters who get health coverage from
employers who are self-insured, meaning they assume the financial risks of
coverage, and are chartered under federal law.
The House defeated a proposed amendment to allow
those employers, among them the state’s largest, like IBM, to be exempt from
paying taxes to support Green Mountain Care. Rep. Anne Donahue,
R-Northfield, said that would leave them in a similar situation to parents
who send their children to private schools, but pay taxes to support public
ones.
Jensen Comment
One enormous problem faced by such a small state is that so many of its
residents must go elsewhere for specialized medical care, including such medical
centers as Dartmouth Hitchcock in New Hampshire and the various medical centers
in Boston and Canada. Cost containment is more difficult when a provider of
insurance cannot regulate the cost of services.
There are other questions such as whether the State of Vermont will pick up
the supplemental costs of Medicare. With such a small population, this can be
troublesome when spreading the insurance risks among a small funding base. One
of the heavy hits taken by supplemental insurers is for the high cost of dying
when older folks must be hospitalized for lengthy stays, often in intensive care
units. CBS on Sixty Minutes claims the major issue with Medicare and its
supplemental insurers is the "High Cost of Dying."
On November 22, 2009 CBS Sixty Minutes aired a video featuring experts
(including physicians) explaining how the single largest drain on the Medicare
insurance fund is keeping dying people hopelessly alive who could otherwise be
allowed to die quicker and painlessly without artificially prolonging life on
ICU machines.
"The Cost of Dying,"CBS Sixty Minutes Video, November 22, 2009
---
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
The single most important feature of the Affordable
Care Act (ObamaCare) is the establishment of a health insurance exchange
where people will be required to buy health insurance if they are not
insured by their employer or a government plan. As envisioned by its
supporters, the exchange will be a model of competition.
But rather than moving toward a competitive world,
we seem to be moving toward the opposite extreme: monopoly. Major
consolidation is underway both on the provider and insurer sides of the
market. And while this trend was already underway before Barack Obama became
president, without doubt it is accelerating because of ObamaCare.
The following bullet points describe what things
look like in the market for commercial insurance in major Texas cities:
·Blue Cross already has 70% of the market in
three of the nine largest metropolitan areas.
·In all of them, and for the state as a whole,
more than 60% of all customers buy from only two insurers.
Since the passage of the health reform bill,
Harvard Pilgrim has announced its departure from the Medicare Advantage
market (leaving 22,000 enrollees to search for coverage elsewhere) and the
Principal Financial Group has left the health insurance market altogether
(leaving 725,000 people behind). Many other small- and medium-sized insurers
are struggling to hold on.
What is causing the immediate problem? One big
problem is a new federal requirement that insurance companies spend no more
than 15% of their revenues on “administration.”
In almost every state, rarely does a session of the
legislature adjourn before someone files a bill to require the public
schools to spend a certain percent of their income “in the classroom.” How
well does this work? Here is Michael Barba’s description in a forthcoming
NCPA Brief Analysis:
"Nationwide, schools spend an average of about
$10,000 per student each year. On average, 60 percent of this is
instructional, according to the National Center for Education Statistics (NCES).
Instructional spending includes such things as teacher and staff salaries,
extracurricular activities such as sports or academic clubs, and classroom
supplies. However, each state can define instructional spending as it
chooses, and expenses labeled as instructional are often not exclusively
classroom expenses. In Texas, for example, the upkeep of vehicles, equipment
and computers, as well as food service, travel, property insurance and
refreshments for meetings are all considered instructional…
President Obama met with the winner of the "save
award" in the Oval Office the other day, the contest for federal employees
who find ways to make government more efficient. Trudy Givens, of Portage,
Wisconsin, suggested that the feds stop mailing out paper copies of the
Federal Register (available online since 1994) to the provinces. Her good
idea will cut about $4 million a year in printing and postage.
We don't work for the government, but here's our
"save" suggestion: How about not spending some $3.5 million to deceptively
promote ObamaCare?
It turns out it cost the Health and Human Services
Department $2.78 million to buy airtime for three cable TV ads last year,
featuring Andy Griffith praising the new entitlement. The "Matlock" eminence
rendered his services pro bono, but Porter Novelli didn't. The media
consulting firm racked up 668 billable hours and earned $404,384.40
producing the spots, according to documents released by the outside GOP
advocacy group Crossroads GPS through the Freedom of Information Act.
At least Porter Novelli didn't charge taxpayers for
fact-checking. Among Mr. Griffith's many deceptive claims, he tells his
fellow seniors that their Medicare benefits won't change (they will, most
immediately in Medicare Advantage) and that ObamaCare strengthens the
program's finances (it doesn't, according to the chief Medicare actuary).
Lovable ol' Andy of Mayberry then says "that new health-care law sure sounds
good" to him, in a transparent bid to win over senior voters in advance of
the 2010 election.
The next time the President wants to run misleading
ads ahead of an election, he might hit up the Democratic Party or use his
bully pulpit, rather than passing the bill to taxpayers. Meantime, an
Administration functionary says in a new promotional Web video for the save
award—how much did that one cost to produce?—that "Something that seems
relatively small if replicated over the full length of the federal
government can really result in substantial savings."
How about we go one better and save several
trillion dollars by repealing a health-care bill that Americans still hate
despite Sheriff Andy's endorsement?
When ObamaCare was passed by the Senate on
Christmas Eve of 2009, senators had less than 72 hours to compare a 383-page
package of amendments to the 2,074-page bill. Public outrage over backroom
deals (such as the Cornhusker Kickback and the Louisiana Purchase) led to
the election of Scott Brown in Massachusetts.
Democrats then cooked up a plan to link the
now-2,409-page Senate-passed ObamaCare bill to dozens of amendments
contained in a separate 150-page Budget Reconciliation bill that could pass
both houses by a simple majority. That's when then-Speaker Nancy Pelosi
famously told the then-Democratic majority, "We have to pass the bill so
that you can find out what is in it."
When President Obama signed ObamaCare into law,
that set in motion a series of funding triggers and money transfers that add
up to $105,464,000,000 in pre-authorized appropriations that are scheduled
to be paid up through FY2019. In laymen's language, that means writing
postdated checks that are guaranteed to be paid out over the next eight
years.
This money was divided into dozens of smaller
amounts so the big total would not be apparent. For example, Section 2953 of
ObamaCare included a pre-funded appropriation of $75 million a year for five
years to "educate adolescents" in "adult preparation subjects" such as
"stress management" and "the development of healthy attitudes and values
about adolescent growth and development, body image, racial and ethnic
diversity, and other related subjects."
Section 4101(a) of ObamaCare prefunded $200 million
a year over four years for the construction of school-based health centers.
In Section 4002, a total of $17,750,000,000 will be deposited over 10 years
to a discretionary account controlled by the HHS secretary (currently
Kathleen Sebelius), who may spend that money "to provide for expanded and
sustained national investment in prevention" and to "help restrain the rate
of growth in private and public sector health care costs."
With all eyes on Wisconsin this past week,
overlooked has been the conservative policy changes that are moving ahead in
New Hampshire. In recent days the New Hampshire House, where the GOP
controls nearly three-quarters of the 400 seats, passed a bill to repeal the
state cap-and-trade law that imposes a tax on energy use and a bill to make
New Hampshire a right-to-work state.
Democratic Gov. John Lynch has vowed to veto both
bills, but my sources in Concord say there's a chance that the vetoes could
be overridden. Meanwhile, Republicans are also set to pass a spending
reduction bill with the kinds of public sector pension reforms that have
incited protests from the labor unions in the Midwest.
New Hampshire has always been the island of liberty
and low taxes surrounded by a sea of Northeastern-style socialism. It's the
only state in the region without an income tax or statewide sales tax, and
per-capita spending is about half of what's found in New York and New
Jersey. Republicans won huge majorities in both houses in November after
turning blue in 2008 and voting for President Obama.
If New Hampshire becomes a right-to-work state, it
would be the only New England state that does not force workers to join a
union and pay dues. The bill passed by 221-131 but still lacks the
two-thirds majority that's needed for a veto override. House Deputy Speaker
Pamela Tucker said that becoming a right-to-work state "would help us become
a haven for employers seeking a pro-business environment." She added:
"Freedom is a core New Hampshire belief, and freedom of association and
choice is a fundamental right of every New Hampshire citizen."
In 2008, New Hampshire joined something called the
Regional Greenhouse Gas Initiative, a region-wide cap-and-trade system for
state utilities. So far, it's resulted in about $27 million in higher
electric costs for consumers, and the environmental benefits have been
dubious. "It does nothing to reduce greenhouse gases because jobs and
businesses just move to other states," says Corey Lewandowski, the New
Hampshire director of Americans for Prosperity. His group is working to make
New Hampshire the first state in the nation to repeal an existing global
warming law. The repeal bill passed with a two-thirds majority, and the
state Senate is expected to follow suit with the necessary margin to
override a veto.
Jensen
Comment
In spite of now being labeled a conservative Yankee state, New Hampshire is
surprisingly liberal on many issues. It has had a succession of senators and
representatives that it sent to Washington DC prior to the 2008 election.
Governors have be Democrats for decades. And New Hampshire is not only one of
the few states sanctifying gay marriage, the Republican-controlled legislature
just turn down an effort to repeal the gay marriage law.
More
notably, New Hampshire is one of the least friendly states to private sector
corporate businesses in terms of business taxes and fees.
Medicare is the real killer. According to Eugene
Steuerle of the Urban Institute, an average couple retiring last year can look
forward to consuming Medicare benefits with a present value of $343,000, having
paid Medicare taxes with a present value of $109,000. Holman W. Jenkins, Jr.
Nobody should be surprised that public-sector
workers in Wisconsin and elsewhere are fighting to preserve every penny of
their promised benefits.
Nobody should be surprised that state governors—and
it doesn't matter which party—are trying to trim those privileges and
benefits.
Nobody should be surprised by anything.
News reporters may be naïve, and some of the
protesters may pretend to be. But this fight was penciled in long ago, when
politicians and union leaders made the strategic decision to negotiate
benefits without negotiating for the funding to make good on them. The mock
shock and horror is all the more laughable given that events in Wisconsin
are a perfect microcosm of the battle that every sentient American knows,
and has known for a generation, awaits Medicare and Social Security.
In keeping with the theatrics of naïveté, President
Obama now calls for "beginning a conversation on entitlements." One wonders
what it was, then, that G.W. Bush began at the 2004 Republican convention,
or what thinkers and activist groups that have been pushing visions of
entitlement reform for decades have been doing.
Has the president not heard of the private sector's
pioneering work on "defined contributions"? Or Bill Clinton's landmark
Medicare commission in 1999? One might as well wonder what pain is coming to
those Obama followers who have yet to suspect their thoughtful liberal might
be a visionless apparatchik.
Don't doubt that Mr. Obama's real impulse, like
that of most Democrats, is to let things ride and then simply, amid a
crisis, start slashing benefits for the "rich" while also raising taxes on
"the rich." Unspoken has been a Democratic assumption that an aging
electorate, in a crisis, would be willing to tax itself to the hilt to prop
up an unreformed or barely reformed Social Security and Medicare.
Even if this assumption were electorally sound,
economics won't oblige in the crisis that's coming. The necessary tax hikes
would kill any hope of growth. The economy would continue its free fall
without root-and-branch entitlement cuts all the more painful for having
been delayed.
Let's lay down a couple of markers for "the
conversation" Mr. Obama pretends he wants to have. The transition to a new
system, in which workers save for their own retirement consumption, will
have to be financed—that is, we'll have to borrow to settle the claims of
those who are retired or nearing retirement and can't be left in the lurch.
Medicare is the real killer. According to Eugene
Steuerle of the Urban Institute, an average couple retiring last year can
look forward to consuming Medicare benefits with a present value of
$343,000, having paid Medicare taxes with a present value of $109,000.
And don't let that figure get your hopes up,
because even that $109,000 is not available today. That money was spent long
ago. The government's trust funds are a fraud. Indeed, by some large amount,
society missed out over many decades on domestic savings and investment that
would have taken place had workers not been relying on unfunded government
promises to support them in retirement.
The flip side of this depressing consideration,
though, is a happier one. Moving toward a system of real savings, in which
payroll taxes would flow into some version of personal accounts controlled
by the worker, would bring a big improvement to incentives. We could expect
a sizeable growth dividend to help finance the transition.
By "finance the transition," of course, we mean
today's workers having to reach into their own pockets twice, paying for
their own retirement while also making up for the saving their parents and
grandparents didn't do. When people talk about generational injustice, this
is what they mean. But the pain can be lightened and spread more evenly with
borrowing. Here's where we should not be afraid of debt. The bond market can
be trusted to distinguish between good debt and bad debt—between borrowing
to fix the system and borrowing to prop it up.
No one should expect much real health-care progress
for the next two years, but at least President Obama is now making
concessions to the political mood, however minor. The White House is
suddenly trying to pacify the critics it used to claim were partisans, or
industry shills, or arguing in bad faith.
The latest penitent is Kathleen Sebelius, who has
finally admitted that there are severe fiscal problems with a new
entitlement for long-term care that was included in ObamaCare. Speaking
Tuesday at the Kaiser Family Foundation, the Health and Human Services
Secretary defended the new government insurance program, known by the
acronym Class. But she also said that "The law, while the structure in the
statute wasn't perfect, provided ample flexibility to make sure that Class
is successful. . . . We at HHS are committed to using that authority to
making sure that both the program meets people's needs while remaining
fiscally sound."
In other words, Ms. Sebelius plans to use her
administrative powers to rewrite the Class program so it doesn't follow
Congressional orders and bankrupt itself by design. She even made a promise
that her rewrite will be so complete that "no taxpayer dollars will be used
to pay for Class benefits," period.
That would certainly be a first in entitlement
history, which is why President Obama's own deficit commission recommended
the "reform or repeal" of Class. It said the program will "require large
general revenue transfers or else collapse under its own weight," while
Senate Budget Chairman Kent Conrad has called Class "a Ponzi scheme of the
first order, the kind of thing that Bernie Madoff would have been proud of."
The main reason Democratic liberals insisted on
passing Class is because it will crowd out private insurance for long-term
care like home health aides or nursing homes. But they also used it to rig
the bill's budget math to make it appear to reduce the deficit.
The program will start collecting premiums up front
in 2012 but won't pay out any cash benefits until five years later. The $70
billion or so accumulated during that lead time will finance other parts of
ObamaCare, and then the Class program is scheduled to go broke sometime
between 2020 and 2025 in part because the money can't be spent twice.
Democrats are deriding last night's House vote to
repeal ObamaCare as "symbolic," and it was, but that is not the same as
meaningless. The stunning political reality is that a new entitlement that
was supposed to be a landmark of liberal governance has been repudiated by a
majority of one chamber of Congress only 10 months after it passed. This
sort of thing never happens.
More House Members—245 in total—voted to rescind
the new entitlement than the 219 Democrats who voted to create it last
March. That partisan majority narrowly prevailed over all 178 Republicans
and some 38 Democrats. The three Democrats who favored repeal yesterday
confirmed the bipartisan opposition to the kind of vast new social program
that historically has been built on a national bipartisan consensus.
Republicans across the country campaigned on repeal
last year, and yesterday's vote showed refreshing respect for the often
invoked, rarely consulted American people. Meanwhile, six additional states
have asked to join the momentous constitutional challenge to ObamaCare in
Florida, bringing the total to 26, plus Virginia's separate suit. A majority
of states resisting this mandate is another "symbolic" threshold.
It's also telling that even many Democrats are now
bowing to the public mood, conceding that the law needs fixing even if they
oppose outright repeal. No less than President Obama declared that "I'm
willing and eager to work with both Democrats and Republicans to improve the
Affordable Care Act. But we can't go backward." House Minority Whip Steny
Hoyer said on Tuesday that Democrats are "open to better ideas."
These feints toward conciliation would be more
convincing if Harry Reid were willing to bring the repeal bill to the Senate
floor. No doubt the Majority Leader fears defections when Republicans
eventually do force an up-or-down vote, especially among the many vulnerable
red-state Democrats standing for re-election in 2012. The retirement of
North Dakota's Kent Conrad, the self-styled deficit hawk who voted for this
fiscal disaster, may be a portent.
Various liberal sages chimed in with a
prediction/hope that repeal will backfire on Republicans, usually based on
outlier polls like those produced by the Kaiser Family Foundation. These are
the same wise men who after Scott Brown's Massachusetts Senate upset a year
ago importuned Democrats to pass the bill anyway. They claimed it would be a
political winner, eventually, once voters were hooked up to subsidized
coverage.
But such spin can't overcome the reality of premium
increases and other damage in the insurance market that consumers can see in
their own paychecks and that will only grow. Recall that reform was sold as
a way to control costs and increase consumer choice. But underlying medical
costs continue to climb, carrying premiums aloft in tandem. Even a nonprofit
insurer like Blue Shield of California, a reliable lobbyist for progressive
causes, says it must raise rates by as much as 59%, in part to comply with
ObamaCare's mandates.
The law's central planning has also set off a wave
of health-industry consolidation that is already reshaping medicine as
providers try to shelter themselves from political risk. A Thompson Reuters
survey released this week found that 65% of physicians believe the quality
of care will deteriorate over the next five years, with only 18% thinking it
will improve. Republicans could have done better in yesterday's debate by
focusing more on this deterioration in choice and quality, rather than so
much on the (admittedly real) harm to jobs and the federal deficit.
The GOP does need to craft a reform alternative
based on competition and market incentives that is more than a return to the
status quo ante. And while "repeal and replace" can't happen as long as Mr.
Obama wields veto power, yesterday's vote sent an important signal to voters
that ObamaCare can't be fixed at the margins when it is so destructive at
its core. Next up: defunding the law's implementation and repealing some of
its more pernicious parts.
Since 1820, world per-capita income has risen more
than eightfold, thanks in part to the spread of democracy, open trading
markets, and the rule of law. But a less-noted source of growth—improvements
to health that have given us longer, more productive lives—has produced as
much as half of the increase in the global economy over the past two
centuries, as research by the late British economist Angus Maddison
suggests. It would be logical to assume that companies whose products make
us healthier would be among the most valued enterprises on the planet, but
this assumption is wrong.
Consider companies that make consumer
products—things like soft drinks, detergent, cosmetics and beer. While their
price-earnings ratios will vary, in today's market their average will most
likely be in the neighborhood of 20. But the average P/E of the largest
American pharmaceutical research companies (Abbott Labs, Bristol-Myers
Squibb, Johnson & Johnson, Eli Lilly, Merck and Pfizer) was recently near
10. Investors must have concluded that pretzels and eyeliner produce faster
profit growth than prescription medicines.
Lower pharma P/E ratios are a recent phenomenon. A
generation ago, drug firms regularly topped magazine lists of the
most-admired companies in America, a reputation usually reflected in their
stock prices. But facing the specter of regulated returns, enterprise values
dropped sharply during debates about proposed health-reform legislation in
1993. When the proposals failed in Congress, valuations eventually
recovered. In the last decade, pharma P/E ratios dropped again.
Contributing to these lower valuations are patent
expirations, regulatory complexity, uncertainty about litigation exposure,
and high U.S. taxes on repatriated foreign income. These factors undoubtedly
influenced the decision by Procter & Gamble to leave the pharmaceutical
business entirely in 2009 and concentrate on consumer products.
Procter & Gamble responded rationally to clear
market signals that discouraged development of life-saving drugs. But for
people whose health, and perhaps survival, will depend on these
medicines—that includes you and me—the implications of the disparity in
market valuations are ominous.
We can remove some of the barriers to growth in
medical research through several public-policy steps:
• Match the inducements of other countries. Many
nations offer generous tax incentives, easier recruitment of clinical-trial
subjects, strong government partnerships and far less litigation. We cannot
and should not stop American biopharmaceutical and medical-device
manufacturers from expanding overseas operations. But we can reduce needless
bureaucracy at home, implement tort reform, and restructure taxation of
foreign income.
• Recognize the return on investment in federal
health research. We clearly need spending restraint in Washington. But
smart budgeting will factor in the economic gains that come from longer,
healthier life spans and the savings from improved therapies. One 2006 study
by Kevin Murphy and Robert Topel of the University of Chicago showed that
life-expectancy gains since 1970 added $3.2 trillion per year to America's
national wealth. A mere 1% reduction in cancer deaths would be worth $500
billion, they noted, and the present value to future generations of a full
cure is a nearly incomprehensible $50 trillion—more than three times today's
GDP.
Congress doubled the budget of the National
Institutes of Health (NIH) between 1998 and 2003. It was money well-spent,
and we're now seeing exciting announcements from the nation's medical
research centers, including 39 new cancer drugs that have been approved
since 2004. In our view at the Milken Institute's FasterCures, the past year
has produced the greatest progress against cancer since I first began
working with the research community in the 1970s. Progress is accelerating
on a range of other diseases as doctors gain traction by using rapidly
evolving technology and by collaborating across disciplines.
But the prospects for continuing this discovery
bonanza are threatened. NIH funding has trended down in real terms since
2003. Current budget realities portend severe future cuts that will cause
some younger medical scientists to either change careers or take their work
to places like Singapore that put out the welcome mat for promising
researchers. Whether continuing breakthroughs emerge from U.S. laboratories
or somewhere else will profoundly affect America's role among nations in the
21st century.
• Support prevention. There's great
concern with rising health-care costs, yet too often we overlook that the
single best way to contain them is to keep people from getting sick in the
first place. That starts with recognizing that lifestyles, not genes, are
the biggest contributors to disease. Public and corporate programs aimed at
even slight reductions in obesity, tobacco use and other damaging behaviors
pay large social and economic dividends.
• Give the FDA adequate resources. At a
recent New York conference hosted by FasterCures, Food and Drug
Administration Commissioner Margaret Hamburg told me that imports of
products subject to FDA inspection have increased to 20 million from six
million shipments in a decade. In fact, an estimated 25% of the U.S. economy
is affected by FDA oversight. And the new food-safety legislation that
Congress passed in December further expands the agency's responsibilities.
Given all this, the FDA soon won't be able to keep
up with the pace of innovation in such areas as medical-device development
and regenerative medicine—the use of stem cells to repair damage to tissues
and organs. That will further slow the movement of effective drugs and
devices from laboratory to patient.
Continued in article
Maxine Says:
Let me get this
straight . . . .
We're going to
be "gifted" with a health care
plan we are forced to purchase and fined if we don't,
Which
purportedly covers at least ten million more people,
without adding a single new doctor,
but provides for 16,000 new IRS agents,
written by a
committee whose chairman
says he doesn't understand it,
passed by
a Congress that didn't read it but exempted themselves from it,
and signed by a
President who smokes,
with funding administered
by a treasury chief who didn't pay his taxes,
for which we'll
be taxed for four years before any
benefits take effect,
by a government
which has already bankrupted Social Security and Medicare,
all to be
overseen by a surgeon general
who is obese,
One of the principles of game theory is that you
should view the game through your opponent's eyes, not just your own.
This past spring, the Patient Protection and
Affordable Care Act (President Obama's health reform) created a system of
extensive federal subsidies for the purchase of health insurance through new
organizations called "exchanges." The details of these subsidies were
painstakingly worked out by members of my own political party to reflect
their values: They decided who was to benefit from the subsidies and what
was to be purchased with them. They paid a lot of attention to their own
strategies, but what I believe they failed to consider properly were the
possible strategies of others.
Our federal deficit is already at unsustainable
levels, and most Americans understand that we can ill afford another
entitlement program that adds substantially to it. But our recent health
reform has created a situation where there are strong economic incentives
for employers to drop health coverage altogether. The consequence will be to
drive many more people than projected—and with them, much greater cost—into
the reform's federally subsidized system. This will happen because the
subsidies that become available to people purchasing insurance through
exchanges are extraordinarily attractive.
In 2014, when these exchanges come into operation,
a typical family of four with an annual income of $90,000 and a 45-year-old
policy holder qualifies for a federal subsidy of 40% of their
health-insurance cost. For that same family with an income of $50,000 (close
to the median family income in America), the subsidy is 76% of the cost.
One implication of the magnitude of these subsidies
seems clear: For a person starting a business in 2014, it will be logical
and responsible simply to plan from the outset never to offer health
benefits. Employees, thanks to the exchanges, can easily purchase excellent,
fairly priced insurance, without pre-existing condition limitations, through
the exchanges. As it grows, the business can avoid a great deal of cost
because the federal government will now pay much of what the business would
have incurred for its share of health insurance. The small business tax
credits included in health reform are limited and short-term, and the
eventual penalty for not providing coverage, of $2,000 per employee, is
still far less than the cost of insurance it replaces.
For an entrepreneur wanting a lean,
employee-oriented company, it's a natural position to take: "We don't
provide company housing, we don't provide company cars, we don't provide
company insurance. Our approach is to put your compensation in your paycheck
and let you decide how to spend it."
But while health reform may alter the landscape for
small business in unexpected ways, it also opens the door to what is a
potentially far larger effect on the Treasury.
The authors of health reform primarily targeted the
uninsured and those now buying expensive individual policies. But there's a
very large third group that can also enter and that may have been grossly
underestimated: the 170 million Americans who currently have
employer-sponsored group insurance. Because of the magnitude of the new
subsidies created by Congress, the economics become compelling for many
employers to simply drop coverage and help their employees obtain
replacement coverage through an exchange.
Let's do a thought experiment. We'll use my own
state of Tennessee and our state employees for our data. The year is 2014
and the Affordable Care Act is now in full operation. We're a large
employer, with about 40,000 direct employees who participate in our health
plan. In our thought experiment, let's exit the health-benefits business
this year and help our employees use an exchange to purchase their own.
First of all, we need to keep our employees
financially whole. With our current plan, they contribute 20% of the total
cost of their health insurance, and that contribution in 2014 will total
about $86 million. If all these employees now buy their insurance through an
exchange, that personal share will increase by another $38 million. We'll
adjust our employees' compensation in some rough fashion so that no employee
is paying more for insurance as a result of our action. Taking into account
the new taxes that would be incurred, the change in employee eligibility for
subsidies, and allowing for inefficiency in how we distribute this new
compensation, we'll triple our budget for this to $114 million.
Now that we've protected our employees, we'll also
have to pay a federal penalty of $2,000 for each employee because we no
longer offer health insurance; that's another $86 million. The total state
cost is now about $200 million.
But if we keep our existing insurance plan, our
cost will be $346 million. We can reduce our annual costs by over $146
million using the legislated mechanics of health reform to transfer them to
the federal government.
That's just for our core employees. We also have
30,000 retirees under the age of 65, 128,000 employees in our local school
systems, and 110,000 employees in local government, all of which presents
strategies even more economically attractive than the thought experiment we
just performed. Local governments will find eliminating all coverage
particularly attractive, as many of them are small and will thus incur minor
or no penalties; many have health plans that will not meet the minimum
benefit threshold, and so they'll see a substantial and unavoidable increase
in cost if they continue providing benefits under the new federal rules.
Our thought experiment shows how the economics of
dropping existing coverage is about to become very attractive to many
employers, both public and private. By 2014, there will be a mini-industry
of consultants knocking on employers' doors to explain the new opportunity.
And in the years after 2014, the economics just keep getting better.
The consequence of these generous subsidies will be
that America's health reform may well drive many more people than projected
out of employer-sponsored insurance and into the heavily subsidized federal
system. Perhaps this is a miscalculation by the Congress, perhaps not. One
principle of game theory is to think like your opponent; another is that
there's always a larger game.
Mr. Bredesen, a Democrat, is the governor of Tennessee and the author
of "Fresh Medicine: How to Fix Reform and Build a Sustainable Health Care
System," just out by Atlantic Monthly Press.
If you believe that this is going to happen, then
you also believe Nancy Pelosi is the tooth fairy. Medicare reimbursements
paid to doctors are scheduled to drop 30% over the next three years. Doctors
already complain about low Medicare fees – and how it is just a cost shift
to private insurance carriers – but it gets worse. By 2019, Medicare fees
are scheduled to drop below Medicaid reimbursements, and by 2050 Medicare
payments will fall to 50% of the private sector. At these rates, most
doctors will undoubtedly opt out of the system, further limiting the access
and quality of medical care for senior citizens. Of course, this is all
predicated on the revised reimbursement rates actually getting through
Congress – which hasn’t happened in any of the last ten years.
One of the reasons the U.S. Chamber of Commerce
opposes repeal is that the bill requires almost all employers to provide
health insurance to even out the playing field. That is a mirage. There are
penalties for not providing insurance, but they are estimated to be
one-sixth of the cost of insurance. Thus, instead of more people having
employer-provided insurance, there will certainly be less. The number of
employees who will lose their coverage ranges from the Congressional Budget
Office (CBO) calculation of 9 million to the estimate of a former CBO
Director of 35 million – over 11% of the entire population! More people will
be on the government rolls – which is exactly what the Democrats want to
happen - as they force-feed us to a single-payer health care system.
Here is one of the truly spiritual revelations of
this plan. Subsidies will be provided to uninsured employees by the
government (or their employer) based on the employee’s income. But that
would be the employee’s “family income,” not his/her wages. This means that
the government will require every employee receiving subsidies to provide a
copy of their tax return to their employer or insurance exchange to prove
the “family income.” Yes, you read it right – this act not only allows the
Department of Health and Human Services to look at your tax return, but it
requires insurance exchanges and employers as well.
You will now have to attach to your tax return
proof that you carry health insurance, or suffer penalties if you don’t.
Your return will also indicate the amount of your subsidy, and, if God
forbid you have previously been paid too much, the Feds will either seize
your refund or send you a bill for the difference. It’s easy to foresee lots
of money being lost in that shuffle, and lots of people receiving
threatening letters from their favorite government agency – the IRS.
As for the sanctity of marriage, there is none.
Because there is already a marriage penalty built into the tax code, you
would think that the people who wrote this bill would make sure to avoid the
same problem. But no – this plan awards higher subsidies for two single
people than one married couple. Yet again the government discourages
marriage. Does anyone wonder why 40% of Americans don’t believe in marriage
when Washington penalizes it in your taxes and health care?
The treasure trove of insanity that’s contained in
this legislation will ultimately appall and disgust the overwhelming
majority of Americans. We clearly remember that this bill was only passed
with Congressional shenanigans, bribes to wavering Senators, and the
pathetic sellout of the Stupak Democrats, all of whom (except one) are now
out of office. We all must work to make sure that those 159 (or 183)
agencies don’t ever see a single dollar of funding, don’t ever start hiring
a staff, and above all, don’t ever get the opportunity to destroy whatever
sense of individuality we have left in this country.
Note: 222 companies and unions have opted out of
ObamaCare, wouldn’t you like to also?
So the watchdog news outfit called PolitiFact has
decided that its "lie of the year" is the phrase "a government takeover of
health care." Ordinarily, lies need verbs and we'd leave the media criticism
to others, but the White House has decided that PolitiFact's writ should be
heard across the land and those words forever banished to describe ObamaCare.
"We have concluded it is inaccurate to call the
plan a government takeover," the editors of PolitiFact announce
portentously. "'Government takeover' conjures a European approach where the
government owns the hospitals and the doctors are public employees," whereas
ObamaCare "is, at its heart, a system that relies on private companies and
the free market." PolitiFact makes it sound as if ObamaCare were drawn up by
President Friedrich Hayek, with amendments from House Speaker Ayn Rand.
This purported debunking persuaded Stephanie
Cutter, a special assistant to the President. If "opponents of reform
haven't been shy about making claims that are at odds with the facts," she
wrote on the White House blog, "one piece of misinformation always stood
out: the bogus claim . . ." We'll spare you the rest.
PolitiFact's decree is part of a larger
journalistic trend that seeks to recast all political debates as matters of
lies, misinformation and "facts," rather than differences of world view or
principles. PolitiFact wants to define for everyone else what qualifies as a
"fact," though in political debates the facts are often legitimately in
dispute.
For instance, everyone can probably agree that
Medicare's 75-year unfunded liability is somewhere around $30.8 trillion.
But that's different from a qualitative judgment, such as the wisdom of a
new health-care entitlement that was sold politically as a way to reduce
entitlement spending. But anyway, let's try to parse PolitiFact's ObamaCare
reasoning.
Evidently, it doesn't count as a government
takeover unless the means of production are confiscated. "The government
will not seize control of hospitals or nationalize doctors," the editors
write, and while "it's true that the law does significantly increase
government regulation of health insurers," they'll still be nominally
private too.
In fact—if we may use that term without
PolitiFact's seal of approval—at the heart of ObamaCare is a vast expansion
of federal control over how U.S. health care is financed, and thus
delivered. The regulations that PolitiFact waves off are designed to convert
insurers into government contractors in the business of fulfilling political
demands, with enormous implications for the future of U.S. medicine. All
citizens will be required to pay into this system, regardless of their
individual needs or preferences. Sounds like a government takeover to us.
PolitiFact is run by the St. Petersburg Times and
has marketed itself to other news organizations on the pretense of
impartiality. Like other "fact checking" enterprises, its animating conceit
is that opinions are what ideologues have, when in reality PolitiFact's
curators also have political views and values that influence their judgments
about facts and who is right in any debate.
In this case, they even claim that the government
takeover slogan "played an important role in shaping public opinion about
the health-care plan and was a significant factor in the Democrats'
shellacking in the November elections." In other words, voters turned so
strongly against Democrats because Republicans "lied," and not because of,
oh, anything the Democrats did while they were running Congress. Is that a
"fact" or a political judgment? Just asking.
As long as the press corps is nominating "lies of
the year," ours goes to the formal legislative title of ObamaCare, the
Patient Protection and Affordable Care Act. For a bill that in reality will
raise health costs and reduce patient choice, the name recalls Mary
McCarthy's famous line about every word being a lie, including "the" and
"and."
Six months after passage of the Affordable Care Act
(ACA), health care reform has finally moved off the front pages of America’s
newspapers and is no longer the lead story on the nightly news. But below
the surface, the controversy and political fights over the issue continue to
roil.
Evidence of that came when higher education was
recently drawn into the fight. On August 12, the American Council on
Education and several other higher education associations wrote to the
Department of Health and Human Services and the White House Office of Health
Reform to ask for guidance regarding key ACA provisions to ensure colleges
and universities could continue to offer students affordable, high-quality
health care plans.
The response by the news
media, spurred by interest groups following the issue, was almost immediate,
and in the last few months organizations ranging from
The Wall Street Journal
to the
College Parents of America have mischaracterized
our effort as an attempt to carve out an “exemption” or “waiver” from ACA
requirements. Some groups have suggested that we actually oppose efforts to
enhance the quality of student health plans, while others say we’re only in
it for the money.
They couldn’t be more
wrong. Read the
letter for yourself.
First, colleges are not
seeking either an exemption or a waiver from the law. Historically, student
health plans have operated under federal law as so-called “limited duration
plans” because they provide coverage for a specific time period and are
neither employer-based group plans nor plans offered on the individual
market. These programs are tailored to meet the primary care needs of
students as well as additional services such as mental health coverage.
Each is priced according
to the eligible campus population and provide coverage to all eligible
students and their dependents, do not vary premiums based on an individual
student’s health status, and typically do not impose pre-existing condition
exclusions. They are particularly important for international and graduate
students. In short, these plans provide coverage that is responsive to the
unique needs of the student population.
While the law specifically
states that institutions may continue to offer student health plans, ACA is
silent on how the law’s new requirements affect these unique plans. Federal
agencies will need to write numerous regulations to implement ACA. Our
letter seeks to include among them regulations that clarify how student
health plans can continue operating as “limited duration plans” under a
structure that incorporates reforms in the ACA -- and not, as some
claim, to elude those reforms.
Specifically, we have
asked HHS to provide rules of the road on two key topics:
What insurance reforms in ACA apply to student
health plans? ACA includes many insurance reforms, such as prohibiting
preexisting condition exclusions or other discrimination based on health
status, but it is not clear which apply to student health plans.
Assuming student health plans incorporate
required insurance reforms and provide at least a minimum ACA-defined
level of coverage, will that satisfy the individual mandate to purchase
health insurance under ACA?
We seek answers to these
questions now because although many of the reforms in ACA don’t take effect
until 2014, a number of institutions will soon be negotiating with insurers
for new long-term contracts that will define the benefit coverage of their
student health plans through 2014.
Are we opposing efforts to
enhance the quality of student health plans? Absolutely not. In fact, we are
following the lead of the American College Health Association, which has a
longstanding set of standards to guide colleges and universities in
structuring high quality coverage for student health plans. We also believe
ACA will inevitably lead to improvements in the quality of student health
plans, which is important because while the majority of institutions offer
health plans of high quality — some continue to lag behind and must be
improved. The key for us is ensuring that the changes brought about by ACA
will result in plans that are both high-quality and affordable.
It is also wrong to
characterize our efforts as an attempt to shield a major higher education
profit center. The money made off these plans by colleges are modest, and
revenue — if any — is returned to campus health centers or used to help
maintain stability in the premiums paid by students.
In short, student plans
respond to the unique health insurance needs of undergraduate and graduate
students. They provide coverage over a limited time period for students
under the age of 26 whose parents are uninsured and nontraditional students
who are too old to access their parents’ plans. In some instances, student
plans offer better coverage than students can get under parental plans,
especially if they’re going to college hundreds or thousands of miles away
from their parents’ networks or parental coverage does not adequately cover
out-of-network care, making it prohibitively expensive.
Colleges and universities
recognize the importance of ACA’s reforms and want high-quality health
insurance options for their students. We are confident we can work with the
administration on a constructive solution to ensure students have access to
affordable, high-quality health coverage that is consistent with the reforms
in ACA.
Terry W. Hartle is the senior vice president and Steven M. Bloom is
the assistant director of federal relations for the American Council on
Education.
Price controls for private premiums shouldn't cause
insurance stocks to rise, so it's notable that the major insurers all gained
on the ObamaCare regulations issued in the last week. The news is that the
White House and HHS Secretary Kathleen Sebelius are shrinking from the logic
of their own reform, at least for a while, in order to minimize the
political damage when consumers lose the coverage they have now.
The latest rule-making—a mere 308 pages—deals with
a complex but important accounting concept known as a "medical loss ratio."
Starting in January, insurers will have to pay out between 80% and 85% of
premiums in direct clinical benefits, while facing an arbitrary cap on
profits and administrative costs. Defining what counts as spending on
"health care," versus everything else an insurer does, is one more channel
for politics to dictate insurance practices.
The imminent dangers are premium increases and
disruption to coverage, especially in the individual market and for
innovative plans that don't meet Washington's specifications. Smaller
carriers won't be able to hit the targets and will fail, while the larger
ones will retire some business or withdraw from states that hurt their
balance sheets. Insurers are already pulling back, as shown in September by
the overnight nationwide collapse of child-only policies, thanks to the
imposition of ObamaCare's "consumer protections."
But don't take our word for it. The 50 state
insurance commissioners—Democrats and Republicans—spent seven months
debating these rules and warned HHS in draft recommendations that "consumers
will not benefit from higher medical loss ratios if the outcome is
destabilized insurance markets where consumer choice is limited and the
solvency of insurers is undermined."
Those recommendations displeased liberals, and some
Democrats like Jay Rockefeller of West Virginia were demanding a harsher
standard in HHS's final rule. Based on Mrs. Sebelius's rhetoric, and HHS's
many interventions in the state deliberations, it seemed as if she might
oblige.
Instead, she loosened the standards in important
ways. States can phase in the federal rules and make other adjustments, as
long as they get an HHS waiver. Maine, Iowa, South Carolina, Georgia and
Florida have already applied, though they're only at the front of the line.
Some types of niche insurance will get exemptions too, such as the "mini
med" policies that McDonald's and other low-wage businesses offer their
workers.
The White House had to tamp down a national furor
after the Journal reported that the medical loss rules would force
McDonald's to drop its plans, and no doubt Mrs. Sebelius's sudden leniency
is meant to mitigate further political damage as costs rise and consumer
choices decline. Yet this is not some Road to Damascus moment. The
dispensations last only until 2014, when the subsidies and the rest of the
ObamaCare apparatus swing into place.
The obvious goal is to shield the plan from its own
unpopularity until President Obama is re-elected and it is too late to
repeal or replace ObamaCare. The goal of medical loss rules is still to
change current coverage in favor of the government-approved version.
Democrats thought they could blame insurers for every problem flowing from
HHS's ObamaCare rules, but perhaps Mrs. Sebelius now realizes that she owns
the health-care system, and so her new strategy is to postpone the
disruptive pain as long as possible.
Midterm elections amid a lousy economy are usually
bad for the President's party, but it looks as if a neutron bomb may
detonate on Democrats in 2010. And one of the major reasons that this year
shifted from ordinary losses to potential catastrophe is ObamaCare. This
election is a referendum on an entitlement the public never wanted and
continues to hate, as evidence from around the country is showing.
Take almost any poll at random. Even this week's
New York Times-CBS poll has repeal leading among likely voters, 47% to 43%.
The latest Pew-National Journal survey shows that a majority of likely
voters—51%—favors repeal, including 53% of independents. The Real Clear
Politics average of all polling shows support for the law at 40.9%—and
opposition at 50.6%.
The Kaiser Family Foundation—whose outlier tracking
poll has consistently shown the most ObamaCare support—now reports that only
42% view the law favorably. That's a seven-point drop since September, and
it happened to coincide with the start date for the "patients bill of
rights," which Kaiser says is among the bill's popular parts. Voters are
learning that mandates—like those that allow "children" to remain on their
parents' health insurance until age 26—tend to increase costs.
There are many other such scales-from-the-eyes
moments. The New England Journal of Medicine, another outlet for ObamaCare
partisans, recently conceded in a "perspective" akin to an editorial that
"it seems clear that Americans today have very negative views about the
general direction of the country," in large part because of the health bill.
Speaking of the shock of recognition, there's the
case of Earl Pomeroy. The nine-term North Dakota Democrat earned liberal
plaudits for his numerous TV ads defending ObamaCare and his vote for it, as
well as blasting Republican Rick Berg for ostensibly putting "big insurance
first."
Now Mr. Pomeroy has cut a closing-argument TV spot
that begins, "I'm not Nancy Pelosi, I'm not Barack Obama." (This may be the
Democratic version of "I am not a witch.") Mr. Pomeroy adds that "I know
I've disappointed you with a vote here or there," and while the ad doesn't
mention health care, symbolically he's given up defending it.
Mr. Pomeroy was one of the few Democrats who
bothered to run on health care at all. Another was Russ Feingold, who made
ObamaCare the centerpiece of his re-election campaign. Yet the Wisconsin
Senator continues to trail Republican Ron Johnson, a businessman and
political novice who was motivated to enter the race because of the bill. In
Washington, Dino Rossi is neck-and-neck with Patty Murray, and the final
stretch of his campaign is almost exclusively about health care.
Even voting against ObamaCare is no guarantee of
safety for Democrats. The Cook Political Report notes that the 34 Democrats
who bucked their party are all in "lean Republican" or "toss up" races. But
the candidates who are doing best are those like Ohio's Zack Space and
Massachusetts's Stephen Lynch who voted for ObamaCare last November and then
flipped to vote against it this March.
As for the eight Democrats who switched from nay to
aye, they're getting hammered. Democrats may hold only one of these
districts—and it's the Cleveland redoubt represented by Dennis Kucinich.
Those soon to be collecting 99 weeks of jobless benefits include Betsy
Markey (Colorado) and Suzanne Kosmas (Florida), both of whom have been left
for dead by the national party, plus John Boccieri (Ohio) and Allen Boyd
(Florida).
In the 92 most-competitive districts that matter
for controlling the House, a Wall Street Journal-NBC News poll found that
55% of voters favor the candidate who wants to repeal ObamaCare. Only 42%
will vote for candidates who want to keep the law. Opposition is most
intense among crucial voting blocks like independents and seniors; those who
called the law "very bad" outweighed the "very goods" by 24 to 34 points.
All this is particularly striking given that the
President Obama, Bill Clinton and so many others assured the backbenchers
that health care would be a political winner. Now even they have given up
trying to spin that false promise, blaming voter hostility on TV ads and, er,
the insurance industry that the public supposedly despises. The reality is
that voters who oppose ObamaCare are far more knowledgeable about the law
and its consequences than most Congressmen who voted for it.
Republicans must do more to advance a reform
alternative to ObamaCare, but no one should mistake the implications of
Tuesday's vote. Whatever the results, the public is telling Congress to
repeal and replace this bill before it does any more damage.
ObamaCare's once and future harms have been well
chronicled, but the major effects so far are less obvious and arguably more
important: A wave of consolidation is washing over the health markets, and
the result is going to be higher costs.
The turn toward consolidation among insurance
companies is not new, and neither is it among doctors, hospitals and other
providers. Yet the health bill has accelerated these trends, as all sides
race to anticipate and manage political risk and regulatory uncertainty.
This dynamic is leading to much larger hospital systems and physician
groups, and fewer insurers dominated by a handful of national conglomerates.
ObamaCare was sold using the language of choice and competition, but it is
actually reducing both.
The first surge will come among the 1,200 insurers
doing business in the U.S., given that a major goal of ObamaCare is to
convert these companies into de facto public utilities. Those regulations
are now being written—and once they're up and running some medium-sized
carriers will collapse under the new mandates and higher overhead. State
insurance commissioners warned the Administration this month that "improper
or overly strident application . . . could threaten the solvency of insurers
or significantly reduce competition in some insurance markets." They also
implied that bankruptcies are likely.
With these headwinds, investors and Wall Street
analysts are now predicting a lost decade for health insurance stocks. But
it may be more accurate to say that there will be a lot of losers and some
very big winners. Mergers and acquisitions will increase dramatically once
companies get a better look at the regulation and figure out the valuation
of M&A targets. Larger carriers will swallow smaller ones quietly before
they fail.
Both publicly traded and nonprofit insurers have
been heading in this direction for years, as in any industry where there are
returns to scale. Size is also important in a low-margin business in which
capital is costly and political clout vital. But scale is far more central
now, because ObamaCare standardizes benefits. Once insurers lose the freedom
to design their own products, they'll essentially be selling commodities,
and survival will depend on enrollment volume and market share.
The same thing will happen to stand-alone and
community hospitals—always a precarious business. Nearly a third of U.S.
hospitals are currently operating in the red and will get steamrolled by
ObamaCare, and many of them will be annexed by national chains and larger
local systems.
This trend got a preview two weeks ago when Mercy
Health Partners announced that it was seeking buyers for three Catholic
hospitals in northeast Pennsylvania. CEO Kevin Cook told local media that
ObamaCare was "absolutely" a factor in the decision to sell, only to
backtrack once his comments were used in campaign ads against House
Democrats Paul Kanjorski and Chris Carney, who voted for the bill.
Though it received little attention over a year of
debate, ObamaCare actively promotes provider consolidation. Writing this
summer in the Annals of Internal Medicine, Nancy-Ann DeParle and other White
House health advisers argued that "The economic forces put in motion by the
Act are likely to lead to vertical organization of providers and accelerate
physician employment by hospitals and aggregation into larger physician
groups."
Ask and ye shall receive. Across the country,
providers are building giant hospital systems and much tighter doctor
alliances like multispecialty groups to get out ahead of a concept known as
"accountable care organizations," or ACOs. To modernize the delivery of
medical services, ACOs would encourage doctors to work in teams to use
resources more efficiently, streamline treatment and improve quality. The
model is the Mayo Clinic and other large integrated systems.
At the moment ACOs are only a gleam in some
bureaucrat's eye, and no one has a clue how they'll operate in practice
until the government releases a working regulatory definition next year. Yet
the percussive effects are already being felt across medicine.
Hospitals are now on a buying spree of private
physician practices in the rush to build something that will qualify as an
ACO. Some 65% of doctors who changed jobs in 2009 moved into a
hospital-owned practice, while 49% of doctors out of residency were hired by
hospitals, according to the Medical Group Management Association. In its
2010 census, the American College of Cardiology reports that nearly 40% of
private cardiology groups are currently integrating with hospitals or
merging with other practices.
Doctors are selling because complying with the
ever-growing list of mandates has become more cumbersome; and while staff
physicians on salary do gain predictability, they also lose the autonomy of
independent practice. The other problem is price controls in Medicare, which
are about 20% below private payments for doctors and 30% lower for
hospitals. Hospitals are also scooping up practices to lock in referral
sources and make up for ObamaCare's Medicare cuts. As it is, two-thirds of
hospitals lose money today on Medicare inpatient services, according to
Medicare.
ACOs are also driving consolidation among
hospitals. Anecdotally, Marquette General Hospital and Bell Hospital formed
a strategic ACO partnership in July that will dominate Michigan's upper
peninsula. In Omaha, Methodist Health System and the Nebraska Medical Center
recently followed suit. Similar alliances are underway in Detroit,
Baltimore, Chicago, greater Boston, Roanoke and southwest Virginia—even
Youngstown, Ohio.
The accountable care movement could do some good if
it spreads best practices. But no one should entertain the illusion that it
will reduce costs perforce and "bend the curve." In fact, the most concrete
effect of this wave of consolidation may be to increase private health
spending significantly.
Unlike Medicare and Medicaid, private reimbursement
rates are determined by negotiations, often highly antagonistic. Insurers
always attribute premium increases to the underlying cost of care, while
doctors and hospitals always argue that there isn't enough competition among
health plans. Both claims are "true," some of the time—but it depends on
which side has more market power.
I work for a health-insurance company, and my
brother is a primary-care physician. As he tells it, my industry is
responsible for the death of his. Insurance companies, he argues, have
killed primary care by grinding down reimbursement and compelling doctors to
see more and more patients just to make a living.
I sympathize with my brother, because I know that
doctors' business with insurers isn't always easy. I'm also aware of the
market's price sensitivity—and reimbursement paid to doctors comes from
premiums paid by customers. Insurers must keep costs down.
Remember Marcus Welby, M.D.? He defined the family
doctor on TV in the 1970s, exemplifying the four Cs: caring, competent,
confidant and counselor. In the mid-'60s, I remember my father-in-law, a
real-life Dr. Welby, telling me the exciting news that the federal
government was going to start paying him to see seniors—patients who before
he had seen for the proverbial chicken (or nothing at all). That fabulous
deal was Medicare.
Medicare introduced a whole new dynamic in the
delivery of health care. Gone were the days when physicians were paid based
on the value of their services. With payment coming directly from Medicare
and the federal government, patients who used to pay the bill themselves no
longer cared about the cost of services.
Eventually, that disconnect (and subsequent program
expansions) resulted in significant strain on the federal budget. In 1966,
the House Ways and Means Committee estimated that by 1990 the Medicare
budget would quadruple to $12 billion from $3 billion. In fact, by 1990 it
was $107 billion.
To fix the cost problem, Medicare in 1992 began
using the "resource based relative value system" (RBRVS), a way of
evaluating doctors based on factors such as education, effort and
specialized training. But the system didn't consider factors such as
outcomes, quality of service, severity or demand.
Today most insurance companies use the Medicare
RBRVS because it is perceived as objective. As a result of RBRVS,
specialists—especially those who perform a lot of procedures—do extremely
well. Primary-care doctors do not.
The primary-care doctor has become a piece-rate
worker focused on the volume of patients seen every day. As Medicare and
insurers focused on trimming the costs of the most common procedures, the
income and job satisfaction of primary-care doctors eroded.
So these doctors left, sold or changed their
practices. New health-care service models, such as the concierge practice
and the Patient-Centered Medical Home, drew doctors away from the standard
service models that most patients rely on for coverage.
All of these factors have contributed to a
fragmented, expensive health system with most of the remaining doctors
focused on reactive instead of preventive care.
The solution to the problem is making primary-care
physicians the captains of the ship. They must have the time and financial
resources necessary to take care of their patients, tailoring care to
patients' specific conditions and needs. And they need the data to track
their patients' results, so they can guide patient progress. They will then
be able to slow (and sometimes reverse) their patients' illnesses, keeping
them out of hospital emergency rooms and specialists' offices. The end
result: reduced costs and improved quality of care.
So who really killed primary care? The idea that a
centrally planned system with the right formulas and lots of data could
replace the art of practicing medicine; that the human dynamics of market
demand and the patient-physician relationship could be ignored. Politicians
and mathematicians in ivory towers have placed primary care last in line for
respect, resources and prestige—and we all paid an enormous price.
Mr. Hannon is senior vice president of marketing and provider affairs
for Blue Cross Blue Shield of Arizona.
The passage of national health-reform legislation
means that the projected shortage of physicians will hit sooner and be far
worse than medical-education experts were predicting two years ago,
according to the Association of American Medical Colleges, which is holding
its annual meeting here this week.
The
legislation approved in March is expected to make
32 million more Americans eligible for health coverage and add millions more
people to the Medicare rolls. In addition, patients are getting older and
sicker, with the over-65 set expected to grow by 36 percent by 2010,
according to the U.S. Census Bureau.
The bottom line, according to the medical colleges'
association, is that the nation could face a deficit of about 91,000 doctors
in 10 years, and 63,000 by 2015. Those projections are far worse than the
shortage the association predicted two years ago, of 39,600 physicians by
2015.
The association supported the legislation and
applauded the expansion of health-care coverage to millions more Americans.
But it said it came with a price.
"This admirable increase in access to care will
likely stress an already overburdened health-care system at the same time
aging baby boomers will need it most," said Deborah E. Powell, chair of the
association and an associate vice president at the University of Minnesota
Medical School.
While primary-care shortages get the most
attention, patients could have to wait longer and travel farther to see
surgeons and other specialists who are likely to be in short supply.
The predictions come despite the fact that medical
schools have been expanding their class sizes, and new schools have opened
in recent years. While the focus of the AAMC is on the allopathic schools it
accredits, osteopathic medical schools have been growing rapidly, and a
large proportion of their graduates pursue careers in primary care.
(Allopathic schools award M.D.'s and osteopathic schools award D.O.'s)
Among the latest predictions that Scott Shipman, a
senior researcher in the association's Center for Workforce Studies,
outlined on Sunday are the following:
Ten years from now, there will be 45,000 too
few primary-care doctors, and a shortage of 46,000 surgeons and medical
specialists.
Almost a third of all physicians will retire
in the next decade, just as aging baby boomers need more care.
Expanding and new medical schools will produce
an additional 7,000 graduates a year over the next decade, but they're
going to have a tough time finding enough places to complete their
residency training, since Medicare's support for such programs
has been frozen since 1997.
Darrell G. Kirch, the association's president, said
that medical education has to change, and that educators can't be paralyzed
by the "political whiplash" many may be feeling as the result of changing
tides of health reform.
"Too often, we compete with each other to offer the
most narrow subspecialties while at the same time we're not meeting the
basic needs of people who are living right outside the doors of our medical
centers," he said.
"Insurance coverage has expanded," Dr. Kirch added,
"but day to day, we still work with financial incentives that focus more on
the total volume of complicated sick care we provide than on well care."
One conference participant noted that community
physicians will be busier keeping up with the growing number of insured
people and may balk at taking on the added role of training the next
generation of doctors.
"I'm afraid that fewer physicians will be willing
to have medical students in their offices slowing them down," said David M.
Krol, senior program officer for the Robert Wood Johnson Foundation, a major
supporter of health-care research.
Is Medicare a "Medicare is a good example of a government program that is
highly efficient?"
-----Original Message-----
From: AECM, Accounting Education using Computers and Multimedia [mailto:AECM@LISTSERV.LOYOLA.EDU]
On Behalf Of Peters, James M Sent: Thursday, September 23, 2010 10:37 AM
To: AECM@LISTSERV.LOYOLA.EDU,
Subject: Re: accounting basics
I think it is time to push back against all this
anti-government rhetoric that just isn't based on observed evidence. Whether
goverments work best or markets work best is a function of the task to be
performed and the nature of the product. Governments have proven they can
provide better health insurance and health care than the private sector.
Medicare is a good example of a goverment program that is highly efficient
and spends 97% of your tax dollars on health care while private sector firms
spend only 70% to 75% of your premium dollars on health care. Some firms
reach 80%, but they are the exception. Government run hospitals in the US
are now rated as among the best, if not the best in the nation. The Veterans
Hospitals have better records of treatment success and lower costs that the
vast majority of private hospitals.
Market advocates seem to forget free market theory.
Free markets only work when certain, rather restrictive conditions are met.
Among the most frequently violated are equal power and knowledge among all
market participants. Even Adam Smith in the Wealth of Nations advocated a
strong role for governments in keeping markets free. When conditions are
right, markets work brilliantly. However, (a rhetorical question) how many
market in the industrialize world really meet the conditions of truly free
markets? My answer is very few.
Governments do some things much better than
markets. The key is recognizing the market conditions that lead to
government advantage and letting governments handle those areas. Auditing is
a prime candidate for government intervention because of no auditor can
truly be objective when they are being paid by the client. The markets
cannot function properly in auditing because the true customer, the general
public, isn't a party to the transaction. Audits aren't just for the current
owners, they are for perpsective owners as well, which means the general
public. The general public needs to be represented at the table when
auditors are hired.
The other key is to recognize that governments fail
when people fail to be informed voters. All governments, like all markets,
are not made equal. Some work better than others. In democracies, the
effectiveness of the government is a function of the involvement and
knowledge of the electorate. Thus, we are all responsible for our own
government's success and failures. The fact that America seems to have a
disfunctional government right now is that we have a disfunctional
electorate that seems to enjoy mindless shouting matches over informed
policy dialog. Other nations don't suffer from this disease.
Let's all join John Stewart in Washington DC for
the "Return Sanity to America" rally. It is a start to building a government
that can live up to its potential.
Jim
September 23, 2010 reply from Bob Jensen
Hi Jim,
If this is your idea of "observed evidence" then
I've no hope for you in the academy. For one thing a good academic would be
more precise about definitions like “better health care.” For example, some
other nations come out “better” in infant mortality because they throw away
very premature small babies and don’t count them into survival rates. What
does “better” mean in terms of who invents the latest and greatest
medications to fight cancer?
Medicare, for example, is one of the least-efficient
government programs that arguably has the worst internal accounting controls
of all other government programs except, possibly, the defense program. An
"efficient" program would have stellar internal controls preventing fraud
and error.
And Medicare is not a very good example of
"government" efficiency since the private sector delivers virtually all the
medical services. The Medicare service providers are notoriously inefficient
by prescribing billions of dollars in unneeded services, medications, and
even non-existent medical equipment.
I don't care to continue on in the AECM with debates
over extreme political dogma since this is truly outside what subscribers
expect from the AECM. They wanted to learn more about the PwC re-branding
and the future of auditing/assurance services. I doubt that they want to
hear a rant about joining a Glenn Beck-bashing by Jon Stewart in Washington
DC. Most of us do not support the extremes of Beck or Stewart and certainly
do not want the AECM to be a rallying call for either extreme. That is not
in the mission of the AECM.
Also I see no need to censor the other subscribers
of the AECM if they happen to disagree with Jim Peterson’s political dogma.
Even if I were a Glenn Beck supporter (which I’m not) I would not urge AECM
subscribers to join me in Beck’s big Washington DC rally (where you would
never find me).
It’s a free country, and I suspect you will be among
the Glenn Beck bashers at Jon Stewart’s rally for liberals. But I don’t
think you should plead with AECM subscribers to join you in this political
burning of Beck’s book.
Faced with mounting debt and looming costs from the
new federal health-care law, many local governments are leaving the hospital
business, shedding public facilities that can be the caregiver of last
resort.
Officials in Lauderdale County, Ala., this spring
opted to transfer their 91-year-old Eliza Coffee Memorial Hospital and other
properties to a for-profit company after struggling to satisfy an angry bond
insurer.
"We were next to knocking on bankruptcy's door,''
said Rhea Fulmer, a Lauderdale County commissioner who approved the deal
with RegionalCare Hospital Partners, of Brentwood, Tenn, but with
trepidation. She said the county had no guarantee the company would improve
care in the decades to come. "Time will tell.''
Clinton County, Ohio, in May sold its hospital to
the same company. Officials in Kenai Peninsula Borough, Alaska, are weighing
a joint venture with a for-profit company, similar to one the same company
made with Bannock County, Idaho. And Prince George's County, Md., is seeking
a buyer for its medical complex.
More than a fifth of the nation's 5,000 hospitals
are owned by governments and many are drowning in debt caused by rising
health-care costs, a spike in uninsured patients, cuts in Medicare and
Medicaid and payments on construction bonds sold in fatter times. Because
most public hospitals tend to be solo operations, they don't enjoy the
economies of scale, or more generous insurance contracts, which bolster
revenue at many larger nonprofit and for-profit systems.
Local officials also predict an expensive future as
new requirements—for technology, quality accounting and care
coordination—start under the overhaul, which became law in March.
Moody's Investors Service said in April that many
standalone hospitals won't have the resources to invest in information
technology or manage bundled payments well. Many nonprofits have bad credit
ratings and in a tight credit market cannot borrow money, either. Meantime,
the federal government is expected to cut aid to hospitals.
"We've been hit by that whiplash recently, with
industries closing down and the number of insured growing less," said J.D.
Mosteller, the attorney for Barnwell County, S.C., which is considering
selling its hospital.
The county has raised property taxes in recent
years to bolster the hospital, which spends more than $1 million just to pay
emergency-room physicians, he said. "We're a county government. We're not
set up to run a nursing home or hospital.''
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free web. Learn MoreSales and mergers of public hospitals are hard to
quantify; the country had 16 fewer government-owned hospitals in 2008 than
2003, says the American Hospital Association, the result of sales, closings
or transfers.
Health-care consultants and financial analysts say
the pace of all hospital sales is picking up at a rate not seen since the
1990s, the dawn of managed care. James Burgdorfer, a partner with investment
banker Juniper Advisory LLC in Chicago, said most public systems would end
in the next two decades because the industry has become too complex for
local politicians. "By the nature of their small size, their independence
and their political entanglements, they are poorly equipped to survive,''
Mr. Burgdorfer said.
During the five-year period that ended Dec. 31,
2009, $52 billion was used to fund hospital mergers and acquisitions of all
types, says Irving Levin Associates of Norwalk, Conn., which tracks
health-care deals. This amount exceeds by 140% the total amount of capital
committed to fund hospital deals announced in the prior five-year period.
In the first half of 2010, there were 25 deals
involving 53 hospitals that were bought or merged, for a total of $3.1
billion, according to Levin Associates. If deals continue apace, it would be
the busiest time since 2007, when there were 58 deals involving 149
hospitals totaling $9.3 billion.
Public and nonprofit hospitals—the latter of which
represent three-fifths of all U.S. hospitals and are sometimes affiliated
with a religious denomination—can be appealing targets for private
operators, which are betting that the new federal law will eventually yield
more paying, insured customers.
Chip Kahn, president and CEO of the Federation of
American Hospitals, a trade group for chains that own nearly 1,000
for-profit hospitals, said his industry tends to run operations more
efficiently, while adding capital.
Most sales include stipulations that the companies
keep services, he said. "You've got to provide the array of services that
the community expects," he said. "Otherwise you're not going to get the
consumers using them.''
Still, skeptics worry that in the hunt for healthy
returns, the for-profits will kill expensive programs and close hospitals
with poor revenue. Residents in many towns have fretted over the blow to
their civic pride and the loss of their history.
The nation's public hospitals rose in different
ways. Some were built with philanthropic donations and were sick houses for
society's poorest. Many in the west and south rose through loans and grants
made possibly by the Hill-Burton Act of 1946. In exchange, public hospitals
provide a large amount of free and reduced-priced care. Some are academic
medical centers. Many suburban and rural public hospitals provide care to
all members of the community, rich and poor.
In the movie "Animal House," the hilariously
loathsome Dean Wormer announces a pointless campus crackdown with the
classic line, "The time has come for someone to put his foot down. And that
foot is me." Democrats seem to have had a similar inspiration and targeted
student health insurance in ObamaCare.
Along comes word that the bill "could make it
impossible for colleges and universities to continue to offer student health
plans." That's how the American Council on Education and a dozen other
higher-ed lobbies put it in a recent letter to the Obama Administration,
warning that the insurance coverage they offer may get junked by ObamaCare's
decrees.
Between 4.5 million to 5.5 million students
annually are insured by short-term plans sponsored by their schools, which
are tailored to upperclassman who have aged out of their parents' coverage
or to international and graduate students. These plans are very low cost
because the benefits are designed for generally healthy young people and
often organized around campus health services and academic medical centers.
All of which means these plans aren't likely to
qualify under ObamaCare's "minimal essential coverage" rules that mandate
rich benefit packages, even if colleges have the flexibility to make
exceptions for special needs. And given that insurance must now be sold
anytime to everyone, colleges may be required to continue to cover students
after they've graduated—leaving this type of coverage unaffordable.
It doesn't help that the regulations governing
student health plans are as carelessly written as the rest of the bill, and
the uncertainty is holding up insurance contracts and plan design for the
coming academic year. Not surprisingly, the colleges are asking federal
regulators for a blanket ObamaCare waiver. (Can everyone else apply too?)
All of this is no accident. The liberals who wrote
the bill despise these campus health plans because they think every plan in
the country should be designed in Washington and have been calling for a
regulatory crackdown for years. Other Democrats probably had no clue about
these rules, even as they voted for a bill that was so large and convoluted
that no one could truly understand it. Either way, count this as another of
ObamaCare's really futile and stupid gestures, with many more to come.
Michael D. Tanner of the Cato Institute has just
written a pamphlet entitled Bad Medicine. It’s a comprehensive analysis of
the Patient Protection and Affordable Care Act (ObamaCare). When you read
it, you quickly begin to wonder where the health care system in this country
might be headed. One company has already staked out its vision, and just
might be establishing the model that all of us will be using in the years
ahead.
Les Bider was seeking a new opportunity. He had
worked his way up to serving as Chairman and CEO of Warner Chappell, the
music publishing end of the record business. The company was sold in 2003,
but Bider stayed on through 2005 to run operations for the new owners. After
leaving Warner, he kept busy with charitable interests and his family until
January, 2008, when he decided he again wanted to do something
professionally. But he wanted the right thing because his desire to get
involved professionally was more a want than a need.
Within a month, he happened upon PinnacleCare.
Bider put his money where his mouth was by investing in the company before
he started working with them. Then after some thoughtful analysis and a
series of meetings, he decided that he wanted to jump in and became the CEO.
PinnacleCare confronts the complexity of today’s
health care system on behalf of its members. The three major aspects of the
program that it provides for its members are 1) Simplification of the
ever-more-complex health care system, 2) High-level analysis of their
personal health, and 3) Notification of the most up-to-date tests and
procedures to maintain good health.
The program does this by providing objective
third-party advice. They focus on wellness and health care episodic events.
If you have a health problem, the company informs you of the best place to
get care by analyzing the quality of available health care providers and
determining the physician best suited to meet your specific needs. They do
what the industry has been missing for years – evaluate the performance of
hospitals and doctors. This is where they clearly separate themselves from
their competitors, who function more as a referral service without any
substantial evaluation.
They start by computerizing your records, and then
having a third-party doctor analyze your complete health picture. Depending
upon the findings, along with personal factors such as age and family
history, tests or procedures are identified that may help maintain or
improve your health. In effect, they provide a manager responsible for
creating a comprehensive health care program tailored to you.
PinnacleCare then adds a wide-ranging set of
services, including travel medical insurance, travel intelligence reports,
medical evacuation services (in case you have to get treatment at a critical
care center), medical intelligence reports that evaluate doctors, locations
of medical centers of excellence and their specialties, along with access to
medical advisory boards.
This service does not come cheaply and not all of
these services are included in their most basic program. Their basic program
for the first year, when the initial analysis is done, costs $5,000 per
couple. The second year, the price drops to $2,500. Costs for more
comprehensive packages go up from there. Yet they have already enrolled
3,000 members, 90% of whom are American. They have not fully adapted their
program to handle changes in the health care system imposed by ObamaCare,
but they will make adjustments as they feel it necessary.
Mr. Bider told me that for now, his company would
not be going after a larger market by creating a more affordable product.
But he does believe that as the company becomes more successful, an
entrepreneur will eventually come in and create a similar, but less
expensive service. The need for individuals to manage their own health,
combined with an ever more complicated health care system and increasingly
sophisticated medical procedures, will compel people to do more than just
visit their primary care physician for an annual checkup.
The Obama administration wants to take ever greater
control over our health care system and create an equality of results for
all Americans. As they attempt to dictate our health care options, people
will fight back by enlisting companies like PinnacleCare to put them back in
charge of their own fate. It has been said many times that “if you don’t
have your health, you ain’t got nothing.” Your choice may come down to a
faceless bureaucrat or companies like PinnacleCare. Mr. Bider is betting you
make the same choice he has made.
California, the novelist Wallace Stegner famously
wrote, is like the rest of America, only more so—meaning that wherever the
country is headed, the Golden State is probably there already. So the
state's ObamaCare advance planning deserves closer scrutiny, given that it
mirrors the regulatory and ideological model that the White House favors for
everyone else.
In a matter of days, California will set a
precedent for the future of the U.S. individual and small-business insurance
markets via ObamaCare's "exchanges," where people will purchase coverage at
heavily subsidized rates. The exchanges don't start up until 2014, but the
states were given wide bureaucratic latitude in how they're run, and
Sacramento is using this flexibility to convert them into a pretext for
imposing de facto price controls on the insurance industry.
That may be what Democrats had in mind when they
passed the bill, but it's particularly unfortunate because in principle
exchanges could be a useful reform. States could sponsor transparent,
neutral clearinghouses that compare costs and benefits among plans,
encouraging insurers to compete to offer the products that consumers find
most valuable. An exchange could operate much like travel websites such as
Expedia.com, and a good one along those lines started in Utah last year.
California looked further east for inspiration—to
Massachusetts, which has the only other exchange in the country. Known as
the connector, it's the centerpiece of the ObamaCare beta test that Mitt
Romney passed in 2006 and is now the power center of the state's public
utility-style insurance regulation. In the daisy chain of "expertise" that
is the health policy world, California's regulations were shaped by Jon
Kingsdale, a devout White House ally who used to run the Massachusetts
connector and is now a consultant.
The most dangerous precedent in the California plan
is known as "selective contracting." Under ObamaCare, all benefits will be
mandated and standardized at the federal level, so all individual and small
business plans will be essentially identical except at the margins. Those
margins include their brand names, the hospital-doctor networks they've set
up, the size of their book of business as pricing leverage and so forth.
In theory, then, all plans that meet ObamaCare's
minimum standards should be allowed onto the exchanges. But in California, a
five-member board of political appointees will pick winners and losers. If
an insurer wants entrée to the pool of subsidized individuals and businesses
with fewer than 50 employees—and of course all of them do—they'll have to
genuflect to whatever dictates this board happens to decree.
Selective contracting will allow the state to
"negotiate" more favorable terms, the preferred euphemism for industrial
policy. The result in practice will be submarket price controls. As a
condition of admittance insurers will also have to justify their premium
levels and rate changes over time. Plans will still be allowed to sell
outside the exchange, but in practice almost all consumers will gravitate to
the exchange because of the subsidies.
This is clearly the template the Obama
Administration favors. Heath and Human Services Secretary Kathleen Sebelius
recently warned the insurance industry that there would be "zero tolerance"
for political misbehavior or "unreasonable" premium increases, which means
anything Ms. Sebelius deems too expensive. To run the HHS exchange
department, Ms. Sebelius has tapped Joel Ario, formerly the Pennsylvania
insurance commissioner and a caustic industry opponent. Mr. Ario was last
heard demanding that Keystone State insurers "cleanse"—that is, lower—their
premiums as a kind of pre-ObamaCare indulgence for purported sins.
The California plan passed the legislature in
August with the support of soon-to-depart Governor Arnold Schwarzenegger,
who will sign them before the end of the month. The overwhelming sentiment
among the authors we spoke with is that the brute force of limiting the
number of plans will lower costs. "The only way to drive price, to drive
value, is the power to say no," as one of them told us.
In other words, less competition is the best way to
drive down costs. The irony is that the California insurance market today
functions reasonably well because consumers have plenty of choices. By
historical accident—the political left that dominates Sacramento is
preoccupied with single payer and has killed incremental proposals—state
regulatory authority is divided between two state agencies, one loaded with
mandates, and the other loosely regulated. Naturally, the second group has
climbed to 91% of the small-business market and 48% of the individual one.
In April, the lame-duck Mr. Schwarzenegger cheered
on this process, claiming that "California always leads the way, we all know
that . . . California is the incubator state. It provides the ideas and the
hard work. It all starts right here." Alas, he's right.
In Washington, politicians often give their bills
clever names designed more to obscure than to reveal.
Consider the CLASS Act. It sounds like yet another
federal attempt to meddle in local schools. Instead, it stands for
“Community Living Assistance Services and Support.”
CLASS was a little-noticed part of the massive
Obamacare bill that the president signed in March. It’s supposed to provide
affordable long-term care insurance to American workers. In reality, it
creates another entitlement likely to increase our exploding federal
deficit.
Starting next year CLASS is scheduled to begin
enrolling people and collecting premiums. If CLASS was a normal insurance
program, it would invest these premiums to build reserves. These reserves
would later be tapped to provide benefits for those individuals in need of
long-term care services.
But CLASS doesn’t work that way.
Similar to Social Security, all premiums that CLASS
collects will be spent immediately. Its trust fund will be filled with
government IOUs. Since participants need to pay five years of premiums
before they’re eligible to collect any benefits, a sizeable amount of
short-term revenue will be raised from CLASS. This aspect was especially
useful when lawmakers were trying to find tricks to reduce the projected
cost of Obamacare. By including the revenues from CLASS, politicians were
able to pretend they’d reduced the cost of the bill by $70 billion.
But even Uncle Sam can’t spend your money twice.
It’s impossible to spend the money today on government programs and invest
the money to fund eventual benefits.
Eventually 2017 will arrive. That’s when CLASS
starts paying benefits. It’s difficult to predict how soon after that the
program would dive into the red and pay out more in benefits than it
collects in premiums. Actuaries at the Centers for Medicare & Medicaid
Services estimate it could be as soon as 2025.
Taxes are a major topic of debate in Washington
right now. Faced with a massive federal deficit, some politicians have
proposed raising taxes on individuals and businesses, despite the obvious
negative effects of tax increases on economic growth and job creation. Yet
at the same time, some in Washington are actually considering the creation
of a new special interest tax break that will hurt economic growth, increase
the deficit and fuel increased civil litigation.
The plaintiffs' bar and its allies in Congress and
the administration are pushing for the adoption of a nearly $1.6 billion tax
deduction for trial lawyers who take contingency fee cases. This proposed
deduction would essentially provide a U.S. government subsidy to plaintiffs'
lawyers to increase the number of frivolous lawsuits.
For several years, the plaintiffs' bar has been
attempting to push this
proposed tax break through Congress. With Congress
so far unwilling to act, plaintiffs' lawyers have decided on a new approach
and are now aggressively lobbying the Treasury Department to bypass Congress
and create the deduction through administrative action.
The tax deduction would impose direct costs on the
federal government and American taxpayers. According to the Congressional
Budget Office, this trial lawyer subsidy would cost nearly $1.6 billion over
ten years, all during a time of record federal deficits.
But these direct costs represent just a fraction of
the proposal's potential damage. The contingency fee tax break would, in
effect, subsidize ever more costly, frivolous litigation against American
businesses. By some estimates, the tax deduction could subsidize as much as
40 percent of the initial plaintiffs' expenses for certain cases. With the
federal government paying for such a large percentage of the up-front costs
of lawsuits, plaintiffs' lawyers will be emboldened to take on the most
speculative and frivolous litigation.
And in these troubled economic times, the last
thing America needs is more frivolous lawsuits. As a percentage of gross
domestic product, the United States spends more than twice as much on
litigation as any other industrialized nation, a cost that reached $254.7
billion in 2008 according to a report by Towers Perrin.
Today marks the six-month anniversary of the
enactment of the Patient Protection and Affordable Care Act, widely known as
ObamaCare. It is a day when the first significant round of benefits kicks
in, and the Obama administration is taking every opportunity to tout them to
the American public.
Insurers, we are being told, will no longer be able
to impose annual limits or lifetime caps on benefits, and they will face a
higher standard before than can drop anyone's coverage. Children will be
guaranteed access to insurance, regardless of health condition. And there is
more to come in the future.
Yet the administration is strangely silent about
who will bear the cost of these benefits. Search the government's own
health-reform website and you'll get the idea that the whole thing is one
big free lunch.
The reality is that the cost of ObamaCare will be
quite high for some people. By 2017, thousands of people in Dallas, Houston
and San Antonio will be paying more than $5,000 a year in lost health-care
benefits to make ObamaCare possible, according to a study published this
month by Robert Book at the Heritage Foundation and James Capretta at the
Ethics and Public Policy Center. For some New York City dwellers, the figure
will exceed $6,000 a year. Unfortunate residents of Ascension, La., will pay
more than $9,000 in lost benefits.
Who are these people? Are they the rich and the
comfortable—the folks presidential candidate Barack Obama told us could
afford to pay for health reform? Are they people who have excessively
profited during a recession that's caused hardships for so many? Are they
the ones who gained the most from the Bush tax cuts?
None of the above. According to the Book/Capretta
study, the people getting hit with these very expensive tabs live in
predominately low-income households. They are disproportionately minorities.
They have trouble paying their own medical bills.
These are the enrollees in Medicare Advantage
plans, health plans operated by private insurers (Cigna, Aetna, United
Health, etc.) that provide extra benefits to the elderly and the disabled on
top of standard Medicare coverage. The price they will pay for health reform
will be a double whammy: less spending on Medicare coupled with reduced
subsidies for their Medicare Advantage plans. In many areas, Medicare
Advantage enrollees will lose about one-third or more of their
health-insurance benefits.
Despite its popularity, conventional Medicare is
actually a lousy health-insurance plan. It doesn't cover most drugs and it
leaves beneficiaries exposed to thousands of dollars in potential
out-of-pocket expenses. To protect themselves, most seniors purchase
additional coverage known as "Medigap" insurance (either from an employer or
purchased directly) and buy drug coverage (Medicare Part D) as well.
Many low-income seniors, however, have trouble
paying three premiums to three plans, and all too often they find a decent
Medigap plan unaffordable. For these retirees (about one in every four
Medicare beneficiaries) Medicare Advantage plans have been a godsend. They
have been able to enroll in comprehensive health plans that resemble the
coverage many nonseniors have—often with no extra premium.
The hostility of the White House and many
congressional Democrats toward these health plans is hard to explain.
Ostensibly, they do everything President Obama says he wants to accomplish
with health reform. They provide subsidized coverage to low- and
moderate-income people who could otherwise not afford it. They have no
pre-existing condition limitations, and some plans actually specialize in
attracting and caring for patients with multiple illnesses. They provide an
annual choice of plans.
On measures of quality and efficiency, they also
score well. According to a study published in June by America's Health
Insurance Plans (a trade group that represents Medicare Advantage insurers):
• Medicare Advantage enrollees had 33% more doctor
visits (presumably representing more primary care), yet experienced 18%
fewer hospital days and 10% fewer hospital admissions than conventional
Medicare patients.
• They had 27% fewer emergency-room visits, 13%
fewer avoidable admissions, and 42% fewer readmissions.
Other studies report similarly impressive results.
This is not to say that the Medicare Advantage
programs could not be improved. Right now, almost all the enrollees are in
HMOs. Very few have a health savings account plan. And there is no practical
way for the chronically ill to manage their own budgets. By contrast, the
Medicaid disabled—as part of pilot programs that have been in force for a
decade—can hire and fire the people who provide them with services, and use
any money they save to purchase other medical care.
Some complain that the government has been paying
Medicare Advantage plans about 13% more than what would have been spent
under conventional Medicare. This is partly explained by the influence of
members of Congress who represent rural areas that would not otherwise be
able to support these plans. In any event, these "overpayments" allow
members to get about $825 in extra benefits each year, including lower
out-of-pocket payments and better coverage for drugs, preventive care, and
chronic disease care.
According to a report published in April by the
administration's own Medicare Office of the Actuary, about 7.4 million
people who would have been enrolled in Medicare Advantage plans in 2017 will
lose their coverage completely. Those who are able to retain their coverage
will lose significant benefits. These cuts are financing lavish subsidies
for health insurance for young people at about the same income level as the
seniors who are being penalized.
To those economic libertarians who view this as an
entitlement wash, don't be misled. Many of the seniors losing their health
plans will enroll in taxpayer-funded Medicaid, in addition to Medicare. The
rest will be on the steps of Capitol Hill in the near future asking to have
their benefits reinstated.
Mr. Goodman is president, CEO and a fellow at the National Center for
Policy Analysis.
Get ready for your life to change. The so-called
benefits of ObamaCare don't start until 2014, but the tax increases,
misallocated resources and federal regulations start now.
Speaker Nancy Pelosi famously said the night of
ObamCare's passage, "We have to pass the bill so that you can find out what
is in it ." The emerging picture is frightening.
ObamaCare dramatically alters the
already-overregulated health insurance market. The federal government will
now manage your health care decisions. The law creates a maze of mandates,
federal directives, price controls, tax increases and subsidies.
We all begin paying ObamaCare taxes this year. The
law includes at last count at least 19 new taxes. As Americans begin to reap
the personal financial burden of Obamacare, the movement to repeal it is
mounting.
Individuals must pay an annual penalty of $695, or
up to 2.5 percent of their annual income, if they don't purchase an approved
health insurance plan. Penalties on families include an annual penalty of
$347 per child, up to $2,250 per family, if parents don't purchase an
approved policy.
Most of us have heard about the penalties on
employers. Business owners must buy a government -approved health plan or
pay a penalty of $2,000 per employee if they have 50 employees or more.
Investors get whacked hard. ObamaCare imposes a 3.8
percent tax on investment income for individuals making $200,000 or more and
on families making $250,000 or more. The investment tax is not indexed for
inflation, so as time passes more people will be expected to pay. Seniors on
fixed incomes and pensioners with IRAs and 401(k) plans will be hit hard.
The so-called "Tax on 'Cadillac' health plans"
imposes a 40 percent tax on health care plans valued at $10,200 for
individuals and $27,500 for families.
Medicare taxes are climbing up, too. The bill
requires single people earning $200,000 or more and couples earning $250,000
or more to pay an additional 0.9 percent in Medicare taxes.
Thinking about downsizing or buying a new home?
There are new taxes on home sales tacked on the bill. ObamaCare imposes a
3.8 percent tax on home sales and other real estate transactions. Almost
every homeowner qualifies as "rich" for one day, the day they sell their
house.
Taxes on medical devices will also be going up to
2.9 percent under ObamaCare.
And we can't forget the new 10 percent tax on
tanning.
ObamaCare empowers the IRS for enforcement. The IRS
is hiring 16,500 new enforcement officials. The IRS will confiscate tax
refunds, place liens on property and seek jail time if healthcare penalties
and taxes are not paid.
Senate Majority Leader Harry Reid told a group of liberal activists
meeting in Las Vegas they shouldn't worry about not getting the single-payer
provision in the new health care law. "We're going to have a public option,"
Reid said. "It's just a question of when."
Remember the objections conservatives and many Republicans raised during
the debate about government-run health care and the danger of eliminating
private health insurance, despite its many flaws? Recall that Britain's
National Health Service (NHS) was frequently cited as an example of where
the U.S. health system might be headed: coverage for all, but with lower
quality, long waits for major surgery and denial of care when the government
decides the procedure is not "cost effective".
Anyone who believes a U.S. health care system based on the NHS model can
somehow fare better than Britain's had better consider this recent headline
and story from London's Sunday Telegraph: "Axe Falls on NHS Services; Hip
operations, cataract surgery and IVF rationed; Cancer care, maternity,
pediatric services at risk."
Rationing? Oh yes, and it is something the unconfirmed, recess-appointed
U.S. health care czar, Donald Berwick, strongly favors.
British government leaders had promised to protect frontline services.
The Obama administration also made similar promises in order to win enough
support from members of Congress, most of whom never read the bill before
they voted for it.
Here's what America can look forward to if it follows the NHS model,
according to an investigation by the Sunday Telegraph: "Plans to cut
hundreds of thousands of pounds from budgets for the terminally ill, with
dying cancer patients to be told to manage their own symptoms if their
condition worsens at evenings or weekends." Never has "take two aspirin and
call me in the morning" sounded more callous.
Nursing homes for the elderly would be closed, the number of hospital
beds for the mentally ill reduced and general practitioners would be
discouraged from sending patients to hospitals. Accident and emergency
department services would also be cut.
Thousands of jobs would be lost at NHS hospitals, reports the Telegraph,
"including 500 staff to go at a trust where cancer patients recently
suffered delays in diagnosis and treatment because of staff shortages."
Katherine Murphy of the Patients Association called the cuts "astonishingly
brutal." She expressed particular concern at attempts to ration (that word
again) hip and knee operations. "These are not unusual procedures," she
said. "This is a really blatant attempt to save money by leaving people in
pain.
What do politicians care about that? In Britain, as in America, top
officials (including Berwick who has lifetime health coverage given to him
by the Institute for Health Care Improvement) will always have access to the
best care, even while they decide the rest of us cannot.
This paragraph in the Telegraph story should send chills down the spine
of every American: "Doctors across the country have already been told that
their patients can have the operations only if they are given 'prior
approval' by the Primary Care Trust, with each authorization made on a 'case
by case' basis."
When cost, rather than the value of life becomes supreme, rationing will
inevitably lead to other cost-cutting policies. And yes, despite
protestations from those who favored Obamacare that "death panels" would not
be part of the equation, you can count on them. They will, of course, be
called something else. We wouldn't want to disturb any remaining moral
sensibilities we might have.
On a quiet Friday afternoon this summer, the
central justification for President Obama’s health-care overhaul died a
quiet death. On that day, a bipartisan coalition in Congress reversed the
scheduled Medicare cuts to physician payments, ensuring that, over the next
decade, the White House’s reforms will cost many billions more than
advertised. After over a year of debate and lofty rhetoric, the reality is
this: the president’s goal of “bending” the health-care cost curve has
unraveled in just a few months.
The president and his supporters argued that we
need ObamaCare in order to tame the federal budget deficit. When he signed
the bill into law, the president touted the importance of the legislation in
reducing long-term deficits. Democrats cited Congressional Budget Office
scoring showing that the health legislation would reduce the deficit over
ten years to the tune of roughly $130 billion. But that was back in March.
In May, the CBO released its quantitative analysis
showing that discretionary spending not accounted for in the previous scores
would cost $115 billion. The CBO director himself expressed significant
doubts about potential deficit reduction. Speaking to the Institute of
Medicine, he said: “Rising health costs will put tremendous pressure on the
federal budget during the next few decades and beyond. In CBO’s judgment,
the health legislation enacted earlier this year does not substantially
diminish that pressure.”
That brings us to the quiet Friday afternoon of
June 25. By cancelling scheduled Medicare cuts, the president and his
Congressional allies have made the fiscal problem even worse: Not only do
those fiscal problems remain, but White House reforms meant to address them
will push net federal-government health expenditures further into the red.
Any notion of fiscal balance has been lost.
Yet cancelling these scheduled Medicare cuts is
nothing new. Time and again, Republican and Democratic leaderships in
Congress have haphazardly voted to undo scheduled cuts.
Congress reversed planned Medicare physician cuts
in 1999—and 2004, 2005, 2006, and 2008. In fact, since 1997, when members of
both parties agreed to automatic cuts if spending rose faster than
population and economic growth, the program has been cut just once, in 2002.
Maybe it’s the pressure of the doctors’ lobby. Maybe it’s the seniors’
lobby. Maybe it’s both.
And this Democratic Congress has been no better. In
fact, just months after passing Obama’s health-reform legislation, Democrats
vigorously and successfully pushed to postpone the Medicare cut until
November (they had previously voted to delay it from April to June 2010).
More worrisome is this: in liberal circles, it’s
popular to argue that Congressional efforts to control Medicare costs under
the Sustainable Growth Rate (SGR) formula have been overly successful. James
R. Horney and Paul N. Van de Water make exactly this point in a publication
for the liberal Center on Budget and Policy Priorities. They write: “Even
though Congress did not allow the full cuts required under the SGR formula
to take effect, it has still cut the physician reimbursement rate
substantially – at its current level, the reimbursement rate in 2010 will be
17 percent below the rate for 2001, adjusted for inflation.” Picking up on
this point, Paul Krugman recently argued that Medicare has been historically
very successful at reigning in costs. But praising Medicare cost containment
in a time of heavy health-care cost inflation is like praising Lehman
Brothers for making good investments in Latin America when the market for
subprime mortgages was imploding.
Let’s put this in perspective: health inflation was
3.4 percent last year, just over double the basic inflation rate. Tellingly,
the worst cost increases were experienced by Medicare (costs were up 8.6
percent), and Medicaid (9.9 percent).
Unfortunately, the White House and Congress
squandered a great opportunity to bend the cost curve downwards, opting
instead for the status quo. The quiet congressional vote in June shows how
far the administration has strayed from its reform rhetoric. If we are ever
to reign in health care spending, we need leaders who will make tough
choices and tough cuts. Their rhetoric must become reality.
On paper, it looks as though the state has made
major progress in insuring the uninsured. From 6.4% of the population in
2006, the uninsured hover around 2% today. However, one
study found that nearly all of the newly insured
are either on Medicaid, in a state-subsidized plan or in an employer
subsidized plan. Only 7% of the newly insured, or about 30,000 people, are
directly paying their own way. It’s relatively easy to get people to sign up
for insurance when coverage is free or almost free. And it’s not very
expensive if you pay for the subsidies using money you would have spent
anyway on free care for those who can’t pay their medical bills.
But aside from moving money from one bucket to
another, have any real problems been solved? The evidence isn’t positive.
There are three major problems in health care all
over the world: cost, quality and access. Since nothing in the Massachusetts
reform addressed the problems of rising costs and less than adequate
quality, those problems have remained more or less unchanged. What about
access to care? Surely, newly insured people have more options in the
medical marketplace.
The trouble is that almost all of the newly insured
are in health plans that pay doctors and hospitals a lot less than what
private insurance pays. Like other places around the country, Massachusetts
Medicaid (called MassHealth) pays providers so little that patients often
turn to hospital emergency rooms and community health centers for their care
when they can’t find doctors who will see them. People in the newly
subsidized private insurance plans aren’t faring much better because these
plans pay only slightly more than what Medicaid pays.
The only solid analysis of what has actually
happened to patients at this point is
a study by Sharon Long and Paul Masi published in
the journal Health Affairs. According to the study:
• There has been no significant change in the
number of Massachusetts patients seeking care in hospital emergency rooms
since the reform was implemented, and there has actually been an increase in
emergency room use by people with incomes below 300% of the poverty level.
• There has been an increase in doctor visits but
no change in visits to specialists and an actual decrease in “medical tests,
treatment and follow up care,” which I assume is care for the chronically
ill.
• There has been no change in the percent of the
population reporting a failure to “get needed care for any reason within the
past 12 months” and remarkably that includes one-third of those with
incomes below 300% of the poverty level.
The problem with counting up doctor visits is that
a visit is not always a visit. Nationally, in the state children’s health
insurance program (CHIP) doctors have responded to an increase in the demand
for their services by scheduling more appointments, but
spending less time with patients. Also, you would
think that the Massachusetts reform would shift health care resources from
the general population to those with less income. But there is no evidence
that has happened. On measures of access, the gap between the poor plus the
near poor and everyone else appears not to have changed at all!
Ask yourself why you care whether other people have
health insurance? The most likely reason is that you want people to have
access to health care. But lack of access to care is a huge problem in
Massachusetts right now. As I
previously reported more than half of all family
doctors and more than half of all internists are not accepting new patients.
The wait is more than a month before a new patient is able to see a family
doctor, and the wait to see an internist averages 48 days. The average wait
in
Boston to see a family doctor is more than two
months.
What I am now reporting will be different than what
you may have read in the newspapers or at other health blogs. MIT Professor
Jon Gruber calls
Massachusetts an unqualified success, citing some of the very same studies I
am citing. But since Gruber was one of the architects of the Massachusetts
health reform, this is like a student grading his own exam.
What about elevating the Massachusetts reforms to
the national level in the form of ObamaCare? As I have previously reported,
ObamaCare is likely to result in less access to care for our
most vulnerable populations: the disabled and the
elderly on Medicare, the poor on Medicaid and the near poor in newly
subsidized private insurance. But that is only the beginning.
President Obama said earlier this year that the
health-care bill that Congress passed three months ago is "essentially
identical" to the Massachusetts universal coverage plan that then-Gov. Mitt
Romney signed into law in 2006. No one but Mr. Romney disagrees.
As events are now unfolding, the Massachusetts plan
couldn't be a more damning indictment of ObamaCare. The state's universal
health-care prototype is growing more dysfunctional by the day, which is the
inevitable result of a health system dominated by politics.
In the first good news in months, a state appeals
board has reversed some of the price controls on the insurance industry that
Gov. Deval Patrick imposed earlier this year. Late last month, the panel
ruled that the action had no legal basis and ignored "economic realties."
In April, Mr. Patrick's insurance commissioner had
rejected 235 of 274 premium increases state insurers had submitted for
approval for individuals and small businesses. The carriers said these
increases were necessary to cover their expected claims over the coming
year, as underlying state health costs continue to rise at 8% annually. By
inventing an arbitrary rate cap, the administration was in effect ordering
the carriers to sell their products at a loss.
Mr. Patrick has promised to appeal the panel's
decision and find some other reason to cap rates. Yet a raft of internal
documents recently leaked to the press shows this squeeze play was opposed
even within his own administration.
In an April message to his staff, Robert Dynan, a
career insurance commissioner responsible for ensuring the solvency of state
carriers, wrote that his superiors "implemented artificial price caps on HMO
rates. The rates, by design, have no actuarial support. This action was
taken against my objections and without including me in the conversation."
Mr. Dynan added that "The current course . . . has
the potential for catastrophic consequences including irreversible damage to
our non-profit health care system" and that "there most likely will be a
train wreck (or perhaps several train wrecks)."
Sure enough, the five major state insurers have so
far collectively lost $116 million due to the rate cap. Three of them are
now under administrative oversight because of concerns about their financial
viability. Perhaps Mr. Patrick felt he could be so reckless because
health-care demagoguery is the strategy for his fall re-election bid against
a former insurance CEO.
The deeper problem is that price controls seem to
be the only way the political class can salvage a program that was supposed
to reduce spending and manifestly has not. Massachusetts now has the highest
average premiums in the nation.
In a new paper, Stanford economists John Cogan and
Dan Kessler and Glenn Hubbard of Columbia find that the Massachusetts plan
increased private employer-sponsored premiums by about 6%. Another study
released last week by the state found that the number of people gaming the
"individual mandate"—buying insurance only when they are about to incur
major medical costs, then dumping coverage—has quadrupled since 2006. State
regulators estimate that this amounts to a de facto 1% tax on insurance
premiums for everyone else in the individual market and recommend a limited
enrollment period to discourage such abuses. (This will be illegal under
ObamaCare.)
Liberals write off such consequences as unimportant
under the revisionist history that the plan was never meant to reduce costs
but only to cover the uninsured. Yet Mr. Romney wrote in these pages shortly
after his plan became law that every resident "will soon have affordable
health insurance and the costs of health care will be reduced."
One junior senator from Illinois agreed. In a
February 2006 interview on NBC, Mr. Obama praised the "bold initiative" in
Massachusetts, arguing that it would "reduce costs and expand coverage." A
Romney spokesman said at the time that "It's gratifying that national
figures from both sides of the aisle recognize the potential of this plan to
transform our health-care system."
An entitlement sold as a way to reduce costs was
bound to fundamentally change the system. The larger question—for
Massachusetts, and now for the nation—is whether that was really the plan
all along.
"If you're going to do health-care cost
containment, it has to be stealth," said Jon Kingsdale, speaking at a
conference sponsored by the New Republic magazine last October. "It has to
be unsuspected by any of the key players to actually have an effect." Mr.
Kingsdale is the former director of the Massachusetts "connector," the beta
version of ObamaCare's insurance "exchanges," and is now widely expected to
serve as an ObamaCare regulator.
He went on to explain that universal coverage was
"fundamentally a political strategy question"—a way of finding a
"significant systematic way of pushing back on the health-care system and
saying, 'No, you have to do with less.' And that's the challenge, how to do
it. It's like we're waiting for a chain reaction but there's no catalyst,
there's nothing to start it."
In other words, health reform was a classic bait
and switch: Sell a virtually unrepealable entitlement on utterly unrealistic
premises and then the political class will eventually be forced to control
spending. The likes of Mr. Kingsdale would say cost control is only a matter
of technocratic judgement, but the raw dirigisme of Mr. Patrick's price
controls is a better indicator of what happens when health care is in the
custody of elected officials rather than a market.
Naturally, Mr. Patrick wants to export the rate
review beyond the insurers to hospitals, physician groups and specialty
providers—presumably to set medical prices as well as insurance prices. Last
month, his administration also announced it would use the existing state
"determination of need" process to restrict the diffusion of expensive
medical technologies like MRI machines and linear accelerator radiation
therapy.
Meanwhile, Richard Moore, a state senator from
Uxbridge and an architect of the 2006 plan, has introduced a new bill that
will make physician participation in government health programs a condition
of medical licensure. This would essentially convert all Massachusetts
doctors into public employees.
All of this is merely a prelude to far more
aggressive restructuring of the state's health-care markets—and a preview of
what awaits the rest of the country.
Among Donald Berwick's greatest rhetorical hits is
this one: "any health-care funding plan that is just, equitable, civilized
and humane must—must—redistribute wealth from the richer among us to the
poorer and less fortunate." Count that as one more reason that President
Obama made Dr. Berwick a recess appointee to run Medicare and Medicaid
rather than have this philosophy debated in the Senate.
We are also learning that "spreading the wealth,"
as Mr. Obama famously told Joe the Plumber in 2008, is the silent
intellectual and political foundation of ObamaCare. We say silent because
Democrats never admitted this while the bill was moving through Congress.
But only days after the bill passed, Senate Finance
Chairman Max Baucus exulted that it would result in "a leveling" of the "maldistribution
of income in America," adding that "The wealthy are getting way, way too
wealthy, and the middle-income class is left behind." David Leonhardt of the
New York Times, who channels White House budget director Peter Orszag, also
cheered after the bill passed that ObamaCare is "the federal government's
biggest attack on economic inequality" in generations.
An April analysis by Patrick Fleenor and Gerald
Prante of the Tax Foundation reveals how right they are. ObamaCare's new
"health-care funding plan" will shift some $104 billion in 2016 to Americans
in the bottom half of the income distribution from those in the top half.
The wealth transfer will be even larger in future years. While every income
group sees a direct or indirect tax increase, everyone below the 50th income
percentile comes out a net beneficiary.
At least at the start, Americans in the 50th
through 80th income percentiles—or those earning between $99,000 to
$158,000—are nearly beneficiaries too, if not for the taxes on insurers,
drug makers and other businesses that will be passed on to everyone as
higher health costs. This group will eventually get soaked even
more—probably through a value-added tax—once ObamaCare's costs explode. But
at the beginning the biggest losers are the upper middle class, especially
the top 10% of income earners, mainly because a 3.8% Medicare "payroll" tax
surcharge will now apply to investment income. ObamaCare, in short, is
almost certainly the largest wealth transfer in American history.
Distributional analyses like the Tax Foundation's
are usually staples in any Beltway policy debate, especially when
Republicans want to cut taxes. Yet aside from this or that provision, none
of the outfits that usually report for this duty—the Tax Policy Center of
the Brookings Institution and Urban Institute, the Center for Budget and
Policy Priorities—have attempted to estimate the full incidence of
ObamaCare's taxes and subsidies.
In part this may be because ObamaCare is such a
complex rewrite of health, tax, welfare and labor laws. But it's also
embarrassing to liberals that much of ObamaCare's redistribution will merely
move income to the lower middle class from the upper middle class, and the
President habitually promises that people earning under $200,000 will be
exempt from his tax increases. We now know they won't be.
With his vast new powers over what government
spends, Dr. Berwick will be well situated to equalize outcomes even more,
and he certainly seems inclined to do so. The most charitable reading of his
redistribution remarks, delivered in a 2008 London speech, is that any
health insurance system will involve some degree of redistribution to the
"less fortunate," that is, to the sick from the healthy.
Yet Dr. Berwick made those comments in the context
of a larger, and bitter, indictment of the U.S. health system, even though
the huge public programs he will run already account for about half of all
national health spending. From his point of view this isn't enough. And his
main stance was that individual clinical choices must be subordinated to
government central planning to serve his view of social justice and health
care guaranteed by the state.
The great irony is that this sort of enforced
egalitarianism imposes higher taxes and other policies that reduce the total
stock of wealth and leave less for Dr. Berwick to redistribute. Economic
growth has been by far the most important factor in improving health and
longevity, especially for those whom Dr. Berwick calls "the poorer and less
fortunate."
Americans have learned the hard way over the past
two years that this Administration believes in wealth redistribution first,
economic growth second. Or as Dr. Berwick also put it in his
wealth-redistribution speech, it is crucial not to have to rely on "the
darkness of private enterprise."
Companies are shifting more responsibility for the
rising costs of health care to employees, according to a recent study by
PricewaterhouseCoopers. More than 40% of the 700 companies surveyed intend
to increase employee contributions for health-insurance coverage, while an
equivalent number plan to increase medical cost-sharing, including higher
deductibles and copayments, at the point of care. Meanwhile, the ranks of
those offering health benefits for retirees are shrinking, with a 40% drop
among those subsidizing coverage after age 65.
That's a level of cost-sharing that is going to
"cause more employees to think about how they use [medical] services," says
Michael Thompson, a principal in PwC's human-resource services group.
Average per-patient medical costs are projected to
rise 9.5% in 2010 and 9% in 2011, according to separate research from PwC's
Health Research Institute. Those estimates are the net results of a variety
of significant trends that are pushing costs both up and down. As for
health-care reform, the changes that will take place in 2011 will have a
minor effect on costs, according to the research (the biggest changes don't
start until 2014).
Instead, the main driver of increased costs next
year is declining Medicare reimbursements from the government to hospitals,
the result of estimated overreimbursements in previous years, says Thompson.
Reimbursements are slated to drop by a total of 0.35% next year for this
reason and because of a mandate in the Patient Protection and Affordable
Care Act to undershoot the inflation rate rather than keep pace with it.
That means hospitals will seek to make up the difference from privately
funded patients, including those on employer-sponsored insurance plans.
"There's always some cost shifting, but this is going to be extraordinary,"
says Thompson.
Meanwhile, the short-term effects of some generally
positive trends are also inflating costs. For one, more physicians and
hospitals are consolidating practices. The number of physicians involved in
mergers or acquisitions in 2009 was nearly twice that of 2008, according to
PwC stats, and is on track to hit a record in 2010. Such consolidations
initially give the larger groups more bargaining power with hospitals and
insurers, increasing costs, but over time should lead to greater
efficiencies and lower costs. PwC also expects hospitals' investment in
digitizing medical records to peak in 2011, again adding to short-term costs
but likely reducing long-term ones.
As a result, employers are requiring more
out-of-pocket cash from employees. One version of that: higher deductibles.
In 2011, for the first time, the majority of employees will face a $400 or
more deductible. That's up sharply from 2009, when the most common plan had
no deductible. For some services, companies are also looking to shift from
flat-fee co-pays to percentage-based co-insurance, where the employee shares
proportionately in the cost of care (see chart below). Some 53% of employers
are using 20% or more co-insurance for most services in their PPO plans now,
up from 40% in 2009.
The one bright spot is that some $26 billion worth
of prescription drugs, including Lipitor, are going off-patent and will be
available in cheaper, generic forms in 2011. The number of people extending
coverage through COBRA is also likely to come down in 2011 as fewer layoffs
occur, reducing company health-care costs by about half a percentage point
on average.
In his brilliant exposition of why sweeping policy changes often have
unintended consequences, the late sociologist Robert K. Merton wrote that
leaders get things wrong when their "paramount concern with the foreseen
immediate consequences excludes the consideration of further or other
consequences" of their proposals. This leads policy makers to assert things
that are false, wishing them to be true.
Which brings us to President Obama's many claims
about his health-care reform. Take his oft-expressed statement that if you
like the coverage you have, you can keep it. That sounds good—but perverse
incentives in his new law will cause most Americans to lose their existing
insurance.
This was brought home to me when I asked the CEO of
a major restaurant chain about health reform's effect on his company, which
now spends $25 million a year on employee health insurance. That will jump
to at least $90 million a year once the new law is phased in. It will be
cheaper, he told me, for the company to dump its coverage and pay a
fine—$2,000 for each full-time worker—and make sure that no part-time
employee accidentally worked 31 hours and thereby incurred the fine.
This reality is settling in at businesses across
America. A Midwestern contractor told me he pays $588,000 for health
insurance for 70 employees, contributing up to $8,400 a year for a family's
coverage. If he stops providing health insurance, he'll pay $2,000 per
employee in fines, and the first 40 employees are exempt from fines
altogether.
It's also dawning on employees that they will lose
their coverage. Some will blame management; many more will blame those who
wrote this terrible legislation.
Employees who lose coverage get to select a policy
from a government-sponsored insurance marketplace called the "exchange."
This will be subsidized by taxpayers. Depending on his income, a worker will
have to pay between 8% and 9.8% of the cost.
But there are a few hitches. Employers now pay for
employee health plans with pre-tax dollars, but workers who buy into one on
the exchange pay with after-tax dollars. Families making less than $30,000
and individuals making less than $15,000 a year will be dumped into
Medicaid, widely viewed as second-class health care.
Either Mr. Obama was stunningly blind to these
perverse effects when he promised people could keep their coverage, or he
felt that admitting his plan would collapse employer-provided health
coverage could keep it from passing. Either way—self-deception or deliberate
deceit—health reform is going to turn out far differently than was promised.
And because more workers will be dumped into subsidized coverage, taxpayers
are likely to pay much more than the $1 trillion-plus price tag claimed by
ObamaCare advocates for its first 10 years.
Health-care plans that existed before the new law
are "grandfathered" with regard to some of its provisions. The rules
released Monday spell out how little these plans can change without losing
their protected status.
Health plans would no longer be grandfathered if a
business changes insurance companies (a common practice when employers shop
for lower prices), raises deductibles more than 5%, drops any existing
benefits, or even increases co-pays by as little as $5.
More Obama Spill Address Gets Low Marks Complying
with these new rules would raise costs for companies who provide coverage,
reduce competition among health insurance companies, and discourage efforts
to make employees more price conscious. The Obama administration itself
estimates that these draft rules could cost up to 80% of small employers and
64% of large employers their grandfathered status. This translates to
between 87 million and 115 million Americans losing their current coverage.
Companies and insurers promise a hardy fight on the proposed regulations,
but repeal of the provisions that authorized them are the only guarantee of
their defeat.
ObamaCare generates more bad news every month. On
top of sluggish job creation, burgeoning deficits, out-of-control spending,
and a miserable response to the Gulf oil leak, the Obama presidency may be
reaching a tipping point. His competence is being called into question and
his credibility undermined. Either one is bad for any president. Both can be
politically lethal.
The White House and its allies have just begun a
multi-million dollar public relations effort – funded in large part by
taxpayers – to try to convince senior citizens that ObamaCare is good for
them. But this attempted snow job obscures the harmful impact the new law
will have on seniors.
The White House isn’t telling seniors about
ObamaCare’s $575 billion in cuts to Medicare that will make it harder and
harder for them to find a doctor. Or that all seniors with a Medicare Part D
prescription plan will be facing higher premiums in the coming years,
according to the non-partisan Congressional Budget Office (CBO).
The White House instead is spending taxpayer
dollars to tell seniors about the $250 rebate check coming to those fully
exposed to the Part D “doughnut hole.” What they neglect to mention is that
fewer than one in ten people on Medicare actually will be receiving the
checks.
And the White House neglects to mention other ways
seniors will be hurt by ObamaCare’s cuts. The president repeatedly pledged
that, “If you like your plan, you will be able to keep it,” but experts in
his own administration say otherwise. According to Medicare’s actuary, more
than seven million seniors with Medicare Advantage plans will lose their
current coverage because of cuts to these plans. And those who still have
Medicare Advantage plans will have “less generous benefit packages” because
of the cuts.
Not surprisingly, cuts in Medicare will impact
seniors’ access to care. Medicare’s actuaries estimate that about 15 percent
of doctors and hospitals will become unprofitable because of ObamaCare,
“possibly jeopardizing access to care for Medicare beneficiaries.”
Meanwhile, the White House is trying to fool
seniors into believing that these cuts will strengthen Medicare by extending
its solvency. But many of the “savings” taken out of Medicare are spent
elsewhere, leading the CBO to conclude that ObamaCare “would not enhance the
ability of the government to pay for future Medicare benefits.”
Congressional leaders could have avoided the
current fight over the 21 percent cut in payments to doctors caring for
Medicare patients by including the payment fix in their health overhaul
bill. Instead, ObamaCare did nothing to help doctors, and now the cuts
threaten seniors’ access to care as more doctors refuse to accept Medicare
patients.
Given ObamaCare’s harmful impact upon seniors, some
might be surprised to know that the powerful seniors’ lobby AARP supported
ObamaCare’s passage and aggressively lobbied for it. But while seniors are
harmed by ObamaCare, the AARP – a multibillion-dollar special interest
organization – did quite well.
In fact, the AARP’s array of sweetheart deals would
make even make Sen. Ben Nelson, father of the “Cornhusker Kickback,” and
Sen. Mary Landrieu, mother of the “Louisiana Purchase,” blush with envy.
A few examples: Last year, the AARP received $427
million in royalty fees for selling “Medigap” policies to seniors – more
than it received from membership dues, grant revenues, and private
contributions combined. Yet thanks to its own special deal, the AARP is
exempted from the $60 billion tax ObamaCare imposes on insurance plans.
Though the White House boasts that ObamaCare
prohibits insurance companies from excluding coverage based upon
pre-existing conditions, AARP is also exempted from this requirement. Thus,
AARP and others selling Medigap policies can and will continue to impose
coverage waiting periods on seniors.
And while ObamaCare limits insurance executives’
compensation to $500,000 a year, AARP is conveniently exempted from the
requirement. As a result, AARP can pay its CEO more than $1 million a year,
just as it has in the past.
Supporters of
student health insurance plans who saw provisions of the Patient Protection
and Affordable Care Act threatening the plans were
reassured Wednesday in a meeting with President Obama’s chief health care
deputy. Representatives of the American College Health Association, the
National Association of College and University Business Officers, College
and University Professional Association for Human Resources and the six
presidential higher education associations met Wednesday with Nancy-Ann
DeParle, director of the White House Office of Health Reform, to share their
concerns. They worry that student plans -- currently defined as "limited
duration," a category that exempts the plans from being part of the
individual market -- would under the new law become too expensive for
colleges and universities to offer.
One person in the room for the meeting, Steven
Bloom, assistant director of government and public affairs at the American
Council on Education, said that DeParle assured the group that the absence
of language making clear that the plans could continue to operate just as
they do today was "not intentional." The Obama administration has emphasized
that "if you like the insurance you have, you get to keep it," Bloom said,
"and they view student insurance as part of that.... It's just fallen
through the cracks."
College health advocates
first met with Congressional aides last fall to
discuss this same concern, but language supporting student health insurance
plans never made it into the final bill. Now that the bill has been passed
and legislation is all but frozen on Capitol Hill, Bloom and his peers
expect that a fix will come through regulations
The employer-sponsored health care system provides
health insurance to more than 60 million people–but it does not exist in a
vacuum. Employers are often reminded of this fact when their health care
costs go up each year. Factored into that cost increase are premiums
employers pay to hospitals to help those institutions provide care to the
uninsured.
Two years ago the actuarial firm Milliman put a
price tag on this cost-shifting:
employers pay an additional $1,115 more for a
family of four’s health insurance to make up for this loss. That totals
about $88 billion annually.
This cost-shifting is once again becoming an issue as the federal government
looks to provide insurance to people who cannot otherwise get it because
they are considered high-risk.
States have for years created high-risk pools to
separate the people with especially high health care costs from the rest of
the population. Normally these folks can’t get insurance. The high risk pool
absorbs some of the cost to insurers.
Now the federal government is getting in on the
action, in large part to address the issue that insurers regularly refuse to
issue insurance to some people or they do so at rates that are prohibitively
high.
A new
analysis on so-called high risk insurance pools
that the federal government will set up as soon as July as a result of
health reform makes the point that the money allotted will run out much
sooner than originally thought. Instead of covering as many as 7 million
people who could qualify there will likely be enough money to cover about
200,000 annually. This is not surprising. The need is always greater; the
funds always inadequate.
So what does this all mean for employers?
It appears one step removed. But, as employers
know, the health care system is fragmented yet, in the end, someone – either
the federal government or employers – ends up paying the cost. In the
analysis, published by the Center for Studying Health System Change, the
authors point out that states with high risk pools currently do not assess
self-insured employer plans.
Under the federal law this will change. Employers
will face an assessment. One possibility is that the assessment will have to
go up in order to increase the amount of money in the pot. The other of
course is to limit who can get access to the high risk pools.
It remains to be seen what kind of conflict this
issue will provoke. Like many other aspects of the new health care reform,
it has the potential to fade away or to metastasize into something
problematic.
But one thing remains likely: costs will continue
to go up. The question is who will pay for these costs? If these assessments
are any sign, it will be insurers and self-insured employers.
How much will the new health care law cost? That
was a matter of particular dispute during the debate of the Patient
Protection and Affordability Act. The bill's authors monkeyed around with
the numbers, delaying some benefits, creating new revenue raisers, and
pushing off known, needed reforms, so that the Congressional Budget Office (CBO)
could come up with a score below the $900 billion target.
Only the most naïve failed to recognize that those
numbers were meaningless: Ultimately, they would have no relationship to how
much the legislation would add to taxpayers' burdens and bloat the federal
budget. CBO has since been revising its estimates upward: Another $115
billion for additional administrative costs associated with the new law. In
addition, Congress now struggles to pass a change to the Medicare
reimbursement rates, which will cost $23 billion just to patch the problem
over for two years.
Taxpayers must be warned that these are just the
first of many upward revisions by CBO. As Congressman Paul Ryan pointed out
during the health care debate, the CBO score was based on ten years of
increased taxes and Medicare cuts, and only six years of benefits. Former
CBO Director Douglas Holtz-Eakin just released his own analysis of the law
and found that, far from reducing the deficit as the President and
Congressional proponents promised, the law will add more than $500 billion
to the deficit during the first ten years and another $1.4 trillion in the
decade after that.
Yet the program's cost for taxpayers are just a
small part of the costs that will be borne by American citizens. Speaker
Pelosi explained that only when the bill passed would Americans know what's
in it, and she was right. Since the bill became law it's consequences for
businesses and the medical system is becoming more obvious. Several large
companies reported that they would suffer multi-million dollar losses due to
the law's new taxes. Companies are also noting the incentives created by the
law to drop insurance coverage for their employees. As Holtz-Eakin wrote:
“Caterpillar recently noted that it could save 70 percent on health care
costs by dropping coverage and paying the penalties; AT&T's $2.4 billion
cost of coverage would drop to just $600 million for penalties.” Altogether,
Holtz-Eakin estimates that as many as 35 million Americans could lose their
employer-sponsored health insurance.
So much for being able to keep your insurance.
Americans are also learning how other provisions will drive up insurance
costs. This year, “children” up to the age of twenty-six will become
eligible for their parents' health insurance policy. Analysts estimate that
this change will increase the cost of all family policies by about one
percent.
One percent itself isn't a big deal, but it's a
reminder of the relationship between mandated benefits and price. The
federal government will soon foist numerous new mandates upon insurance
companies: free preventive care services, an end to benefit caps, limits on
price differentials for those with pre-existing conditions, and many more to
come. Far from freebies, these are expensive benefits and their costs will
be spread around the insured population, driving premium prices up.
The law also gives government new powers to dictate
how much insurance companies operate. As a result, insurance companies will
have to find new ways to make ends meet, such as by reducing payments to
doctors. And those doctors will also find ways to trim back costs, by
consolidating practices to reduce overhead and taking on fewer patients.
Americans need not wait for the federal law to
fully take effect to understand what's in store. They can also look to
Massachusetts, where a similar health care law is already in force. Health
care policy expert Grace Marie Turner recently reviewed the problems that
plague Massachusetts. Health care costs for a family of four in the Bay
State are the highest in the nation, with per capita health care spending
27% higher than the rest of the nation. The increased demand for medical
services has created a shortage of doctors, making it difficult to get an
appointment and creating long wait times. Ironically this has led to
increased use of emergency rooms, a problem that greater insurance coverage
was supposed to solve. Insurance companies need to raise rates to cover
additional expenses, but the Governor is threatening to cap rate hikes,
which will leave private insurers operating at a loss. How long is that
sustainable?
The debate about how much this new health care law
will cost Americans is far from over. Undoubtedly, as more of the law is
implemented, we will learn more about its many hidden costs and
consequences. But one thing is for sure, this new law will cost more, and
like much, much more than the law's proponents promised.
For decades small business owners have been telling
anyone who would listen that they need health-care reforms that lower costs.
But President Obama and his allies in Congress pushed through a law that
will dramatically raise health-care costs and increase the overall cost of
doing business. What's more, the federal mandate requiring that nearly all
U.S. residents carry health insurance by 2014 seriously threatens our basic
constitutional rights and individual freedoms.
This is why the National Federation of Independent
Business (NFIB), on behalf of small business owners nationwide, has joined
the lawsuit with 20 states mounting a constitutional challenge to this
devastating new health-care law.
This law is death by a thousand cuts for small
business owners. According to the Congressional Budget Office (CBO), the
overhaul will cost about $115 billion more than first projected, bringing
the total to more than $1 trillion. Small businesses will also now have to
deal with an onslaught of new taxes and burdensome paperwork.
Supporters say the law will significantly help
small businesses, focusing on the much-talked about small business tax
credit. But the reality is that the tax credit is complex and very limited
because firms qualify based on number of employees and average wages. The
credit, which is only available for a maximum of six years, puts small
business owners through a series of complicated "tests" to determine if they
qualify and how much they will receive. Fewer than one-third of small
businesses even pass the first three (of four) tests to qualify: have 25
employees or less, provide health insurance, and pay 50% of the cost of that
insurance.
More importantly, the credit is temporary, but
health-care cost increases are permanent. When the credit ends, small
businesses will be left paying full price. They'll also be forced to deal
with all sorts of new taxes, fees and mandates buried in this 2,000-page
law.
One of these new taxes is a so-called health
insurance fee. It's a massive $8 billion tax (that escalates to $14.3
billion by 2018) on insurance companies based on their market share. This
tax will be paid almost exclusively by small businesses and individuals
because the law specifically excludes self-insured plans, the plans that
most big businesses and labor unions offer, from having to pay the tax.
While the health insurance fee was designed to "go
after" large health-insurance companies, the reality is that insurers aren't
simply going to absorb this new tax; it will be passed on to customers.
Specifically, it will be passed on to the plans that 87% of small businesses
and individuals buy. A study by the Federal Policy Group published last
October found that the amount of taxes passed on to the typical family of
four could be $500 or more per year.
Adding insult to injury, the law also requires all
businesses to issue IRS 1099 forms to document every business-to-business
transaction of $600 or more. To someone who's never run a business, this may
sound like nothing. But Congress hopes to raise $17 billion in added tax
revenues and fees from this new mandate. That's hardly nothing.
The burden of raising that expected revenue falls
again on the backs of small business owners who already suffer under
unmanageable federal paperwork burdens. What's worse, this new reporting
requirement has absolutely nothing to do with health-care reform. It was
included to help pay for the nearly trillion-dollar price tag of the bill.
Why should small business owners have to pay for a bill that causes them so
much harm? They shouldn't, which is why NFIB is fighting against this law in
court.
We also believe the health-care law is
unconstitutional. The centerpiece of this law is an individual mandate
requiring virtually all Americans to purchase health insurance or pay a
fine. We strongly believe that the Commerce Clause of the Constitution does
not give Congress the power to force individuals to purchase a private
product or face a fine. Requiring individuals to purchase something simply
because they are alive is unprecedented. The military draft is the only
exception to this, and Congress's authority to enact the draft is provided
for in the Constitution, unlike this mandate.
The individual mandate imposes unique burdens on
those small business people, including many NFIB members, who are sole
proprietors and the least able to afford it. These independent men and women
rarely can afford to distinguish between their own "personal" resources and
those of their business. The mandate will now force them to spend money on
insurance they may not want, rather than using those funds to run and grow
their businesses.
If this law is not overturned, then all citizens
should be prepared for the long arm of the federal government to reach even
further into how we choose to live our lives, spend our money and pursue our
own definitions of happiness.
Health-care reform is too important to be based on
an unconstitutional mandate. Small businesses need the judicial system—if
necessary, the U.S. Supreme Court—to overturn this law to protect them from
having to pay for a statute that causes them more harm than good and
ultimately infringes on all Americans' personal freedoms.
Mr. Danner is president and CEO of the National Federation of
Independent Business (NFIB), a nonprofit, nonpartisan organization that
works to promote and protect the rights of small businesses to own, operate
and grow their businesses.
Jensen Comment
It's so sad that with resounding control of both the House and the Senate that
the Democratic Party could not legislate a national healthcare plan. What they
got is a version that destructs small business and employment opportunities
without constraining medical costs and an entitlements economic disaster. Oh
Canada! How great it would be if the U.S. had a pay-as-you go health care
system.
Remember the health care issue? Well, the fiscal
consequences of the socialized medicine scheme enacted by President Barack
Obama and Congress just two months ago are already beginning to snowball.
Democratic Rep. Henry Waxman of California, the
chairman of the House Committee on Energy and Commerce, was one of the key
architects and advocates of Obamacare. He was back on the House floor on
Friday delivering an urgent plea to fellow Democrats that inadvertently --
or, perhaps, unavoidably -- revealed the fraudulent nature of our new
national health care regime.
It was supposed to save the taxpayers money,
remember?
"This legislation will lower costs for families and
for businesses and for the federal government, reducing our deficit by over
$1 trillion in the next two decades," Obama said when he signed the bill.
On Friday, Waxman declared that the sky is about to
fall on the Medicare system. He went to the House floor to "urge" his
colleagues to vote for a bill that includes $102 billion in new federal
spending and would add $54 billion to the national debt over the next 10
years -- $25 billion of it in the few months remaining in this fiscal year.
Why did Waxman believe this new
borrowing-and-spending was necessary?
"It's absolutely critical to do this if we are
going to keep doctors in Medicare and keep the promise to Medicare
beneficiaries that they will have access to physicians' services," said
Waxman. "This provision will provide a moderate increase in physicians'
fees, 2.2 percent for the rest of the year. If we don't act, doctors' fees
will be cut by 21 percent from where they are today. This would be
unconscionable."
It would not merely be unconscionable. If the
21-percent cut in Medicare fees for doctors -- that, in fact, legally took
effect on June 1 -- is allowed to stand, many doctors in this country will
simply stop seeing Medicare patients. They will not be able to afford it.
The cost to them of serving their patients will exceed what they are paid.
Their profit margin will be swept away.
To make precisely this point, 12 national surgeons'
associations -- including the American Association of Neurological Surgeons,
the American Association of Orthopedic Surgeons and the American Academy of
Otolaryngology-Head and Neck Surgery -- sent House Speaker Nancy Pelosi a
letter last Wednesday warning her what would happen if Medicare doctors'
fees are slashed as they are scheduled to be under current law.
"These continued payment cuts, rising practice
costs and a lack of certainty going forward, make it difficult, if not
impossible, for already financially challenged surgical practices to
continue to treat Medicare patients," the surgeons' associations told
Pelosi.
The letter pointed the speaker toward the results
of a survey of more than 13,000 physicians done in February by the Surgical
Coalition, a group of more than 20 medical associations. The survey asked
these doctors what they would do if Medicare fees were slashed by the
scheduled 21.2 percent.
Twenty-nine percent said they would opt out of the
Medicare system entirely. Almost 69 percent said they would limit the number
of appointments they would take from Medicare patients, 45.8 percent said
they would start referring complex Medicare patients to other physicians,
45.3 percent said they would stop providing certain services, 43.8 percent
said they would defer purchasing new medical equipment and 42.7 percent said
they would cut their staff.
White House Senior Adviser David Axelrod argued
earlier this year that health-care reform would become more popular after it
passed, boosting Democrats in the midterm elections. "We have to go out and
sell it," he told the National Journal, adding in an interview in Newsweek
that "people [will] see the benefits that accrue to them."
That's not quite how it has worked out. ObamaCare
is becoming more, not less, unpopular. The Rasmussen poll reported the week
after health reform's passage in March that 55% of likely voters supported
its repeal while 42% did not. A Rasmussen poll last month showed that 56%
backed repeal; 39% did not.
Some may argue that President Obama has been able
to extol the legislation's supposed virtues only sporadically, instead
having to confront other challenges from the Gulf oil spill to foreign
policy controversies. But the real problem is ObamaCare's substantive
defects, some only now coming to light. Consider the April 22 analysis by
Medicare's chief actuary, Richard Foster, which blasted to smithereens many
of Mr. Obama's claims for the bill.
For starters, Mr. Foster estimated Americans would
pay $120 billion in fines for not having adequate insurance coverage and
that 14 million people would lose their coverage as rising costs led
companies to dump it. Those effects are not in keeping with Mr. Obama's
promises that if people liked the health insurance they had they could keep
it, and that the reforms would provide universal coverage.
Finding it hard to cover costs under the bill's
formulas, according to Mr. Foster's analysis, doctors would refuse new
patients and one out of every six hospitals and nursing homes could start
operating in the red. And while Medicaid would cover 16 million more people,
there might not be enough doctors to treat them.
Because of new taxes, Mr. Foster rightly claimed
that sick people would face "high drug and device prices" and everyone would
pay higher premiums—again, exactly the opposite of what Mr. Obama said.
Then in May, the Congressional Budget Office
updated its cost projections. It found that the new health legislation would
cost $115 billion more than estimated when it was enacted.
That's not the end of the bad news. October will
see the first round of Medicare cuts. Up to half of seniors will lose their
Medicare Advantage coverage (a program that allows seniors to receive
additional services through a private health plan), or at least some of
their benefits under this program. Watch for the administration to try to
keep companies from notifying their customers of benefit cuts or premium
increases before the election. Meanwhile, the Daily Caller website reported
yesterday that the administration has missed deadlines for issuing four sets
of regulations specified by the bill and lacks a master time-line for the
other required regulations.
Drug and medical device companies are already
making provisions for the new taxes that kick in next year. This means less
investment in plants and equipment and smaller R&D budgets. Big layoffs,
especially in the pharmaceutical industry, will result as companies confront
this expensive new reality.
All of this represents a great political challenge
to the administration and the Democratic Party this fall. Doctors, nurses
and hospital workers impacted by health-care reform's adverse effects will
speak more often to more people and with greater passion and credibility
than will the president and his allies. So too will the millions of people
who work for insurance companies, drug companies, device manufacturers and
other health-care providers.
More Complete Coverage: Health-Care Overhaul Then
there are employers and their workers. According to a survey by Towers
Watson, a human resources consulting firm, 88% of companies plan to pass on
increased health-care benefit costs to employees, 74% plan to reduce
benefits, and up to 12% will drop all coverage for employees. Retirees won't
fare well either: 43% of employers that now provide retiree medical benefits
are likely to reduce or eliminate them thanks to the new health legislation.
Employers will not wait until the last moment to
spring changes on their workers. They understand it is in their best
interest to fully educate employees about the ramifications of the new
health-care bill. Many have already begun helping employees understand why
companies are being forced to make inevitable changes.
The health-care concerns of millions of Americans
will ripple through the electorate before November. When joined with other
voter concerns on jobs, spending and deficits, these ripples are likely to
create what analysts call a "wave" election, which will wash away effective
Democratic control of Congress.
Mr. Rove, the former senior adviser and deputy chief of staff to
President George W. Bush, is the author of "Courage and Consequence"
(Threshold Editions, 2010).
Millions of American workers could discover that
they no longer have employer-provided health insurance as ObamaCare is
phased in. That's because employers are quickly discovering that it may be
cheaper to pay fines to the government than to insure workers.
AT&T, Caterpillar, John Deere and Verizon have all
made internal calculations, according the House Energy and Commerce
Committee, to determine how much could be saved by a) dropping their
employer-provided insurance, b) paying a fine of $2,000 per employee, and c)
leaving their employees with the option of buying highly-subsidized
insurance in the newly created health-insurance exchange.
AT&T, for example, paid $2.4 billion last year to
cover medical costs for its 283,000 active employees. If the company dropped
its health plan and paid an annual penalty for each uninsured worker, the
fines would total almost $600 million. But that would leave AT&T with a tidy
profit of $1.8 billion.
Economists say employee benefits ultimately
substitute for cash wages, which means that AT&T employees would get higher
take-home pay. But considering that they will be required by federal law to
buy their own insurance in an exchange, will they be net winners or losers?
That depends on their incomes.
A Congressional Budget Office (CBO) analysis of the
House version of ObamaCare, which is close to what actually passed in March,
assumed a $15,000 premium for family coverage in 2016. Yet the only subsidy
available for employer-provided coverage is the same one as under current
law: the ability to pay with pretax dollars. For a $30,000-a-year worker
paying no federal income tax, the only tax subsidy is the payroll tax
avoided on the employer's premiums. That subsidy is only worth about $2,811
a year.
If this same worker goes to the health-insurance
exchange, however, the federal government will pay almost all the premiums,
plus reimburse the employee for most out-of-pocket costs. All told, the CBO
estimates the total subsidy would be about $19,400—almost $17,000 more than
the subsidy for employer-provided insurance.
In general, anyone with a family income of $80,000
or less will get a bigger subsidy in the exchange than the tax subsidy
available at work.
But will the insurance in the exchange be as good?
In Massachusetts, people who get subsidized insurance from an exchange are
in health plans that pay providers Medicaid rates plus 10%. That's less than
what Medicare pays, and a lot less than the rates paid by private plans.
Since the state did nothing to expand the number of doctors as it cut its
uninsured rate in half, people in plans with low reimbursement rates are
being pushed to the rear of the waiting lines.
The Massachusetts experience will only be amplified
in other parts of the country. The CBO estimates there will be 32 million
newly insured under ObamaCare. Studies by think tanks like Rand and the
Urban Institute show that insured people consume twice as much health care
as the uninsured. So all other things being equal, 32 million people will
suddenly be doubling their use of health-care resources. In a state such as
Texas, where one out of every four working age adults is currently
uninsured, the rationing problem will be monumental.
Even if health plans in the exchange are identical
to health plans at work, the subsidies available can only be described as
bizarre. In general, the more you make, the greater the subsidy at work and
the lower the subsidy in the exchange. People earning more than $100,000 get
no subsidy in the exchange. But employer premiums avoid federal and state
income taxes as well as payroll taxes, which means government is paying
almost half the cost of the insurance. That implies that the best way to
maximize employee subsidies is to completely reorganize the economic
structure of firms.
Take a hotel with maids, waitresses, busboys and
custodians all earning $10 or $15 an hour. These employees can qualify for
completely free Medicaid coverage or highly subsidized insurance in the
exchange.
So the ideal arrangement is for the hotel to fire
the lower-paid employees—simply cutting their plans is not an option since
federal law requires nondiscrimination in offering health benefits—and
contract for their labor from firms that employ them but pay fines instead
of providing health insurance. The hotel could then provide health insurance
for all the remaining, higher-paid employees.
Ultimately, we could see a complete restructuring
of American industry, with firms dissolving and emerging based on government
subsidies.
A much better approach was proposed by Sen. John
McCain in the last presidential election. The principle behind that plan is
enshrined in the legislation sponsored by Sens. Tom Coburn (R., Okla.) and
Richard Burr (R., N.C.), and Reps. Paul Ryan (R., Wis.) and Devin Nunes (R.,
Calif). This approach would replace the current subsidies with a system that
gives every family, regardless of income, the same number of dollars of tax
relief for health insurance.
Under this approach, all insurance would be
subsidized the same way, regardless of where it is purchased. All taxpayers
would be subsidized the same way, regardless of how they obtain their
insurance. Unlike the president's scheme, it makes sense both in terms of
equity and economics.
Mr. Goodman is the president and CEO of the National Center for Policy
Analysis.
The director of the Congressional Budget Office
said Tuesday that the health care reform legislation would cost, over the
next ten years, $115 billion more than previously thought, bringing the
total cost to more than $1 trillion.
The revised figure is due to estimated costs to
federal agencies to implement the new health care reform bill – such as
administrative expenses for the Internal Revenue Services and the Department
of Health and Human Services -- and the costs for a "variety of grant and
other program spending for which specified funding levels for one or more
years are provided in the act."
CBO had originally estimated that the health care
reform bill would result in a net reduction in federal deficits of $143
billion from 2010-2019; this revised number would eliminate most of that
savings.
In a statement, House Minority Leader John Boehner,
R-Ohio, said that the new CBO analysis "provides ample cause for alarm. This
comes just weeks after the Obama administration itself released an analysis
confirming that the new law actually increases Americans’ health care costs.
The American people wanted one thing above all from health care reform:
lower costs, which Washington Democrats promised, but they did not deliver.
These revelations widen the serious credibility gap President Obama is
facing."
Office of Management and Budget spokesman Kenneth
Baer said in response that the health care law "will reduce the deficit by
more than $100 billion in the first decade, and that will not change unless
Congress acts to change it. If these authorizations are funded, they must be
offset somewhere else in the discretionary budget. The President has called
for a non-security discretionary spending freeze, and he will enforce that
with his veto pen."
Baer also pointed a reporter to comments made by
OMB director Peter Orszag on his blog in March in which the budget director
says that Congress has the power to pay for the $115 billion costs with cuts
elsewhere, or not act on those budget authorizations in the bill at all.
This is a long and somewhat involved followup to my
previous post on ObamaCare. . For those of you
with O.A.D.D. (online attention-deficit disorder), I’ve provided an express
and local version.
EXPRESS:
The official projections for health-care reform,
which show it greatly reducing the number of uninsured and also reducing the
budget deficit, are simply not credible. There are three basic issues.
The cost and revenue projections rely on
unrealistic assumptions and accounting tricks. If you make some adjustments
for these, the cost of the plan is much higher.
The so-called “individual mandate” isn’t really a
mandate at all. Under the new system, many young and healthy people will
still have a strong incentive to go uninsured.
Once the reforms are up and running, some employers
will have a big incentive to end their group coverage plans and dump their
employees onto the taxpayer-subsidized individual plans, greatly adding to
their cost.
LOCAL:
For future reference (or possibly to roll up and
beat myself over the head with in my dotage) I have filed away a copy the
latest analysis (pdf) of health-care reform from the Congressional Budget
Office. By 2019, it says, the bills passed by the House and Senate will have
cut the number of uninsured Americans by thirty-two million, raised the
percentage of people with some form of health-care coverage from
eighty-three per cent to ninety-four per cent, and reduced the federal
deficit by a cumulative $143 billion. If all of these predictions turn out
to be accurate, ObamaCare will go down as one of the most successful and
least costly government initiatives in history. At no net cost to the
taxpayer, it will have filled a gaping hole in the social safety net and
solved a problem that has frustrated policymakers for decades.
Does Santa Claus live after all? According to the
C.B.O., between now and 2019 the net cost of insuring new enrollees in
Medicaid and private insurance plans will be $788 billion, but other
provisions in the legislation will generate revenues and cost savings of
$933 billion. Subtract the first figure from the second and—voila!—you get
$143 billion in deficit reduction.
The first objection to these figures is that the
great bulk of the cost savings—more than $450 billion—comes from cuts in
Medicare payments to doctors and other health-care providers. If you are
vaguely familiar with Washington politics and the letters A.A.R.P. you might
suspect that at least some of these cuts will fail to materialize. Unlike
some hardened skeptics, I don’t think none of them will happen. One part of
the reform involves reducing excessive payments that the Bush Administration
agreed to when it set up the Medicare Advantage program in 2003. If Congress
remains under Democratic control—a big if, admittedly—it will probably enact
these changes. But that still leaves another $300 billion of Medicare
savings to be found.
The second problem is accounting gimmickry. Acting
in accordance with standard Washington practices, the C.B.O. counts as
revenues more than $50 million in Social Security taxes and $70 billion in
payments towards a new home-care program, which will eventually prove very
costly, and it doesn’t count some $50 billion in discretionary spending.
After excluding these pieces of trickery and the questionable Medicare cuts,
Douglas Holtz-Eakin, a former head of the C.B.O., has calculated that the
reform will actually raise the deficit by $562 billion in the first ten
years. “The budget office is required to take written legislation at face
value and not second-guess the plausibility of what it is handed,” he wrote
in the Times. “So fantasy in, fantasy out.”
Holtz-Eakin advised John McCain in 2008, and he has
a reputation as a straight shooter. I think the problems with the C.B.O.’s
projections go even further than he suggests. If Holtz-Eakin’s figures
turned out to be spot on, and over the next ten years health-care reform
reduced the number of uninsured by thirty million at an annual cost of $56
billion, I would still regard it as a great success. In a $15 trillion
economy—and, barring another recession, the U.S. economy should be that
large in 2014—fifty or sixty billion dollars is a relatively small sum—about
four tenths of one per cent of G.D.P., or about eight per cent of the 2011
Pentagon budget.
My two big worries about the reform are that it
won’t capture nearly as many uninsured people as the official projections
suggest, and that many businesses, once they realize the size of the
handouts being offered for individual coverage, will wind down their group
plans, shifting workers (and costs) onto the new government-subsidized
plans. The legislation includes features designed to prevent both these
things from happening, but I don’t think they will be effective.
Consider the so-called “individual mandate.” As a
strict matter of law, all non-elderly Americans who earn more than the
poverty line will be obliged to obtain some form of health coverage. If they
don’t, in 2016 and beyond, they could face a fine of about $700 or 2.5 per
cent of their income—whichever is the most. Two issues immediately arise.
Even if the fines are vigorously enforced, many
people may choose to pay them and stay uninsured. Consider a healthy single
man of thirty-five who earns $35,000 a year. Under the new system, he would
have a choice of enrolling in a subsidized plan at an annual cost of $2,700
or paying a fine of $875. It may well make sense for him to pay the fine,
take his chances, and report to the local emergency room if he gets really
sick. (E.R.s will still be legally obliged to treat all comers.) If this
sort of thing happens often, as well it could, the new insurance exchanges
will be deprived of exactly the sort of healthy young people they need in
order to bring down prices. (Healthy people improve the risk pool.)
If the rules aren’t properly enforced, the problem
will be even worse. And that is precisely what is likely to happen. The
I.R.S. will have the administrative responsibility of imposing penalties on
people who can’t demonstrate that they have coverage, but it won’t have the
legal authority to force people to pay the fines. “What happens if you don’t
buy insurance and you don’t pay the penalty?” Ezra Klein, the Washington
Post’s industrious and well-informed blogger, asks. “Well, not much. The law
specifically says that no criminal action or liens can be imposed on people
who don’t pay the fine.”
So, the individual mandate is a bit of a sham.
Generous subsidies will be available for sick people and families with
children who really need medical care to buy individual coverage, but
healthy single people between the ages of twenty-six and forty, say, will
still have a financial incentive to remain outside the system until they get
ill, at which point they can sign up for coverage. Consequently, the number
of uninsured won’t fall as much as expected, and neither will prices.
Without a proper individual mandate, the idea of universality goes out the
window, and so does much of the economic reasoning behind the bill.
The question of what impact the reforms will have
on existing insurance plans has received even less analysis. According to
President Obama, if you have coverage you like you can keep it, and that’s
that. For the majority of workers, this will undoubtedly be true, at least
in the short term, but in some parts of the economy, particularly industries
that pay low and moderate wages, the presence of such generous subsidies for
individual coverage is bound to affect behavior eventually. To suggest this
won’t happen is to say economic incentives don’t matter.
Take a medium-sized firm that employs a hundred
people earning $40,000 each—a private security firm based in Atlanta,
say—and currently offers them health-care insurance worth $10,000 a year, of
which the employees pay $2,500. This employer’s annual health-care costs are
$750,000 (a hundred times $7,500). In the reformed system, the firm’s
workers, if they didn’t have insurance, would be eligible for generous
subsidies to buy private insurance. For example, a married forty-year-old
security guard whose wife stayed home to raise two kids could enroll in a
non-group plan for less than $1,400 a year, according to the Kaiser Health
Reform Subsidy Calculator. (The subsidy from the government would be
$8,058.)
In a situation like this, the firm has a strong
financial incentive to junk its group coverage and dump its workers onto the
taxpayer-subsidized plan. Under the new law, firms with more than fifty
workers that don’t offer coverage would have to pay an annual fine of $2,000
for every worker they employ, excepting the first thirty. In this case, the
security firm would incur a fine of $140,000 (seventy times two), but it
would save $610,000 a year on health-care costs. If you owned this firm,
what would you do? Unless you are unusually public spirited, you would take
advantage of the free money that the government is giving out. Since your
employees would see their own health-care contributions fall by more than
$1,100 a year, or almost half, they would be unlikely to complain. And even
if they did, you would be saving so much money you afford to buy their
agreement with a pay raise of, say, $2,000 a year, and still come out well
ahead.
Even if the government tried to impose additional
sanctions on such firms, I doubt it would work. The dollar sums involved are
so large that firms would try to game the system, by, for example, shutting
down, reincorporating under a different name, and hiring back their
employees without coverage. They might not even need to go to such lengths.
Firms that pay modest wages have high rates of turnover. By simply refusing
to offer coverage to new employees, they could pretty quickly convert most
of their employees into non-covered workers.
The designers of health-care reform and the C.B.O.
are aware of this problem, but, in my view, they have greatly underestimated
it. According to the C.B.O., somewhere between eight and nine million
workers will lose their group coverage as a result of their employers
refusing to offer it. That isn’t a trifling number. But the C.B.O. says it
will be largely offset by an opposite effect in which employers that don’t
currently provide health insurance begin to offer it in response to higher
demand from their workers as a result of the individual mandate. In this
way, some six to seven million people will obtain new group coverage, the
C.B.O. says, so the overall impact of the changes will be minor.
The C.B.O.’s analysis can’t be dismissed out of
hand, but it is surely a best-case scenario. Again, I come back to where I
started: the scale of the subsidies on offer for low and moderately priced
workers. If economics has anything to say as a subject, it is that you can’t
offer people or firms large financial rewards for doing something—in this
case, dropping their group coverage—and not expect them to do it in large
numbers. On this issue, I find myself in agreement with Tyler Cowen and
other conservative economists. Over time, the “firewall” between the
existing system of employer-provided group insurance and taxpayer-subsidized
individual insurance is likely to break down, with more and more workers
being shunted over to the public teat.
At that point, if it comes, politicians of both
parties will be back close to where they began: searching for health-care
reform that provides adequate coverage for all at a cost the country can
afford. What would such a system look like? That is a topic for another
post, but I don’t think it would look much like Romney-ObamaCare.
A little more than a month after the passage of the
Patient Protection and Affordable Care Act, President Obama's
trillion-dollar overhaul of the nation's health care system, the
administration has already begun to tout its successes. On his weekly radio
address, the president
argued that it was already providing Americans
with "real benefits," while Health and Human Services Secretary Kathleen
Sebelius released a
four-page memo laying out the "significant
progress" she claims her department has already made in implementing the
law. "Over the coming weeks, our team across government will continue to
work diligently to produce the regulations and guidance necessary to
implement this landmark new law," she concludes.
The prospect of adding new regulations to the books
may be what passes for excitement in Washington these days, but it's hardly
a ringing endorsement. So while ObamaCare might qualify as victory for
Washington's army of bureaucrats and rulemakers, for the rest of us, there
isn't much to cheer.
Since the law's passage, the news about it has been
been unrelentingly bad. With each passing it day, it looks more likely that
costs will go up, businesses will face new bureaucratic burdens, and many
individuals will lose their current health care plans—just as the law's
critics predicted before its passage.
Already, businesses small and large are warning of
the ill effects of the law's changes to the tax code. In order to generate
the nearly $1 trillion necessary to pay for the law, its authors scoured the
tax code looking to squeeze out more money whereever possible. And sure
enough, within a few days of its passage, a handful of big companies took
tax write downs in response to changes in the tax treatment of an existing
drug subsidy. An estimate by Credit Suisse puts the total damage across the
economy at
around $4.5 billion—with $1 billion coming from
AT&T alone.
The change involved the tax treatment of a subsidy
that never should have existed, but it suggests the extent to which
America's health care system is already reliant on government meddling, and
how costly expanding the government's role in the system can be. And,
perhaps more importantly, a planned investigation into the write-downs
revealed that many big corporations are considering dropping their health
care coverage and dumping employees onto the public dole.
When Rep. Henry Waxman (D-Calif.) heard about the
write-downs, he called a hearing with AT&T and other companies claiming big
hits. But soon after the subpoenaed corporate documents were turned in, the
hearing was canceled. Why? Likely because, as
Fortune magazine reported, the documents
showed that the companies were considering dropping coverage for many
employees—directly contradicting one of the president's key promises, that,
under ObamaCare, "if you like your health care plan, you can keep your
health care plan." Even with penalties in place for employers who decline to
provide health insurance, documents showed that Caterpillar could reduce its
health care costs by as much as 70 percent and AT&T could save as much as
$1.8 billion by shifting their employees into public programs.
Small businesses, meanwhile, have discovered that
their tax preparation costs just went way up. The PPACA will require small
business owners and the self-employed to fill out 1099s for every company
they do more than $600 worth of business with. That means any freelancer who
buys a mid-range laptop from Best Buy will technically be required to fill
out a 1099, no matter if the retailer is an indifferent chain giant. As with
the drug subsidy modification, the idea is to beef up compliance and raise
additional revenue—about $17 billion worth.
Yet if it works, it will drive up compliance
costs—how many home-based freelancers are likely to generate a docket of
1099s, complete with tax identification numbers, for big corporate suppliers
all by themselves? And if, as seems likely, the requirement is widely
ignored, it will have the exact opposite of its intended effect, pushing
more and more taxable transactions into illegal, unrecorded territory.
At the same time, cost projections continue to
spiral upwards. The Congressional Budget Office now reports that the law
will require an additional $115 billion in previously unreported (and yet
unpaid-for) discretionary spending. Medicare's actuary has reported that
total medical spending in the U.S. will actually go up and that crucial cuts
to Medicare—cuts being used to pay for the law's new entitlement
spending—aren't likely to happen, but that Medicare benefits are likely to
be reduced. And in Massachusetts, the state whose 2006 health care overhaul
served as the model for ObamaCare, insurers have gone to war with the
governor, and the state treasurer is warning that the program could drive
the state into bankruptcy.
Thanks to the pace of modern medical progress, it's
no longer true that, as Jean Baptiste Moliere quipped in 1673, "nearly all
men die of their medicines, not their diseases." But when it comes to health
care, it may be that governments die of their reforms.
The attorneys general of 13 states recently filed a
lawsuit in federal court challenging the constitutionality of the Medicaid
portions of the new health law. Given the dismal track record states and
individuals have had challenging New Deal social programs, many pundits have
concluded their suit will be dismissed out of hand. I wouldn't be so sure.
The new health law gives states frontline
responsibility for setting up an untried system of "exchanges" through which
individuals will purchase health-care insurance. States receive partial
federal support for running the exchanges up to 2015, after which they run
them at their own considerable but uncertain expense. States can opt out of
organizing these exchanges—but only if they extend Medicaid coverage to more
of their residents, including all uninsured persons whose incomes are 133%
to 200% of the poverty level.
This program is highly coercive and it raises a
constitutional problem of the first magnitude.
ObamaCare's defenders say there is no problem—since
no state has to participate in Medicaid at all, they're free to walk away
entirely from the ObamaCare deal. But this too is a fake option.
Suppose a thief takes your family portrait worth
$100 to you and then makes a take-it-or-leave it offer to sell it back to
you for $50. You prefer the picture to the money. He prefers the money to
the picture. Does that make the thief's offer a win/win? Of course not. It
is ransom.
And thus the ObamaCare deal: States may leave
Medicaid but the Medicaid taxes their citizens pay will support the program
in other states. The state's option to leave Medicaid would be real only if
the federal government refunded its citizens' Medicaid taxes or paid them
into the state treasury.
There is one big obstacle to state success in the
courts. In Frothingham v. Mellon (1923), a citizen of Massachusetts and the
state itself challenged the use of federal tax dollars for infant and
maternal health under the 1921 Maternity Act. Their argument was that the
payments to individual people were not expenditures for the "general welfare
of the United States," which, properly understood, only covered standard
public goods like national defense.
But the Supreme Court there mistakenly held that
neither the individual citizen nor the state had standing to challenge the
program—on the peculiar ground that any potential constitutional violation
that hurt everyone could be challenged by no one. That ruling put
Massachusetts (like states today) in an impossible bind. A principled
decision not to accept the federal funds meant that its citizens' tax
dollars simply would go to mothers and infants in other states.
Fortunately, the obstacle that the Supreme Court
raised to a state's standing to sue has already been breached. In
Massachusetts v. EPA—the notorious 2007 decision allowing the EPA to treat
carbon dioxide as a pollutant—the Supreme Court recognized that the state
had standing to sue to protect its own coastline from the supposed ravages
of excess CO2. The Supreme Court should likewise also recognize a state's
standing to sue when the federal government seeks to command its resources
to serve federal objectives. In New York v. United States (1992), the Court
prevented the U.S. from forcing states to take title to nuclear waste. It
can surely prevent the federal government from mandating massive
expenditures of scarce state resources.
Under the Constitution the states are not wards of
the federal government. Clever federal tax and spending statutes must not be
allowed to reduce states to a servile status that allows the federal
government to force massive wealth shifts among them.
The federal government should be told either to
refund to the states their citizens' Medicaid tax dollars when they pull out
of the program or to drop the new mandates to expand Medicaid coverage as
the price the states must pay to escape ObamaCare-created duties.
Mr. Epstein is a professor of law at the University of Chicago and a
senior fellow at the Hoover Institution.
Updates on May 10, 2010
A galaxy is composed of gas and dust and
stars—billions upon billions of stars.
Carl Sagan, Cosmos, chapter 1, page 3[27]
Changes to the tax code’s section 6041: The IRS Will Soon Be Buried in
a new "galaxy" of 1099 Forms
I apologize for the wording of this blog that may offend some readers
I forward it only because it will affect accountancy, especially tax accountants
and their clients
"Another Pelosi Easter egg in ObamaCare: IRS mandate on business," by Ed
Morrissey, Hot Air, April 29, 1010 ---
http://hotair.com/archives/2010/04/29/another-pelosi-easter-egg-in-obamacare-irs-mandate-on-business/
That means any time a business pays any one entity
$600 or more in a year, they will have to create a 1099 to file with the
IRS. That means that the businesses have to get all of the tax information
for every vendor, provide separate accounting for every payee, and then send
the forms to both the IRS and the payees at the end of every year — as the
payees do the same with their vendors, and so on. Edwards puts the scope in
context:
Do any of you know if this will also apply to foreign
subsidiaries that mostly buy goods and services in their home countries.
What about domestic company purchases products from foreign vendors such as
Canadian or Indonesian vendors?
Also if your university pays $1,200 to British Airways for
your visit to the European Accounting Association annual meetings will your
university have to file a British Airways 1099 form? Will a similar 1099 have to
be filed for the European hotel that does not even have a U.S. tax ID number?
The purpose of this legislation might extend well beyond
the intent to collect Federal taxes. It could become a massive database on
international vendors and workers.
Updates on April 29, 2010
Journal of Accountancy e-Alert on April 22, 2010
> >
FASB Issues Health Care Proposals
April 16, 2010
FASB issued two exposure drafts that would change accounting for health care
organizations. One proposal would require that the measurement of charity care
for disclosure purposes by health care providers be based on the direct and
indirect costs of providing the charity care. The second proposal is aimed at
how organizations account for medical malpractice and similar liabilities and
related insurance payouts.
Jensen Comment
There are some potential cost accounting research projects here regarding cost
accounting in health care facilities.
Health care facility cost accounting may become an even
greater priority for the FASB since the government intends to regulate health
insurance premiums in the private sector. Price regulations make cost accounting
an important, if not the most important, input into price regulation.
Fearing that health insurance premiums may shoot up
in the next few years, Senate Democrats laid a foundation on Tuesday for
federal regulation of rates, four weeks after President Obama signed a law
intended to rein in soaring health costs.
After a hearing on the issue, the chairman of the
Senate health committee, Tom Harkin, Democrat of Iowa, said he intended to
move this year on legislation that would “provide an important check on
unjustified premiums.”
Mr. Harkin praised a bill introduced by Senator
Dianne Feinstein, Democrat of California, that would give the secretary of
health and human services the power to review premiums and block “any rate
increase found to be unreasonable.” Under the bill, the federal government
could regulate rates in states where state officials did not have
“sufficient authority and capability” to do so.
The White House offered a similar proposal in the
weeks leading up to approval of the health care legislation last month. But
it was omitted from the final measure, in part for procedural reasons.
Reviving the proposal on Tuesday, Mr. Harkin said:
“Rate review authority is needed to protect consumers from insurance
companies’ jacking up premiums simply because they can. Protections must be
in place to ensure that companies do not take advantage of current market
conditions before health reform fundamentally changes the way they do
business in 2014.”
“Currently,” Mr. Harkin said, “about 22 states in
the individual market and 27 states in the small group market do not require
a review of premiums before they go into effect — and perhaps even more.
This is a gaping hole in our regulatory system, and it is unacceptable.”
Under the new health care law, starting in 2014,
most Americans will be required to have insurance. Insurers will have to
offer coverage to all applicants and cannot charge higher premiums because
of a person’s medical condition or history.
Michael T. McRaith, director of the Illinois
Department of Insurance, told Congress on Tuesday, “There is a distinct
possibility that less responsible companies will raise rates to price out
people who are sick or might become sick between now and 2014.”
Mr. McRaith said he and the governor of Illinois,
Pat Quinn, a Democrat, “unequivocally support state-based insurance
regulation,” because local officials understand local markets.
He endorsed Mrs. Feinstein’s bill, saying it would
“provide an impetus” for states to regulate premiums if they did not already
do so.
Karen M. Ignagni, president of America’s Health
Insurance Plans, a trade group for insurers, said Congress should let the
new law work before piling on additional requirements.
Congress, she said, has largely ignored the cause
of rising premiums: the explosive growth of medical costs and the power of
hospitals and other health care providers to dictate prices.
Ms. Ignagni said the law imposed new requirements,
taxes and fees on health plans, which could further drive up costs.
Senator Lamar Alexander of Tennessee, the No. 3
Republican in the Senate, said: “Health insurance companies’ profits for one
year equal about two days of health care spending in the United States. So
even if we were to take away all the profits of the so-called greedy
insurance companies, that would still leave 363 days a year when health care
costs are expanding at a rate our country cannot afford.”
Grace-Marie Turner, president of the Galen
Institute, a research center that advocates free-market health policies,
said the Democrats’ proposal was unlikely to succeed in lowering insurance
costs.
“Capping premiums without recognizing the forces
that are driving up costs would be like tightening the lid on a pressure
cooker while the heat is being turned up,” Mrs. Turner said.
Mrs. Feinstein said her bill would close what she
described as “an enormous loophole” in the new law. And she said health
insurance should be regulated like a public utility.
“Water and power are essential for life,” Mrs.
Feinstein said. “So they are heavily regulated, and rate increases must be
approved. Health insurance is also vital for life. It too should be strictly
regulated so that people can afford this basic need.”
Mr. Harkin interrupted the hearing to note that one
of the nation’s largest insurers, UnitedHealth Group, had just reported that
its first-quarter earnings had increased 21 percent, to $1.19 billion,
surpassing Wall Street expectations.
Some securities analysts say they doubt that
insurers can sustain such gains after major provisions of the new law take
effect.
The
megatrends in global health care selected by the
Harvard Business Review highlight a stark reality: Health care is
changing rapidly and — unless we do the right things and do them well, care
will become entirely unaffordable.
In the United States, the new law to reform health
insurance is a huge step forward in the struggle to improve the quality of
care and bring its cost under control. But that universal coverage bill is
just the first step. It opens the door to the next two levels of reform. We
need to significantly improve care and we need to significantly moderate the
increase in the cost of care. Frankly, we need three agendas to ensure that
we keep moving down the path to better and more affordable care.
Agenda One: Provide Universal Coverage
We are the only industrialized country in the world
that doesn't cover all of its citizens. The reform law doesn't get us all
the way there, but it will go a long way toward fixing that problem.
It's very hard to improve care of people until they
have insurance and the bill moves us nicely in that direction.
If we very carefully and skillfully build and
implement the new insurance market exchanges mandated by the law, they will
give Americans much better choices. People should be able to use the
exchanges to choose care systems and teams that will double their chances of
surviving cancer, triple their chances of surviving strokes, and quadruple
their chances of surviving major heart surgery.
Agenda Two: Provide Better and Safer Care
American health care is plagued by major
performance problems. Consider the following facts:
We get care right for American patients with
chronic conditions (the people who use over 75% of all care dollars)
barely half the time.
We have a million patients a year getting
infections in hospitals that they didn't have when they entered the
hospitals. Those painful and expensive infections are now the leading
cause of death in hospitals.
While asthma is the fastest-growing condition
among kids, we only get their care right 47% of the time. And because
the system for generating, collecting, and analyzing data is grossly
inadequate, we don't even know which 47% is getting the right care!
Clearly, we need to make care vastly better and a
lot safer. We can do that just by focusing in a very practical way on a few
things. For starters, we need to target a major reduction in infection
deaths and we need to mandate team based care for patients with multiple
medical conditions.
Agenda Three: Make Care Much More
Affordable
We spend twice as much as any other country in the
world for basically the same care. We also obviously need to fix that.
We need to do a couple of very basic and practical
things to slow or even stop the growth of new cases of diabetes or heart
disease. We know what those few basic things are. We just need to make them
a priority.
For example walking 30 minutes a day five days a
week cuts the new cases of diabetes by half. Medicare would be saved
financially if half as many people became diabetic. Walking also can cut the
number of strokes and kidney failures and can improve the survival rates of
people with several kinds of cancer.
We also need to make a couple of changes in our
food intake. Saturated fats for example, should be labeled and avoided.
Lives will be saved.
To make care affordable for the next decade, we
also will need to understand why we spend twice as much for each unit of
care compared to other industrialized countries. Unit prices for hospital
days, CT scans, prescription drugs, and basic medical procedures all cost
two or three times as much per item as they do in France, Germany, Canada,
and the Netherlands. Health care costs in the U.S. would drop from 17.3% of
the GDP to under 12% if we paid Canadian or Dutch prices.
Why are unit costs of care so much higher in
America? No one knows. It has never been studied. What we do know is that
American caregivers could not survive economically with European or Canadian
fee levels. So we obviously can't just cut fees. As a macro-economic issue,
we do need to recognize that fees drive costs and that higher fees are the
number one cost difference between the U.S. and every other country. We
don't need to reduce fees — but we will have absolutely no hope of ever
getting to more affordable care in the U.S. if we don't find a way to
constrain future increases in fee levels.
What do you think the megatrends in global health
care mean for the United States? What do you think should be the immediate
priorities for improving the health of Americans, improving the quality of
care in the U.S., and lowering its cost?
George C. Halvorson is chairman and chief executive officer of Kaiser
Permanente, the nation's largest nonprofit health plan and hospital system.
He is also the author of
Health Care Will Not Reform Itself.
The Writedowns Revisited:
Commerce Secretary Gary Locke owes CEOs an apology
Rep. Waxman has
since canceled those hearings with much less dudgeon or media fanfare, and the
report from his own staffers explains his retreat. "The companies acted properly
and in accordance with accounting standards in submitting filings to the SEC in
March and April," they write. "These one-time charges were required by
applicable accounting rules." This may stand as the first time in history that
Mr. Waxman has admitted a mistake. Scroll Down for Update on April 29
Ketz Me If You Can
Another One from That Ketz Guy (this time questioning the reasoning of our
Secretary of Commerce)
"Does Gary Locke Support Accounting Lies?" by: J. Edward Ketz, SmartPros,
April 2010 ---
http://accounting.smartpros.com/x69221.xml
I just don't understand the
current administration. You would think that after the last decade of
financial thievery and accounting mischief, the Obama administration would
not tolerate a return to such prevarications. But if one listens to his
Secretary of Commerce Gary Locke, that might not be the case.
Mr. Locke wrote an
op-ed (“Don’t
Believe the Writedown Hype”) that appeared in the
Wall Street Journal April 1, 2010. At least the date of publication was
appropriate.
He repeats the political
dogma that the recently passed healthcare act will reduce the number of
uninsured, it will invest $5 billion in a reinsurance program, it contains a
number of reforms that will slow the rate of increase in health care costs,
and it creates a board that will restrain Medicare costs. Locke then
asserts that these changes will benefit corporations as well as individuals.
While I believe these
assertions exaggerate the benefits of the bill and ignore its dysfunctional
components, for the sake of argument, let’s assume that Gary Locke is
correct. So what? Any cost reductions will be accounted for in the future
when the business enterprise actually enjoys cost reductions. Accountants
don’t dream of fewer expenses and then book them. We wait for history to
prove their validity and to correct any errors.
Locke then criticizes
commentators for focusing on a “minor” provision in the legislation that
increases health-care costs. He then asserts without proof that the actual
impact will be “quite modest.” What puffery!
What motivated this
discussion was various 8-Ks issued by corporate America. On March 24, AT&T
informed investors that it would take a charge of about $1 billion.
Specifically, it stated:
Included among the major
provisions of the law is a change in the tax treatment of the Medicare Part
D subsidy. AT&T… intends to take a non-cash charge of approximately $1
billion in the first quarter of 2010 to reflect the impact of this change.
As a result of this legislation, including the additional tax burden, AT&T
will be evaluating prospective changes to the active and retiree health care
benefits offered by the company.
I find it interesting that
Locke calls this a “minor” provision but AT&T calls it “major” because it
involves an expense of $1 billion. I guess it depends on one’s
perspective. To AT&T’s investors, $1 billion is probably significant as it
reduces quarterly earnings by one-third. But to the government which
creates budget deficits of trillions of dollars per year, maybe $1 billion
is immaterial.
I would think that the
administration would applaud the honesty by AT&T’s managers. FAS 106
specifies the accounting for other postemployment benefits (OPEBs),
including their tax effects. As this legislation removes a tax subsidy from
corporations (I’ll leave it to others to debate the merits of this part of
the bill), the firms do indeed incur higher healthcare costs. And these
costs are immediate and persistent. (There also is interaction with FAS
109, accounting for deferred taxes, but that need not concern us.)
The investment community
needs honesty and I hope the administration does too. Accordingly, Mr.
Locke should not be so critical of the immediate recognition of additional
costs by corporations which are real and immediate and should be recognized
in income statements. And he should not be pushy for the recognition of
cost reductions until they materialize—if they in fact materialize.
Other companies are also
issuing 8-Ks and announcing similar writedowns: Caterpillar, $100 million;
Deere, $150 million; and Boeing, $150 million. Some estimate that when all
is said and done, such writedowns will amount to $15 billion or so.
Additionally, some corporations are doubtless considering whether to reduce
the OPEBs they offer employees. I would not characterize these effects as
“quite modest.”
On March 26, Henry Waxman
announced that he would require corporate executives to appear before his
committee on April 21 to determine whether they are playing politics through
these 8-Ks. Unless Mr. Locke supports accounting lies, he too should make
an appearance and explain to Mr. Waxman how investors and creditors
appreciate more honesty and transparency in the accounting reports. Of
course, it is possible that some members of Congress would prefer accounting
shenanigans if they don’t reveal some of the costs of the recently passed
legislation.
Gary Locke admonishes
readers to “look past the hype and the overheated rhetoric.” I suggest he
read his own sentence. I also suggest he include investors and creditors in
the business community, for without their capital, the business of America
ceases to operate. As Commerce Secretary, he should applaud the recent 8-Ks
that managers are releasing. The information is invaluable to investors and
creditors.
Rep. Waxman has
since canceled those hearings with much less dudgeon or media fanfare, and the
report from his own staffers explains his retreat. "The companies acted properly
and in accordance with accounting standards in submitting filings to the SEC in
March and April," they write. "These one-time charges were required by
applicable accounting rules." This may stand as the first time in history that
Mr. Waxman has admitted a mistake.
"The Writedowns Revisited: Gary Locke owes CEOs an apology," The Wall
Street Journal, April 29, 2010 ---
http://online.wsj.com/article/SB10001424052748704423504575212422971814134.html#mod=djemEditorialPage_t
Another day, another never-mind ObamaCare moment.
Earlier this week, House Democrats concluded that the deluge of corporate
writedowns—amounting to about $3.4 billion so far—were in fact the result of
ObamaCare, not the nefarious CEO conspiracy that the White House repeatedly
cited when it was embarrassed soon after the bill's passage.
Commerce Secretary Gary Locke rushed to attack
AT&T, Verizon, Caterpillar and many others reporting losses from a tax
increase on retiree drug benefits as "premature and irresponsible." He later
took to these pages to denounce those who noticed these writedowns as
"disingenuous" and peddling "overheated rhetoric."
Meanwhile, House baron Henry Waxman vowed to summon
the offending executives to his committee because their actions "appear to
conflict with independent analyses, which show the new law will expand
coverage and bring down costs."
Mr. Waxman has since canceled those hearings with
much less dudgeon or media fanfare, and the report from his own staffers
explains his retreat. "The companies acted properly and in accordance with
accounting standards in submitting filings to the SEC in March and April,"
they write. "These one-time charges were required by applicable accounting
rules." This may stand as the first time in history that Mr. Waxman has
admitted a mistake.
The larger question is what motivated the White
House to unleash this assault. Democrats were amply warned about the
destructive consequences of these tax changes, and if they really thought
these companies were acting out of political motives, then they didn't
understand what was in their own bill. Or at least that's one possibility.
More likely is that they did know and were simply
trying to intimidate business and mislead the public in the early days of
what was supposed to be the rapturous response to ObamaCare's passage.
Instead, the public has turned even more negative on the bill as Americans
discover that it won't control costs but will raise insurance premiums and
taxes. No wonder Democrats want to change the subject to immigration and
Goldman Sachs.
Medical Malpractice Lottery for Lawyers or Criminals or Both
Hi Jagdish,
Of course there are mistakes by physicians, hospitals, and drug companies all
over the world, mistakes that fall under the heading of medical "malpractice"
even when there are no criminal infractions.
To my knowledge the United States is the only nation, however, that turned
medical malpractice into a legal lottery for lawyers or criminals or both.
2. How Texas Greatly Reduced Malpractice Insurance Costs USA
Today
reported on July 31, 2009, Page 10A, (using OECD data for 2008) that health care
costs in Canada were $3,505 per capita. Before any Obamacare legislation for
health care the per capita cost of health care in the United States was $6,567.
In large measure this due to the cost physicians, nurses, ambulance services,
and hospitals must pay for malpractice insurance. Thousands of gynecologists in
the United States dropped the obstetrics part of their practices because of the
enormous price of malpractice insurance. Many hospitals dropped obstetrics
services for the same reason.
In 2003 Texas voters passed a constitutional amendment that puts tight caps
on punitive damages, thereby almost eliminating the lawyer and criminal legal
lottery in Texas ---
http://www.nytimes.com/2007/10/05/us/05doctors.html?_r=1
The tremendous impact was that gynecologists thereafter added back their former
obstetrics medical services that were dropped because of unaffordable
malpractice insurance for obstetrics. Neurosurgeons and other physicians who
were turning away Medicare patients once again opened their doors to Medicare
patients.
My wife's wonderful gynecologist and close friend in San Antonio was one of
those surgeons who dropped obstetrics services when malpractice insurance costs
went through the ceiling. After the Texas constitutional amendment was passed
and malpractice insurance subsequently became affordable she once again added
obstetrics to her medical services practice.
Before Texas capped punitive damages, while we were still living in San
Antonio, my wife had two of her 15 spine surgeries performed by a surgeon from
the South Texas Spinal Clinic. When it came time for next surgery her
surgeon turned her away saying that the South Texas Spinal Clinic no longer
accepted any Medicare patients (Erika was then covered under Medicare Disability
Insurance that took over for Workers Comp Insurance). Purportedly the soaring
costs, especially malpractice insurance, made complicated Medicare surgeries at
the South Texas Spinal Clinic big money losers in for spinal surgeons. We
had to go to Boston to find Erika a high quality spine surgeon who accepted her
as a Medicare patient.
Out of curiosity in November 2009, I phoned the South Texas Spinal Clinic and
discovered it once again is accepting Medicare patients even though Erika has no
intention of returning to that clinic. Ostensibly a major factor in deciding to
once again take on Medicare patients is the decline in malpractice insurance
costs due largely to a change in the Texas Constitution.
Interestingly, decreases in malpractice insurance costs
have been a major factor in increasing competition for physician specialists in
Texas:
Four years after Texas voters approved a
constitutional amendment limiting awards in
medical malpracticelawsuits, doctors are
responding as supporters predicted, arriving from all parts of the country
to swell the ranks of specialists at Texas
hospitalsand bring professional health care to
some long-underserved rural areas. “It was hard to believe at first; we
thought it was a spike,” said Dr. Donald W. Patrick, executive director of
the medical board and a neurosurgeon and lawyer. But Dr. Patrick said the
trend — licenses up 18 percent since 2003, when the damage caps were enacted
— has held, with an even sharper jump of 30 percent in the last fiscal year,
compared with the year before. Ralph Blumenthal, "More Doctors
in Texas After Malpractice Caps," The New York Times, October 5, 2007
---
http://www.nytimes.com/2007/10/05/us/05doctors.html
3. The Veterans Administration and Military Services recruited
tens of thousands of physicians by promising them that they will not only be the
highest paid employees of the government but that they will not have to pay for
expensive malpractice insurance or settlement claims. Taxpayers pick up those
costs.
4. The legal lottery for lawyers and
criminals in the United States
Here's and example.:
On January 26, 2012 CBS News had a segment on the latest scheme in Florida and
elsewhere where all participants in an "accident" are fraudsters. The states
most vulnerable to these latest schemes are the 12 "no-fault" insurance states.
These fake accident scams have exploded in this down economy.
Since there are so many fake medical clinics in Florida, many of these
so-called "rear-enders" are reported in Florida. Florida is also the most
troublesome state in the U.S. for filing millions of phony disability claims
that give recipients at any age Social Security monthly payments for life plus
Medicare coverage for life even if the faker is young such as 23 years of age
and a long expectation of life. The phony medical clinics of course get a big
cut of the pot. Some of the worst abusers of this fraud are Cuban immigrants in
south Florida, but there are tens of millions of other perfectly healthy people
in the United States who are now drawing lifetime Social Security benefit checks
plus Medicare medical insurance coverage originally intended for retirees over
age 65. The road to economic hell is paved with good intentions!
This is an an example of a fake auto accident scam that does not even require
a lawsuit in a no-fault insurance state"
All the fraudsters are recruited up front for small amounts of cash
Two cheap cars are damaged slightly
The cars are parked on an isolated road in such a manner that it looks
line one car hit the back end of the other car
The "accident" is phoned into the police
Before the police arrive five fraudsters with picture IDs enter the
front car
Five more enter the rear car
The police arrive and write up an accident report
The next day all 10 people are examined by a fraudulent medical clinic
that organized the scheme and supposedly finds soft tissue spinal damage in
each passenger
Insurance laws demand immediate payment to each passenger --- amounts
vary by state with $10,000 in Florida to $50,000 in New York
Nobody has to sue anybody for causing the accident
Most of the money is raked off by the fraudulent medical clinic that
organized and carried out the scheme, including recruiting of the passengers
There are of course variations in car accident scams, but these are often
more dangerous and may entail lengthy litigation.
"Scammers cash in on car 'accidents'" ---
Watch the video!
(CBS News)
In this tough economy, one type of insurance fraud
is more popular than ever. It involves scam artists who stage car crashes in
order to cash in. CBS News chief investigative correspondent Armen Keteyian
shows us how it works.
In Tampa, Florida, security cameras outside a
business captured an accident: an SUV "slammed" into a car.
But rewind the tape and you see the car was
actually driven into the middle of the street. The driver got out, a
collision, and then five people climbed into the damaged vehicle.
The passengers later claimed they were injured, to
rip off their car insurance company. Instead, they were arrested and
convicted of "staging" a car accident.
Ron Poindexter is the Florida director for the
National Insurance Crime Bureau, a not-for-profit agency funded by the
insurance industry to investigate fraud.
"It's a big problem nationally," he said. "In
Florida it's a huge, growing problem that's out of control."
Today 12 states have what's known as no-fault auto
insurance. That means no matter who's at fault, everyone involved in a car
accident is entitled to insurance money if they're hurt. In Florida, it's up
to $10,000 per person; in New York, it's $50,000 -- payouts so big, it's set
the stage for massive fraud and scammers like this man, who asked we conceal
his identity.
"First of all you gotta recruit people," said the
former scammer. "You have to look around for people who wanna do car
accidents. And then you have to ask them if they wanna be the hitter or the
one [who's] hit [by the] car in front."
"The hitter or the one that's getting hit," asked
Keteyian.
"Yeah," he said.
Here's how it works: It's run by organizers who own
bogus medical clinics. They in turn hire recruiters who find people willing
to stage accidents for money.
The people involved are then taken to the bogus
clinics. An undercover video, shot by Florida State investigators, shows
what typically happens next. Here, an investigator posing as an accident
"victim" was told to sign one insurance form after another for medical
treatment he'll never receive. He was then paid $700 in cash for faking the
accident and an injury.
"It's easy money like that. And it's a lot of
money," said the former scammer.
"Is it always the same thing, is it a back
problem?" asked Keteyian.
5. On November 22, 2009 CBS Sixty Minutes aired a video featuring experts
(including physicians) explaining how the single largest drain on the Medicare
insurance fund is keeping dying people hopelessly alive who could otherwise be
allowed to die quicker and painlessly without artificially prolonging life on
ICU machines.
"The Cost of Dying,"CBS Sixty Minutes Video, November 22, 2009
---
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
What is hypocritical is that most families only want to keep Granny alive
only when Medicare will pay. The instant Granny's estate will have to bear the
cost these hypocrites instantly agree to pull Granny off life support.
What is really sad is the way Republicans are standing in the way of making
rational cost-benefit decisions about dying by exploiting the "Kill Granny"
political strategy aimed at killing a government option in health care reform.
See the "Kill Granny" strategy at ---
www.defendyourhealthcare.us
Health-Care Taxes Put Spotlight
on Tax-Exempt Municipal Bonds The latest
wrinkle in the muni-verse: the health-care reform legislationsigned
by President Barack Obama on Mar. 23. One widely
discussed feature of the bill is a new Medicare tax that levies 3.8% on wages
and other kinds of income, starting in 2013. The tax would not apply to interest
on tax-exempt bonds and other forms of unearned income, such as any gain from
the sale of a principal residence, that are excluded from gross income under the
U.S. income tax code, according to a footnote in the Joint Committee on
Taxation's Technical Explanation of the revenue provisions of the Reconciliation
Act of 2010. That may seem like a no-brainer, but R.J. Gallo, senior portfolio
manager for muni bonds at Federated Investors in Pittsburgh, says he's received
calls from a few brokers asking whether munis would be exempt from the
additional tax.
David Bogoslaw, “Health-Care Taxes
Put Spotlight on Munis," Business Week, March 23. 2010 ---
http://www.businessweek.com/investor/content/mar2010/pi20100323_076507.htm?link_position=link1
This week it became impossible in Massachusetts for
small businesses and individuals to buy health-care coverage after Governor
Deval Patrick imposed price controls on premiums. Read on, because under
ObamaCare this kind of political showdown will soon be coming to an
insurance market near you.
The Massachusetts small-group market that serves
about 800,000 residents shut down after Mr. Patrick kicked off his
re-election campaign by presumptively rejecting about 90% of the premium
increases the state's insurers had asked regulators to approve. Health costs
have run off the rails since former GOP Governor Mitt Romney and Beacon Hill
passed universal coverage in 2006, and Mr. Patrick now claims price controls
are the sensible response to this ostensibly industry greed.
Yet all of the major Massachusetts insurers are
nonprofits. Three of largest four—Blue Cross Blue Shield, Tufts Health Plan
and Fallon Community Health—posted operating losses in 2009. In an emergency
suit heard in Boston superior court yesterday, they argued that the
arbitrary rate cap will result in another $100 million in collective losses
this year and make it impossible to pay the anticipated cost of claims. It
may even threaten the near-term solvency of some companies. So until the
matter is resolved, the insurers have simply stopped selling new policies.
A court decision is expected by Monday, but state
officials have demanded that the insurers—under the threat of fines and
other regulatory punishments—resume offering quotes by today and to revert
to year-old base premiums. Let that one sink in: Mr. Patrick has made the
health insurance business so painful the government actually has to order
private companies to sell their products (albeit at sub-market costs).
One irony is that Mr. Patrick's own Attorney
General and his insurance regulators have concluded—to their apparent
surprise—that the reason Massachusetts premiums are the highest in the
nation is the underlying cost of health care, not the supposed industry
abuses that Mr. Patrick and his political mentor President Obama like to
cite.
On top of that, like ObamaCare, integral to the
Massachusetts overhaul are mandates that require insurers to cover anyone
who applies regardless of health status or pre-existing conditions and to
charge everyone about the same rates. This allows people to wait until
they're about to incur major medical expenses before buying insurance and
transfer the costs to everyone else. This week Blue Cross Blue Shield
reported a big uptick in short-term customers who ran up costs more than
four times the average, only to drop the coverage within three months.
Last July, Charlie Baker detailed similar gaming at
Harvard Pilgrim, the health plan he used to run. Between April 2008 and
March 2009, about 40% of its new enrollees stayed with it for fewer than
five months and on average incurred costs about 600% higher than the company
would have otherwise expected.
Mr. Baker is almost certain to be Mr. Patrick's GOP
opponent in the fall election. The Governor's lurch toward price controls is
obviously part of a bid to tar the former CEO as an industry villain. David
Plouffe, the architect of Mr. Obama's Presidential campaign, has signed on
as a Patrick 2010 consultant. These kinds of collisions between politics and
health care are going to occur constantly across the country as ObamaCare
kicks in.
On paper, it looks as though the state has made
major progress in insuring the uninsured. From 6.4% of the population in
2006, the uninsured hover around 2% today. However, one
study found that nearly all of the newly insured
are either on Medicaid, in a state-subsidized plan or in an employer
subsidized plan. Only 7% of the newly insured, or about 30,000 people, are
directly paying their own way. It’s relatively easy to get people to sign up
for insurance when coverage is free or almost free. And it’s not very
expensive if you pay for the subsidies using money you would have spent
anyway on free care for those who can’t pay their medical bills.
But aside from moving money from one bucket to
another, have any real problems been solved? The evidence isn’t positive.
There are three major problems in health care all
over the world: cost, quality and access. Since nothing in the Massachusetts
reform addressed the problems of rising costs and less than adequate
quality, those problems have remained more or less unchanged. What about
access to care? Surely, newly insured people have more options in the
medical marketplace.
The trouble is that almost all of the newly insured
are in health plans that pay doctors and hospitals a lot less than what
private insurance pays. Like other places around the country, Massachusetts
Medicaid (called MassHealth) pays providers so little that patients often
turn to hospital emergency rooms and community health centers for their care
when they can’t find doctors who will see them. People in the newly
subsidized private insurance plans aren’t faring much better because these
plans pay only slightly more than what Medicaid pays.
The only solid analysis of what has actually
happened to patients at this point is
a study by Sharon Long and Paul Masi published in
the journal Health Affairs. According to the study:
• There has been no significant change in the
number of Massachusetts patients seeking care in hospital emergency rooms
since the reform was implemented, and there has actually been an increase in
emergency room use by people with incomes below 300% of the poverty level.
• There has been an increase in doctor visits but
no change in visits to specialists and an actual decrease in “medical tests,
treatment and follow up care,” which I assume is care for the chronically
ill.
• There has been no change in the percent of the
population reporting a failure to “get needed care for any reason within the
past 12 months” and remarkably that includes one-third of those with
incomes below 300% of the poverty level.
The problem with counting up doctor visits is that
a visit is not always a visit. Nationally, in the state children’s health
insurance program (CHIP) doctors have responded to an increase in the demand
for their services by scheduling more appointments, but
spending less time with patients. Also, you would
think that the Massachusetts reform would shift health care resources from
the general population to those with less income. But there is no evidence
that has happened. On measures of access, the gap between the poor plus the
near poor and everyone else appears not to have changed at all!
Ask yourself why you care whether other people have
health insurance? The most likely reason is that you want people to have
access to health care. But lack of access to care is a huge problem in
Massachusetts right now. As I
previously reported more than half of all family
doctors and more than half of all internists are not accepting new patients.
The wait is more than a month before a new patient is able to see a family
doctor, and the wait to see an internist averages 48 days. The average wait
in
Boston to see a family doctor is more than two
months.
What I am now reporting will be different than what
you may have read in the newspapers or at other health blogs. MIT Professor
Jon Gruber calls
Massachusetts an unqualified success, citing some of the very same studies I
am citing. But since Gruber was one of the architects of the Massachusetts
health reform, this is like a student grading his own exam.
What about elevating the Massachusetts reforms to
the national level in the form of ObamaCare? As I have previously reported,
ObamaCare is likely to result in less access to care for our
most vulnerable populations: the disabled and the
elderly on Medicare, the poor on Medicaid and the near poor in newly
subsidized private insurance. But that is only the beginning.
TOPICS: Advanced
Financial Accounting, Income Tax, Medicare, Tax Deferrals
SUMMARY: Mr.
Locke is the commerce secretary of the United States. In this opinion page
piece, he expresses support for the recently-passed health care reform act
as being "focused on three goals: protecting Americans' choice of doctors
and health plans, assuring quality and affordable health care for all
Americans, and reducing costs for families and businesses...[Mr. Locke notes
that], in recent days, critics have seized on a minor provision in the law
to suggest it's already increasing health-care costs for businesses. [He
argues that] a fair reading of this provision suggests that its actual
impact is quite modest, and far outweighed by the benefits for large
businesses..." stemming from the three benefits described above. Mr. Locke
focuses on large businesses because those are the firms reporting charges to
write off deferred tax assets in the first quarter of 2010 stemming from a
change instituted in the new law. The change eliminates deductibility of
prescription drug benefits provided to retirees if those benefits have been
subsidized by the federal government. "When the Medicare Part D prescription
drug bill passed in 2003, businesses were given a double subsidy to help
cover the cost of providing prescription drug coverage to their retirees.
The government picked up 28% of the cost of their retiree prescription drug
plans, and businesses were allowed to both exclude that 28% subsidy from
their income and at the same time deduct that subsidy from their income for
tax purposes... [The WSJ] reported...that while one company calculated a
$100 million hit to its first-quarter earnings, its actual cost after taxes
and subsidies, beginning in 2013, was closer to $7 million a year, or less
than 1% of its profits last year." That final reference is to AT&T's
write-off of deferred tax assets as described in the related article.
CLASSROOM APPLICATION: The
article is useful to discuss accounting for income taxes, deferred tax
assets, the lack of time value of money consideration in accounting for
income taxes, and the impact of a change in estimate, particularly on
quarterly reporting.
QUESTIONS:
1. (Introductory)
What is a deferred tax asset? When is such an asset recorded? When is its
value reduced by an allowance?
2. (Introductory)
What health care cost deduction resulted in companies such as AT&T,
Caterpillar, Inc., 3M Co. and others recording deferred tax assets? Explain
your understanding of this particular example of a deferred tax asset.
3. (Introductory)
What change in law was enacted with the health care reform, which required
the companies to write off these deferred tax assets?
4. (Advanced)
Why must companies record the entire amount of the write-off of deferred tax
assets in one quarter? In your answer, cite authoritative accounting
literature contained in the FASB codification which establishes these
requirements.
5. (Advanced)
Do you think that the amount of the Q1 2010 write-offs accurately measures
potential cost increases to U.S. businesses stemming from the health care
reform legislation? Support your answer.
Reviewed By: Judy Beckman, University of Rhode Island
President Obama began his campaign to reform the
American health-care system focused on three goals: protecting Americans'
choice of doctors and health plans, assuring quality and affordable health
care for all Americans, and reducing costs for families and businesses.
The new comprehensive health-care legislation meets
these goals, and will significantly benefit American businesses by slowing
and eventually reversing the tide of crippling premium increases washing
over our nation's employers.
These cost savings are real. They will grow over
time. And they will make U.S. businesses more competitive.
First, by drastically cutting the number of
uninsured, this law reduces the hidden tax of about $1,000 for family
coverage that those with insurance pay to cover the cost of the uninsured
who rely on emergency rooms for care.
Second, the law invests $5 billion in a new
reinsurance program for early retirees starting this year. For employers
paying for their retirees between ages 55-64, this provision will directly
reduce family premiums by as much as $1,200.
Third, the new law contains numerous reforms that a
2009 study by the Business Roundtable—an association of CEOs of leading U.S.
companies—says will help slow the growth rate of health costs over time.
It places a fee on insurance companies' most
expensive plans that independent experts agree will put downward pressure on
the long-term growth of health costs.
It empowers an Independent Payment Advisory Board
to keep Medicare cost growth in check and promote payment and health
delivery system reforms. And it realigns incentives to reward medical
providers for the value, not the volume, of their care.
Based on the midrange estimates of the nonpartisan
Congressional Budget Office (CBO), the present value benefit of the premium
reductions from these reforms over the next three decades is in excess of
$200 billion.
Add these system-wide reforms with measures like
the $40 billion in tax credits that will be available to about four million
small businesses over the next decade to help cover the cost of employee
health coverage, and what you have is a law that is unquestionably
pro-business and pro-jobs.
However, in recent days, critics have seized on a
minor provision in the law to suggest it's already increasing health-care
costs for businesses. A fair reading of this provision suggests that its
actual impact is quite modest, and far outweighed by the benefits for large
businesses outlined above.
Let's explain how this started. When the Medicare
Part D prescription drug bill passed in 2003, businesses were given a double
subsidy to help cover the cost of providing prescription drug coverage to
their retirees. The government picked up 28% of the cost of their retiree
prescription drug plans, and businesses were allowed to both exclude that
28% subsidy from their income and at the same time deduct that subsidy from
their income for tax purposes.
In 2013, that changes. Under the new law,
businesses will still get the same 28% subsidy, and it will still be tax
free. They just don't get to deduct the subsidy.
Seems reasonable, right? This is how virtually
every other federal subsidy for businesses and individuals is treated by the
IRS. Indeed, Donald Marron, acting CBO director for President George W.
Bush, put it this way: "[A]s the Joint Committee on Taxation recently noted,
that treatment is highly unusual. In my view, it's right that the recent
health legislation closed that loophole."
This change has garnered recent headlines because,
to comply with accounting laws, companies affected by the provision have
taken a one-time charge reflecting the loss of future tax deductions over
the decades-long duration of their retiree health-care plans. Critics have
seized on this accounting adjustment to suggest these costs—as much as $1
billion in one company's case—are going to place immediate and substantial
cost burdens on America's businesses.
This is disingenuous.
The actual cash flow impact of these provisions
begins in 2013, and is only a tiny fraction of the accounting charge-offs.
This newspaper reported last Friday that while one
company calculated a $100 million hit to its first-quarter earnings, its
actual cost after taxes and subsidies, beginning in 2013, was closer to $7
million a year, or less than 1% of its profits last year.
Credit Suisse's response to the tax controversy
was: "don't overreact to the hit on earnings." Morgan Stanley referred to it
as "noise" that would have "no impact whatsoever" on their view of this
earnings cycle. And UBS projected that the impact in virtually all cases
represented less than 1% of market capitalization for affected companies.
When you look past the hype and the overheated
rhetoric, the benefits of the health reforms for America's businesses large
and small far outweigh the impact of this small tax provision.
And while critics have rushed to highlight this
small accounting measure, they conveniently leave out the one fact on which
every serious health-care analyst agrees: The status quo was completely
unsustainable for American businesses.
The Business Roundtable study said that if current
cost trends continued through 2019, the total cost of employer and employee
premiums and out-of-pocket expenses would be 166% higher than it is today.
That would either force companies to decrease or
eliminate employee health-insurance benefits or subject them to
back-breaking costs that would make them less competitive in the global
marketplace.
The bill President Obama signed into law last week
helps avoid each of these equally unappealing options.
I understand that in these difficult economic
times, the potential for any additional expense is not welcomed by American
businesses. But in the long run, the health insurance reform law promises to
cut health-care costs for U.S. businesses, not expand them.
That's good for them. That's good for their
employees. That's good for America.
Mr. Locke is the commerce secretary of the United States.
Another One from That Ketz Guy (this time questioning the reasoning of our
Secretary of Commerce)
"Does Gary Locke Support Accounting Lies?" by: J. Edward Ketz, SmartPros,
April 2010 ---
http://accounting.smartpros.com/x69221.xml
I just don't understand the
current administration. You would think that after the last decade of
financial thievery and accounting mischief, the Obama administration would
not tolerate a return to such prevarications. But if one listens to his
Secretary of Commerce Gary Locke, that might not be the case.
Mr. Locke wrote an
op-ed (“Don’t
Believe the Writedown Hype”) that appeared in the
Wall Street Journal April 1, 2010. At least the date of publication was
appropriate.
He repeats the political
dogma that the recently passed healthcare act will reduce the number of
uninsured, it will invest $5 billion in a reinsurance program, it contains a
number of reforms that will slow the rate of increase in health care costs,
and it creates a board that will restrain Medicare costs. Locke then
asserts that these changes will benefit corporations as well as individuals.
While I believe these
assertions exaggerate the benefits of the bill and ignore its dysfunctional
components, for the sake of argument, let’s assume that Gary Locke is
correct. So what? Any cost reductions will be accounted for in the future
when the business enterprise actually enjoys cost reductions. Accountants
don’t dream of fewer expenses and then book them. We wait for history to
prove their validity and to correct any errors.
Locke then criticizes
commentators for focusing on a “minor” provision in the legislation that
increases health-care costs. He then asserts without proof that the actual
impact will be “quite modest.” What puffery!
What motivated this
discussion was various 8-Ks issued by corporate America. On March 24, AT&T
informed investors that it would take a charge of about $1 billion.
Specifically, it stated:
Included among the major
provisions of the law is a change in the tax treatment of the Medicare Part
D subsidy. AT&T… intends to take a non-cash charge of approximately $1
billion in the first quarter of 2010 to reflect the impact of this change.
As a result of this legislation, including the additional tax burden, AT&T
will be evaluating prospective changes to the active and retiree health care
benefits offered by the company.
I find it interesting that
Locke calls this a “minor” provision but AT&T calls it “major” because it
involves an expense of $1 billion. I guess it depends on one’s
perspective. To AT&T’s investors, $1 billion is probably significant as it
reduces quarterly earnings by one-third. But to the government which
creates budget deficits of trillions of dollars per year, maybe $1 billion
is immaterial.
I would think that the
administration would applaud the honesty by AT&T’s managers. FAS 106
specifies the accounting for other postemployment benefits (OPEBs),
including their tax effects. As this legislation removes a tax subsidy from
corporations (I’ll leave it to others to debate the merits of this part of
the bill), the firms do indeed incur higher healthcare costs. And these
costs are immediate and persistent. (There also is interaction with FAS
109, accounting for deferred taxes, but that need not concern us.)
The investment community
needs honesty and I hope the administration does too. Accordingly, Mr.
Locke should not be so critical of the immediate recognition of additional
costs by corporations which are real and immediate and should be recognized
in income statements. And he should not be pushy for the recognition of
cost reductions until they materialize—if they in fact materialize.
Other companies are also
issuing 8-Ks and announcing similar writedowns: Caterpillar, $100 million;
Deere, $150 million; and Boeing, $150 million. Some estimate that when all
is said and done, such writedowns will amount to $15 billion or so.
Additionally, some corporations are doubtless considering whether to reduce
the OPEBs they offer employees. I would not characterize these effects as
“quite modest.”
On March 26, Henry Waxman
announced that he would require corporate executives to appear before his
committee on April 21 to determine whether they are playing politics through
these 8-Ks. Unless Mr. Locke supports accounting lies, he too should make
an appearance and explain to Mr. Waxman how investors and creditors
appreciate more honesty and transparency in the accounting reports. Of
course, it is possible that some members of Congress would prefer accounting
shenanigans if they don’t reveal some of the costs of the recently passed
legislation.
Gary Locke admonishes
readers to “look past the hype and the overheated rhetoric.” I suggest he
read his own sentence. I also suggest he include investors and creditors in
the business community, for without their capital, the business of America
ceases to operate. As Commerce Secretary, he should applaud the recent 8-Ks
that managers are releasing. The information is invaluable to investors and
creditors.
A study of Medicare patients shows that costlier,
more complex spinal fusion surgeries are on the rise — and sometimes done
unnecessarily — for a common lower back condition caused by aging and
arthritis.
What's more alarming is that the findings suggest
these more challenging operations are riskier, leading to more complications
and even deaths.
"This is exactly what the health care debate has
been dancing around," said Dr. Eugene Carragee of Stanford University
Medical Center.
"You have one kind of operation that could cost
$20,000 and another that could cost $80,000 and there's not good evidence
the expensive one is being used appropriately in the majority of cases,"
Carragee said.
Add to that the expense for patients whose problems
after surgery send them back to the hospital or to a nursing home and
"that's not a trivial amount of money" for Medicare, said Carragee. He wrote
an accompanying editorial in the Journal of the American Medical Association
where the federally funded study appears Wednesday.
The cost to Medicare, just for the hospital charges
for the three types of back surgery reviewed is about $1.65 billion a year,
according to the researchers.
All the patients in the study had stenosis in their
lower backs, a painful squeezing in the spine that's most common in people
over 50. The researchers compared the risks for three different types of
surgery for the condition: decompression, simple fusion and complex fusion.
"All operations aren't the same and some seem to be
associated with higher complication rates than others," said lead author Dr.
Richard Deyo of Oregon Health and Science University in Portland. "It's not
necessarily true that the more aggressive surgery is better, at least in
terms of safety."
There's little agreement about the best way to
treat chronic lower back pain, and much depends on what's causing the pain.
Alternatives to complicated surgery Patients should
ask their doctors about alternatives to complicated operations, Deyo said.
Could steroid injections and physical therapy be tried? Would a simple
decompression procedure be as helpful as a spinal fusion and with less risk?
In a decompression procedure, the simplest method
in the Medicare study, a surgeon cuts away part of the bone that's painfully
pressing on nerves. It can cost about $30,000 in hospital and surgeon fees.
For a fusion, a surgeon binds two or more vertebrae
together using a bone graft, with or without plates and screws. The
researchers defined a complex fusion as one involving three or more
vertebrae or more than one side of the spine. Fusions cost $60,000 to
$90,000.
The researchers analyzed data on more than 32,000
Medicare patients who had one of the three types of surgeries in 2007.
Higher death rates About 5 in 100 patients who had
simple or complex fusions suffered major complications such as stroke
compared to 2 in 100 with decompressions. The risk of death within 30 days
after surgery was different too: 6 in 1,000 for complex fusions compared
with 5 in 1,000 for simple fusions and 3 in 1,000 for decompressions.
The study didn't address how successful the various
types of surgeries were at relieving pain.
More than half the patients who had complex fusions
had a simple stenosis, which usually calls for decompression alone. They did
not have the curvature of the spine or a slipped vertebra — additional
conditions that might suggest a fusion is needed. There's not much evidence
for doing a complex fusion for a person with simple stenosis, Carragee and
other experts said.
"It certainly looks like there's more complex
surgery being done than we have very good evidence to support," Carragee
said.
Allegations of kickbacks Rates of complex fusions
in Medicare patients rose 15-fold from 2002 to 2007, while decompressions
and simple fusions declined, the study found. Although the overall procedure
rate fell, hospital charges grew 40 percent.
Aggressive marketing of devices used in complex
fusions is likely playing a role in the increase, Deyo said. The marketing
includes ads in medical journals and lectures by surgeons on the payroll of
device manufacturers.
Allegations of kickbacks to spine surgeons for
using products and questionable financial arrangements to doctors as
consultants have plagued the multibillion-dollar industry. One company,
Medtronic Inc., reached a $40 million settlement with the U.S. Justice
Department in a whistleblower case that included allegations the company
paid doctors to use its spine surgery products. The company denied any
wrongdoing.
Jensen Comment
Although I don't dispute the findings of the above study, there certainly
are exceptions. The prognosis was that my wife would die unless she had some
of her spinal fusions, especially surgery Number 8 when she was so bent
forward that she was crushing her abdominal organs. She now has metal
bracing on her spine from her neck to her hips ---
http://faculty.trinity.edu/rjensen/Erika2007.htm
Note that I’m not in favor of repealing the recent legislation. But I am in
favor of adding a public option so long as taxation and insurance premiums are
added to fully cover the annual costs of health insurance. And let's stop the BS
on the left and on the right side of this debate.
This is a long and somewhat involved followup to my
previous post on ObamaCare. . For those of you
with O.A.D.D. (online attention-deficit disorder), I’ve provided an express
and local version.
EXPRESS:
The official projections for health-care reform,
which show it greatly reducing the number of uninsured and also reducing the
budget deficit, are simply not credible. There are three basic issues.
The cost and revenue projections rely on
unrealistic assumptions and accounting tricks. If you make some adjustments
for these, the cost of the plan is much higher.
The so-called “individual mandate” isn’t really a
mandate at all. Under the new system, many young and healthy people will
still have a strong incentive to go uninsured.
Once the reforms are up and running, some employers
will have a big incentive to end their group coverage plans and dump their
employees onto the taxpayer-subsidized individual plans, greatly adding to
their cost.
LOCAL:
For future reference (or possibly to roll up and
beat myself over the head with in my dotage) I have filed away a copy the
latest analysis (pdf) of health-care reform from the Congressional Budget
Office. By 2019, it says, the bills passed by the House and Senate will have
cut the number of uninsured Americans by thirty-two million, raised the
percentage of people with some form of health-care coverage from
eighty-three per cent to ninety-four per cent, and reduced the federal
deficit by a cumulative $143 billion. If all of these predictions turn out
to be accurate, ObamaCare will go down as one of the most successful and
least costly government initiatives in history. At no net cost to the
taxpayer, it will have filled a gaping hole in the social safety net and
solved a problem that has frustrated policymakers for decades.
Does Santa Claus live after all? According to the
C.B.O., between now and 2019 the net cost of insuring new enrollees in
Medicaid and private insurance plans will be $788 billion, but other
provisions in the legislation will generate revenues and cost savings of
$933 billion. Subtract the first figure from the second and—voila!—you get
$143 billion in deficit reduction.
The first objection to these figures is that the
great bulk of the cost savings—more than $450 billion—comes from cuts in
Medicare payments to doctors and other health-care providers. If you are
vaguely familiar with Washington politics and the letters A.A.R.P. you might
suspect that at least some of these cuts will fail to materialize. Unlike
some hardened skeptics, I don’t think none of them will happen. One part of
the reform involves reducing excessive payments that the Bush Administration
agreed to when it set up the Medicare Advantage program in 2003. If Congress
remains under Democratic control—a big if, admittedly—it will probably enact
these changes. But that still leaves another $300 billion of Medicare
savings to be found.
The second problem is accounting gimmickry. Acting
in accordance with standard Washington practices, the C.B.O. counts as
revenues more than $50 million in Social Security taxes and $70 billion in
payments towards a new home-care program, which will eventually prove very
costly, and it doesn’t count some $50 billion in discretionary spending.
After excluding these pieces of trickery and the questionable Medicare cuts,
Douglas Holtz-Eakin, a former head of the C.B.O., has calculated that the
reform will actually raise the deficit by $562 billion in the first ten
years. “The budget office is required to take written legislation at face
value and not second-guess the plausibility of what it is handed,” he wrote
in the Times. “So fantasy in, fantasy out.”
Holtz-Eakin advised John McCain in 2008, and he has
a reputation as a straight shooter. I think the problems with the C.B.O.’s
projections go even further than he suggests. If Holtz-Eakin’s figures
turned out to be spot on, and over the next ten years health-care reform
reduced the number of uninsured by thirty million at an annual cost of $56
billion, I would still regard it as a great success. In a $15 trillion
economy—and, barring another recession, the U.S. economy should be that
large in 2014—fifty or sixty billion dollars is a relatively small sum—about
four tenths of one per cent of G.D.P., or about eight per cent of the 2011
Pentagon budget.
My two big worries about the reform are that it
won’t capture nearly as many uninsured people as the official projections
suggest, and that many businesses, once they realize the size of the
handouts being offered for individual coverage, will wind down their group
plans, shifting workers (and costs) onto the new government-subsidized
plans. The legislation includes features designed to prevent both these
things from happening, but I don’t think they will be effective.
Consider the so-called “individual mandate.” As a
strict matter of law, all non-elderly Americans who earn more than the
poverty line will be obliged to obtain some form of health coverage. If they
don’t, in 2016 and beyond, they could face a fine of about $700 or 2.5 per
cent of their income—whichever is the most. Two issues immediately arise.
Even if the fines are vigorously enforced, many
people may choose to pay them and stay uninsured. Consider a healthy single
man of thirty-five who earns $35,000 a year. Under the new system, he would
have a choice of enrolling in a subsidized plan at an annual cost of $2,700
or paying a fine of $875. It may well make sense for him to pay the fine,
take his chances, and report to the local emergency room if he gets really
sick. (E.R.s will still be legally obliged to treat all comers.) If this
sort of thing happens often, as well it could, the new insurance exchanges
will be deprived of exactly the sort of healthy young people they need in
order to bring down prices. (Healthy people improve the risk pool.)
If the rules aren’t properly enforced, the problem
will be even worse. And that is precisely what is likely to happen. The
I.R.S. will have the administrative responsibility of imposing penalties on
people who can’t demonstrate that they have coverage, but it won’t have the
legal authority to force people to pay the fines. “What happens if you don’t
buy insurance and you don’t pay the penalty?” Ezra Klein, the Washington
Post’s industrious and well-informed blogger, asks. “Well, not much. The law
specifically says that no criminal action or liens can be imposed on people
who don’t pay the fine.”
So, the individual mandate is a bit of a sham.
Generous subsidies will be available for sick people and families with
children who really need medical care to buy individual coverage, but
healthy single people between the ages of twenty-six and forty, say, will
still have a financial incentive to remain outside the system until they get
ill, at which point they can sign up for coverage. Consequently, the number
of uninsured won’t fall as much as expected, and neither will prices.
Without a proper individual mandate, the idea of universality goes out the
window, and so does much of the economic reasoning behind the bill.
The question of what impact the reforms will have
on existing insurance plans has received even less analysis. According to
President Obama, if you have coverage you like you can keep it, and that’s
that. For the majority of workers, this will undoubtedly be true, at least
in the short term, but in some parts of the economy, particularly industries
that pay low and moderate wages, the presence of such generous subsidies for
individual coverage is bound to affect behavior eventually. To suggest this
won’t happen is to say economic incentives don’t matter.
Take a medium-sized firm that employs a hundred
people earning $40,000 each—a private security firm based in Atlanta,
say—and currently offers them health-care insurance worth $10,000 a year, of
which the employees pay $2,500. This employer’s annual health-care costs are
$750,000 (a hundred times $7,500). In the reformed system, the firm’s
workers, if they didn’t have insurance, would be eligible for generous
subsidies to buy private insurance. For example, a married forty-year-old
security guard whose wife stayed home to raise two kids could enroll in a
non-group plan for less than $1,400 a year, according to the Kaiser Health
Reform Subsidy Calculator. (The subsidy from the government would be
$8,058.)
In a situation like this, the firm has a strong
financial incentive to junk its group coverage and dump its workers onto the
taxpayer-subsidized plan. Under the new law, firms with more than fifty
workers that don’t offer coverage would have to pay an annual fine of $2,000
for every worker they employ, excepting the first thirty. In this case, the
security firm would incur a fine of $140,000 (seventy times two), but it
would save $610,000 a year on health-care costs. If you owned this firm,
what would you do? Unless you are unusually public spirited, you would take
advantage of the free money that the government is giving out. Since your
employees would see their own health-care contributions fall by more than
$1,100 a year, or almost half, they would be unlikely to complain. And even
if they did, you would be saving so much money you afford to buy their
agreement with a pay raise of, say, $2,000 a year, and still come out well
ahead.
Even if the government tried to impose additional
sanctions on such firms, I doubt it would work. The dollar sums involved are
so large that firms would try to game the system, by, for example, shutting
down, reincorporating under a different name, and hiring back their
employees without coverage. They might not even need to go to such lengths.
Firms that pay modest wages have high rates of turnover. By simply refusing
to offer coverage to new employees, they could pretty quickly convert most
of their employees into non-covered workers.
The designers of health-care reform and the C.B.O.
are aware of this problem, but, in my view, they have greatly underestimated
it. According to the C.B.O., somewhere between eight and nine million
workers will lose their group coverage as a result of their employers
refusing to offer it. That isn’t a trifling number. But the C.B.O. says it
will be largely offset by an opposite effect in which employers that don’t
currently provide health insurance begin to offer it in response to higher
demand from their workers as a result of the individual mandate. In this
way, some six to seven million people will obtain new group coverage, the
C.B.O. says, so the overall impact of the changes will be minor.
The C.B.O.’s analysis can’t be dismissed out of
hand, but it is surely a best-case scenario. Again, I come back to where I
started: the scale of the subsidies on offer for low and moderately priced
workers. If economics has anything to say as a subject, it is that you can’t
offer people or firms large financial rewards for doing something—in this
case, dropping their group coverage—and not expect them to do it in large
numbers. On this issue, I find myself in agreement with Tyler Cowen and
other conservative economists. Over time, the “firewall” between the
existing system of employer-provided group insurance and taxpayer-subsidized
individual insurance is likely to break down, with more and more workers
being shunted over to the public teat.
At that point, if it comes, politicians of both
parties will be back close to where they began: searching for health-care
reform that provides adequate coverage for all at a cost the country can
afford. What would such a system look like? That is a topic for another
post, but I don’t think it would look much like Romney-ObamaCare.
"SignThe first big idea that he stresses is the
creation of a new agency to spearhead innovation and scale up any of the
many pilot schemes contained in the bills that manage to reform delivery or
payment systems. It is true that the reform effort began with earnest intent
to “bend the cost curve”. Alas, explains Mark McClellan of the Brookings
Institution, the most meaningful proposals have since been watered down or
delayed.
The second lever of change that Mr Orszag says is
underappreciated is an excise tax introduced on the most expensive (or
“Cadillac”) insurance plans. Most economists like this idea, as it is likely
to discourage excessive consumption of health care.
Unfortunately, because of political pressure from
labour unions and other groups, the Cadillac tax has been diluted, and
delayed until 2018. Sceptics wonder if a future Congress will really
implement this tax when the time comes. Mr Orszag is right that, if
implemented, this provision will represent an important lever of cost
control. But it’s a big “if”.
The third and strongest argument Mr Orszag makes is
for the potential of an independent payment-advisory board on Medicare
spending. Under the new law this group is to make recommendations to
Congress on how to reduce the rate of growth in spending per head in
Medicare if that expenditure exceeds a target figure.
Sceptics abound. Yes, the approach succeeded when
used by the Pentagon to decide which military bases to shut down. But an
earlier version of this idea, known as MedPAC, flopped because Congress
simply ignored even worthy ideas that proved politically inconvenient. And
the new law carves out a ten-year exemption for hospitals—appalling, when
one considers that runaway costs and misaligned incentives in hospitals lie
at the very heart of the cost problem. But Mr Orszag believes this approach
will help in two ways: it insulates tough decisions from politics, and it
encourages ongoing reform rather than one-shot heroics. Critics say that is
a lot of faith to put in a weakened body.
All this points to the only certain thing about
Obamacare: that this is just another episode in the long saga of health
reform. Indeed, by adding tens of millions of people to an unreformed and
unsustainably expensive health system, this reform makes it all the more
urgent to tackle the question of cost.
On that, at least, left and right seem to agree.
Paul Krugman, an economics professor at Princeton and a liberal booster of
reform, wrote on the eve of the votes: “There is, as always, a tunnel at the
end of the tunnel: we’ll spend years if not decades fixing this thing.”
Robert Moffit of the Heritage Foundation, a conservative think-tank opposed
to the effort, agrees, albeit in darker terms: “This marks the beginning of
the next phase of this hundred years war.”
Let’s start with Obama’s big lie. It is absolutely
indisputable that taxes are being raised on people whose income is below the
magical figure of $250,000. The way it’s done is by reducing the
medical-expense deduction. Currently, you’re allowed to deduct out-of-pocket
medical expenses that exceed 7.5% of your income, but the new law changes
that to 10%. This means if your income is $100,000, and you paid $10,000 in
hospital bills, you will lose a $2,500 deduction and probably pay about $700
in additional taxes. In a country in which only 12% of health care expenses
are paid by the individuals who actually receive the services, this increase
will just encourage more people to shift those costs to third-party payers.
Then there is the familiar political trick; i.e.,
claiming that your taxes are not being raised, but at the same time
increasing taxes on companies that sell things to you. Of course, those
companies just pass the cost along to you. Under this “reform,” new fees and
taxes are being imposed upon three medical industry groups: health insurers,
medical device manufacturers, and pharmaceutical companies. The insidious
objective here is not just to hide the real cost of this new plan, but to
encourage exasperated Americans – who ultimately have to pay these rising
costs – to view government-run health care more favorably.
What the bill mandates is utterly surreal. For
example, there is a $2 billion annual tax imposed on medical device
companies through 2017, increasing to $3 billion thereafter. Each of these
firms must report their sales to the Treasury, who will then apportion the
$2 billion tax amongst the various companies. Since no one knows exactly how
many medical devices are sold in America, the companies haven’t the
slightest clue what their cost per device will be. Let’s say 10 million are
sold in the first year – that would mean a fee of $200 per device. But what
if sales are driven down because of these higher costs (not to mention the
real possibility that some of the companies will go out of business because
of these huge new fees)? What if only 7 million devices were sold in the
second year? The tax per device would now be $285. That would not only drive
up the price of devices again, but – more importantly – it will profoundly
discourage product innovation and investment because no one would be able to
anticipate their gross production costs.
The elimination of one specific deduction has
recently received a lot of media coverage. Companies that provided a
prescription drug benefit to their retired employees were until now able to
deduct 28% of the cost. It is estimated that this exemption saved taxpayers
about $544 per person compared to the price of Medicare Part D for the same
drug benefit. Now Congress has told corporations that you can pay the
benefit, but you cannot deduct the costs, which is why all these large
companies are taking massive loss write-offs. How long will it be before the
companies stop providing this benefit? Believe me – when this happens, there
will be a further outcry from the Left; the demagogues will point fingers at
private industry; and, again the argument will be made for a totally
government-run health system.
There’s also a new requirement that companies with
50 employees provide health insurance. What happens to the employer who has
48, then 49 employees? They have to decide whether to expand and be
harnessed with the new costs and administrative requirements, or stop the
growth of their company. Talk about a job-killing provision.
Nancy Pelosi stated that this bill would create 4
million new jobs – 400,000 in the first year alone. It’s pretty clear that
these jobs will all be the new government employees necessary to oversee
these mandates, and administrative employees needed by businesses to comply.
Not one productive job will be created, but thousands – maybe tens of
thousands – will be lost or shipped overseas. The people of India are
already salivating. If you thought our health care system hindered our
international competitiveness before, just wait until Health Care Reform is
fully implemented.
The only saving grace is that the bill takes on a
favorite constituency of the Democrats – Hollywood. The bill adds a 10% tax
on tanning salons. No doubt, that should balance the budget.
An expansion in government power has a way of
creating its own captured interests, and ObamaCare is proving to be no
exception. Whatever its views before the law passed, the health-care
industry is now mobilizing en masse to become its biggest public advocate.
America's Health Insurance Plans, the insurance
industry trade group, confirmed this week that it will participate in Enroll
America, a new nonprofit founded by liberal activist Ron Pollack and his
health-care pressure group, Families USA. Mr. Pollack describes the program
as a 50-state effort to fully and quickly vest every American in ObamaCare's
many programs, subsidies and benefits. He's confidently promising to raise
"tens of millions of dollars per year," presumably from AHIP's members, as
well as from the drug and hospital industries.
For industry players, this is political protection
money against Democrats who, thanks to ObamaCare, will now have the power to
effectively set insurance rates. Like the Italian grocer who had to hire Don
Fanucci's nephew in Godfather II, AHIP CEO Karen Ignagni is hoping this and
other offerings will deter Democrats from making an example of her members.
Good luck.
The insurance industry acquiesced to multiple and
expensive new ObamaCare regulations in the belief the "individual mandate"
will create healthy new customers to cover the costs. But Democrats watered
down the mandate's tax penalty, so millions of those customers may wait to
buy insurance until they are already sick. Mrs. Ignagni needs Mr. Pollack to
help lure Americans to her members' doors.
All of which illustrates why it is so hard to
repeal entitlements. As Nobel economist Gary Becker noted in our March 27
Weekend Interview, entitlements create their own political barricade of
interest groups that grow to depend on them. So, like AARP, the health
industry will now become an arm of the government (and the Democratic
Party), with a self-interest in defending ObamaCare. Powerful government
always benefits the powerful, which is something to remember when you hear
from Enroll America.
One of the prime arguments used to sell ObamaCare
was that it would reverse the financial crisis and save the country a
gazillion dollars — with benefits beginning in its first year. Sadly,
somebody’s arm got twisted to produce Congressional Budget Office (CBO)
figures — nicely timed for the House vote — to supposedly back up the
Democrats’ arguments. Nobody seemed to understand that the CBO figures were
just estimates. Yet, as they say, the devil is in the details. The CBO
details clearly indicate that having the government’s role expanded to
provide universal coverage will significantly increase costs, as well as
premiums and taxes. Worse, the CBO notes that most of the current costs of
the U.S. world-class health care are from providing new, cutting-edge
treatments and ever-expanding medical technologies. They add, “Given the
central role of medical technology in cost growth, reducing or slowing
spending over the long term would probably require decreasing the pace of
adopting new treatments and procedures or limiting the breadth of their
application.”
How’s that for dispelling the claims that quality
will remain high, rationing won’t happen, and technology will continue to
expand while costs go down? The real life record of government control is a
long way from matching the soaring rhetoric that has dominated the media
coverage of the health care debate. Further, in those countries where
massive government intervention has replaced free market enterprise, the
reality is far short of the utopian promises and the policies that have been
spun out so recklessly and misleadingly. Price controls, inevitably, limit
innovation. If that happens to medical research and technological
advancement, the results will be disastrous.
Continued in article
Updates on March 30, 2010
In the media we are now being bombarded with all the benefits of
the new health care plan for young and old and poor. What is never mentioned is
that over a hundred million people getting new or expanded coverage are paying
zero for it (except possibly in having less chance for a job in small and medium
sized businesses). In Canada virtually all people getting universal health care
insurance are paying something for their coverage. In the United States we've
avoided such taxes by putting the bill on our badly overburdened Chinese credit
cards.
Americans at all levels of
income should have to agree to much higher taxes
The average Canadian family
spends more money on taxes than on necessities of life such as food, clothing,
and housing, according to a study from The Fraser Institute, an independent
research organization with offices across Canada. The Canadian Consumer Tax
Index, 2007, shows that even though the income of the average Canadian family
has increased significantly since 1961, their total tax bill has increased at a
much higher rate. The Fraser Institute,
April 16, 2007 ---
http://www.newswire.ca/en/releases/archive/April2007/16/c5234.html In 2007
tax revenue in Canada per capita was $12,820 from OECD tables ---
http://stats.oecd.org/Index.aspx?DataSetCode=CSP2009
Instead We Have a Job Killer in Action
Meanwhile, John DiStaso of the New Hampshire Union Leader reported this week
that ObamaCare could cost the Granite State's major ski resorts as much as $1
million in fines, because they hire large numbers of seasonal workers without
offering health benefits. "The choices are pretty clear, either increase prices
or cut costs, which could mean hiring fewer workers next winter," he wrote.
"The ObamaCare Writedowns," The Wall Street Journal, March
27, 2010 ---
http://online.wsj.com/article/SB20001424052748704100604575146002445136066.html#mod=todays_us_opinion
Jensen Comment
I may be justice that small businesses have to pay more for the health insurance
of seasonal employees, but the net result will be much more unemployment and
lower opportunity for teens to find seasonal employment. Are we forcing idleness
on teens willing to work part-time and seasonal jobs? How much will this hurt
their quest for working to help support their advanced training and education?
So says Gary Becker when asked if the financial
collapse, the worst recession in a quarter of a century, and the rise of an
administration intent on expanding the federal government have prompted him
to reconsider his commitment to free markets.
Mr. Becker is a founder, along with his friend and
teacher the late Milton Friedman, of the Chicago school of economics. More
than four decades after winning the John Bates Clark Medal and almost two
after winning the Nobel Prize, the 79-year-old occupies an unusual position
for a man who has spent his entire professional life in the intensely
competitive field of economics: He has nothing left to prove. Which makes it
all the more impressive that he works as hard as an associate professor
trying to earn tenure. He publishes regularly, carries a full-time teaching
load at the University of Chicago (he's in his 32nd year), and engages in a
running argument with his friend Judge Richard Posner on the "Becker-Posner
Blog," one of the best-read Web sites on economics and the law.
When his teaching schedule permits, Mr. Becker
visits the Hoover Institution, the think tank at Stanford where he has been
a fellow since 1988. The day he and I meet in his Hoover office, Mr. Becker
has already attended a meeting with former Treasury Secretary Hank Paulson
and spent several hours touring Apple headquarters down the road in
Cupertino with his wife, Guity Nashat, a historian of the Middle East, and
their grandson. "I guess you'd call our grandson a computer whiz," he
explains proudly. "He's just 14, but he has already sold a couple of apps."
View Full Image
Zina Saunders I begin with the obvious question.
"The health-care legislation? It's a bad bill," Mr. Becker replies. "Health
care in the United States is pretty good, but it does have a number of
weaknesses. This bill doesn't address them. It adds taxation and regulation.
It's going to increase health costs—not contain them."
Drafting a good bill would have been easy, he
continues. Health savings accounts could have been expanded. Consumers could
have been permitted to purchase insurance across state lines, which would
have increased competition among insurers. The tax deductibility of
health-care spending could have been extended from employers to individuals,
giving the same tax treatment to all consumers. And incentives could have
been put in place to prompt consumers to pay a larger portion of their
health-care costs out of their own pockets.
"Here in the United States," Mr. Becker says, "we
spend about 17% of our GDP on health care, but out-of-pocket expenses make
up only about 12% of total health-care spending. In Switzerland, where they
spend only 11% of GDP on health care, their out-of-pocket expenses equal
about 31% of total spending. The difference between 12% and 31% is huge.
Once people begin spending substantial sums from their own pockets, they
become willing to shop around. Ordinary market incentives begin to operate.
A good bill would have encouraged that."
Despite the damage this new legislation appears
certain to cause, Mr. Becker believes we're probably stuck with it.
"Repealing this bill will be very, very difficult," he says. "Once you've
got a piece of legislation in place, interest groups grow up around it. Look
at Medicare and Medicaid. Originally, the American Medical Association
opposed Medicare and Medicaid. Then the AMA came to see them as a source of
demand for physicians' services. Today the AMA supports Medicare and
Medicaid as staunchly as anyone. Something like that will happen with this
new legislation."
Bad legislation, maintained by self-seeking
interest groups. Back in 1982, I remind Mr. Becker, the economist Mancur
Olson published a book, "The Rise and Decline of Nations," predicting just
that trend. Over time, Olson argued, interest groups would form to press for
policies that would almost invariably prove protectionist, redistributive or
antitechnological. Policies, in a word, that would inhibit economic growth.
Yet since the benefits of such policies would accrue directly to interest
groups while the costs would be spread across the entire population, very
little opposition to such self-seeking would ever develop. Interest
groups—and bad policies—would proliferate, and the nation would stagnate.
Olson may have sketched his portrait during the
1980s, but doesn't it display a remarkable likeness to the United States
today? Mr. Becker thinks for a moment, swiveling toward the window. Then he
swivels back. "Not necessarily," he replies.
"The idea that interest groups can derive specific,
concentrated benefits from the political system—yes, that's a very important
insight," he says. "But you can have competing interest groups. Look at the
automobile industry. The domestic manufacturers in Detroit want
protectionist policies. But the auto importers want free trade. So they
fight it out. Now sometimes in these fights the dark forces prevail, and
sometimes the forces of light prevail. But if you have competing interest
groups you don't end up with a systematic bias toward bad policy."
Mr. Becker places his hands behind his head. Once
again, he reflects, then smiles wryly. "Of course that doesn't mean there
isn't any systematic bias toward bad policy," he says. "There's one bias
that we're up against all the time: Markets are hard to appreciate."
Capitalism has produced the highest standard of
living in history, and yet markets are hard to appreciate? Mr. Becker
explains: "People tend to impute good motives to government. And if you
assume that government officials are well meaning, then you also tend to
assume that government officials always act on behalf of the greater good.
People understand that entrepreneurs and investors by contrast just try to
make money, not act on behalf of the greater good. And they have trouble
seeing how this pursuit of profits can lift the general standard of living.
The idea is too counterintuitive. So we're always up against a kind of
in-built suspicion of markets. There's always a temptation to believe that
markets succeed by looting the unfortunate."
As he speaks, Mr. Becker appears utterly at ease.
He wears loose-fitting clothes and slouches comfortably in his chair. His
hair, wispy and white, sets off his most striking feature—penetrating eyes
so dark they seem nearly black. Yet those dark eyes display not foreboding,
but contentment. He does not have the air of a man contemplating national
decline.
I read aloud from an article by historian Victor
Davis Hanson that had appeared in the morning newspaper. "[W]e are in
revolutionary times," Mr. Hanson argues, "in which the government will grow
to assume everything from energy to student loans." Next I read from a
column by economist Thomas Sowell. "With the passage of the legislation
allowing the federal government to take control of the medical system," Mr.
Sowell asserts, "a major turning point has been reached in the dismantling
of the values and institutions of America."
"They're very eloquent," Mr. Becker replies, his
equanimity undisturbed. "And maybe they're right. But I'm not that
pessimistic." The temptation to view markets with suspicion, he explains, is
just that: a temptation. Although voters might succumb to the temptation
temporarily, over time they know better.
"One of the points Secretary Paulson made earlier
today was how outraged—how unexpectedly outraged—the American people became
when the government bailed out the banks. This belief in individual
responsibility—the belief that people ought to be free to make their own
decisions, but should then bear the consequences of those decisions—this
remains very powerful. The American people don't want an expansion of
government. They want more of what Reagan provided. They want limited
government and economic growth. I expect them to say so in the elections
this November."
Even if ordinary Americans still want limited
government, I ask, what about those who dominate the press and universities?
What about the molders of received opinion who claim that the financial
crisis marked the demise of capitalism, rendering the Chicago school
irrelevant?
"During the financial crisis," he replies, "the
government and markets—or rather, some aspects of markets—both failed."
The Federal Reserve, Mr. Becker explains, kept
interest rates too low for too long. Freddie Mac and Fannie Mae made the
mistake of participating in the market for subprime instruments. And as the
crisis developed, regulators failed to respond. "The Fed and the Treasury
didn't see the crisis coming until very late. The SEC didn't see it at all,"
he says.
"The markets made mistakes, too. And some of us who
study the markets made mistakes. Some of my colleagues at Chicago probably
overestimated the ability of the Fed to smooth disruptions. I didn't write
much about the Fed, but if I had I would probably have overestimated the Fed
myself. As the banks developed new instruments, economists paid too little
attention to the systemic risks—the risks the instruments posed for the
whole financial system—as opposed to the risks they posed for individual
institutions.
"I learned from Milton Friedman that from time to
time there are going to be financial problems, so I wasn't surprised that we
had a financial crisis. But I was surprised that the financial crisis
spilled over into the real economy. I hadn't expected the crisis to become
that bad. That was my mistake."
Once again, Mr. Becker reflects. "So, yes, we
economists made mistakes. But has the experience of the past few years
invalidated the finding that markets remain the most efficient means for
producing economic growth? Not in any way.
"Look at growth in developed countries since the
Second World War," he continues. "Even after you take into account the
various recessions, including this one, you still end up with a good record.
So even if a recession as bad as this one were the price of free markets—and
I don't believe that's the correct way of looking at it, because government
actions contributed so greatly to the current problem—but even if a bad
recession were the price, you'd still decide it was worth paying.
"Or look at developing countries," he says. "China,
India, Brazil. A billion people have been lifted out of poverty since 1990
because their countries moved toward more market-based economies—a billion
people. Nobody's arguing for taking that back."
My last question involves a little story. Not long
before Milton Friedman's death in 2006, I tell Mr. Becker, I had a
conversation with Friedman. He had just reviewed the growth of spending that
was then taking place under the Bush administration, and he was not happy.
After a pause during the Reagan years, Friedman had explained, government
spending had once again begun to rise. "The challenge for my generation,"
Friedman had told me, "was to provide an intellectual defense of liberty."
Then Friedman had looked at me. "The challenge for your generation is to
keep it."
What was the prospect, I asked Mr. Becker, that
this generation would indeed keep its liberty? "It could go either way," he
replies. "Milton was right about that."
Mr. Becker recites some figures. For years, federal
spending remained level at about 20% of GDP. Now federal spending has risen
to 25% of GDP. On current projections, federal spending would soon rise to
28%. "That concerns me," Mr. Becker says. "It concerns me a great deal.
"But when Milton was starting out," he continues,
"people really believed a state-run economy was the most efficient way of
promoting growth. Today nobody believes that, except maybe in North Korea.
You go to China, India, Brazil, Argentina, Mexico, even Western Europe. Most
of the economists under 50 have a free-market orientation. Now, there are
differences of emphasis and opinion among them. But they're oriented toward
the markets. That's a very, very important intellectual victory. Will this
victory have an effect on policy? Yes. It already has. And in years to come,
I believe it will have an even greater impact."
The sky outside his window has begun to darken. Mr.
Becker stands, places some papers into his briefcase, then puts on a tweed
jacket and cap. "When I think of my children and grandchildren," he says,
"yes, they'll have to fight. Liberty can't be had on the cheap. But it's not
a hopeless fight. It's not a hopeless fight by any means. I remain basically
an optimist."
In the wake of the passage of sweeping health care
reform legislation by the U.S. Congress, the political battle over the bill
seems destined to continue. But what do Harvard Business School faculty
experts, whose research applies a management lens to health care policy and
delivery, think about the bill's content? And what are the next steps for
improving patient care and containing costs?
Richard Bohmer Physician and Professor of Management Practice at
Harvard Business School. Author of Designing Care: Aligning the
Nature and Management of Health Care.
Insurance reform is a necessary but not sufficient
component of U.S. health care reform. We need to think very hard as well
about the optimal way of caring for a particular type of patient and then
how to pay for that optimal way. For me, the optimal way is the function of
a science: What is possible in terms of drugs, technology, devices,
information technology, and personnel; then secondarily, consider the
current regulations in place and the payment models.
There is an important set of discussions to be had
around how we actually organize care, with all sorts of managerial and
strategic decisions to be made at a policy and national level. Yet at ground
zero, lots of interesting experiments are underway, with professionals
trying different ways of configuring and managing services. On that list I
include experiments with disease management programs, substituting nurse
practitioners for physicians in certain circumstances, the in-store clinic
model for treatment of simple diseases, and experiments with IT to enable
precise electronic communication between patients and doctors so that real
medical discussions can be had at a distance.
At the national level we don't hear much about
these innovations; yet they present an equally important set of issues. We
need to make a distinction between debating how it will be paid for and what
the "it" is that is paid for.
Several factors are pushing us to change how we
deliver care. Perhaps the most important of these is changing expectations.
Patients are used to good service from other industries, and they expect
higher performance than they see in the health care sector. They obviously
worry a lot about whether their insurance will cover the medical services
they need, but they are also concerned about the care they get — how
accurate, reliable, and fail-safe it is, as well as how responsive and
convenient. Employers expect better outcomes, and of course they and
patients want fewer errors and fewer patients harmed by care that was
intended to cure their disease. Finally, all health care's constituents
expect better value.
As for innovation, our prevailing model has been
that knowledge flows into medical and nursing practice from funded external
research. In this model it is the role of provider organizations to bring
knowledge published in the medical and nursing literatures to bear on
individual patients by selecting the right therapies and the right way of
implementing those therapies — a one-way flow of knowledge from the research
community to the delivery community to each individual patient.
However, routine practice is itself a fertile
source of innovations in care, in both what to do and how to do it. Medical
knowledge and how to operationalize it can be learned through taking care of
patients, and delivery organizations create knowledge for themselves. This
is knowledge flow not from bench-side-to-bedside, but from
bedside-to-bedside. New insights derived from practice can be brought to
bear for the benefit of each subsequent patient.
Given the increased expectations of performance, we
now need to design care by asking nitty-gritty design questions such as: How
is care going to be delivered? Who will do what, when, where, and how? How
will they hand over tasks and decision rights and accountability to the next
person who will do what, when, where, and how? And how does technology
support these decisions?
Hence, a lot of health care reform is a management
problem. It can't be solved by policymakers acting at a distance. That is
why we should help doctors understand the managerial issues related to their
clinical practice. My involvement with the MD/MBA program at Harvard
Business School is part of that belief. A not-for-profit institution
deserves to be as well managed as a for-profit institution. In terms of
health care delivery, the absence of a profit motive doesn't mean that
people should tolerate poorly designed processes and symptoms, especially
when organizational performance is a necessary component of realizing the
best clinical outcomes for individual patients.
Adapted from the 11/23/09 HBS Working Knowledge article,"Management's
Role in Reforming Health Care."
Democrats dragged themselves over the health-care
finish line in part by repeating that voters would like the plan once it
passed. Let's see what they think when they learn their insurance costs will
jump right away.
Even before President Obama signed the bill on
Tuesday, Caterpillar said it would cost the company at least $100 million
more in the first year alone. Medical device maker Medtronic warned that new
taxes on its products could force it to lay off a thousand workers. Now
Verizon joins the roll of businesses staring at adverse consequences.
In an email titled "President Obama Signs Health
Care Legislation" sent to all employees Tuesday night, the telecom giant
warned that "we expect that Verizon's costs will increase in the short
term." While executive vice president for human resources Marc Reed wrote
that "it is difficult at this point to gauge the precise impact of this
legislation," and that ObamaCare does reflect some of the company's policy
priorities, the message to workers was clear: Expect changes for the worse
to your health benefits as the direct result of this bill, and maybe as soon
as this year.
Mr. Reed specifically cited a change in the tax
treatment of retiree health benefits. When Congress created the Medicare
prescription drug benefit in 2003, it included a modest tax subsidy to
encourage employers to keep drug plans for retirees, rather than dumping
them on the government. The Employee Benefit Research Institute says this
exclusion—equal to 28% of the cost of a drug plan—will run taxpayers $665
per person next year, while the same Medicare coverage would cost $1,209.
In a $5.4 billion revenue grab, Democrats decided
that this $665 fillip should be subject to the ordinary corporate income tax
of 35%. Most consulting firms and independent analysts say the higher costs
will induce some companies to drop drug coverage, which could affect about
five million retirees and 3,500 businesses. Verizon and other large
corporations warned about this outcome.
U.S. accounting laws also require businesses to
immediately restate their earnings in light of the higher tax burden on
their long-term retiree health liabilities. This will have a big effect on
their 2010 earnings.
While the drug tax subsidy is for retirees,
companies consider their benefit costs as a total package. The new bill
might cause some to drop retiree coverage altogether. Others may be bound by
labor contracts to retirees, but then they will find other ways to cut
costs. This means raising costs or reducing coverage for other employees. So
much for Mr. Obama's claim that if you like your coverage, you can keep
it—even at Fortune 500 companies.
In its employee note, Verizon also warned about the
40% tax on high-end health plans, though that won't take effect until 2018.
"Many of the plans that Verizon offers to employees and retirees are
projected to have costs above the threshold in the legislation and will be
subject to the 40 percent excise tax." These costs will start to show up
soon, and, as we repeatedly argued, the tax is unlikely to drive down costs.
The tax burden will simply be spread to all workers—the result of the White
House's too-clever decision to tax insurers, rather than individuals.
A Verizon spokesman said the company is merely
addressing employee questions about ObamaCare, not making a political
statement. But these and many other changes were enabled by the support of
the Business Roundtable that counts Verizon as a member. Verizon CEO Ivan
Seidenberg's health-reform ideas are 180 degrees from Mr. Obama's, but
Verizon's shareholders and 900,000 employees and retirees will still pay the
price.
Businesses around the country are making the same
calculations as Verizon and no doubt sending out similar messages. It's only
a small measure of the destruction that will be churned out by the rewrite
of health, tax, labor and welfare laws that is ObamaCare, and only the
vanguard of much worse to come.
There are lies and then their are damn
lies
"Pelosi Claims Health Care Reform to Save $1.3 Trillion; No Mention in CBO
Estimate," by Matt Cover, CNS News, March 26, 2010 ---
http://www.cnsnews.com/news/article/63373
House Speaker Nancy Pelosi (D-Calif.) said that the
health care reform package the House passed on March 21 would ultimately
save the country $1.3 trillion over the next 20 years. That claim, however,
was not made by the Congressional Budget Office (CBO) in its cost estimate
of the bill.
Pelosi, speaking to reporters at her weekly Capitol
Hill press conference on Thursday, said that one of the most important
reasons for passing the legislation was that it would save the government so
much money.
“[O]ne of the main reasons to do the bill was that
it saves the taxpayers $1.3 trillion — $1.3 trillion — over the life of the
bill and the 10 years beyond,” she said.
However, no such figure appears in the
Congressional Budget Office’s estimate of the package President Obama signed
into law Tuesday.
According to a CBO letter sent to Pelosi on March
20, the day before that House passed the bill, the health reform bill and an
accompanying package of amendments is expected to reduce the deficit by $143
billion over the 2010-2019 time period.
For the following decade, the CBO does not attempt
to quantify the bill’s possible effects on the budget because, as it says,
there are simply too many unknown factors for any estimate to be accurate.
“CBO has developed a rough outlook for the decade
following the 2010–2019 period by grouping the elements of the legislation
into broad categories and (together with JCT) assessing the rate at which
the budgetary impact of each of those broad categories is likely to increase
over time,” the report says.
The CBO did give a broad range that the package
might reduce the deficit, saying that if Congress did not modify the law
over the next 20 years, it could reduce the deficit “during that decade in a
broad range between one quarter percent and one-half percent of gross
domestic product (GDP).”
The CBO said that any estimates beyond 20 years
were unreasonable, and declined to give any in their letter to Pelosi.
“CBO has not extrapolated estimates further into
the future because the uncertainties surrounding them are magnified even
more.”
While some press accounts attributed Pelosi’s
figure to internal calculations based on the CBO’s 20-year projections,
CNSNews.com could not confirm this despite repeated requests to the
Speaker’s office asking to name the source of the figure.
In addition, in a March 19 letter to Rep. Paul Ryan
(R-Wisc.) the CBO explained that the health care bill will begin adding to
the deficit the moment congressional Democrats change the payment system
Medicare uses to pay doctors.
Known as the “Doc Fix,” the change was removed from
earlier versions of the bill in order to make it appear deficit- friendly.
However, if Democrats go ahead with the changes as expected, the CBO
explained that the deficit will rise by nearly $60 billion.
"CBO estimates that enacting H.R. 3961 [Doc Fix],
by itself, would cost about $208 billion over the 2010–2019 period," the CBO
informed Ryan. "CBO estimates that enacting H.R. 3961 together with those
two bills [health care and a companion package of amendments] would add $59
billion to budget deficits over the 2010–2019 period."
Health-Care Taxes Put Spotlight
on Tax-Exempt Municipal Bonds The latest
wrinkle in the muni-verse: the health-care reform legislationsigned
by President Barack Obama on Mar. 23. One widely
discussed feature of the bill is a new Medicare tax that levies 3.8% on wages
and other kinds of income, starting in 2013. The tax would not apply to interest
on tax-exempt bonds and other forms of unearned income, such as any gain from
the sale of a principal residence, that are excluded from gross income under the
U.S. income tax code, according to a footnote in the Joint Committee on
Taxation's Technical Explanation of the revenue provisions of the Reconciliation
Act of 2010. That may seem like a no-brainer, but R.J. Gallo, senior portfolio
manager for muni bonds at Federated Investors in Pittsburgh, says he's received
calls from a few brokers asking whether munis would be exempt from the
additional tax.
David Bogoslaw, “Health-Care Taxes
Put Spotlight on Munis," Business Week, March 23. 2010 ---
http://www.businessweek.com/investor/content/mar2010/pi20100323_076507.htm?link_position=link1
Among its many changes, the new health-care law
eliminated a tax deduction that companies used to cut the cost of
drug-benefit programs for retired workers. President Obama signed the
massive health-care overhaul into law earlier this week in a big victory for
ruling Democrats.
News Hub: Health Costs for CompaniesThe health
reform bill eliminated a subsidy for companies that operated as a double
deduction. Companies such as John Deere and Caterpillar will face new costs
up to $150 million, Ellen Schultz reports. Yet companies that still offer
retiree drug benefits, mostly older industrial concerns or those with
unionized employees, say the end of the deduction could force them to alter
their benefit plans. In other words, they might curtail or even cancel them.
"As a result of this legislation, including the
additional tax burden, AT&T will be evaluating prospective changes to the
active and retiree health care benefits offered by the company," AT&T said
in a filing with the government on Friday.
An AT&T spokesman declined to comment further on
the filing.
Earlier this week, Verizon Communications /quotes/comstock/13*!vz/quotes/nls/vz
(VZ 30.37, +0.06, +0.20%) sent a letter to employees suggesting that changes
to their health-care plans could be afoot. AT&T and Verizon are the two
largest phone companies in the U.S. and include a substantial number of
unionized workers.
Several million retirees are estimated to receive
drug benefits from a few thousand companies. If those retirees were shifted
to the federal Medicare program, the government would to pick up the
expense. Whether savings from elimination of the subsidy would offset those
higher Medicare costs is unclear.
Under the old law, companies received a federal
subsidy worth up $1,330 per retiree if they provided former workers with
drug-care benefits. At the same time, however, companies could deduct the
value of the subsidy from their taxable income. See blog on whether the new
health care law already is hurting business
White House spokesman Robert Gibbs on Thursday said
the government merely eliminated a tax loophole that effectively allowed a
company to benefit twice from one law.
The AT&T announcement is sure to cause a ripple in
Washington. Republicans have already assailed the administration for what
they say are excessive costs saddled on business by the health-care law. The
issue is sure to be part of their campaign against Democrats in the fall
elections.
Democrats say the health-care law will become more
popular over time and they point out that it also includes substantial new
subsidies for business.
"There's $10 billion in health-care reform for
support for businesses with early retirees," Gibbs said.
Heavy-equipment maker Caterpillar Inc. issued an
11th-hour salvo against the Democrats' health-care plan, saying the bill's
Medicare adjustments and insurance mandates would increase the company's
costs by $100 million in the first year.
The blast, conveyed in a letter to House Democratic
and Republican leaders ahead of an expected Sunday vote on the legislation,
highlights how big employers are split on the issue.
Caterpillar, which has been held up as an exemplar
of U.S. competitiveness by President Barack Obama, said the envisioned
overhaul of the health-care system could increase its health-care costs by
20% in the first year, mainly because the initiative would eliminate
subsidies for companies that cover drug benefits for their retirees. Most of
that would be reflected in a non-cash charge to earnings.
That change would hurt a lot of older manufacturers
with large numbers of retirees who are still covered by company medical
plans. Many of the companies are locked into contracts under which they must
continue to pay retiree drug benefits, or are reluctant to drop them out of
loyalty to their workers.
Caterpillar, which pays to insure more than 150,000
employees, retirees and their dependants, said it could "ill-afford cost
increases that place us at a disadvantage versus our global competitors."
Representatives of other large companies say they
share Caterpillar's unease, not only on the drug provision but on the
overall direction of the administration's health-care plan. Big companies,
already burdened with skyrockeing insurance costs, are mainly worried that
the bill will eventually fail to contain long-term increases in health
costs.
Other big employers, notably Wal-Mart Stores Inc.,
have come out prominently in support of the Democratic health-care
legislation.
Caterpillar's main objection pertains to the plan
to recoup about $4.5 billion over six years by eliminating a federal subsidy
that encouraged companies to keep offering retiree drug benefits after the
government extended Medicare coverage for drugs to seniors in 2003.
Unless companies drop those benefits, they will
lose the subsidies and face sharply higher costs for every retiree they
cover. If the current bill becomes law, hundreds of companies would also
have to register steep one-off losses in future earnings, which for many
could tally in the hundreds of millions of dollars.
"We are disappointed that efforts at reform have
not addressed the cost concerns we've raised throughout the year," said the
letter, which was sent to Democratic House Speaker Nancy Pelosi and GOP
House Minority Leader John Boehner.
A Caterpillar spokeswoman said the Peoria, Ill.,
company hasn't decided if it will continue its seniors' drug coverage. The
company projected last year in its annual report that it expected to receive
$370 million in prescription-drug subsidies under the Medicare Part D
program between 2009 and 2018.
In talks with lawmakers and the Obama
administration, companies have said any revenue gains for the government
could prove illusory if companies all decide to shed retiree drug coverage,
thus pushing people into Medicare Part D. Paying the subsidy costs the
government roughly $600 per person, while covering the retirees themselves
would cost it about $1,900 each, according to various estimates.
AK Steel Corp., which still offers employees
pensions and retiree health care, estimated its costs would rise by millions
of dollars under the pending bill.
Alan McCoy, spokesman for the Ohio-based steel
maker, said AK remains neutral about the bill but that it expects to pay
more for its retiree coverage.
"Does it have us panicked? No. Are watching it
carefully? Yes," he said. "We are not in hand-to-hand combat on the Hill."
Joe Bartolacci, chief executive of Matthews
International Corp., a maker of caskets and product branding materials with
2,500 U.S. workers, said he likely will have to scale back the quality of
his health-insurance offerings if the bill passes because he expects his
health costs to rise.
He is especially worried about a provision with the
legislation that will extend how long children are allowed to stay on a
parent's plan.
The National Association of Manufacturers, a
lobbying group, has opposed the Democrats' plan for months, contending that
it will drastically increase its members' health-care costs.
The NAM said specific provisions would hurt
manufacturers, including an excise tax on health-insurance plans, new
industry-specific fees to pay for changes to the health-care system and the
repeal of the Medicare Part D subsidy.
"While we oppose this legislation," the group said
in a letter sent to House leaders Friday, "we will continue to advocate for
reforms that lower costs and improve care but do not put undue burdens on
those who keep our country growing and competitive in a global marketplace."
If you’re deeply, dangerously in debt, how can it
make sense to take on an extravagant new long-term commitment, even if you
claim you’ve cut back other expenses to “pay for it?” That’s the underlying
question about Obamacare that jubilant Democrats refuse to acknowledge.
Opponents of the sweeping health-care overhaul
spent most of their time challenging the feeble arguments that allowed the
administration to manipulate figures from the Congressional Budget Office to
suggest that their reforms actually reduced the deficit. With a dubious
combination of complicated new taxes and severe Medicare cutbacks, the
president insisted that the costly new program (running to at least $950
billion over ten years) would be paid for – and more. The Democrats claimed
that Obamacare would reduce red ink by an average of some $20 billion a year
over the next decade --- in other words, trimming the current devastating
deficit by as much 1.6%! These sunny (and silly) calculations led speaker
Pelosi to enthuse: “The real question isn’t how we can afford to do it. The
real question is how can we afford not to do it?”
In other words, the president and his supporters
assert that they’ve discovered nearly a trillion dollars in fresh savings
from spending reductions and new revenue sources. In their logic, that makes
their $950 billion health reform eminently affordable.
But this logic ignores the underlying budgetary
crisis. Even if all of the promised cost savings and tax increases yielded
all the money the Democrats predicted (a hugely improbable outcome), and
even if they didn’t spend nearly all the additional cash on a new
entitlement, they’d still make a relatively small dent in the deficit. If
they applied all the “new” money to balancing the books and spent not a cent
on new programs, they’d still reduce the predicted deficits for the next
decade by less than 10% -- keeping the big government spend-a-thon on its
record-shattering, bankruptcy-threatening path (with deficits remaining at
their best more than double the worst red-ink under President Bush).
Meanwhile, none of the lemming-like partisans who
marched with the President over the fiscal cliff ever bothered to
acknowledge that finding spending cuts and tax hikes to finance Obamacare
makes it vastly harder – a trillion dollars harder, in fact – to find more
new sources to pay down the debt or to shore up Medicare. The accepted
figure on Medicare’s unfunded commitments amounts to an almost unimaginable
38 trillion dollars. With that looming train wreck, one would think that any
dollars that cost-cutters could wring out of the collapsing program would go
to protecting the system’s overall viability, not to new commitments.
A sense of perspective gives the lie to the
ludicrous claim that Obamacare counts as “affordable” reform, or some sort
of miraculous budgetary bargain. Even those who believe in the messianic
powers of Mr. Obama can’t suggest a logical basis for an expensive new
program helping to trim deficits. Insuring 30 million more Americans isn’t
free. New spending of $950 billion (at the absolute minimum) hardly counts
as affordable in any sense of the word when the overall budget remains
unsustainably unbalanced. The gimmicks, rosy projections, and benefit cuts
placed on the table to sell Obamacare will make it all the harder (if not
impossible) to find future sources of saving and revenue to keep the
government’s rickety finances from cataclysmic and nation-threatening
implosion.
"Durbin Implies Obama Not ‘Telling the Truth’
about Health Care Premiums," by Melannie Hunter-Omar, CNS News, March
10, 2010 ---
http://www.cnsnews.com/news/article/62587
Senate Majority Whip Dick Durbin (D-Ill.) on
Wednesday contradicted President Barack Obama on whether the health care
reform bill will lead to a decrease in health care premiums.
Durbin claimed that rates would go up, while the
president said the rates would go down.
“Anyone who would stand before you and say well, if
you pass health care reform, next year's health care premiums are going
down, I don't think is telling the truth. I think it is likely they would go
up, but what we are trying to do is slow the rate of increase,” Durbin said,
speaking on the Senate floor.
Compare Durbin’s remarks to what President Barack
Obama said during a speech at Arcadia University in Glenside, Pa., on
Monday.
“Our cost-cutting measures mirror most of the
proposals in the current Senate bill, which reduces most people’s premiums
and brings down our deficit by up to $1 trillion over the next decade
because we’re spending our health care dollars more wisely,” the president
said.
“Those aren’t my numbers. Those aren’t my numbers
--they are the savings determined by the Congressional Budget Office, which
is the nonpartisan, independent referee of Congress for what things cost,”
Obama added.
But as CNSNews.com reported, the Congressional
Budget Office’s analysis of the final Senate health care bill indicates that
it would impose a mandatory $15,000 annual fee on middle-class families that
earn greater than 400 percent annually of the federal poverty level. That
means $88,200 for a family of four.
Among the five basic facts that the CBO analysis
cites about the bill is that “Your family insurance plan – if your employer
drops your coverage and you are forced to buy it on your own – will cost
about $15,000 per year when the legislation is in full force in 2016.”
Continued in article
But we have to pass the
bill so that you can find out what is in it, away from the fog of the
controversy. Nancy Pelosi, Speaker of the House
of Representatives
"Pelosi's Pig in a Poke ," by James Tarango, The
Wall Street Journal "Best of the Web" email newsletter, March 10, 2010
Speaker
Nancy Pelosi turned up yesterday at the Washington
conference of the National Association of Counties, and she engaged in a
little cheerleading for ObamaCare:
You've heard about the controversies
within the bill, the process about the bill, one or the other. But I
don't know if you have heard that it is legislation for the future, not
just about health care for America, but about a healthier America, where
preventive care is not something that you have to pay a deductible for
or out of pocket. Prevention, prevention, prevention--it's about diet,
not diabetes. It's going to be very, very exciting.
But we have to
pass the bill so that you can find out what is in it, away from
the fog of the controversy.
Yes,
reader, she really said, "We have to pass the bill so that you can find out
what is in it." If you don't believe us, ask
YouTube. And Pelosi is not alone in equating
knowledge of the bill's contents to enactment of it. Consider the lead
paragraph of this
Associated Press dispatch about Sen. Blanche
Lincoln of Arkansas, who cast the deciding vote allowing passage of the
Senate's version of ObamaCare;
A moderate Democrat insisted Tuesday she
remained opposed to pushing a health care bill through the Senate with a
simple majority vote, despite saying she wanted to see what was in the
legislation.
The non-partisan Congressional Budget Office
likewise warned last December 23 that Obamacare’s putative savings “would be
received by the government only once, so they cannot be set aside to pay for
future Medicare spending and, at the same time, pay for current spending on
other parts of the legislation or on other programs. . . . To describe the
full amount of [Hospital Insurance] trust fund savings as both improving the
government’s ability to pay future Medicare benefits and financing new
spending outside of Medicare would essentially double-count a large share of
those savings and thus overstate the improvement in the government’s fiscal
position.”
Consequently, Sen. Jeff Sessions (R., Ala.)
predicts: “Taxpayers will be left holding billions in debt bonds to the
Medicare Trust Fund that must be repaid.”
The Senate’s Obamacare bill would take $52 billion
in anticipated Social Security revenues and divert them to offset
Obamacare’s overall net cost. But wait: Those who have been promised future
Social Security payments expect that $52 billion to be available to prevent
their pension checks from bouncing. These $104 billion in political pledges
cost only $52 billion.
This bill also includes something called Community
Living Services and Support. This “CLASS Act” would offer long-term-care
insurance with premiums invoiced immediately, but with benefits commencing
in 2016. In the interim, the CBO expects a $72 billion surplus to
accumulate. Congressional Democrats already have dedicated that sum to
counterbalance and thus lower Obamacare’s perceived cost. But the Treasury
needs that same $72 billion to finance the CLASS Act’s medical services. So,
which is it?
Senate Budget Committee Chairman Kent Conrad (D.,
N.D.) described this scam in the Washington Post as “a Ponzi scheme of the
first order, the kind of thing that Bernie Madoff would have been proud of.”
Despite the president's repeated attempts to defend
his health reforms, ObamaCare remains deeply unpopular—in the past four
months the Rasmussen poll consistently suggests 52% to 58% of Americans are
opposed to it. Now President Obama is trying to change the debate by
attacking insurance companies. His populist rhetoric is misleading, and his
own words show he knows as much.
One of the chief complaints about health insurers
is that they refuse to provide insurance to everyone at the same price,
regardless of an individual's pre-existing medical conditions. On Monday,
talking to a friendly town-hall audience at Arcadia University, Mr. Obama
was blunt: "Every year, the problem gets worse. Every year, insurance
companies deny more people coverage because they've got pre-existing
conditions."
Yet President Obama himself has acknowledged more
than once that insurers don't really have a choice.
In his Feb. 3 town-hall meeting in Nashua, N.H., he
said: "You can't [demand] insurance companies . . . take somebody who's
sick, who's got a pre-existing condition, if you don't have everybody
covered, or at least almost everybody covered. And the reason, if you think
about it, is simple. If you had a situation where not everybody was covered
but an insurance company had to take you because you were sick, what
everybody would do is they'd just wait till they got sick and then they'd go
buy insurance. Right? And so the potential would be there to game the
system."
In his Jan. 20 ABC News interview, Mr. Obama noted
that if insurance firms accepted all applicants, premiums would skyrocket,
an insurance mandate would be necessary, and massive taxpayer subsidies
would follow. The president obviously knows it makes no sense to blame
insurance companies for paying attention to pre-existing conditions when
taking on new customers.
Mr. Obama, Health and Human Services (HHS)
Secretary Kathleen Sebelius, and their Democratic allies have also hammered
the insurance industry for making huge profits at the cost of patients'
finances and health. Their complaints picked up especially after WellPoint
subsidiary Anthem announced last month that it would raise individual
insurance premiums up to 39% for some California customers.
The Democrats' attack is misplaced. Fortune 500
data show that of the 43 industries that actually made a profit in 2009,
health insurance ranked 35th, with profits of only 2.2% of revenues.
More fundamentally, premium increases are driven
not by profits but by costs, as WellPoint has made abundantly clear in
California. When HHS issued "Insurance Companies Prosper, Families Suffer,"
its Feb. 18 report on firms that implemented "excessive" premium increases,
plenty of nonprofit firms (such as Blue Cross/Blue Shield of Michigan,
Regency Blue Cross/Blue Shield of Oregon, and Blue Cross/Blue Shield of
Rhode Island) made the list.
But rather than argue over accounting data—which
never show that profits amount to a significant portion of health-care costs
anyway—let's listen to what the marketplace is telling us. If health
insurance is so lucrative, why aren't giant companies jumping in?
MetLife has chosen to invest billions of dollars of
free cash not in the health-insurance business but in a risky acquisition of
the international life insurance business of beleaguered conglomerate AIG.
And what about firms like Microsoft, General Election, Google and Wal-Mart?
They know how to enter new markets and make a profit. Why aren't they
selling health plans?
Those who know best are persuaded that far from
being easy, making money selling health insurance is tough. It is no wonder
Warren Buffett told CNBC on March 1 that health insurance is one part of the
vast insurance market in which he has avoided investing.
Mr. Obama's third theme is that health insurance
needs more regulation. Borrowing from legislation introduced by California
Sen. Dianne Feinstein (who wants for-profit insurance firms to disappear),
the president's own reform plan, announced on Feb. 22, included a federal
Medical Insurance Rate Authority to review insurance premiums and prevent
unreasonable increases.
Federal regulation of health insurance premiums
makes little sense. Most states already have the power to review and reduce
premiums. It hasn't done them much good. Massachusetts, which already has
the essence of ObamaCare—no restrictions on pre-existing conditions, an
individual mandate, and huge taxpayer subsidies—has the highest premiums in
the nation.
The Bay State has the power to cut premiums, but it
hasn't figured out how to do that without cutting health care itself. Oregon
has had much the same experience, as have others. State insurance regulators
quickly pointed out that Mr. Obama's proposal for a federal rate authority
wouldn't work and would complicate their essential task of making sure that
insurance firms have sufficient funds to cover future health care costs.
A proper debate over how to deal with both the
insured and the uninsured, including those with significant pre-existing
medical conditions, is extremely important. It involves difficult problems
of regulation, incentives and costs. The president's populist foray against
health insurers is a reckless diversion from that broader debate.
He and his reform allies should explain to the
public the real dilemma. Health insurers operate in a market in which party
one (the patient) is told by party two (the doctor) what products and
services to consume, while party three (the insurance firm) pays the bill,
and more often than not, party four (the employer) bears the financial risk
of cost overruns. That's a tough business environment in which to make money
without offending someone.
All this contributes to a second problem, which is
a growing credibility gap. In his speech Wednesday, demanding an "up or
down" vote, the president seemed convinced and committed—but nothing he said
sounded true. His bill will "bring down the cost of health care for
millions," it is "fully paid for," it will lower the long term deficit by a
trillion dollars.
Does anyone believe this? Does anyone who knows the
ways of government, the compulsions of Congress, and how history has played
out in the past, believe this? Even a little? Rep. Bart Stupak said Thursday
that he and several of his fellow Democrats won't vote for the Senate
version of the bill because it says right there on page 2,069 that the
federal government would directly subsidize abortions. The bill's proponents
say this isn't so. It would be a relief to have a president who could weigh
in believably and make clear what his own bill says. But he seems to devote
more words to obscuring than clarifying.
'Every argument has been made. Everything that
there is to say about health care has been said, and just about everybody
has said it," President Obama declared yesterday as he urged Democrats to
steamroll his plan through Congress. What hasn't been heard,
however, is even a shred of White House honesty about the true costs of
ObamaCare, or its fiscal consequences.
Nearby, we reprint
Wisconsin Republican Paul Ryan's remarks at the
health summit last week, which methodically dismantle the falsehoods—there
is no other way of putting it—that Mr. Obama has used to sell "reform" and
repeated again yesterday. No one in the political class has even tried to
refute Mr. Ryan's arguments, though he made them directly to the President
and his allies, no doubt because they are irrefutable. If Democrats are
willing to ignore overwhelming public opposition to ObamaCare and pass it
anyway, then what's a trifling dispute over a couple of trillion dollars?
At his press conference yesterday, Mr. Obama
claimed that "my proposal would bring down the cost of health care for
millions—families, businesses and the federal government." He said it is
"fully paid for" and "brings down our deficit by up to $1 trillion over the
next two decades." Never before has a vast new entitlement been sold on the
basis of fiscal responsibility, and one reason ObamaCare is so unpopular is
that Americans understand the contradiction between untold new government
subsidies and claims of spending restraint. They know a Big Con when they
hear one.
Mr. Obama's fiscal assertions are possible only
because of the fraudulent accounting and budget gimmicks that Democrats
spent months calibrating. Readers can find the gory details in Mr. Ryan's
pre-emptive rebuttal nearby, though one of the most egregious deceptions is
that the bill counts 10 years of taxes but only six years of spending.
The real cost over a decade is about $2.3 trillion
on paper, Mr. Ryan estimates, and even that is a lowball estimate
considering how many people will flood to "free" health care and how many
businesses will be induced to drop coverage. Mr. Obama claimed yesterday
that the plan will cost "about $100 billion per year," but in fact the costs
ramp up each year the program exists. The far more likely deficits are $460
billion over the first 10 years, and $1.4 trillion over the next 10.
What Mr. Ryan calls "probably the most cynical
gimmick" deserves special attention, which is known in Washington as the
"doc fix." Next month Medicare physician payments are scheduled to be cut by
22% and deeper thereafter, though Congress is sure to postpone the
reductions as it always does. Failing to account for this inevitability
takes nearly a quarter-trillion dollars off the ObamaCare books and by
itself wipes out the "savings" that the White House continues to take credit
for.
Some in the liberal cheering section now claim that
this Medicare ruse isn't Mr. Obama's problem because it was first promised
by Republicans and Bill Clinton in 1997. But then why did Democrats include
the "doc fix" in all early versions of the bill to buy the support of the
American Medical Association, only to dump this pricey item later when
hiding it would make it easier to fake-reduce the deficit?
The President was (miraculously) struck dumb by Mr.
Ryan's critique, and in his response drifted off into an irrelevant tangent
about Medicare Advantage, while California Democrat Xavier Becerra claimed
"you essentially said you can't trust the Congressional Budget Office." But
Mr. Ryan was careful to note that he didn't doubt the professionalism of CBO,
only the truthfulness of the Democratic gimmicks that the budget gnomes are
asked to score.
Yesterday Mr. Obama again invoked the "nonpartisan,
independent" authority of CBO, which misses the reality that if you feed the
agency phony premises, you are going to get phony results at the other end.
The President also claimed the reason his plan is
in trouble, and the reason Democrats must abuse the Senate's rules to ram
this plan into law, is that "many Republicans in Congress just have a
fundamental disagreement over whether we should have more or less oversight
of insurance companies." So most of Mr. Obama's first year in office has
been paralyzed over nothing more than minor regulatory hair-splitting. This
is so preposterous that the President can't possibly believe it.
Congress's spring break begins on March 29, and
Democratic leaders plan on jamming this monster through Congress before
then. Americans have to hope that enough rank-and-file Democrats aren't as
deaf to fiscal honesty as this President.
House Democrats are suspicious of each other, none
of them trust their Senate counterparts, and vice versa, and a Soviet mole
has infiltrated the highest levels of British intelligence. Sorry, that last
part is from a John le Carré thriller, though it might take a novelist to do
justice to the ObamaCare-induced paranoia that now engulfs Congress—not to
mention the double game that the White House may well be running.
Last week President Obama sanctioned
"reconciliation," a complex tactic that would jam ObamaCare into law on
sheer power politics. But what if this gambit is really a false-flag
operation, meant to lure House Democrats into voting for a bill that they
would otherwise oppose? That's the question many rank-and-file Members are
now asking themselves, and they're right to be worried.
The cleanest option for Democrats would be for the
House to pass the Senate's Christmas Eve bill word for word, thereby
bypassing a Senate filibuster under the normal rules and forwarding
ObamaCare directly to the Rose Garden signing ceremony. But Speaker Nancy
Pelosi has repeatedly said the votes simply don't exist for the Senate bill
as is.
Liberals don't think the middle-class insurance
subsidies are large enough. Big Labor hates the "Cadillac tax" on high-cost
health coverage because extremely generous benefits typically come out of
collective bargaining. The pro-life Democrats led by Michigan's Bart Stupak
can't abide federal funding for abortion. Everyone detests the enveloping
corruption, such as the Nebraska Medicaid bribe for Ben Nelson, which has
become so politically toxic that the opponents now include Ben Nelson.
Thus the convoluted scheme the White House has
mapped out. The House would first pass the Senate bill, and then pass a
reconciliation bill that addresses these objections—in effect converting the
process into a makeshift and unprecedented vehicle for amendments. Mrs.
Pelosi can't rope in the 216 votes she needs without an iron-clad promise of
another round of Senate action.
Iron-clad promise—or double-cross? After all, the
White House would much prefer the Senate bill, because by its lights the
cost-control programs are tougher than what the House prefers. And from a
political perspective, a bill that can be signed immediately and that the
press will portray as an historic achievement is far better than the
drawn-out and gory battle that would be reconciliation. Republican Senators
will have many procedural knives at their disposal, and the process will
force Democrats to cast further votes and spend more months debating a
deeply unpopular bill.
In other words, perhaps Mr. Obama has embraced this
reconciliation two-step only to renege as soon as the House gives him what
he wants. While some House Democrats would be furious, they'd soon be
defending the Senate bill by necessity against the GOP. The moderates who
vote for it might be collateral damage, but the White House has already
concluded that this is the price of building its cradle-to-grave entitlement
citadel.
Mr. Obama's closing arguments are lending credence
to rank-and-file fears that they're getting played. Democrats are telling
reporters that Mr. Obama has been telling them in private meetings that his
Presidency, and the party's claim to any achievement, rests on passing a
bill. With barely any mention of substance, the right bill is any bill, by
any political means necessary.
The White House also announced that it now wants
the House to pass the Senate bill by March 18, before Mr. Obama departs for
a foreign tour in the Pacific. But this barely leaves any time for the
Congressional Budget Office to score Mr. Obama's reconciliation fixes. Then
there's House Majority Leader Steny Hoyer's far-fetched suggestion to Mr.
Stupak and the antiabortion bloc that Democrats can take care of their
concerns in a third bill, which everyone knows will fail in the Senate if it
even comes to the floor.
In this wilderness of political mirrors, anything
is possible. Spooked Democrats shouldn't be surprised if they wind up being
double-crossed for the ostensibly greater good of Mr. Obama's legacy.
As Washington prepares to revisit the subject of
health-care reform, perhaps some fresh experience from Middle America would
be of value.
When I was elected governor of Indiana five years
ago, I asked that a consumer-directed health insurance option, or Health
Savings Account (HSA), be added to the conventional plans then available to
state employees. I thought this additional choice might work well for at
least a few of my co-workers, and in the first year some 4% of us signed up
for it.
In Indiana's HSA, the state deposits $2,750 per
year into an account controlled by the employee, out of which he pays all
his health bills. Indiana covers the premium for the plan. The intent is
that participants will become more cost-conscious and careful about
overpayment or overutilization.
Unused funds in the account—to date some $30
million or about $2,000 per employee and growing fast—are the worker's
permanent property. For the very small number of employees (about 6% last
year) who use their entire account balance, the state shares further health
costs up to an out-of-pocket maximum of $8,000, after which the employee is
completely protected.
The HSA option has proven highly popular. This
year, over 70% of our 30,000 Indiana state workers chose it, by far the
highest in public-sector America. Due to the rejection of these plans by
government unions, the average use of HSAs in the public sector across the
country is just 2%.
What we, and independent health-care experts at
Mercer Consulting, have found is that individually owned and directed
health-care coverage has a startlingly positive effect on costs for both
employees and the state. What follows is a summary of our experience:
State employees enrolled in the consumer-driven
plan will save more than $8 million in 2010 compared to their coworkers in
the old-fashioned preferred provider organization (PPO) alternative. In the
second straight year in which we've been forced to skip salary increases,
workers switching to the HSA are adding thousands of dollars to their
take-home pay. (Even if an employee had health issues and incurred the
maximum out-of-pocket expenses, he would still be hundreds of dollars
ahead.) HSA customers seem highly satisfied; only 3% have opted to switch
back to the PPO.
The state is saving, too. In a time of severe
budgetary stress, Indiana will save at least $20 million in 2010 because of
our high HSA enrollment. Mercer calculates the state's total costs are being
reduced by 11% solely due to the HSA option.
Most important, we are seeing significant changes
in behavior, and consequently lower total costs. In 2009, for example, state
workers with the HSA visited emergency rooms and physicians 67% less
frequently than co-workers with traditional health care. They were much more
likely to use generic drugs than those enrolled in the conventional plan,
resulting in an average lower cost per prescription of $18. They were
admitted to hospitals less than half as frequently as their colleagues.
Differences in health status between the groups account for part of this
disparity, but consumer decision-making is, we've found, also a major
factor.
Overall, participants in our new plan ran up only
$65 in cost for every $100 incurred by their associates under the old
coverage. Are HSA participants denying themselves needed care in order to
save money? The answer, as far as the state of Indiana and Mercer Consulting
can find, is no. There is no evidence HSA members are any less likely to
defer needed care or common-sense preventive measures such as routine
physicals or mammograms.
It turns out that, when someone is spending his own
money alone for routine expenses, he is far more likely to ask the questions
he would ask if purchasing any other good or service: "Is there a generic
version of that drug?" "Didn't I take that same test just recently?" "Where
can I get the colonoscopy at the best price?"
By contrast, the prevalent model of health plans in
this country in effect signals individuals they can buy health care on
someone else's credit card. A fast-food meal costs most Americans more out
of pocket than a visit to the doctor. What seems free will always be
overconsumed, compared to the choices a normal consumer would make. Hence
our plan's immense savings.
The Indiana experience confirms what common sense
already tells us: A system built on "cost-plus" reimbursement (i.e., the
more a physician does, the more he or she gets paid) coupled with "free" to
the purchaser consumption, is a machine perfectly designed to overconsume
and overspend. It will never be controlled by top-down balloon-squeezing by
insurance companies or the government. There will be no meaningful cost
control until we are all cost controllers in our own right.
Americans can make sound, thrifty decisions about
their own health. If national policy trusted and encouraged them to do so,
our skyrocketing health-care costs would decelerate.
Mr. Daniels, a Republican, is governor of Indiana.
The Oba-Kabuki health care show at Blair House
kicked off with a big lie on Thursday morning -- and it all went downhill
from there. The taxpayer-funded infomercial backfired by exposing the
president's thin skin, the Democrats' naked disingenuousness and the ruling
majority's allergies to political and policy realities.
Responding to Sen. Lamar Alexander's opening call
for Democrats to renounce parliamentary tactics designed to limit debate,
circumvent filibusters and lower the threshold for passage of health care
reform to a simple 51-vote majority, Senate Majority Leader Harry Reid
sputtered indignantly: "No one's talking about reconciliation!" Everybody
and their mother has been invoking the "R" word on Capitol Hill, starting
with Reid.
In a letter on Feb. 16, four Democratic senators
pushed Reid to adopt the procedure, normally reserved for budget matters. A
few days later, White House Press Secretary Robert Gibbs discussed the
option. Then Reid himself talked up reconciliation on a Nevada public
affairs show as an option to ram the government health care takeover through
in the next 60 days.
According to The Hill, Reid said that
"congressional Democrats would likely opt for a procedural tactic in the
Senate allowing the upper chamber to make final changes to its health care
bill with only a simple majority of senators, instead of the 60 it takes to
normally end a filibuster." A few days after that, Reid snapped that
Republicans "should stop crying" about the abrogation of Senate minority
rights, since the GOP had used the reconciliation process in the past.
So, the cleanest, most ethical holier-than-thou
Congress ever is now defending the unprecedented adoption of ram-down rules
for a radical, multitrillion-dollar program to usurp one-seventh of the
economy on the grounds of "two wrongs make it right"? Hope and change, baby.
For his part, President Obama responded with one
part pique and two parts diffidence. After the summit lunch break,
Republicans pushed the reconciliation issue again in the face of the
Democrats' refusal to disavow the short-circuiting of the deliberative
process. "The American people," an annoyed Obama asserted, "are not all that
interested in procedures inside the Senate." Oh, really? A new USA
Today/Gallup poll reports that 52 percent of Americans oppose using the
procedural maneuver to pass the health care bill in the Senate.
The survey also showed that Americans oppose
Demcare-style health care "reform" by 49 percent to 42 percent -- with those
"strongly" opposed outnumbering those "strongly" in favor by 23 percent to
11 percent. Obama's best and brightest team of Chicago strategists,
new-media gurus and communications specialists still hasn't figured it out:
Voters are as fed up with the corrupt process in Washington as they are with
the White House's overreaching policies. It's both, stupid.
When he wasn't cutting off Republicans who stuck to
budget specifics and cited legislative page numbers and language instead of
treacly, sob-story anecdotes involving dentures and gallstones, Obama was
filibustering the talk-a-thon away by invoking his daughters, rambling on
about auto insurance and sniping at former GOP presidential rival John
McCain. "We're not campaigning anymore," lectured the perpetual
campaigner-in-chief.
After ostentatiously disputing the GOP's claims
that health care premiums would rise under his plan, Obama walked it back.
Confronted with more GOP pushback on the failure of Demcare to control
costs, Obama told GOP Rep. Paul Ryan that he'd rather not "get bogged down
in numbers." Not numbers that he couldn't cook on the spot without staff
consultation, anyway.
Obama and the Democrats labored mightily to create
the illusion of almost-there bipartisanship by repeatedly telling
disagreeing Republicans that "we don't disagree" and "there's not a lot of
difference" between us. But the dogs weren't riding the ponies in this show.
This was a set-up from the start. The "we're so
close" mantra is the rhetorical wedge the White House will use to blame
Republicans for fatal obstructionism, while whitewashing festering
opposition from both pro-life Democrats who oppose the government funding of
abortion services still in the plan and left-wing progressives in the House
who are clinging to a full, unadulterated public option.
While Republicans came off well, the six-hour
blowhard-fest was a monumental waste of time. Obamacare Theater tied up GOP
energy and resources as the White House readies its "Plan B" (expanding
government health care coverage, just at a slower pace) and Democratic
leaders prep their reconciliation ram-down for early next week. This
Washington box-office bomb is a prelude to much bigger legislative horrors
still to come. Don't you love farce?
Nothing in the health-care summit promised greater
progress or movement. Positions started out hardened, and likely ended so.
Good faith and generosity did not flourish. Some people said some smart
things. The Republicans seemed fortified not with Ovaltine but, in some
cases, Espresso. No normal human watching the debate could determine with
complete confidence who was being forthcoming about the meaning of this
facet of the Senate bill or that subclause in Section D. And so the viewers
probably judged things along party lines. "You can't trust politicians." "At
least Democrats care."
It's already de rigueur to say no normal humans
were watching, but on a snowy day on the Eastern Seaboard, with a maturing
population, in a nation of TV watchers, and on a subject that for a year has
aroused passions, plenty of normal people would have been watching.
Which is not, I think, good news for the president.
Mr. Obama will not have helped himself by his manner. The summit
highlighted, even showcased, something unappealing and unhelpful there, a
tendency to attempt to show dominance and command by patronizing, even
subtly bullying, even trimming. All people in public life have moments like
this—most people do, in whatever walk—but you're not supposed to have them
when you're trying to sway minds, reach out and build support.
Which left me doubting that was what he was
actually trying to do.
The way the meeting was arranged, the president was
the teacher, the lecturer. Arrayed before him were the bright if
occasionally unruly students. He was keen to establish that it was his
meeting—he decides who speaks next and who should wrap up, he decides what
is and is not "a legitimate point." He was Mr. President, they were John and
Lamar. He wielded a shiny pen like an anchorman eager to show depth and
ease. He even said, "There was an imbalance in the opening statements
because—I'm the president." Yowza. Grace shows strength, accommodation shows
security. This showed—well, not strength. When Rep. Eric Cantor attempted to
make a sharp point, the president took the camera off him by calling for his
aides and conferring with them as Mr. Cantor spoke.
The president has entered a boorish phase.
This is not a good sign for his program, but tells
us something about his likely next step.
The president opened his remarks saying he is
concerned about deficits, and then turned to standard, heart-rending
anecdotes about the sick and uninsured. If we do nothing, he said, costs
will only get worse; moving now is not reckless but prudent. He put the
congressmen on the defensive: We in government have the best health care in
the world, why can't everyone else? His mother's last days were consumed by
arguing with insurance companies. He cleverly brought up past statements by
the Republicans present in which they criticized and called for change in
the U.S. health care system. The past year of debate has descended into "a
very ideological battle" in which "Politics wound up . . . trumping common
sense." But there's still time to reason together. Let's focus on what we
agree on.
One thing about Mr. Obama is that he is in many
ways an unusually true-to-form political figure. Nothing forces him off his
subject. Opposition doesn't deflect him. He also, as he demonstrated in the
2008 debates, likes to speak long to take the oxygen out of the room, to
tire his opponents and leave them having to decide which of his many
statements to address first.
After he spoke, the great question was: Would the
Republicans come alive? Would they make coherent arguments? The choice of
Sen. Lamar Alexander as the first GOP spokesman was smart. In a folksy,
easygoing manner he told the president the American people do not support
his bill. We think we have good ideas to reduce health care costs, he said.
He offered a heart-rending anecdote of his own. He said we have to put the
current bills on the shelf and start new, "with a clean sheet." He outlined
issues of potential agreement. When Mr. Obama spoke, the Republicans looked
at him. When Mr. Alexander spoke, the president watched, stony-faced, and
took notes.
Mr. Alexander acknowledged what I've called the
Comprehensiveness Blight, the tendency of Congress to put together
thousand-page omnibus bills that the public refuses to back because they
don't trust Congress not to hide self-serving mischief within them. Mr.
Alexander called for smaller, shorter, clearer bills that tackle discrete
problems. At this point the president was wearing a face that was no doubt
meant to look thoughtful, but actually looked hostile.
It is hard in politics to control the face.
Mr. Alexander ended by asking the president to
renounce the idea of banging his bill through the Senate with 51 votes.
"It's not appropriate" to rewrite the rules of 17% of the US economy through
what is called "reconciliation." Don't go "jamming it through." "Let's start
over."
Mr. Alexander was a good GOP spokesman because
there is a certain credibility to his bipartisan approach. When I asked him
a few days before the summit if Washington was broken, he was keen to speak
of working successfully with Democrats on energy and education. "There's
plenty of opportunities to get results," he said, and he seemed to mean it.
Speaker Nancy Pelosi was fascinating, though not
because of what she said. She has high energy, an air of pleasure in her
life, and always looks like a lady, putting in the time and effort it takes
for a busy woman to be chic and attractive. She is like someone who walks
into politics each day as if she wants to physically adorn it. This I take
to be a patriotic act. Her remarks were dull and witless. Nothing she said
was the fruit of fresh thought. She offered cornball, off-point clichés
about the kitchen table: "We don't have time to start over!" "I've seen
grown men cry." It was a speech that could have been given at a Democratic
party fund-raiser, and no doubt has been. What runs her and keeps her from
embarrassment is the lovely, unquestioned conviction that she is right and
that's that. There are politicians whose strengths come from their limits.
Her limit is that she cannot, ever, see truth on the other side. The steel
of her certitude becomes her strength. It allows her to squash opponents
legislatively like little bugs.
It was interesting that while Sen. Alexander spoke
to the room and not the cameras, she spoke to the cameras and not the room.
Which seemed to say it all.
The whole point of the summit, I believe, was for
the Democrats, to win whatever support remains for the bill they will
attempt to ram home in the Congress, and for the Republicans to prove they
are not the party of "no" but a party of serious ideas and intentions.
It was a talking-point festival. Nobody moved the
needle. The Democrats emoted, making appeals to the sentiment. The
Republicans analyzed, sometimes indignantly, but their statements often
seemed disconnected, as if their plans lack a framework that coheres.
At odds with his party's health-care style was the
president, who has the certitude but not the passions of an ideologue.
What the meeting made clear is what the Democrats
are going to do—not step back and save the moderates of their party but
attempt to bully a bill through the Congress.
A mere three days before President Obama's
supposedly bipartisan health-care summit, the White House yesterday released
a new blueprint that Democrats say they will ram through Congress with or
without Republican support. So after election defeats in Virginia, New
Jersey and even Massachusetts, and amid overwhelming public opposition,
Democrats have decided to give the voters what they don't want anyway.
Ah, the glory of "progressive" governance and
democratic consent.
"The President's Proposal," as the 11-page White
House document is headlined, is in one sense a notable achievement: It
manages to take the worst of both the House and Senate bills and combine
them into something more destructive. It includes more taxes, more subsidies
and even less cost control than the Senate bill. And it purports to fix the
special-interest favors in the Senate bill not by eliminating them—but by
expanding them to everyone.
The bill's one new inspiration is a powerful
federal board that would regulate premiums in the individual insurance
market. In all 50 states, insurers are already required to justify premium
increases to insurance commissioners, who generally have the power to give a
regulatory go-ahead, or not. But their primary concern is actuarial
soundness and capital standards, making sure that companies have enough cash
to pay claims.
The White House wants to create another layer of
review that will be able to reject any rate increase that is "unreasonable
or unjustified." Any insurer deemed guilty of such an infraction by this new
bureaucracy "must lower premiums, provide rebates, or take other actions to
make premiums affordable." In other words, de facto price controls.
Insurance premiums are rising too fast; therefore,
premium increases should be illegal. Q.E.D. The result of this rate-setting
board will be less competition in the individual market, as insurers flee
expensive states or regions, or even a cascade of bankruptcies if premiums
are frozen and the cost of the care they are expected to cover continues to
rise. For all the Dickensian outrage about profiteering by WellPoint and
other companies, insurance is a low-margin business even for health care,
and at least 85 cents of the average premium dollar, usually more, is
devoted to actual health services.
Price controls are always the first resort of
national health care—i.e., Medicare's administered prices for doctors and
hospitals. This new White House gambit is merely a preview of ObamaCare's
inevitable planned medical economy, which will reduce choice and quality.
The coercive flavor that animates this exercise is
best captured in the section that purports to accept the Senate's
"grandfather clause" allowing people who like their current health plan to
keep it. Except that "The President's Proposal adds certain consumer
protections to these 'grandfathered' plans. Within months of legislation
being enacted, it requires plans . . . prohibits . . . mandates . . .
requires . . . the President's Proposal adds new protections that prohibit .
. . ban . . . and prohibit . . . The President's Proposal requires . . ."
After all of these dictates, no "grandfathered" plan will exist.
Meanwhile, the new White House plan further
vitiates the remnants of cost-control that remained in the House and Senate
bills. Now the highly vaunted excise tax on high-cost insurance plans won't
kick in until 2018, whereas it would have started in 2013 in the Senate
bill, and this tax will only apply to coverage that costs more than $27,500.
Very few plans ever reach that threshold, and sure
enough, this is the same $60 billion deal the White House cut in December
with union leaders who have negotiated very costly benefits. Now it is
extended to all to avoid the taint of political favoritism.
While the White House claims to eliminate the
"Cornhusker Kickback," the Medicaid bribe that bought Nebraska Senator Ben
Nelson's vote, political appearances are deceiving. As with the union
payoff, what the White House really does is broaden the same to all states,
with all new Medicaid spending through 2017 and 90% after 2020 transferred
to the federal balance sheet. Governors will love this ruse, but national
taxpayers will pay more.
And more again, because the White House has adopted
the House's firehose insurance subsidies. People earning up to 400% of the
poverty line—or about $96,000 for a family of four in 2016—will qualify for
government help, and, naturally, this new entitlement is designed to expand
over time.
The Administration also claims to have discarded
the House's 5.4-percentage-point surtax on joint-filers earning more than $1
million a year, but it sneaks it back in by expanding the Senate's expansion
of the 2.9% Medicare payroll tax to joint income about $250,000. The White
House would now apply that tax for the first time to income from "interest,
dividends, annuities, royalties and rents," details to come.
*** The larger political message of this new
proposal is that Mr. Obama and Democrats have no intention of compromising
on an incremental reform, or of listening to Republican, or any other, ideas
on health care. They want what they want, and they're going to play by
Chicago Rules and try to dragoon it into law on a narrow partisan vote via
Congressional rules that have never been used for such a major change in
national policy. If you want to know why Democratic Washington is
"ungovernable," this is it.
''If you have a better idea,
show it to me."
That was President Barack Obama's challenge two weeks ago to House
Republicans regarding health-care reform. He has since called for a
bipartisan forum, not to start over on health reform but to "move forward"
on the "best ideas that are out there."
The best ideas out
there are not those that were passed by the House and Senate last year,
which consist of more spending, more regulations and more bureaucracy.
If the president is serious about building a system that delivers more
quality choices at lower cost for every American, here's where he should
start:
Make insurance
affordable. The current taxation of health insurance is arbitrary and
unfair, giving lavish subsidies to some, like those who get Cadillac
coverage from their employers, and almost no relief to people who have
to buy their own. More equitable tax treatment would lower costs for
individuals and families. Many health economists conclude that tax
relief for health insurance should be a fixed-dollar amount, independent
of the amount of insurance purchased. A step in the right direction
would be to give Americans the choice of a generous tax credit or the
ability to deduct the value of their health insurance up to a certain
amount.
Make health insurance portable.
The first step toward genuine portability—and the best way of solving
the problems of pre-existing conditions—is to change federal policy.
Employers should be encouraged to provide employees with insurance that
travels with them from job to job and in and out of the labor market.
Also, individuals should have the ability to purchase health insurance
across state lines. When insurers compete for consumers, prices will
fall and quality will improve.
Meet the needs of the chronically ill.
Most individuals with chronic diseases want to be in charge of their own
care. The mother of an asthmatic child, for example, should have a
device at home that measures the child's peak airflow and should be
taught when to change his medication, rather than going to the doctor
each time.
Having
the ability to obtain and manage more health dollars in Health Savings
Accounts is a start. A good model for self-management is the Cash and
Counseling program for the homebound disabled under Medicaid. Individuals in
this program are able to manage their own budgets and hire and fire the
people who provide them with custodial services and medical care.
Satisfaction rates approach 100%, according to the Robert Wood Johnson
Foundation. We should also encourage health plans to specialize in managing
chronic diseases instead of demanding that every plan must be all things to
all people. For example, special-needs plans in Medicare Advantage actively
compete to enroll and cover the sickest Medicare beneficiaries, and stay in
business by meeting their needs. This is the alternative to forcing insurers
to take high-cost patients for cut-rate premiums, which guarantees that
these patients will be unwanted.
Allow doctors and patients to control costs.
Doctors and patients are currently trapped by government-imposed payment
rates. Under Medicare, doctors are not paid if they communicate with
their patients by phone or e-mail. Medicare pays by task—there is a list
of about 7,500—but doctors do not get paid to advise patients on how to
lower their drug costs or how to comparison shop on the Web. In short,
they get paid when people are sick, not to keep them healthy. So
long as total cost to the government does not rise and quality of care
does not suffer, doctors should have the freedom to repackage and
reprice their services. And payment should take into account the quality
of the care that is delivered. Once physicians are liberated under
Medicare, private insurers will follow.
Don't cut Medicare.
The reform bills passed by the House and Senate cut Medicare by
approximately $500 billion. This is wrong. There is no question that
Medicare is on an unsustainable course; the government has promised far
more than it can deliver. But this problem will not be solved by cutting
Medicare in order to create new unfunded liabilities for young people.
Protect early retirees.
More than 80% of the 78 million baby boomers will likely retire before
they become eligible for Medicare. This is often the most difficult time
for individuals and families to find affordable insurance. A viable
bridge to Medicare can be built by allowing employers to obtain
individually owned insurance for their retirees at group rates; allowing
them to deposit some or all of the premium amount for post-retirement
insurance into a retiree's Health Savings Account; and giving employers
and younger employees the ability to save tax-free for post-retirement
health.
Inform consumers.
Patients need to have clear, reliable data about cost and quality before
they make decisions about their care. But finding such information is
virtually impossible. Sources like Medicare claims data (stripped of
patient information) can help consumers answer important questions about
their care. Government data—paid for by the taxpayers—can answer these
questions and should be made public.
Eliminate junk lawsuits.
Last year the president pledged to consider civil justice reform. We do
not need to study or test medical malpractice any longer: The current
system is broken. States across the country—Texas in particular—have
already implemented key reforms including liability protection for using
health information technology or following clinical standards of care;
caps on non-economic damages; loser pays laws; and new alternative
dispute resolution where patients get compensated for unexpected,
adverse medical outcomes without lawyers, courtrooms, judges and juries.
Stop health-care fraud.
Every year up to $120 billion is stolen by criminals who defraud public
programs like Medicare and Medicaid, according to the National Health
Care Anti-Fraud Association. We can help prevent this by using
responsible approaches such as enhanced coordination of benefits,
third-party liability verification, and electronic payment.
Make medical
breakthroughs accessible to patients. Breakthrough drugs,
innovative devices and new therapies to treat rare, complex diseases as
well as chronic conditions should be sped to the market. We can do this
by cutting red tape before and during review by the Food and Drug
Administration and by deploying information technology to monitor the
quality of drugs and devices once they reach the marketplace.
The
solutions presented here can be the foundation for a patient-centered
system. Let's hope the president has the courage to embrace them.
The stunning victory of Scott Brown in
Massachusetts may prove to be a game-changer for the President's health-care
"reform" agenda. This is good news for the ability of lower-income families
lacking insurance to climb up the ladder of American prosperity. His
associated rhetoric notwithstanding, the President's policies in the
stimulus bill and health-care debate increase current barriers to the
American dream. These legislative efforts (we use the Senate health-care
bill for illustration) raise to shocking levels the effective marginal tax
rates (EMTR) on lower and middle-income singles and families--with the
government taking up to 41% of each additional dollar.
The mechanics are simple. The effective marginal
tax rate is the answer to the question: "If I earn $1 more, how much less
than $1 do I get to save or spend?" If you can keep that full dollar for
your disposal, the effective marginal tax rate is zero. If earning another
dollar does not raise your disposable income by even a penny, the effective
marginal tax rate is 100 percent.
Obviously, neither extreme is realistic. But
exactly where federal policies come down in between has dramatic
implications for the ability of families to rise from the ranks of the poor,
or to ascend toward the upper end of the middle class. This mobility is the
heart of the American dream that has made the United States a beacon of
economic light for centuries. Equal opportunity to achieve that dream – not
equal paychecks or equal government handouts – is the real-world litmus test
for fairness in government policy.
Consider, then, the figure below constructed for a
two-earner family with two school-age children, one of whom is in college.
The solid line shows the EMTR based on income tax law prior to the
health-care bill (it excludes the impact of the payroll taxes). The dashed
line displays the damaging increases in the EMTR assuming the health
insurance premium subsidies contained in the Senate health-care bill and
insurance cost estimates provided by the Kaiser Family Foundation. As a
family's income rises above 133% of poverty, Medicaid eligibility will be
eliminated but a family that does not receive health insurance from their
employer will receive a subsidy to purchase health insurance in the
"exchange." In turn, however, as their efforts yield higher income,
subsidies are clawed back or effectively taxed away. The current law
policies show that there are already some lower income families facing EMTRs
above those in the middle class. But the barrier to success imposed by
health-care reform is even more striking. According to the Congressional
Budget Office, about 20 million people would receive a subsidy to purchase
insurance through an exchange and thus face a higher EMTR.
How can a family be expected to get ahead when
taking an extra shift, finding a way for a second parent to work, or
investing in night school courses to qualify for a raise means handing the
government as much as 41% of the additional income earned? Parents already
juggle the tough trade-off between working more to build their family's
future and spending time at home with their children. The bigger the EMTR,
the tougher that tradeoff becomes.
How could this happen? In part, it may reveal
ignorance about the long-term impacts class warfare-based programs. For
decades, both parties have employed refundable tax credits (i.e., disguised
spending programs) as a way of providing benefits to low-income families
while appearing to favor low taxes and small government. The class-conscious
left has insisted that these benefits be "targeted" – i.e., that they
disproportionately help those lower-income families that pay no taxes and be
phased-out for the tax-paying middle class. The result fit their agenda of
wealth redistribution. The right, eager to achieve any tax cuts they could
muster, accepted the income limitations as the price of getting any tax
relief. With progressives' hell-bent effort to soak the rich, the outlook
for the poor and middle class quietly and steadily deteriorated to the
condition we find it today.
Every "phase-out" of a tax credit or subsidy
program is an EMTR in disguise. The cumulative impact is a cruel twist on
"targeting," as families are anchored near the bottom of the income
distribution by layers of fiscal cement. Ignorance is a dangerous animal in
the hands of tax policymakers.
A second possibility is subtle paternalism toward
the poor. Unlike the rich who are presumed to know what they want (which
progressives are dead set on thwarting), it may be that poorer Americans are
presumed to need guidance on how to live their lives (or a "nudge" in the
parlance of the faddish behavioralists in the Obama Administration). They
need to be told that it is a good idea to work, take care of your children,
go to college and have health insurance, hence a tax credit for every
virtue.
In the end it does not matter how we got here.
Taxes interfere with the basic rewards for work, thrift, and saving.
Excessive EMTRs damage these incentives, discourage the taxed, and threaten
to rob America of a vitality that is its signature.
This year marks a crucial time in the future of tax
policy. The tax laws enacted in 2001 and 2003 will sunset, along with the
recent tax credits included in the so-called stimulus bill. As Congress
thinks about the future, we hope it puts full weight on the importance of a
tax code that supports the ability of the poor and middle-class to achieve
their dreams.
The Massachusetts special election sends the strong
message that voters want Washington to scale back its interference in their
lives. Re-thinking the policies that get in the way of their pursuit of
success is a good place to start.
Jensen Comment
If we are going to have expanded healthcare coverage, I see nothing wrong
with making recipients pay graduated to their level of income. Even the poor
should make sacrifices for their expanded healthcare coverage. And the
middle class should pay much more.
February 8, 2010 message from a friend in Germany
Hello Bob and Erika,
as it is Super Bowl Sunday I am sitting here
reminiscing about my time in the US, and, of course, thinking about the
people that I met. So I’m sending you an email as I am waiting for the Super
Bowl to come on in about an hour. Once again they will show the big game on
German TV. I have to take the rest of my vacation time from last year until
the end of March of this year, so I decided to take tomorrow off to get rid
of some of the vacation time (I have done this almost every year since I
came back from the US, and two years ago I was even so lucky to be in the US
for the Patriots-Giants Super Bowl, the greatest Super Bowl I have seen). So
I am still quite busy at work, and still enjoy what I do very much. Since I
am in an energy-related field, I am so to speak ‘part of’ this huge ‘push’
(for lack of a better word) that is going on towards renewable energy right
now. Even though superconducting power cables are not a renewable energy
source but rather one form of transmitting energy , there is a lot of
interest in the technology right now. Taking a day off tomorrow turned out
to be a good choice, as all public transportation workers in the city of . .
. will be on strike, so I would have had to take the car to get to
work.
I hope you are doing well in the mountains of New
Hampshire, which I assume didn’t get hammered by the snowstorm the last few
days, but are covered in snow anyway. I am reading Bob’s emails with great
interest, especially regarding the banking situation and the health
insurance situation. These are also two significant issues over here (you
could actually argue that the strike tomorrow has a little to do with the
bank bailout, see below….).
The new German government is trying to reform our
health care system. Medical care in Germany is probably among the best in
the world, and costs are quite high (so I guess it’s quite similar to the US
in these manners…). We have this system of public option insurance, which
covers ~ 80% of the population, and private insurance, which covers almost
everyone else (except for the few percent that fall through the cracks). In
any case, the underlying idea of the system is not so bad, but the
administration is so complex that a) only the Germans could come up with it
and b) only the Germans can run it without going nuts. What is interesting
is that Germany is one of only a few countries in Europe that has this
private insurance option, most have only the public option (or so I read in
an article recently, I am not the expert on health insurance). The public
option insurance had to curtail what they reimburse quite a bit in recent
years to cut costs, so more and more people try to get into private
insurance. This, however, is not so easy: You have to earn a certain amount
of money, and the insurance companies can deny coverage or exclude certain
pre-existing conditions. (I have pre-existing conditions, so for me private
insurance would be almost useless, as they would exclude these conditions,
or rack up my premiums, or both). Plus, my wife (while she is not working,
when she is working she will be covered herself again, and have to pay the
premium (percentage of income))) and kid are covered with no additional
premium in the public option, so it is always a safe bet, despite the fact
that it may not pay for all the treatments the private insurance pays for
(they generally pay for everything that is medically necessary though, even
quite complex and costly procedures). So in any case, if you are interested
I can tell you a bit more about health insurance in Germany. (There is
actually another similarity between Germany and the US: With Germany being
the biggest economy in Europe, medication costs a lot more here than in
neighboring countries (or so I’ve read), which to me seems similar to the
US/Canada medication cost issue).
As I said before, there will be a strike here in .
. . tomorrow as the greedy public works employees (part of which are
the transportation workers) show little solidarity to all the poor bankers
bailed out by government funds. Since German governments (state and federal)
had to fund the solidarity fund for starving bankers to keep them from
bankruptcy and local governments have lower tax receipts due to the economic
crisis, there is very little money for pay raises for public works
employees, which, of course, should be happy to have a job and be able to
collect a paycheck. (But thanks to the banks and the great work the bankers
do, they all have jobs (except for the ones that got laid off, of course,
but hey, if we laid off some bankers or let their banks go belly up, more
people doing real work would be sure to get laid off too, because it’s a
trickle-down economy, as we all know)). Collecting a paycheck is obviously
something the greedy workers couldn’t do if it wasn’t for banks having money
(and handing it out via ATMs, and central banks printing as much of it as is
necessary, or maybe even more), which goes to show that there is a true lack
of solidarity from the general public towards the poor starving bankers
bailed out by government funds.
So the poor bankers will have a hard time driving
their BMWs and Mercedes to work tomorrow, as the roads will be clogged up by
the cheap and smelly cars of people that would otherwise take public
transportation to work (I assume that everyone that can take the day off
will do so, just like I do. People were actually advised to take the day off
if they can). Maybe I should check the newspaper again to make sure there
isn’t an impromptu bank holiday tomorrow, after all, when bankers do so much
good for us year-round they shouldn’t have to suffer through such a rough
commute to work because of some greedy workers going on strike.
In any case, I would normally ride my bike to work
if it wasn’t for this rather rough winter, which for me is the latest piece
of evidence that global warming is maybe not all it’s cracked up to be. It’s
pretty reasonable to assume that human activity has an influence on climate,
obviously, but when almost every seasonal forecast is dead wrong, it’s hard
to se how the source can be believed to be correct in forecasts over many
decades. In any case, I hope to be able to live to see, and wouldn’t be
surprised if indeed it gets warmer, but I wouldn’t be shocked if it gets
colder or stays the same either). Nonetheless, energy efficiency and
renewable energy development is a reasonable thing to shoot for anyway,
whether there is global warming or not… http://network.nationalpost.com/np/blogs/fpcomment/archive/2010/01/17/lawrence-solomon-bbc-drops-top-ipcc-source-for-climate-change-data.aspx
So the Hadley center in Britain predicted a winter
with mild temperatures, but this may end up being the coldest winter in
central-northern Europe in 30 years. We’ve had snow on the ground since
mid-December, and the 15 day forecast right now has not a single day with a
daytime high above freezing… (nonetheless, every now and then we have a day
that is slightly above freezing, which usually leads to some melting of the
snow and ice on the ground, and subsequently even more treacherous road
conditions). The local governments were woefully unprepared for this winter,
which is certainly not surprising when you are being told to expect a milder
than normal winter. The road crews didn’t clear the roads properly in
mid-December (probably assuming, like everyone else, including me, that this
was going to melt rather quickly), and so we’ve had a mess on the ground
ever since. I haven’t ridden my bike in 8 weeks now.
I am still traveling to Norway quite a bit, and I
thoroughly enjoy these trips. I also travel to the US, but only maybe once
or twice a year; I was in Tucson last June. I really enjoy these trips also,
I am quite lucky that I get to go on business trips to the US as I really
enjoy spending time there. Business trips to places you’d like to visit
anyway are not such a bad thing. (Of course, at work I am trying to not let
on that I enjoy business trips, but I think they have me figured out
anyway…. Luckily my wife puts up with it too). Whenever I travel to the US,
I wonder how my life would be had I stayed there six years ago. In any case,
now I am a happily married man with a house and a kid, which you can see in
the attached pictures.
Second Message on February 15, 2010 from my friend in Germany
Hi Bob,
the longer I am living in Germany again the
stranger Germans seem to me. In any case, to understand the German attitude
to health insurance I think it is important to bear in mind Bismarck's
social legislation (
http://en.wikipedia.org/wiki/Otto_von_Bismarck#Bismarck.27s_social_legislation
)
and the German mind in general. Germans are a rather risk-averse bunch that
believes that things are likely to get worse rather than better.
I have recently come across a few articles on
health insurance in Germany that essentially say that the private insurance
is facing problems, or rather private insurance is jacking up the rates for
two reasons: Private insurers pay more for the same services than the public
insurance option (except for their basic tariffs) does: there is a so-called
multiplier which says what you can charge for a given procedure when charged
to private insurance. I have seen the factor of 2.3 used, but the way
doctors can charge for their services in Germany is rather difficult to
grasp for me so this factor of 2.3 may or may not be the multiple of what a
public option insured person is charged. The higher pay for the same
services is one of the reasons privately insured people have shorter waiting
times in doctor's offices.
The second reason for higher rates seems to be that
privately insured patients do not care how much a procedure costs, as soon
as they are above the co-pay limit (often there is a co-pay limit of a few
hundred euros or so a year, above that there is no co-payment anymore for
privately insured people). (There is an upper limit on how much a doctor can
spend on average for publicly insured people, but I am not sure how much of
a deterrent this is for a doctor to prescribe what is necessary).
In any case, recently it has been argued that the
medical doctors are now charging private insurance patients more to make up
for what they do not get from the publicly insured people.
So the issue of public health insurance in Germany
remains an interesting one, and, as everywhere else, rates are likely to
rise.....
Regards,
XXXXX
Health Insurance in Germany ---
http://www.toytowngermany.com/wiki/Health_insurance
Note that pre-existing conditions drive up the private insurance rates for
individuals.
Private insurance often leads to preferential treatment from physicians and
hospitals.
My friend also tells me that having private insurance is somewhat of a status
symbol in Germany.
Basic introduction
Health insurance is obligatory for everyone residing
in Germany who is employed full-time by a company. The company pays half of
the insurance contributions, the other half comes out of the employee's
salary. The employee's half usually totals around 10% of their gross salary.
When starting work with a company usually the employee won't have to worry
too much about how the system works. The company will automatically sign
them up with an insurance company and the contributions automatically
deducted from the salary. Sometimes the employee may be asked if they have a
preferred insurance company. It is recommended to simply go with one of the
big names, like "AOK" or "TKK". They are all pretty similar.
Health insurance has been obligatory for everybody in Germany, including the
self-employed, since 2007. Medical treatment can be hugely expensive.
There are two types of health insurance in Germany. These are the "public"
and "private" systems. This system often causes considerable confusion. Full
details are given below.
Public Health insurance
If you are employed in Germany and you are
earning less than the threshold (Versicherungspflichtgrenze) of EUR
48,600.- gross per year (EUR 4,050 gross
per month), you are automatically and compulsorily insured in a public
health insurance scheme. This is also true for students at a state or
state-approved university in Germany and certainly for interns too. This
also means that your employer does not have the option of accepting an expat
insurance scheme (see below). You are only exempt from mandatory public
health insurance as an employee working in Germany if you are seconded (
German: "entsendet") by a company which has its HQ in a member state of the
EEA (= European Economic Area; including all of the EU plus Iceland,
Liechtenstein and Norway) or in certain contracting states (among them being
Canada and Quebec, PR China, Israel, Japan and the USA; for the complete
list please check with DVKA.de). "Secondment" exists if the employee goes
abroad for work purposes on instructions from his/her employer and the work
is time-limited in advance, inter alia because of the particularity of
employment or by contract. Unfortunately I found no definition of the
maximum acceptable "time-limit". The compulsory membership in German public
health insurance while working here is protected by European Regulation No.
EEC 1408/71, among others. It is furthermore laid out in the German SGB (=Sozialgesetzbuch),
5th book, § 257
All in all, what this means is: if you are employed by a German company or
any other foreign company in Germany and you earn less than EUR 4,050 gross
salary per month, you are a mandatory member of the public German health
insurance system. You pay half plus 0.9% and your employer pays roughly half
of the insurance premium too. As of 2009, the premium has been standardised
for all public health insurance companies at 15.5% of gross salary up to the
threshold (Beitragsbemessungsgrenze) of EUR 44,100.
This will drop to 14.9% from July 2009. Although they more or less offer the
same services, it's still worth comparing.
Public health insurance is great, however, if you earn only a small amount
(because you get a lot of insurance for a low sum of money) or if you are
married and have a spouse and children with you - because they are covered
by the public health insurance too (this may change in the near future,
though, according to the latest political plans). But beware: since a lot of
services from the public health insurance system have been downgraded or
cancelled in recent years, you might want to consider getting additional
private insurance to cover some services like 1- or 2-bed rooms in hospital,
Chefarzt-Betreuung (operation and treatment by the head doctor of the
hospital) or full dental services/replacement etc. Even then you might still
have to pay some extra if you have a very complicated illness and you try to
get the most-respected expert in Germany to treat you, because in these
cases treatment is only covered up to a certain limit. If you want to be
sure about having enough funds in the event of severe illness to get the
best possible treatment, other insurance types (Dread Disease offered by
Canada Life or Scandia for instance) are a possibility.
Private Health Insurance
Now if you are earning more than the
threshold of EUR 4,050 gross salary per month, you can
elect to leave the public health insurance and get a private health
insurance while employed in Germany. Here the comparison between different
offers is a bit more complicated and you may want to get the advice of a
professional advisor or broker. I have seen some attempts to compare
different quotations from different private health insurances, but you
cannot just take one quote with the price XYZ and another one with ABC to be
paid per month and say that the cheaper one is the better choice - it may
vary strongly regarding the insured coverage. The best way to start a
comparison is to ask private insurers to send you a quotation "Analog GKV",
meaning with the same coverage as the public health insurance. Then you can
compare the insurance quotations on an even footing. You can also lower your
premium by using "excess options (Selbstbeteiligung)". This means that you
are willing to pay for instance the first 300.- EUR every year out of your
own pocket and you will receive reimbursement only for the costs in excess
of that 300.- EUR. Since most of the private insurances offer to repay you 1
or 2 monthly premiums after one year of not having using the insurance at
all, you should add this repayment amount to the excess-option-amount agreed
in your contract and then you know at what medical cost per year it makes
economical sense to hand in all invoices to the insurer during any given
year. The highest excess option I know of is 2.400.- EUR per year; standard
is between 300 and 750 EUR per year. If you take a very high excess option,
you will achieve a similar coverage like with most expat health insurances:
you are covered for all serious medical problems, but you will pay for all
prescriptions and ordinary consultations of a doctor out of pocket. So, a
Private Health insurance can be much lower in monthly premium than a Public
health insurance while providing you with more and better coverage. Still:
if you are married with children and your spouse does not earn any income
here in Germany, public insurance covering all family members with your own
premium can be the better deal. And if you want to have a better coverage
than Public Insurance offers, you can always get an add-on insurance from
private insurance companies, where you cover certain medical issues that you
deem to be important for you.
Use of Foreign Health Insurance
One of the main questions I have seen on TT is the
question Hutcho asked me too: can I use a private insurance from abroad,
which is cheaper than German insurance even though it may not cover all that
German private insurance offers? For instance Expathealthcare, Bupa etc. The
answer I finally got from the official side is, amazingly, YES! Apparently
you can... My source for this valuable information is a Ms. LÖWER at the
DVKA, the "Deutsche Verbindungsstelle Krankenkasse - Ausland", a federal
institution. But this of course applies only if you are above the magic
threshold of monthly income stated above, i.e. would be eligible for Private
Health insurance according to German laws and regulations. Hence
theoretically you could ask your employer to accept a BUPA or MediCare
policy - even as a German employee, if I understand this regulation
correctly.
However: a) foreign insurance is most certainly not certified according to §
257, 2a and hence your employer has no obligation to pay a share of the
insurance costs, as he is required to do if you select a licensed German
private health insurance. He may nonetheless decide to do so. But some tax
issues would inevitably arise for the employer if he does. b) According to
German law/regulations you will also need an additional "long-term care
insurance". For this you will need to pick a German insurance because to my
knowledge no foreign insurance is qualified or certified for this insurance.
This insurance is required by law; you cannot avoid it.
Now remains one important question: why are foreign health insurances so
much less expensive than German health insurances? Of course there are
differences in the coverage that cause a different computation of risk for
the insurance company to be asked to pay out of the insurance coverage. But
what makes a German insurance also so much more expensive is that they build
up a capital stock for the insured early on in order to make sure that
health costs do not explode in old age. This is something the expat
insurances seem not to do if you look at the increase of premiums for people
aged 30 to people aged 50. Therefore, if you plan to stay in Germany for a
longer period of time, it might be wise to pay the higher premium on the
German insurance in order to keep costs stable in later years.
Moreover, you should be aware that expat health insurance schemes have
limitations on cover for chronic conditions. Such policies are designed to
cover treatment of medical conditions that respond quickly to treatment
(acute conditions). Medical insurance is not intended to cover you against
the cost of recurrent, continuing or long-term treatment of chronic medical
conditions since these treatments become a series of predictable, rather
than unexpected, events. See the following link for further information and
for examples:
AXA PPP - chronic conditions
Health insurance for freelancers
Health insurance is usually arranged through a
person's employer, who also contributes to the scheme. The self-employed, on
the other hand, are responsible for arranging their own private insurance.
Since 2007, even the self-employed are legally obliged to have health
insurance cover. They can choose between private health insurance schemes
offered by German providers and the expat schemes outlined above. Advice
from an independent agent is recommended. Health insurance costs are usually
tax deductible; an insurance agent or financial advisor will be able to
advise you on this.
Summary
It is now up to each individual to check the services
offered by foreign insurance companies with regard to his/her needs and
security requirements and then decide which is the overall best option. As
it is, an employer can not force you to legally use a German private health
insurance at all. But the computer system may not be able to handle having
no employer-share of health insurance or other such administration
problems... And you should make sure to pick an insurance company that has a
good track record in actually paying you the money if you need to get
expensive treatment or hospitalization. Otherwise even a fortnight in a
German hospital with surgery can easily run up a bill of tens of thousands
of euros. And finally you need to decide if you plan to stay in Germany only
for a short period of time or for several years or maybe the rest of your
life: in the later cases, the German insurance will give you a good deal on
the long run.
Conclusion
Even though this will of course sound somewhat selfish
considering my own profession, if you can opt out of the public insurance
system the best advice is to take an independent broker to help you
understand your options and to guide you through the legal jungle here in
Germany.
Of course, the public is right. In the midst of the
worst economic crisis in seventy years, why waste enormous political capital
battling to pass a healthcare plan that is modeled on a proven failure in
Massachusetts, as voters there clearly registered? Meanwhile, the president
has dropped the ball in the effort to make bankers act responsibly by
forcing them to forego outrageous bonuses and help homeowners stay in their
homes. Again quoting the message of that Wall Street Journal/NBC poll: "The
president's focus on health care amid heightened job concerns could be
hurting his ratings. At the one-year mark of his presidency, 35 percent of
Americans said they were 'quite or extremely' confident he had the right
priorities to improve the economy, down from 46 percent at midyear." The
Journal noted that a majority disapproved of the government's response to
the financial crisis, adding, "The related problem for Mr. Obama is the
public's lingering anger about the bailouts of 2008 and 2009, which helped
boost bank profits even as unemployment grew--a toxic political problem."
This week it became impossible in Massachusetts for
small businesses and individuals to buy health-care coverage after Governor
Deval Patrick imposed price controls on premiums. Read on, because under
ObamaCare this kind of political showdown will soon be coming to an
insurance market near you.
The Massachusetts small-group market that serves
about 800,000 residents shut down after Mr. Patrick kicked off his
re-election campaign by presumptively rejecting about 90% of the premium
increases the state's insurers had asked regulators to approve. Health costs
have run off the rails since former GOP Governor Mitt Romney and Beacon Hill
passed universal coverage in 2006, and Mr. Patrick now claims price controls
are the sensible response to this ostensibly industry greed.
Yet all of the major Massachusetts insurers are
nonprofits. Three of largest four—Blue Cross Blue Shield, Tufts Health Plan
and Fallon Community Health—posted operating losses in 2009. In an emergency
suit heard in Boston superior court yesterday, they argued that the
arbitrary rate cap will result in another $100 million in collective losses
this year and make it impossible to pay the anticipated cost of claims. It
may even threaten the near-term solvency of some companies. So until the
matter is resolved, the insurers have simply stopped selling new policies.
A court decision is expected by Monday, but state
officials have demanded that the insurers—under the threat of fines and
other regulatory punishments—resume offering quotes by today and to revert
to year-old base premiums. Let that one sink in: Mr. Patrick has made the
health insurance business so painful the government actually has to order
private companies to sell their products (albeit at sub-market costs).
One irony is that Mr. Patrick's own Attorney
General and his insurance regulators have concluded—to their apparent
surprise—that the reason Massachusetts premiums are the highest in the
nation is the underlying cost of health care, not the supposed industry
abuses that Mr. Patrick and his political mentor President Obama like to
cite.
On top of that, like ObamaCare, integral to the
Massachusetts overhaul are mandates that require insurers to cover anyone
who applies regardless of health status or pre-existing conditions and to
charge everyone about the same rates. This allows people to wait until
they're about to incur major medical expenses before buying insurance and
transfer the costs to everyone else. This week Blue Cross Blue Shield
reported a big uptick in short-term customers who ran up costs more than
four times the average, only to drop the coverage within three months.
Last July, Charlie Baker detailed similar gaming at
Harvard Pilgrim, the health plan he used to run. Between April 2008 and
March 2009, about 40% of its new enrollees stayed with it for fewer than
five months and on average incurred costs about 600% higher than the company
would have otherwise expected.
Mr. Baker is almost certain to be Mr. Patrick's GOP
opponent in the fall election. The Governor's lurch toward price controls is
obviously part of a bid to tar the former CEO as an industry villain. David
Plouffe, the architect of Mr. Obama's Presidential campaign, has signed on
as a Patrick 2010 consultant. These kinds of collisions between politics and
health care are going to occur constantly across the country as ObamaCare
kicks in.
As a candidate, Barack Obama promised
to pass a health care plan with important benefits for average Americans.
For the typical family, costs would go down by as much as $2,500 annually.
Adults wouldn't be required to buy insurance. No one but the wealthy would
face higher taxes.
A year later, however, the health care proposals in
Congress lack many of those easy-to-sell benefits, which became victims of
the lengthy process of trying to win over wavering lawmakers, appeasing
powerful special-interest groups and addressing concerns about the heavily
burdened Treasury.
"There's nothing in it the average person could
understand about why your costs would be lower," said Robert Blendon, a
professor of health policy at Harvard's School of Public Health. "They don't
even have good illustrations about how it would be cheaper. They did not
find a way to save money for people with job-based insurance."
Today, the legislation is in serious trouble,
lacking a crucial 60th vote in the Senate after Republican Scott Brown was
elected to the Massachusetts seat once held by the late Edward Kennedy, a
Democrat.
Certainly, attacks by the Republicans - as well as
the Democrats' inability to articulate the benefits of the legislation
clearly - are partly responsible for the measure's lack of popularity. So
are crucial policy decisions that Democratic leaders made as they struggled
to push the legislation through, according to experts of different
ideological persuasions.
"Health reform is a really hard thing to do," said
Jonathan Oberlander, an associate professor of social medicine at the
University of North Carolina-Chapel Hill. "They did a lot right,
strategically. But you can do everything right and still fail in health
reform."
Here are some of the policy choices that experts
say have hurt the bill's chances:
WHAT'S IN IT FOR ME?
For the majority of voters who get insurance
through their employers, the downsides have become increasingly tangible
while the promised benefits - lower costs among them - have seemed more
nebulous. One reason: Democrats didn't want to be so tough on health care
providers that they'd fight the legislation.
"The Democrats succeeded in doing reform without
goring anyone's ox and the public has seen that for what it is: They are not
substantially bringing costs down in the foreseeable time horizon," said
Joel Cantor, the director of the Rutgers University Center for State Health
Policy in New Brunswick, N.J.
To be sure, the Senate Democrats crafted a
"Cadillac tax" on the highest-cost insurance plans for people with employer
coverage. That was deemed necessary to help slow the growth of health care
costs and to help finance the plan. It means that some people with coverage
could end up worse off, however.
Lawmakers incorporated tax credits to help small
businesses afford coverage, but most of the bills' provisions are targeted
at the more than 30 million Americans who lack coverage and the 17 million
who buy insurance in the individual market. The bills would bar insurers
from rejecting individuals with health problems and would guarantee that
policies couldn't be canceled if enrollees got sick. However, such promises
seem hypothetical for many people who already have jobs and insurance, the
very constituency the Democrats need to succeed.
MEDICARE
The Democrats would finance a big chunk of the bill
by slowing the growth of Medicare spending, which is probably inevitable,
given the sheer size of the program.
In doing so, however, they've opened themselves up
to charges that seniors would pay the price.
Democrats and the AARP, the powerful seniors'
lobby, argue that the legislation wouldn't hurt older Americans and in fact
would help them by lowering costs for prescription drugs and making other
improvements. They also say that payment cuts to private Medicare Advantage
plans are good policy because the plans cost more than traditional Medicare
does.
Certainly, there are no easy ways to finance such a
massive revamp.
"The choices are to take it out of existing health
programs, increase taxes or reduce other spending," said Gail Wilensky, who
ran Medicare and Medicaid under President George H.W. Bush and is now a
senior fellow at Project HOPE, an international health education foundation.
"Those are three really unattractive options."
The Medicare reductions, however, have become
targets for attack ads aired by opponents such as the 60 Plus Association, a
conservative advocacy group, and America's Health Insurance Plans, the
industry's major trade group.
The proposed reductions "made it easy to scare
seniors" and are "responsible in significant measure for the opposition" to
the bill, Oberlander said.
TAXES
The discussion of various taxes has confused and
alarmed people, experts said.
To pay for a plan that's estimated to cost at least
$900 billion over a decade, Democratic lawmakers, at various times, have
considered levies, fines or penalties on high earners, medical-device
makers, tanning salons, elective plastic surgery, drug companies, expensive
health coverage, sugary sodas, people who refuse to get insurance and
companies that don't provide coverage.
Many of the taxes have been dropped or scaled back.
Others have been designed to pressure the health care system to operate more
efficiently. However, the list of levies has fueled concerns that Americans,
struggling with a severe economic slump, would have to pony up more for the
taxman.
"The final bill will not have all those taxes in
it," Blendon said, "but people hear about the tax on insurers, the tax on
pharmaceuticals, the income tax - and they can't segregate it in their
minds."
"People don't like taxes," said Leslie Norwalk, who
was the acting administrator of the Centers for Medicare and Medicaid
Services during the administration of President George W. Bush. "The
electorate is trying to decide what it thinks about this health care stuff,
sees the economy is in trouble and a lot of discussion about taxes, but
isn't all that unhappy about their own health care."
DEAL-MAKING
Putting together complicated legislation is always
messy, but the health care debate has been especially prone to distractions,
setbacks, reversals and deal-making.
For months, Senate Democratic leaders searched for
a compromise that would bring at least one Republican on board while trying
not to lose liberal Democrats who threatened to withhold support. The fight
over a government-run insurance plan took so much time and energy that other
issues were eclipsed. The fracas over "death panels" during the August
recess fueled a revolt against the legislation. Abortion emerged as a potent
issue that nearly derailed the measure.
"The longer the clock's running, the bigger the
chance you have for something to pop up and surprise you," said Peter
Harbage, a Democratic health policy consultant.
Negotiators cut parochial deals for individual
lawmakers: extra Medicaid spending for Nebraska, exemptions from Medicare
Advantage cuts for parts of Florida, special help for some Montana residents
with asbestos disease.
All this helped secure the votes to get the bill
through the Senate, but it bolstered the perception that the measure was
pork-barrel spending aimed at helping some more than others.
"They say, 'Look, God knows what other dirty deals
they did,' " said Uwe Reinhardt, a health care economics professor at
Princeton University.
January 18, 2010
Hidden in Obama's health care bill is a huge
marriage penalty. Both the Senate and House bills would set up yet another
federal program to provide financial incentives to subsidize marriage avoidance
and illegitimate offspring.
Phyllis Schlafly, "The Marriage Penalty in Health Care," Townhall,
January 12, 2010 ---
http://townhall.com/columnists/PhyllisSchlafly/2010/01/12/the_marriage_penalty_in_health_care
Here is the cost in the House bill for an unmarried
couple who each earn $25,000 a year (total: $50,000). When they both buy
health insurance (which will be mandatory), the combined premiums they pay
will be capped at $3,076 a year.
But if the couple gets married and has the same
combined income of $50,000, they will pay annual premiums up to a cap of
$5,160 a year. That means they have to fork over a marriage penalty of
$2,084.
Continued in article
Dirty Rotten Strategies: How We Trick Ourselves and Others Into
Solving the Wrong Problems Precisely by
Ian I. Mitroff and
Abraham Silvers (Stanford University Press; November 2009, 192 pages; $24.95
but Amazon sells it new for $12.95
People and organizations are perfectly capable of
making the most outrageous missteps. But, how does a person, organization,
or society know that it is committing an error? And, how can we tell that
when others are steering us down wrong paths?
Dirty Rotten Strategies delves into how
organizations and interest groups lure us into solving the "wrong problems"
with intricate, but inaccurate, solutions. Authors Ian I. Mitroff and
Abraham Silvers argue that we can never be sure if we have set our sights on
the wrong problem, but there are definite signals that can alert us to this
possibility.
While explaining how to detect and avoid dirty
rotten strategies, the authors put the media, healthcare, national security,
academia, and organized religion under the microscope. They offer a biting
critique that examines the failure of these major institutions to accurately
define our most pressing problems. For example, the U.S. healthcare industry
strives to be the most technologically advanced in the world, but, our
cutting-edge system does not ensure top-quality care to the largest number
of people.
Readers will find that far too many institutions
have enormous incentives to let us devise elaborate solutions to the wrong
problems. As Thomas Pynchon said," If they can get you asking the wrong
questions, then they don't have to worry about the answers."
From a political perspective, this book shows why
liberals and conservatives define problems differently, and demonstrates how
each political view is incomplete without the other. Our concerns are no
longer solely liberal or conservative. In fact, we can no longer trust a
single group to define issues across the institutions explored in this book
and beyond.
Dirty Rotten Strategies is a bipartisan call for
anyone who is ready to think outside the box to address our major concerns
as a society—starting today.
Rehabilitating Tom DeLay's
reputation always seemed hopeless, or so we thought—but then again,
President Obama ran on hope. Against the odds Democrats are making the
former GOP Majority Leader look better by comparison as they bypass the
ordinary institutions of deliberative democracy in the final sprint to pass
ObamaCare.
Instead of appointing a
formal conference committee to reconcile the House and Senate health bills,
a handful of Democratic leaders will now negotiate in secret by themselves.
Later this month, presumably white smoke will rise from the Capitol Dome,
and then Nancy Pelosi, Harry Reid and the college of Democratic cardinals
will unveil their miracle. The new bill will then be rushed through both
chambers with little public scrutiny or even the chance for the Members to
understand what they're passing.
Evading conference has
become standard operating procedure in this Congress, though you might think
they'd allow for the more open and thoughtful process on what Mr. Obama has
called "the most important piece of social legislation since the Social
Security Act passed in the 1930s and the most important reform of our
health-care system since Medicare passed in the 1960s."
This black-ops mission ought
to be a particular embarrassment for Mr. Obama, given that he campaigned on
transparent government. At a January 2008 debate he said that a health-care
overhaul would not be negotiated "behind closed doors, but bringing all
parties together, and broadcasting those negotiations on C-Span so the
American people can see what the choices are."
The C-Span pledge became a
signature of his political pitch. During a riff at the San Francisco
Chronicle about "accountability," he added that "I would not underestimate
the degree to which shame is a healthy emotion and that you can shame
Congress into doing the right thing if people know what's going on."
Apparently this Congress
knows no shame. In a recent letter to Congressional leaders, C-Span
president Brian Lamb committed his network to airing "all important
negotiations," which if allowed would give "the public full access, through
television, to legislation that will affect the lives of every single
American." No word yet from the White House.
At a press conference in
December, even Mrs. Pelosi said that "we would like to see a full
conference." One reason she mentioned was that "there is a great deal of
work involved in reviewing a bill and seeing what all the ramifications are
of it," though her real motive at the time was that a conference seemed like
a chance to drag the bill closer to the House version.
With public support
collapsing, however, Democrats now think the right bill is any bill—and
soon. Democrats know that a conference forces the majority party to cast
votes on awkward motions and would give the Republicans who have been shut
out for months a chance to participate. This sunlight, and the resulting
public attention, might scare off wavering Democrats and defeat the bill.
Ethics rules the Democrats passed in 2007 also make it harder to "airdrop"
into conference reports the extra bribes they will no doubt add to grease
the way for final passage.
Democrats howled at the
strong-arm tactics Mr. DeLay used to pass Medicare drug coverage in 2003,
and so did we. But they've managed to create an even more destructive bill,
and their tactics are that much worse. We can't even begin to imagine the
uproar if the Republicans had tried to privatize Social Security with such
contempt for the democratic process and public opinion.
Democratic leaders in Congress have
apparently shunned a request from C-SPAN CEO Brian Lamb to open up the health
care negotiations process to their cameras and therefore to the American people.
Emerging from yet another closed door meeting on health care, House Speaker
Nancy Pelosi (D-Calif.) denied at a press conference that Democrats had in any
way been secretive in their negotiations, asserting that they have been
perfectly transparent throughout the legislative process. “There has never been
a more open process for any legislation,” Pelosi actually said with a straight
face. Connie Hair, "Pelosi’s Iron Curtain
Surrounds Health Care," Human Events, January 6, 2010 ---
http://www.humanevents.com/article.php?id=35086
"This bill will strengthen Medicare and extend
the life of the program." - President Barack Obama, after the Senate health care bill secured 60
votes.
It's from the Wonk Room blog at the Center for
American Progress, and as you can see, it puts this claim up there front and
central. As you can see from the quote above, it's not just an error made by
one pundit. As I recall, the claim was made more than once during the Senate
debate, and of course, by our president in selling the bill. The graphic was
very widely distributed.
Unfortunately, the CBO finally got around to ruling
on this question, and no, this is not actually going to fix the Medicare
budget problem; it's an artifact of the way the government accounting is
done.
The explanation is a little complicated, and I'm
not sure how many of you want to go through it, but I'll try my hand at a
reasonably succinct explanation. Basically, Medicare, like Social Security,
has a "trust fund" (actually, more than one), which is supposed to fund it
until the trust fund is exhausted in 2019. The "trust fund" does not exist
in any meaningful sense, because its "assets" consist of claims on the
general fund, i.e. all the rest of the tax money. As Medicare goes into
deficit, it trades in those assets to cover its funding gap, which means the
general fund has to find the money to pay off the special bonds by either
raising taxes, cutting other spending, or borrowing more money. After the
trust fund is exhausted, the general fund has to find the money to pay for
the Medicare deficit by either . . . raising taxes, cutting other spending,
or borrowing more money. The difference to taxpayers is nil.
Technically, when you cut Medicare spending, that
money shows up as an increase in the Medicare trust fund, rather than some
other possible accounting entry. But the effect on the unified budget is the
same: the money saved by cutting Medicare is spent on other stuff. Whether
Medicare is "calling bonds" or "demanding money to cover its deficit", we
still have to find exactly as much money to pay for Medicare as we did
before. Which is a lot of money. One of the reasons the projected deficits
for the rest of the decade are so big is that the cost of Medicare is
outstripping the revenue raised by its payroll tax, and so we have to shovel
in more and more money from the general fund.
You can dedicate that money to paying for
Medicare--but then you have to introduce a corresponding future liability on
the general fund, in the amount of the Medicare savings. That would mean
that this bill would increase the deficit by hundreds of billions of
dollars, rather than reducing it.
Or as the CBO says:
The key point is that the savings to the HI
trust fund under the PPACA would be received by the government only
once, so they cannot be set aside to pay for future Medicare spending
and, at the same time, pay for current spending on other parts of the
legislation or on other programs. Trust fund accounting shows the
magnitude of the savings within the trust fund, and those savings indeed
improve the solvency of that fund; however, that accounting ignores the
burden that would be faced by the rest of the government later in
redeeming the bonds held by the trust fund. Unified budget accounting
shows that the majority of the HI trust fund savings would be used to
pay for other spending under the PPACA and would not enhance the ability
of the government to redeem the bonds credited to the trust fund to pay
for future Medicare benefits. To describe the full amount of HI trust
fund savings as both improving the government's ability to pay future
Medicare benefits and financing new spending outside of Medicare would
essentially double-count a large share of those savings and thus
overstate the improvement in the government's fiscal position.
It's a little disappointing, really. At the rate
that Democratic politicians were generating ever-more-spectacular budget
savings from the same old set of health care proposals, I had expected our
looming fiscal problems to be permanently resolved by this time next week.
From
TheAtlantic - shaping the national debate on
the most critical issues of our times, from politics, business, and the
economy, to technology, arts, and culture.
Stock-market indices are not much good as
yardsticks of social progress, but as another low, dishonest decade expires
let us note that, on 2000s first day of trading, the Dow Jones Industrial
Average closed at 11357 while the Nasdaq Composite Index stood at 4131, both
substantially higher than where they are today. The Nasdaq went on to hit
5000 before collapsing with the dot-com bubble, the first great Wall Street
disaster of this unhappy decade. The Dow got north of 14000 before the
real-estate bubble imploded.
And it was supposed to have been such an awesome
time, too! Back in the late '90s, in the crescendo of the Internet boom,
pundit and publicist alike assured us that the future was to be a
democratized, prosperous place. Hierarchies would collapse, they told us;
the individual was to be empowered; freed-up markets were to be the common
man's best buddy.
Such clever hopes they were. As a reasonable
anticipation of what was to come they meant nothing. But they served to
unify the decade's disasters, many of which came to us festooned with the
flags of this bogus idealism.
Before "Enron" became synonymous with shattered
401(k)s and man-made electrical shortages, the public knew it as a champion
of electricity deregulation—a freedom fighter! It was supposed to be that
most exalted of corporate creatures, a "market maker"; its "capacity for
revolution" was hymned by management theorists; and its TV commercials
depicted its operations as an extension of humanity's quest for
emancipation.
Similarly, both Bank of America and Citibank,
before being recognized as "too big to fail," had populist histories of
which their admirers made much. Citibank's long struggle against the Glass-Steagall
Act was even supposed to be evidence of its hostility to banking's
aristocratic culture, an amusing image to recollect when reading about the
$100 million pay reportedly pocketed by one Citi trader in 2008.
The Jack Abramoff lobbying scandal showed us the
same dynamics at work in Washington. Here was an apparent believer in
markets, working to keep garment factories in Saipan humming without federal
interference and saluted for it in an op-ed in the Saipan Tribune as "Our
freedom fighter in D.C."
But the preposterous populism is only one part of
the equation; just as important was our failure to see through the ruse, to
understand how our country was being disfigured.
Ensuring that the public failed to get it was the
common theme of at least three of the decade's signature foul-ups: the
hyping of various Internet stock issues by Wall Street analysts, the
accounting scandals of 2002, and the triple-A ratings given to
mortgage-backed securities.
The grand, overarching theme of the Bush
administration—the big idea that informed so many of its sordid episodes—was
the same anti-supervisory impulse applied to the public sector: regulators
sabotaged and their agencies turned over to the regulated.
The public was left to read the headlines and
ponder the unthinkable: Could our leaders really have pushed us into an
unnecessary war? Is the republic really dividing itself into an immensely
wealthy class of Wall Street bonus-winners and everybody else? And surely
nobody outside of the movies really has the political clout to write
themselves a $700 billion bailout.
What made the oughts so awful, above all, was the
failure of our critical faculties. The problem was not so much that
newspapers were dying, to mention one of the lesser catastrophes of these
awful times, but that newspapers failed to do their job in the first place,
to scrutinize the myths of the day in a way that might have prevented
catastrophes like the financial crisis or the Iraq war.
The folly went beyond the media, though. Recently I
came across a 2005 pamphlet written by historian Rick Perlstein berating the
big thinkers of the Democratic Party for their poll-driven failure to stick
to their party's historic theme of economic populism. I was struck by the
evidence Mr. Perlstein adduced in the course of his argument. As he tells
the story, leading Democratic pollsters found plenty of evidence that the
American public distrusts corporate power; and yet they regularly advised
Democrats to steer in the opposite direction, to distance themselves from
what one pollster called "outdated appeals to class grievances and attacks
upon corporate perfidy."
This was not a party that was well-prepared for the
job of iconoclasm that has befallen it. And as the new bunch muddle
onward—bailing out the large banks but (still) not subjecting them to new
regulatory oversight, passing a health-care reform that seems (among other,
better things) to guarantee private insurers eternal profits—one fears they
are merely presenting their own ample backsides to an embittered electorate
for kicking.
The sad state of governmental accounting and accountability -
William D. Eggers is the Global Director of Deloitte's Public Sector Research
Program. John O'Leary is a Research Fellow at the Ash Institute of the Harvard
Kennedy School. Their new book is
If We Can Put a Man on the Moon: Getting Big Things Done in Government
(Harvard Business Press, 2009).
When President Obama launched his
health reform effort, more than anything he wanted
to avoid the mistakes of the
1993-1994 attempt at health care reform. His
advisors have said repeatedly over these past months that they want
something passed.
Now it appears they will get their wish. It's
certainly true that one way "Obama Care" could fail — the one everybody has
been worrying about — is by never being passed into law. Another way it can
fail, however, is if a poorly designed bill passes and then wreaks havoc
during implementation. Indeed, this sort of design and execution failure
could do greater lasting damage to the goals of health care reform than mere
failure to pass a bill.
The Obama administration, and all reform-minded
public agencies and organizations, would do well to avoid some of the
mistakes of 2004, when an all-Republican Congress and White House rammed
through a
Medicare prescription drug benefit. The messy,
ill-considered implementation of what in essence was a massive giveaway
program generated huge initial ill-will among seniors, the very group the
benefit was designed to serve.
Ultimately, the GOP's Medicare prescription drug
reform stands as a model for achieving short-term legislative success that
creates an implementation nightmare. In more general terms, those pushing
for change saw official approval as the finish line rather than, more
accurately, as the starting line.
Here are some of the key risks that the 2004 Congress should have had in
mind in their push to get Medicare reform done — and which should be
front-of-mind for change-leaders now:
The risk of ramming it through.
The process by which Medicare Part D became legislative reality wasn't
pretty. It involved low-balled cost estimates, an unprecedented all-night
vote, and high-pressure tactics from Republicans to sway votes that cost Tom
DeLay an ethics rebuke. With all the high-stakes political gamesmanship, any
actual review of the proposed policy for "implementability" was minimal to
non-existent. A related lesson as the Democrats now drive health care and
other reforms through Congress: political memory rarely fades. Cut-throat
tactics lead inexorably to future in-kind retribution. Public leaders must
stop the vicious cycle in which avenging political battle scars trumps
practical lessons learned from prior missteps of execution.
Forgetting who you're designing the reform
for. Seniors were totally confused by their new "benefit."
"This whole program is so complicated that I've stayed awake thinking, 'How
can a brain come up with anything like this?'" lamented a seventy-nine-year
old, retired business manager. Americans do not normally lie awake pondering
the design of a federal program. But the Medicare prescription drug program
was something special. "I have a PhD, and it's too complicated to suit me,"
said a seventy-three-year old retired, chemist.
Giving the nation's elderly voters apoplexy was not
what Republicans had intended. But lawmakers had designed the legislation
primarily to curry favor with other "stakeholders" — big pharmaceutical
firms, health plans, employers, rural hospitals, and senior advocates such
as the AARP — instead of designing it to work in the real world for the "end
consumer" of the reform, i.e. everyday senior citizens.
The number of plans the typical senior had to sort
through depended on where he or she lived. In Colorado, retirees faced a
choice of 55 plans from 24 companies. Residents of Pennsylvania selected
from 66 plans.
"The program is so poorly designed and is creating
so much confusion that it's having a negative effect on most beneficiaries,"
said one pharmacist. "It's making people cynical about the whole process —
the new program, the government's help."
Unrealistic timeline and scale.
"No company would ever launch countrywide a new product to 40 million people
all at once," explained Kathleen Harrington, the Bush political appointee at
the
Centers for Medicare and Medicaid Services who led
the launch of Medicare Part D. "No one would ever say that you have to get
all of the platforms, all of the systems developed for this and working
within six months." Nobody except Congress, who in fact tried to do this,
giving scant consideration to implementation challenges and the inherent
difficulty in changing a well-established system.
The launch from hell. The computer
system cobbled together to support the new benefit crashed the very first
day coverage took effect. System errors slapped seniors with excessive
charges or denied them their drugs altogether. Computer glitches generated
calls to the telephone hotlines, which quickly became overloaded.
While eventually the program was turned around
thanks to some heroic efforts by senior federal executives, the days and
weeks following the January 2006 opening of benefit enrollment were
a disaster — caused primarily by a dysfunctional
design process and lack of an implementation mindset.
Lessons learned. Both Medicare
Part D, as well as what we have seen of the current, huge effort toward
health care reform, highlight why government has such a hard time dealing
with complex problems. But the basic truth is simple: ultimately, to be
successful, a health reform bill has to do two things — it has to pass
through Congress, and it has to actually work in the real world.
These two considerations often work against each
other. For political reasons, artificial deadlines are introduced. To
appease interest groups, regulations are altered, or goodies buried in the
bill. These measures are almost always taken to secure passage, but with
little (or not enough) thought given to how they might hinder
implementation.
Given the problems that arose in the comparatively
simple launch of a new drug benefit to seniors, policymakers should be
examining every risk inherent in implementing any serious overhaul of
one-seventh of our economy. The legislative process needs to produce health
care reform that can work in the real world or the backlash from a failed
implementation will be furious.
William D. Eggers is the Global Director of Deloitte's Public Sector
Research Program. John O'Leary is a Research Fellow at the Ash Institute of
the Harvard Kennedy School. Their new book is
If We Can Put a Man on the Moon: Getting Big Things Done in Government (Harvard Business Press, 2009).
Sometimes there is a fine ethical line between
legislative maneuvering and bribery. At other times, that line is crossed by
a speeding, honking tractor-trailer, with outlines of shapely women on mud
flaps bouncing as it rumbles past.
Such was the case in the final hours of Senate
Majority Leader Harry Reid's successful attempt to get cloture on health
care reform. Sen. Ben Nelson of Nebraska, the last Democratic holdout, was
offered and accepted a permanent exemption from his state's share of
Medicaid expansion, amounting to $100 million over 10 years.
Afterward, Reid was unapologetic. "You'll find," he
said, "a number of states that are treated differently than other states.
That's what legislating is all about."
But legislating, presumably, is also about giving
public reasons for the expenditure of public funds. Are Cornhuskers
particularly sickly and fragile? Is there a malaria outbreak in Grand
Island? Ebola detected in Lincoln?
Reid didn't even attempt to offer a reason why
Medicaid in Nebraska should be treated differently from, say, Medicaid
across the Missouri River in Iowa. The majority leader bought a vote with
someone else's money. Does this conclusion sound harsh? Listen to Sen.
Lindsey Graham of South Carolina, who accused the Senate leadership and the
administration of "backroom deals that amount to bribes," and "seedy Chicago
politics" that "personifies the worst of Washington."
This special deal for Nebraska raises an immediate
question: Why doesn't every Democratic senator demand the same treatment for
their state? Eventually, they will. After the Nelson deal was announced,
Sen. Tom Harkin of Iowa enthused, "When you look at it, I thought well, God,
good, it is going to be the impetus for all the states to stay at 100
percent (coverage by the federal government). So he might have done all of
us a favor." In a single concession, Reid undermined the theory of Medicaid
-- designed as a shared burden between states and the federal government --
and added to future federal deficits.
Unless this little sweetener is stripped from the
final bill by a House-Senate conference committee in January, leaving Nelson
with a choice. He could enrage his party by blocking health reform for the
sake of $100 million -- making the narrowness of his interests clear to
everyone. Or he could give in -- looking not only venal but foolish.
How did Nelson gain such leverage in the
legislative process in the first place? Because many assumed that his
objections to abortion coverage in the health bill were serious -- not a
cover, but a conviction. Nelson, a rare pro-life Democrat, insisted in an
interview he would not be a "cheap date." Republican leadership staffers in
the Senate thought he might insist on language in the health care bill
preventing public funds from going to insurance plans that cover abortion on
demand, as Democratic Rep. Bart Stupak had done in the House.
Instead, Nelson caved. The "compromise" he accepted
allows states to prohibit the coverage of elective abortions in their own
insurance exchanges. Which means that Nebraska taxpayers may not be forced
to subsidize insurance plans that cover abortions in Nebraska. But they will
certainly be required to subsidize such plans in California, New York and
many other states.
In the end, Nelson not only surrendered his own
beliefs, he betrayed the principle of the Hyde Amendment, which since 1976
has prevented the coverage of elective abortion in federally funded
insurance. Nelson not only violated his own pro-life convictions, he may
force millions of Americans to violate theirs as well.
I can respect those who are pro-life out of
conviction, and those who are pro-choice out of conviction. It is more
difficult to respect politicians willing to use their deepest beliefs -- and
the deepest beliefs of others -- as bargaining chips.
In a single evening, Nelson managed to undermine
the logic of Medicaid, abandon three decades of protections under the Hyde
Amendment and increase the public stock of cynicism. For what? For the sake
of legislation that greatly expands a health entitlement without reforming
the health system; that siphons hundreds of billions of dollars out of
Medicare, instead of using that money to reform Medicare itself; that
imposes seven taxes on Americans making less than $250,000 a year, in direct
violation of a presidential pledge; that employs Enron-style accounting
methods to inflate future cost savings; that pretends to tame the insurance
companies while making insurance companies the largest beneficiaries of
reform.
And, yes, for $100 million. It is the cheap date
equivalent of Taco Bell.
Health Care Sens. Patrick Leahy and Bernie
Sanders said Monday in interviews that they will vote to pass health care
reform legislation before Christmas, the Vermont Press Bureau and
The Burlington Free Press reported. Neither is overly enthusiastic about
the final Senate bill, but last-minute additions to the proposal - increased
Medicaid funding for Vermont and additional funding for community health
centers - brought them on board. "If we don't do this now, when will we do
it?" Sanders asked.
LINK and
LINK
Health Centers For Sanders, the addition he
argues could revolutionize health care across the country is a $10 billion
investment in community health centers and primary care personnel. The
funding would expand these health centers, which offer an array of primary
and preventive care services, to an additional 10,000 communities, Sanders
said. The funding will also pay off school loans for primary care doctors,
dentists, nurses and other front-line medical staff who agree to work in
medically underserved regions of the country, the Free Press and
press bureau articles reported.
LINK and
LINK
Health Centers Windham County could be home
to the state's newest community health center, after Sen. Bernard Sanders,
I-Vt., was able to increase the health center funding in the final version
of the Senate health care bill, the Brattleboro Reformer reported.
"One of the reasons I voted for the Senate bill was that we were able to get
in an ammendment for $10 billion over five years to expand community health
centers and the National Health Service Corps," said Sanders on Monday.
LINK
The Art of Compromise Republicans on Monday
slammed provisions Democrats inserted in their far-reaching health-care
overhaul bill to win over individual senators.Senate Majority Leader Harry
Reid labored hard at the end of the process to keep liberals on board, and
one of his biggest moves was inserting $10 billion for community health
centers, a favorite cause of Sen. Sanders, a who at one point said he might
vote no, The Wall Street Journal reported. "Sanders, the last liberal
holdout, got $600 million in Medicaid help," ABC News reported on
World News Tonight. "Even Bernie Sanders got something," Fox News
reported.
LINK,
VIDEO and
VIDEO
Health Centers "You're talking about a
program that benefits people in 50 states. Actually it benefits my state
less than most other states because we're far advanced in the community
health center. We save taxpayers' money because we keep people out of the
emergency room and we give them primary health care. Now you tell me why
that's such a bad deal. It has support from Republicans," Sen. Sanders told
CNN.
VIDEO
Deal Sanders "was unhappy Democratic leaders
dropped a public option and said this a few days ago. ‘It is not for sure
that I will vote for that bill.' Suddenly his home state of Vermont got some
extra help for Medicaid...But to clinch Sanders' vote, Democrats added his
pet project, $10 billion for community health centers nationwide." Dana Bash
concluded her report by saying "Republicans mastered the art of backroom
deal-making when they were in charge here, so this is very much bipartisan,"
according to CNN.
VIDEO
The Deal Sen. Sanders "held out for larger
Medicaid payments for his state," The Washington Post claimed.
"Sanders threatened to vote against the Senate bill unless it included a
public plan. He relented when Reid agreed to include an additional $10
billion for community health centers," Investors Business Daily
reported. A right-wing LA Times columnist said Sanders was
"leveraging his socialist principles for billions in special deals." Another
falsely asserted that Sanders "finagled $10 billion worth of earmarked
greenbacks for the funding of community health centers in his home state."
And a Fox News online commentator asserted that "Vermont got $250 million in
extra federal Medicaid funding to prevent Bernie Sanders from bolting from
the left."
LINK and
LINK
There are several information programs out there
produced by John Stoical, that address our health care situation. They are
very good because they cover a number of important issues, help the viewer
to understand basic principles, and provide sound ideas how to improve the
presnt system, which the present health care plan on Capital Hill does not
do.
The first presentation I'm going to bring to your attention is a six part
ABC 20/20 program that appears on YouTube. The second will be a sixteen
clip presentation on Stossel's FoxNews Business site.
The ABC 20/20 presentation is entitled, "John Stossel - Sick in America".
It's a six part series. I am presenting this one first, because it's a
straight forward presentation, part one through six. It aired on September
14th, 2007. Even thought it's dated by over two years, it's a good
introductory on this topic.
Here are the links to those clips. It's probably easier if you just click a
link, view it, and use the back button, to access the next clip here. There
are some conflicting presentations over there, and I don't want you to have
to wade through them trying to figure out which one is the correct next clip
in the series.
Stossel also produced a program for FoxNews Business channel on health
care. In it he interviews people who want nationalized health care. He
challenges them and provides an alternative view based on successful
programs that are out there today and working. It's a sixteen part series,
that appears near the bottom of the web page I'm linking just below.
The presentation is provided in four banks, of four parts each. View the
first through fourth video in each bank before hitting the link on the right
to the next bank of four videos View them and repeat until you've seen all
sixteen videos. Here's that link.
FoxNews Business Stossel Health Care Remember, it's down the page...
I would encourage folks to take a look at these presentations developed and
presented by John Stossel.
If I already have health insurance, can I keep it as is?
The short answer is: yes. There's nothing in
the Senate or House bills that would cause you to lose the insurance you
have right now.
Can I keep my doctors?
Related WATCH: Big Hurdle Cleared on Health
CareObama Praises Senate for Advancing Health Care Bill WATCH: Health
Care and the HolidaysAgain, yes. The bills do not change the status quo.
If I change or lose my job, can I keep the same insurance?
No... But the government would set up a new
"insurance exchange" that you can buy into. Low and middle income people
would get subsidies to buy this insurance. And you wouldn't be excluded
from these exchanges if you have a pre-existing condition.
If I'm on Medicare, will there be cuts to my benefits?
No - your benefits will not be cut. In fact,
the bill would improve your prescription drug coverage.
Jensen Comment
This is a shortened version of the actual ABC newscast that elaborated
that Medicare benefits will probably have to be cut in future to make
this legislation economically viable. The long and short of it is that
Medicare at current levels just cannot be sustained.
. . . one of the biggest problems vexing physicians: a flawed
Medicare payment system that threatens to slash their fees each year. In
2010, payments would be cut by 21.5 percent for Medicare and for the
military health benefits program, which bases its fees on Medicare. The
defense bill Obama signed Sunday would postpone the cuts for two months
but Congress must act to make a costly, permanent fix to the problem ---
http://thehill.com/homenews/senate/73249-ama-endorses-senate-health-bill
Will taxes go up?
In some cases, yes. Some higher-wage people
would pay higher payroll taxes.
Also, insurance companies that offer the most
expensive plans -- the so-called "Cadillac plans" -- will be taxed. And
they may pass those taxes on to employers and employees...or cut the
benefits.
Finally, health industries - like device makers
and hospitals - would pay higher taxes, too... And they may pass those
costs onto you.
Jensen Comment
Much depends upon what you call a "tax." Households making over $88,000
might well see premiums go up if they are not getting insurance from an
employer. Also employers will see premiums rise and may offset wage
increases when the cost of employee benefits increase. The fact of the
matter is that medical insurance companies face greatly increased costs
of coverage for previously uninsured people, coverage of pre-existing
conditions, greatly increased coverage of mental health, costs of
marriage counseling, etc. Somebody has to pay the piper, and some of
these costs will be passed along to policy holders.
If I'm uninsured now, how soon do I get the help to buy health
insurance?
There's a big lag time. Under the House
bill: 2013. And, under the Senate bill, not until 2014.
Jensen Comment
This is a shortened version of the actual ABC newscast that elaborated
on the reasons for the delay. ABC News mentioned that the main reason
for the delay is to make the Obamacare legislation look cheaper over the
next 10 years. If all uninsured got immediate coverage, the cost of the
legislation would skyrocket.
When or if this bill kicks in, will coverage
actually be affordable for me?
Experts say that's an open
question. Even some people who get government subsidies may not find it
affordable. And in some cases if you don't buy in, you may be penalized.
The bottom line is this: for most Americans, the 160 million Americans
who get insurance through employers right now, you will not see much of
a change from this bill. If a person is unhappy with their plan and feel
like they are paying too much out of pocket -- that is unlikely to
change.
Jensen Comment
This is a misleading answer. Since employers can pay only a $750 penalty
to opt out of providing medical insurance coverage for each employee,
many will avail themselves of this option, thereby forcing employees to
seek out their own private medical plans. Of course many employers will
not take this cheaper route, but others will take this cheaper route on
the grounds that it is the only way to avoid having to lay off more
workers. Low income people will probably get huge subsidies such that
their coverage will be affordable. Middle income households, however,
may get clobbered with premiums that are not affordable without huge
sacrifices in other living costs.
The American Medical Association endorsed the
Senate's healthcare reform legislation Monday, giving Democrats the blessing
of the nation's largest physician society as the bill approaches the finish
line.
The endorsement stands as a significant coup for
President Barack Obama and congressional Democratic leaders, who have
aggressively sought the AMA’s backing. The organization had opposed
comprehensive healthcare reform bills dating back to the Truman
administration.
In addition to whatever resources the AMA can bring
to help speed healthcare reform legislation toward final passage, the
endorsement also offers Democrats with the symbolic support of physicians,
who could help popularize the effort and would be key to a smooth
implementation of the legislation in the coming years.
The AMA also announced its support of the House
version of the bill that cleared the lower chamber last month. The Senate is
on track to vote on its bill on Christmas Eve.
While the AMA does not represent all American
physicians — and a number of state-based and surgical specialty groups have
opposed the Senate bill — its influence in Washington is unparalleled among
medical societies. Paired with the endorsement of the powerful senior
citizens group AARP, the AMA's support also could help Democrats win over
skeptical older voters.
In a statement, the AMA's president-elect says the
Senate legislation achieves many of the organization's goals for healthcare
reform, including: extending coverage to the uninsured, prohibiting
insurance companies from denying coverage based on pre-existing conditions
or establishing annual or lifetime caps on benefits, and promoting
preventive healthcare and wellness services.
“All Americans deserve affordable, high-quality
health coverage so they can get the medical care they need — and this bill
advances many of our priority issues for achieving the vision of a health
system that works for patients and physicians,” said Cecil Wilson.
The AMA made its endorsement even though the Senate
bill would not solve one of the biggest problems vexing physicians: a flawed
Medicare payment system that threatens to slash their fees each year.
When no other Republican was willing to work with
Democrats on legislation to revamp the health care system, Senator Olympia
J. Snowe of Maine stuck it out.
Ms. Snowe was part of the bipartisan Group of Six
on the Senate Finance Committee that worked for months to draft the health
care bill. And even when the other two Republicans in the group, Michael B.
Enzi of Wyoming and Charles E. Grassley of Iowa, dropped out, Ms. Snowe kept
at it.
She put forward numerous amendments when the
Finance Committee took up the bill – not aimed at killing the bill like so
many other amendments proposed by her Republican colleagues – but to improve
it, especially to make insurance more affordable for families and small
businesses.
In recent weeks, Ms. Snowe has been the subject of
intense efforts by the White House to win her vote. She had several
one-on-one meetings personally with President Obama, including one on
Saturday afternoon. But on Sunday the string finally ran out.
In a formal statement that in some ways only
confirmed the obvious, Ms. Snowe said that she would vote against ending
debate on the bill, and would oppose the legislation absent major changes.
“Having been fully immersed in this issue for this
entire year and as the only Republican to vote for health reform in the
Finance Committee, I deeply regret that I cannot support the pending Senate
legislation as it currently stands, given my continued concerns with the
measure and an artificial and arbitrary deadline of completing the bill
before Christmas that is shortchanging the process on this monumental and
trans-generational effort,” she said.
Unlike the barrage of attacks unleashed on the bill
by her Republican colleagues, Ms. Snowe’s criticism is particularly
devastating for the Democrats. In many ways, Ms. Snowe wants to vote for the
health care bill even more than some of the reluctant centrists who will
provide Democrats with the pivotal votes.
In Ms. Snowe’s view, Democrats are rushing the bill
unnecessarily. In a recent interview, she warned that Congress would spend
years fixing the bill if it was adopted in her current form. She recalled
her days in the Maine state legislature, where legislation titled “errors
and inconsistencies” would be needed to correct mistakes – in the Congress
such legislation is often referred to as “technical corrections” and she
said many such corrections would be need on the health measure.
Ms. Snowe has also sent a five-page letter to the
director of the Congressional Budget Office asking numerous questions about
the legislation and the budget office’s cost analysis. Among her questions
were inquiries about the average projected cost of insurance policies that
will be available under the legislation, as well as the impact on small
employers.
Democrats have made clear that they have no
intention of slowing the legislation to meet Ms. Snowe’s demands. But given
her intense focus on the issue, chances are the Democrats will end up having
to answer her questions, one way or another.
Here’s the rest of Ms. Snowe’s statement:
Having been fully immersed in this issue for
this entire year and as the only Republican to vote for health reform in
the Finance Committee, I deeply regret that I cannot support the pending
Senate legislation as it currently stands, given my continued concerns
with the measure and an artificial and arbitrary deadline of completing
the bill before Christmas that is shortchanging the process on this
monumental and trans-generational effort.
“Only three weeks ago the Senate received a
more than 2,000 page bill on one of the most complex issues in our
history, and we have since considered fewer than two dozen amendments
out of more than 450 filed. A little over 24 hours ago, the Senate
received a final, nearly 400 page manager’s amendment that cannot be
changed or altered, with more than 500 cross references including to
other statutes and will be voted on at 1 am Monday morning. It defies
logic that we are now expected to vote on the overall, final package
before Christmas with no opportunity to amend it so we can adjourn for a
three week recess even as the legislation will not fully go into effect
until 2014, four years from now.
I remain convinced we must work toward a
responsible, common sense solution to reverse the trend of spiraling
health care costs — that will cause one-in-four Americans this year to
have either inadequate coverage or none at all, and threatens affordable
coverage for millions more Americans in the future. As I pledged to the
President in an Oval Office meeting Saturday afternoon, I couldn’t agree
more that reform is an imperative, and I will continue my constructive
efforts to forge effective, common sense health care reform as the
process moves into a House-Senate conference.
The reality that the status quo is unacceptable
is what originally brought six of us together on the Senate Finance
Committee this summer in the only bipartisan effort in any committee of
the House or Senate in the so-called Group of Six, convened by Chairman
Max Baucus. We met 31 times, week after week for over four months, to
debate policy and not politics.
Two months ago, when I voted for the Finance
Committee bill, I said that the process moving forward shouldn’t be
about vote counting, but rather crafting the right policy and that the
credibility of the process would determine the credibility of the
outcome. So I was troubled that when the Finance bill was melded with
the measure reported by the Senate HELP committee it was without the
more inclusive, collaborative process I’d participated in up to that
point and instead it was done in the shadows, without transparency, just
to garner the necessary 60 votes and nothing more.
This bill has taken a dramatically different
direction since the Finance Committee bill – it is now 1,200 pages
longer and includes a new employer mandate that could annihilate the job
growth potential that is so vital to our economic recovery. As the Small
Business & Entrepreneurship Council has stated, this mandate “will only
burden firms with more costs and red tape which means they will not
grow, invest, or create jobs.”
This bill also creates the CLASS Act on long
term care insurance, a brand new program which the Medicare Actuary has
said is projected to go into the red just five years after it begins
paying out benefits. And the legislation requires a $90 billion increase
in Medicare payroll taxes – a provision that was not part of the bill I
voted for in Finance Committee – that predominately affects the
self-employed and the very same small business owners we are counting on
to create new jobs and lead us out of this recession. And that’s just to
name a few of the vital issues.
Furthermore, we still don’t have answers to
some of the most fundamental questions that people will be asking at
their kitchen tables. These are the critical questions relevant to
peoples’ daily lives, such as, what does this mean for me? How much will
my health insurance plan cost? How much will my deductible or my co-pay
be? How much am I going to have to pay out of pocket? Not one single
member in Congress – Republican or Democrat – can answer those
questions, and that is why I wrote to the Congressional Budget Office on
December 3rd requesting a complete analysis of these and other key
issues as it is imperative that we have those answers before proceeding.
Ultimately, there is absolutely no reason to be
hurtling headlong to a Christmas deadline on monumental legislation
affecting every American, when it doesn’t even fully go into effect
until 2014. When 51 percent of the American people in a recent survey
have said they do not approve of what we are doing, they understand what
Congress does not — and that is, that time is not our enemy, it is our
friend. Therefore, we must take a time out from this legislative game of
“beat the clock”, reconvene in January – instead of taking a three week
recess – and spend the time necessary to get this right. Legislation
affecting more than 300 million Americans deserves better than midnight
votes on a bill that cannot be further amended and that no one has had
the opportunity to fully consider – and the Senate must step up to its
responsibility as the world’s greatest deliberative body on behalf of
the American people.
Born at 9.1 Ounces She
Would've been thrown away in most other nations Cozy in her incubator, set to 81.5 degrees, heart going
at 174 beats a minute as she snoozed in her red, footy pajamas, Oliviyanna
Harbin-Page may be a global record-holder. Born Aug. 5 to 16-year-old Jamesha
Harbin of Eight Mile after 21 to 24 weeks of gestation, Oliviyanna weighed only
259 grams, or 9.1 ounces -- possibly making her, according to the University of
South Alabama Children's & Women's Hospital, the world's smallest surviving
baby. She now weighs 3 pounds 2 ounces. One of three girl triplets -- the other
two are identical, she is fraternal
"Baby who may be world's smallest surviving newborn could go home soon," by Roy
Hoffman, al.com, December 18, 2009 ---
http://blog.al.com/live/2009/12/baby_who_may_be_worlds_smalles.html
DONALDSON: But without taking that step, a
quotation that you love from Napoleon, I think, is right, also. If you start
to take Vienna, take Vienna. Then worry about how to administer the city
later. Actually, he took it without firing a shot the first time. But the
point is -- they did. I mean, two branch marshals took the bridge and all
that.
(LAUGHTER)
This step in passing a bill now is a first step.
No, these provisions will be changed, I hope, I trust, in the years ahead,
but without the first step, we're never
going to have a bill which covers people and begins the process of reducing
the cost.
Isn't it fascinating how many liberal media members don't like this bill,
but still want to see it get passed?
Isn't even more fascinating how many liberal media members have faith
in government to bring down healthcare costs when virtually every analysis
of the bills in both chambers suggest that such expenses will indeed
continue to rise?
Posted on Sunday, December 20, 2009 11:34:46
AM by
Ooh-Ah
1. $518.5 Billion In Tax Increases On Health Insurance, Small
Businesses, And Medical Treatments. (Senate Finance Committee
Minority Staff Review Of JCT And CBO Cost Estimates, 12/19/09)
2. $470.7 Billion In Total Cuts To Medicare And Medicaid
Would Pay For Two New Unsustainable Entitlements. (Table 5, Douglas
W. Elmendorf,
Letter To Senator Harry Reid, 12/19/09)
3. Americans Still Won't See Benefits Of This Health Care
Experiment Until 2014, But They Start Paying For It In 2010. (Page
7, Douglas W. Elmendorf,
Letter To Senator Harry Reid, 12/19/09)
4. According To Independent Actuaries In The Obama
Administration, Overall National Health Spending Will Be Increased By $239
Billion. (Richard Foster, Centers For Medicare And Medicaid Chief
Actuary, “Estimated Financial Effects Of The ‘Patient Protection And
Affordable Care Act Of 2009,’ As Proposed By The Senate Majority Leader On
November 18, 2009,”
Centers For Medicare & Medicaid Services, 12/10/09)
5. States Still Burdened With $26 Billion In Unfunded Mandates
From Medicaid That Would Force Them To Increase Taxes. (Page 8,
Douglas W. Elmendorf,
Letter To Senator Harry Reid, 12/19/09)
6. The "Doc Fix" Provision That Would Add $250 Billion To
The Deficit Is Still Not Included In The Democrats' List Price For Their
Health Care Experiment. (Page 18, Douglas W. Elmendorf,
Letter To Senator Harry Reid, 12/19/09)
7. A New Entitlement Program For Long-Term Care That One
Democrat Senator Called "A Ponzi Scheme" Would Still Be Created.
(Table 5, Douglas W. Elmendorf,
Letter To Senator Harry Reid, 12/19/09; Shailagh Murray & Lori
Montgomery, "Centrists Unsure About Reid's Public Option,"
The Washington Post, 10/28/09)
8. Taxpayer Dollars Would Fund Abortions. (Sec.
1303, H.R. 3590, Manager’s Amendment To The Amendment In The Nature Of A
Substitute, "Patient Protection And Affordable Care Act,"
Introduced 11/18/09; Chris Frates, “NRLC Opposes Nelson Amendment,”
Politico’s “Live Pulse” Blog, 12/19/09)
9. Gives Vast New Authority To The Office Of Personnel
Management To Administer Interstate Insurance Plans Even Though CBO
Determined It Won’t Lower Premiums. (Pages 9, Douglas W.
Elmendorf,
Letter To Senator Harry Reid, 12/19/09)
10. An Even More Poweful New Medicare Commission Of Unelected
Bureaucrats Would Ration Care. (Pages 16-17, Douglas W. Elmendorf,
Letter To Senator Harry Reid, 12/19/09)
'If your family earns less than $250,000 a year,
you will not see your taxes increased a single dime. I repeat: not one
single dime." So spoke Barack Obama at his first address to Congress in
February. We're about to find out if the President cares about that promise
as much he does passing a health-care bill.
Congressional Democrats have loaded up their health
bills with provisions raising taxes on the middle-class by stacks and stacks
of dimes. And Senate Democrats on Tuesday made clear they won't be bound by
the President's vow; 54 voted to kill Idaho Republican Mike Crapo's
amendment to strip the bill of taxes on families earning less than $250,000
and individuals earning less than $200,000.
Those tax hits include a mandate of up to $750 a
year for Americans who fail to purchase health insurance; new levies on
small businesses (many of which file individual tax returns) that don't
offer health care to employees; new tax penalties on health savings accounts
and flexible spending accounts; and higher taxes on medical spending,
including restrictions on medical itemized deductions, as well as taxes on
cosmetic surgery. A Senate Finance Committee minority staff report finds
that by 2019 more than 42 million individuals and families—or 25% of all tax
returns under $200,000—will on average see their taxes go up because of the
Senate bill. And that's after government subsidies.
This profusion of tax hikes is central to the
Democratic fiction that the Senate bill is budget neutral. And because many
Senate Democrats are cool to the House proposal to fund legislation with a
surtax on the "wealthy," many of these middle-tax hikes will likely remain
in final legislation. Yet President Obama is embracing the bill.
Democrats are instead trying to claim that some
taxes really aren't taxes. The President in September engaged in a debate
with ABC's George Stephanopoulos, with the President arguing that the
individual mandate isn't a tax since it is for the good of America. Michigan
Senator Debbie Stabenow says increasing the amount of medical expenses a
person must accumulate before deducting them also isn't a tax because "most
Americans" don't itemize. Except the millions of middle-class Americans who
do. Democrats have argued their restrictions on health savings accounts
simply close "tax loopholes" and therefore also aren't new taxes.
Americans who will be paying more to the IRS can be
trusted to know the difference. In April, Press Secretary Robert Gibbs was
asked if the President's tax promise applied to health care. He replied:
"The statement didn't come with caveats." On the evidence in December, it
did.
Penalty:
Tax equal to 2.5 percent of adjusted
gross income over certain thresholds
($9,350 for individuals, $18,700 for
couples).
Exemptions:
American Indians,
people with religious objections
and people who can show financial
hardship.
Senate version
Includes
mandate.
Penalty:
$95 a year per person in 2014; $350
in 2015; $750 or 2 percent of a
household’s income, whichever is
greater, in 2016 and beyond. No
penalty if the cost of cheapest
available plan exceeds 8 percent of
household income.
Exemptions:
American Indians,
people with
religious objections and
people who can show financial
hardship.
"Get Real on Health Costs: Obama's plan won't cut spending," by
Robert J. Samuelson, Newsweek Magazine, December 21, 2009, Page 36 ---
http://www.newsweek.com/id/226482
We are now witnessing a determined counterattack by
the Obama administration and its political allies on the matter of health
costs. Many critics (including me) have argued that Obama's "reform" agenda
wouldn't control rapidly rising health spending and might speed it up. The
logic is simple. People with insurance use more health services than those
without. If the government insures 30 million or more Americans, health
spending will rise. The best policy: control spending first, then expand
coverage.
But the Obama administration insists it can insure
most of the uninsured and tackle runaway health spending simultaneously.
There's so much waste in today's health-care system that both goals can be
pursued together, Peter Orszag, head of the Office of Management and Budget,
has said.
Two new reports by liberal advocacy groups echo
that claim. The first, from the Center on Budget and Policy Priorities,
contends that lower Medicare reimbursement rates to hospitals and other
providers can pay for about half of the $900 billion or so government cost
over a decade of expanded health benefits. Critics (again, including me)
have said that Congress would put the Medicare cuts in today and might
repeal some or all of them in the future. Nonsense, says the study. Congress
has allowed many past reductions in Medicare reimbursements to take effect.
Even more upbeat is a report from the Center for
American Progress (CAP) Action Fund and the Commonwealth Fund arguing that
savings from the bills' cost-cutting provisions have been underestimated.
Some measures would push hospitals to reduce readmission rates; "bundled
payments" between doctors and hospitals for some illnesses would encourage
coordinated care; taxes on gold-plated insurance plans would deter
overspending. Health costs would be lower than expected: Medicare "savings"
would total $576 billion over a decade (about $200 billion more than
estimated by the Congressional Budget Office, which mostly counted lower
reimbursement rates); the federal deficit would drop up to $459 billion over
a decade; and health-care "savings" for typical families would total about
$2,500 by 2019.
Who's right? Let's start with the numbers.
Unfortunately, the word "savings" is used misleadingly. It doesn't mean (as
is usual) actual reductions; it signifies smaller future increases. There's
a big difference. In 2009, national health spending will total an estimated
$2.5 trillion, or 17.7 percent of the gross domestic product. By 2019, it's
projected to rise to $4.67 trillion under present policies, or 22.1 percent
of GDP. With CAP's "savings," it rises a little less sharply to $4.49
trillion, or 21.3 percent of GDP, according to Harvard economist David
Cutler, a coauthor of the study. Similarly, family health-insurance premiums
rise from 19 percent of median family income in 2009 to 25 percent in 2019
under present policies and 23 percent with CAP's "savings."
The point is simple: even with highly optimistic
assumptions, health spending remains out of control. It absorbs more of
government, business, and family budgets. Higher health spending would put
pressure on future budget deficits, already projected to total about $9
trillion over the next decade. If new taxes and Medicare "savings" are real,
they could be used exclusively to pay down deficits, not finance new
spending.
But many may not be real. Writing in The Wall
Street Journal, Dr. Jeffrey Flier, dean of Harvard Medical School, gave the
various health bills a "failing grade" and said they wouldn't "control the
growth of costs or raise the quality of care." Dr. Delos Cosgrove, head of
the Cleveland Clinic, was quoted in NEWSWEEK saying practically the same
thing. The chief actuary of the Centers for Medicare & Medicaid Services, a
federal agency, doubts the cost-saving provisions touted by CAP would save
much money. He's also skeptical that Congress, facing complaints from
hospitals and a squeeze on services, would allow all the Medicare
reimbursement cuts to take effect.
Health spending might spontaneously slow, but
history suggests skepticism. To attack costs first would require admitting
that not all good things are possible simultaneously and that the uninsured
already receive much medical care. It would require genuine bipartisanship,
not just a scramble for a few Republican votes. And it would require
stronger measures to dismantle a fee-for-service delivery system that
rewards more, not better, care. That would be a difficult but realistic
approach; Obama's is wishful thinking.
Robert Samuelson is also the author of The Great Inflation and Its
Aftermath: The Past and Future of American Affluenceand Untruth: Why the
Conventional Wisdom Is (Almost Always) Wrong.
The Congressional Budget Office Weighs In on Accounting
Disasters of Senate's Pending Healthcare Legislation
Fact 3: The bill does not require employers to buy health
insurance for their workers, and makes employers with 50 workers or more pay a
fee of only $750 for each fulltime worker they do not insure if any of their
workers get an insurance plan on the exchange using a federal subsidy.
"Senate Health Care Bill Would Force Some Middle Class
Families to Pay $15,200 Yearly Insurance Fee, According to CBO Analysis Tuesday,
December 15, 2009," By Terence P. Jeffrey, Editor-in-Chief, CNS News,
December 15, 2009 ---
http://www.cnsnews.com/news/article/58533
Forget the public option. Even without it, the
health care bill presented in the Senate by Majority Leader Harry Reid (D.-Nev.)
would make some middle-class American families pay what amounts to a $15,200
annual federally-mandated insurance fee, according to facts revealed in
analyses published by the Congressional Budget Office.
The fee would result from the facts that the bill
requires individuals—but not employers—to purchase health insurance plans
and that families that earn up to 400 percent of the federal poverty level
would be given government subsidies to purchase insurance in
government-regulated insurance exchanges while families earning more than
400 percent of the federal poverty level would be denied government
subsidies.
A family of four—two parents and two
children—earning $88,200 would be at 400 percent of the poverty level this
year, according to the U.S. Department of Health and Human Services. A
family of four earning $88,201, therefore, would not be eligible for a
federal subsidy to buy insurance under the Senate health-care bill. If the
mother and father in such a family could not get employer-based health
insurance—because their employers decided not to buy their workers
insurance—the family would be required by law to purchase a policy with its
own money that would cost an estimated $15,200 per year, according to the
CBO.
The basic facts demonstrating that this would be
the case if the Senate health care bill were to become law were presented in
letters that the CBO sent to Sen. Harry Reid (D.-Nev.) on November 18 and to
Sen. Evan Bayh (D.-Ind.) on November 30. The letters are available on the
CBO Web site.
Here are the facts about what the Reid health care
bill would mean for the finances of families that earn more than 400 percent
of the poverty level and the CBO sources for those facts:
Fact 1: The bill requires all legal U.S. residents
to buy health insurance beginning in 2014.
Fact 2: The bill provides subsidies to people
making up to 400 percent of the poverty level to buy health insurance if
their employer does not buy them insurance and as long as they agree to
purchase a government-regulated insurance plan in the government-regulated
insurance exchange.
Source: Page 4 of a Nov. 18 CBO letter to Sen. Reid
states: “The legislation would take several steps designed to increase the
number of legal U.S. residents who have health insurance. Starting in 2014,
the legislation would establish a requirement for such residents to obtain
insurance and would in many cases impose a financial penalty on people who
did not do so. The bill also would establish new insurance exchanges and
would subsidize the purchase of health insurance through those exchanges for
individuals and families with income between 133 percent and 400 percent of
the federal poverty level (FPL).”
Fact 3: The bill does not require employers to
buy health insurance for their workers, and makes employers with 50 workers
or more pay a fee of only $750 for each fulltime worker they do not insure
if any of their workers get an insurance plan on the exchange using a
federal subsidy.
Fact 4: Individuals who are offered insurance by
their employer cannot buy insurance with a federal subsidy in the exchange.
Source: Page 7 of the Nov. 18 CBO letter to Sen.
Reid says: “The legislation contains a number of other key provisions
related to insurance coverage. Firms with more than 50 workers that did not
offer coverage would have to pay a penalty of $750 for each full-time worker
if any of their workers obtained subsidized coverage through the insurance
exchanges; that dollar amount would be indexed. As a rule, fulltime workers
who were offered coverage from their employer would not be eligible to
obtain subsidies via the exchanges.”
Fact 5: By 2016, when the new health-care system
created by the bill is fully operational, the average family insurance
policy sold to people buying insurance individually, rather than through an
employer, will cost $15,200 per year.
Source: Page 6 of a Nov. 30 CBO letter to Sen. Evan
Bayh (D.-Ind.) says: “Average premiums per policy in the nongroup market in
2016 would be roughly $5,800 for single policies and $15,200 for family
policies under the proposal.”
Fact 6: According to the analysis of the CBO and
Joint Tax Committee, 32 million people will buy their insurance on their own
rather than through an employer in 2016 under the Senate bill, and only 18
million of those people will get federal subsidies to buy their insurance,
meaning 14 million will be required by the law to buy their own health
insurance and will not be given any federal subsidy to do so.
Source: Page 24 of the Nov. 30 CBO letter to Sen.
Bayh says: “Therefore, of the 32 million people who would have nongroup
coverage in 2016 under the proposal (including those purchased inside and
outside the exchanges), about 18 million, or 57 percent, would receive
exchange subsidies.”
Common sense analysis: The CBO may be
underestimating the number of Americans that would be forced under the
Senate health care bill to buy health insurance plans without any help from
an employer or the government—a group that will include middle-class
families who are forced by the government to pay $15,200 for a health
insurance plan out of their own pockets.
Why? The bill imposes a maximum fine of only $750
per worker on employers with more than 50 workers who do not buy insurance
for their workers. Thus employers will face a choice: Pay the employer’s
share of the insurance plans for their workers--including the employer's
share for the typical $15,200 family insurance plan--or drop insurance for
all their employees and pay a maximum fee of only a $750 per employee.
Under the bill, the financially rational decision
for employers will be to drop their health insurance plans and pay the $750
fine. This decision will be reinforced by the fact that their employees
making less than 400 percent of the poverty level will only qualify for a
federal insurance subsidy if the employer does not offer the worker an
insurance plan.
Left out in the cold will be workers who earn more
than 400 percent of the poverty level and whose employers make the
financially rational decision to drop their health insurance coverage. These
workers will be required by federal law to buy health insurance, but will
get no subsidy to do so. According to the estimate of the CBO, they will
have to pay $15,200 for a family policy in 2016.
In effect, the Senate health care bill will impose
a new $15,200 annual tax on all American families that make over 400 percent
of the poverty level and whose employers decide not to purchase health
insurance for their workers after the bill takes effect.
December 15, 2009 reply from Curtis Brown at Trinity University
I’m no expert on health care policy, but I’m very troubled by Bob’s
recent posting. As in at least one of his other recent postings, he passes
along an article from a right-wing web site, adding an inflammatory subject
heading that is not supported by anything in the article he forwards.
Meanwhile the article itself makes claims that are unsupported by the
sources that it cites. (The “facts” listed in the article are mostly
correct, but the inferences from them, the headline of the article, and the
really wild final sentence find no justification there at all, as far as I
can determine.) (By the way, Bob lists the author of the article as
“Editor-in-Chief of CBS News,” making his source sound much more mainstream
than it is: that should be CNS news, not CBS news.)
1. Bob’s subject heading is unsupported by anything in the article
he forwards. Not even the author of the article, much less the CBO, appears
to say anything about “accounting disasters.”
2. The headline of the article is extremely misleading. “According
to CBO Analysis” implies that the CBO actually makes the assertion that the
bill “would force some middle class families to pay [a] $15,200 yearly
insurance fee.” But the CBO says nothing of the sort; this an inference the
author of the article makes from pieces drawn from several different places
in the letters. Let’s see whether it’s a reasonable inference.
3. First of all, the $15,200 figure is the estimated average
cost of a nongroup premium under the proposed legislation. It doesn’t follow
that anyone will be forced to pay this amount, even if they have to
buy their own insurance and they don’t receive a subsidy, since presumably
one could buy a premium with lesser coverage for a lesser amount. (As I note
below, the coverage of the average policy is predicted to be significantly
better than under current law.)
4. The CBO estimates that the cost of the average nongroup premium
compared to the projected cost under current law, for the same coverage,
would go down between 7 and 10 percent (letter to Bayh, p. 5).
5. The CBO also estimates that the average policy would have
significantly better coverage than would be the case under current law.
Other things being equal, this would push the cost of the average nongroup
premium up by 27 to 30 percent. The net change in the cost of a
premium is estimated to be +10 to +13% (letter to Bayh, p. 5), and to
increase by less than that for the average nongroup purchaser who is not
subsidized (letter to Bayh, p. 7). But presumably getting improved coverage
will be voluntary. If your employer is paying, or you’re being subsidized,
you might want better coverage. On the other hand, if you are paying for
your own premium, you might not want increased coverage. If you elected to
keep the same coverage, and if you would be paying for your own policy
regardless of whether or not the bill is passed, then your costs would
apparently (on average) go down by the 7 to 10 percent I mentioned in
point 4.
6. From the points I’ve made so far, it appears as though, if
you would purchase your own policy regardless of whether the law is changed
or not, and you elected the same coverage either way, you would be better
off under the proposed legislation. (On the other hand, if you wanted
improved coverage, you could probably get substantially better coverage for
a very modest increase in price.) However, what if you wouldn’t have to buy
your own policy under current law, but you would need to under the proposed
legislation? The article strongly implies that there will be many people who
don’t currently buy their own policies but who would be forced to under the
proposed legislation. Is this supported by the CBO analysis? No, quite the
contrary. According to the letter to Reid, p. 9, "relative to currently
projected levels, the number of people purchasing individual coverage
outside the exchanges would decline by about 5 million." That’s right: the
CBO estimates that you are less likely to have to buy your own
nongroup policy under the proposed legislation than you are under current
law. Many people who currently have to buy their own nongroup insurance will
be able to buy group insurance on the “exchanges.”
7. Forget all the above for a moment, and pretend that everything
the article says is correct. How badly should I feel for the (mythical)
people who will supposedly be “forced to” pay about $15,000 a year for
insurance? According to the article itself, to be in this category a family
of four would need an income of $88,200 or more. (Those with lower incomes
will be subsidized, and those who receive subsidies and are in the nongroup
market would see their costs go down by 56-59% -- letter to Bayh, p.
5.) After paying for their health insurance, they would have only about
$73,000 for the rest of their expenses for the year. Even if this happened,
it’s hard to see it completely ruining anyone’s life. Contrast that with the
fact that the CBO says that by 2019 “the number of nonelderly people who are
uninsured would be reduced by 31 million” (letter to Reid, p. 8).
This will literally save lives. A
relatively conservative estimate of the number of lives lost in 2006 due to
a lack of health care coverage is 22,000 (Urban Institute, using methodology
developed by the Institute of Medicine:
http://www.urban.org/publications/411588.html). A Harvard Medical School
study puts the number at more like 45,000 per year (http://prescriptions.blogs.nytimes.com/2009/09/17/harvard-medical-study-links-lack-of-insurance-to-45000-us-deaths-a-year/?scp=2&sq=harvard&st=cse).
Providing coverage to tens of millions of additional people literally has
the potential to save tens of thousands of lives a year. When worrying about
whether families with incomes of $88,000 or more might have to pay a little
more for insurance, a worry which doesn’t seem to be supported by the CBO
analysis anyway, we should set that against the benefits that the bill would
make possible.
Curtis
Jensen Comment I’ve always had highest respect for Curtis, and most of his recent points
were well taken (by me). I do wish he’d asked for clarification on some matters
before posting his reply (which he has done in the distant past, especially
regarding a tidbit years ago on Reed College’s reasons for not participating in
media ranking surveys such as US News surveys that get Trinity highest honors).
The exact
wording of the Congressional Budget Office report reads as follows: If you add
30% to what households making over $88,000 now pay for coverage (including
Trinity’s contribution), the CNS tidbit seems not as far off as Curtis suggests.
The taxpayer subsidies will only go to lower income families.
That difference in unsubsidized premiums is the net effect of
three changes:
• Average
premiums would be 27 percent to 30 percent higher because a greater amount of
coverage would be obtained. In particular, the average insurance policy in this
market would cover a substantially larger share of enrollees’ costs for health
care (on average) and a slightly wider range of benefits. Those expansions would
reflect both the minimum level of coverage (and related requirements) specified
in the proposal and people’s decisions to purchase more extensive coverage in
response to the structure of subsidies.
• Average
premiums would be 7 percent to 10 percent lower because of a net reduction in
costs that insurers incurred to deliver the same amount of insurance coverage to
the same group of enrollees. Most of that net reduction would stem from the
changes in the rules governing the nongroup market.
• Average
premiums would be 7 percent to 10 percent lower because of a shift in the types
of people obtaining coverage. Most of that change would stem from an influx
of enrollees with below-average spending for health care, who would purchase
coverage because of the new subsidies to be provided and the individual mandate
to be imposed.3
3 Although
the effects of each factor should be multiplied rather than added in order
to generate the total effect on premiums, there are also interactions among
the three factors that make the sum of the individual effects roughly equal
to the total effect. The ranges shown for the likely effects of each factor
and for the likely overall effect on premiums were chosen to reflect the
uncertainties involved in the estimates; however, the actual effects
could fall outside of those ranges. 4 Because of an error, the
figures for average nongroup premiums in 2016 under current law that were
reported in CBO’s September 22, 2009, letter to Senator Baucus on this
subject (which had been reported as being
Average premiums per policy in the nongroup market in 2016 would
be roughly $5,800 for single policies and $15,200
for family policies under the proposal, compared with roughly $5,500 for
single policies and $13,100 for family policies under current law.4The weighted average of the differences in those amounts equals
the change of 10 percent to 13 percent in the average premium per person
summarized above, but the percentage increase in the average premium
per policy for family policies is larger and that for single policies is
smaller because the average number of people covered per family policy is
estimated to increase under the proposal. The effects on the premiums paid
by some individuals and families could vary significantly from the average
effects on premiums.
Those
figures indicate what enrollees would pay, on average, not accounting for
the new federal subsidies. The majority of nongroup enrollees (about 57
percent) would receive subsidies via the new insurance exchanges, and those
subsidies, on average, would cover nearly two-thirds of the total premium,
CBO and JCT …
What I really meant by “accounting disaster” in the latest health care tidbit
is failing to recognize a huge tax on the middle class and failing to call it
for what it is --- a huge tax. But I don’t want to elaborate more on that now.
The promise of reform has always been that
Americans can have better--and universal--healthcare at lower cost. If the
public option and Medicare expansion are dropped, and if schemes to pay for
the proposal with Medicare and Medicaid "cost containment" are retained,
the Senate legislation will break that promise.
Obama and key Congressional leaders appear to be
more determined to get a bill, any bill, than to enact fundamental reform.
The president's failure even to mention the public option when he lobbied
Senate Democrats empowered Joe Lieberman and others who were angling for its
elimination. And Obama's failure to use his bully pulpit was matched by
Reid's compromises and missteps. When the majority leader embraced rules
that require sixty votes to act--rather than challenge the rules directly or
via budget reconciliation procedures that allow a simple majority--he ceded
authority to insurance-industry shills like Lieberman and Ben Nelson, who
then blocked reform at every turn.
At this late yet critical stage, Congressional
progressives must push back. Compromise is inevitable. The hard question is
whether it opens the door to progress or closes it. In a Washington
increasingly fixated on deficit reduction and entitlement cuts, a bill with
neither a public option nor Medicare expansion could be disastrous.
As a conference committee sets out to merge House
and Senate bills, progressives should declare that they will not back a bill
that enriches insurers while raiding the treasury and squeezing existing
federal programs. They should argue more aggressively than ever for real
competition--ideally in the form of a public option but at least with
Medicare expansion. That, after all, is what they promised Americans in
2008.
'If your family earns less than $250,000 a year,
you will not see your taxes increased a single dime. I repeat: not one
single dime." So spoke Barack Obama at his first address to Congress in
February. We're about to find out if the President cares about that promise
as much he does passing a health-care bill.
Congressional Democrats have loaded up their health
bills with provisions raising taxes on the middle-class by stacks and stacks
of dimes. And Senate Democrats on Tuesday made clear they won't be bound by
the President's vow; 54 voted to kill Idaho Republican Mike Crapo's
amendment to strip the bill of taxes on families earning less than $250,000
and individuals earning less than $200,000.
Those tax hits include a mandate of up to $750 a
year for Americans who fail to purchase health insurance; new levies on
small businesses (many of which file individual tax returns) that don't
offer health care to employees; new tax penalties on health savings accounts
and flexible spending accounts; and higher taxes on medical spending,
including restrictions on medical itemized deductions, as well as taxes on
cosmetic surgery. A Senate Finance Committee minority staff report finds
that by 2019 more than 42 million individuals and families—or 25% of all tax
returns under $200,000—will on average see their taxes go up because of the
Senate bill. And that's after government subsidies.
This profusion of tax hikes is central to the
Democratic fiction that the Senate bill is budget neutral. And because many
Senate Democrats are cool to the House proposal to fund legislation with a
surtax on the "wealthy," many of these middle-tax hikes will likely remain
in final legislation. Yet President Obama is embracing the bill.
Democrats are instead trying to claim that some
taxes really aren't taxes. The President in September engaged in a debate
with ABC's George Stephanopoulos, with the President arguing that the
individual mandate isn't a tax since it is for the good of America. Michigan
Senator Debbie Stabenow says increasing the amount of medical expenses a
person must accumulate before deducting them also isn't a tax because "most
Americans" don't itemize. Except the millions of middle-class Americans who
do. Democrats have argued their restrictions on health savings accounts
simply close "tax loopholes" and therefore also aren't new taxes.
Americans who will be paying more to the IRS can be
trusted to know the difference. In April, Press Secretary Robert Gibbs was
asked if the President's tax promise applied to health care. He replied:
"The statement didn't come with caveats." On the evidence in December, it
did.
I still stand by my original contention that President
Obama and Congressional leaders are misleading the public about cost (taxes by
any other name) increases in Obamacare rather than the lies about cost savings.
The tidbit I should've used instead of the CNS tidbit is as follows:
The promise of reform has always been that
Americans can have better--and universal--healthcare at lower cost.
If the
public option and Medicare expansion are dropped, and if schemes to pay for
the proposal with Medicare and Medicaid "cost containment" are retained,
the Senate legislation will break that promise.
Obama and key Congressional leaders appear to be
more determined to get a bill, any bill, than to enact fundamental reform.
The president's failure even to mention the public option when he lobbied
Senate Democrats empowered Joe Lieberman and others who were angling for its
elimination. And Obama's failure to use his bully pulpit was matched by
Reid's compromises and missteps. When the majority leader embraced rules
that require sixty votes to act--rather than challenge the rules directly or
via budget reconciliation procedures that allow a simple majority--he ceded
authority to insurance-industry shills like Lieberman and Ben Nelson, who
then blocked reform at every turn.
At this late yet critical stage, Congressional
progressives must push back. Compromise is inevitable. The hard question is
whether it opens the door to progress or closes it. In a Washington
increasingly fixated on deficit reduction and entitlement cuts, a bill with
neither a public option nor Medicare expansion could be disastrous.
As a conference committee sets out to merge House
and Senate bills, progressives should declare that they will not back a bill
that enriches insurers while raiding the treasury and squeezing existing
federal programs. They should argue more aggressively than ever for real
competition--ideally in the form of a public option but at least with
Medicare expansion. That, after all, is what they promised Americans in
2008.
Continued in article
In my opinion, President Obama has helped to create
hysteria in Congress by insisting that legislation, even nation-destroying
legislation ,be rushed at breakneck speed without our legislators or our voters
understanding the complexities of the Senate and House monsters that are on the
table. I’m in favor of health care reform, and I do in fact favor a national
health insurance plan that absorbs the private sector insurance systems into a
government national plan.
Special interests on both sides of the table have written
clauses into the House and Senate versions that legislators and voters have not
had time to understand. The Congressional Budget Office, in turn, has been
forced to make cost estimates based upon hurried and unrealistic assumptions.
My last Tigertalk tidbit on
Obamacare is from Howard Dean who, as Chairman of the Democratic National
Committee, was very effective in helping to not only get President Obama elected
but to help push the landslide victories of Democrats in both the House and the
Senate in 2008 ---
http://en.wikipedia.org/wiki/Howard_Dean
There has been no stronger advocate of health care reform
than Howard Dean, MD. He’s consistently advocated health care reform since he
became the very liberal Governor of Vermont.
On December 15, 2009 Howard Dean was given the microphone
on the MSNBC Countdown (Keith Olbermann) prime time slot. Howard Dean loudly and
effectively proclaimed that both the Senate and House should vote down the
Obamacare monsters that are now on the table. Instead, he advocated that less
rushed and more deliberate effort should be undertaken in 2010 to create a more
reasoned package that does not allow special interests to dominate (or sneak
into a bill) efforts by both parties of Congress to bring about health care
reform that is truly reform.
I think Howard Dean is right
on in the video at
http://www.msnbc.msn.com/id/3036677/#34439255
Senator Wyden follows Dr. Dean in this video and, in my viewpoint, is entirely
wrong. Dean is right on.
Perhaps emergency legislation for basic coverage of
uninsured citizens should be passed as a stop-gap such that the issue of
uninsured people does not create a rush once again to legislate a
nation-destroying monster.
But we should not legislate monsters that special interests
have wrought in the current House and Senate versions of Obamacare
Congressional advocates of the latest health care
reform proposal claim that it will not cost ordinary Americans more--the
costs will be borne by "the rich" and by employers. After all, both the
House and the Senate versions require employers who do not provide health
benefits to pay higher taxes.
But the Congressional Budget Office (CBO) recently
reported what economists have long known: Regardless of who is formally
required to pay, the burden of these taxes and costs will ultimately fall
primarily on employees through lower wages. An employer mandate does not
give workers without health insurance something for nothing but rather
forces them to purchase it out of their wages whether they like it or
not--and no matter how low those wages are. Congressional rhetoric to the
contrary, much of the burden of paying for an employer mandate will fall on
ordinary Americans, and lower-income workers will be hit the hardest.
Employer Mandates
Both the House and Senate drafts of health care
reform include so-called "employer mandates" or "pay or play" provisions.
These mandates require employers to pay higher taxes if (a) they do not
offer health insurance, or (b) they offer it but have employees who decline
it and instead use the government system.
The Senate version requires employers to pay $750 a
year for each full-time employee without health coverage. The House version
goes further, requiring most employers who do not provide health benefits
(or whose employees decline it) to pay a penalty of 8 percent of their
payroll. It has even been proposed that employers whose employees enroll in
Medicaid may be required to pay this tax.
The ostensible purpose of such a tax penalty is to
discourage employers from dropping workers onto the taxpayer-subsidized
government plan. The tax will pay a portion of the public's costs when
employees use the new government system instead of employer-sponsored
insurance. However, the actual result will be lower pay and job losses,
especially for low-income workers.
Costs Paid by Employees, Not Employers
Advocates of an employer mandate claim that
employers and "the rich" will bear the burden of health coverage. However,
the CBO recently reported that ordinary workers--not their employers--will
ultimately bear the full cost of any reforms that make health insurance more
expensive for employers.[1]
Although workers do not physically write a check
for their health benefits, their employers write a smaller check to them
every payday. Workers pay for health benefits through lower wages. As the
CBO explains:
Although employers directly pay most of the costs
of their workers' health insurance, the available evidence indicates that
active workers--as a group--ultimately bear those costs. Employers' payments
for health insurance are one form of compensation, along with wages, pension
contributions, and other benefits. Firms decide how much labor to employ on
the basis of the total cost of compensation and choose the composition of
that compensation on the basis of what their workers generally prefer.
Employers who offer to pay for health insurance thus pay less in wages and
other forms of compensation than they otherwise would, keeping total
compensation about the same. ...
[I]f employers who did not offer insurance were
required to pay a fee, employees' wages and other forms of compensation
would generally decline by the amount of that fee from what they would
otherwise have been.[2]
Employers do not have limitless funds to dole out
according to their own generosity. They must pay for all benefits and wages
out of revenue received from customers; therefore they must decide how many
employees to hire, and what to pay, based on the total cost of having that
employee (and that employee's productivity). It does not matter from the
employer's point of view how compensation is divided between wages,
benefits, and payroll or other taxes.
If Congress makes health coverage more expensive
for employers, or requires new payroll taxes, employers will be forced to
cut wages to make up the difference. Even if the law stated (as the House
bill does[3]) that employers could not cut pay directly to make up for the
cost of health care, they will ultimately, somehow have to do just that.
For example, they could give smaller raises (too
small to keep pace with inflation), less frequent promotions, lower starting
pay to new employees, and/or wage cuts due to "the recession" until their
total costs of employing a worker had fallen by nearly the same amount as
the employer mandate imposed by Congress.[4]
No Free Lunch
An employer mandate does not give workers without
health coverage a "free lunch": They will not be able to keep their current
wages and benefits and have health care added to it at their employers'
expense. Instead, the proposed laws would effectively force them to purchase
health insurance and therefore spend less on other goods. Some workers will
prefer this arrangement, but many others will not. In essence, the Congress
would be telling the poor: "If you now have to choose between food and
health insurance, you no longer have that choice--from now on you have to
buy the health insurance."
Wage Cuts for Low-Income Workers
These wage reductions will most seriously affect
low-income workers. Most higher-income earners already have health benefits
and so will not experience any wage cuts as long as their health insurance
meets the new federal requirements.
The employer mandate's burden would primarily fall
on lower-income and less-skilled workers who do not currently have health
coverage. The House version would force these workers to take the equivalent
of an 8 percent pay cut--amounting to $1,600 a year for a full-time worker
earning $10 an hour.
Job Losses for Low-Income Workers
On July 24, the federal minimum wage will rise to
$7.25 an hour. Employers cannot legally take the full cost of the employer
mandate penalty out of the paychecks of anyone earning close to this
minimum. Thus, paying $7.25 an hour plus the health care tax will make
unskilled workers even more expensive to hire. So, as the CBO points out,
their employers will respond by laying them off or hiring fewer of them in
the first place:
[A] play-or-pay provision would reduce the hiring
of low-wage workers, whose wages could not fall by the full cost of health
insurance or a substantial play-or-pay fee if they were close to the minimum
wage.[5]
Health care reform is supposed to help vulnerable
workers. But the House's approach to health care reform will cost many of
them their jobs.
Tax Increases on Ordinary Workers
President Obama promised not to raise taxes on
workers earning less than $250,000 a year, and supporters of an employer
mandate claim that they will not make low- and middle-income workers bear
the burden of paying for it. The focus on the surcharge on those earning
over a million dollars a year reinforces this impression.
However, low-income workers will bear much of the
cost, paying higher taxes indirectly through reduced wages. The House bill
imposes what is effectively an 8 percent surtax that applies only to workers
who do not already have health insurance, most of whom are already in the
lower-income strata and can least afford to pay higher taxes.
James Sherk is Bradley Fellow in Labor Policy and Robert A. Book,
Ph.D., is Senior Research Fellow in Health Economics in the Center for Data
Analysis at The Heritage Foundation.
At the current rate of increase, the cost of family
insurance will reach twenty-seven thousand dollars or more in a decade,
taking more than a fifth of every dollar that people earn. Businesses will
see their health-coverage expenses rise from ten per cent of total labor
costs to seventeen per cent. Health-care spending will essentially devour
all our future wage increases and economic growth. State budget costs for
health care will more than double, and Medicare will run out of money in
just eight years. The cost problem, people have come to realize, threatens
not just our prosperity but our solvency.
So what does the reform package do about it? Turn
to page 621 of the Senate version, the section entitled “Transforming the
Health Care Delivery System,” and start reading. Does the bill end
medicine’s destructive piecemeal payment system? Does it replace paying for
quantity with paying for quality? Does it institute nationwide structural
changes that curb costs and raise quality?
It does not. Instead, what it offers is . .
. pilot programs.
It's hard to imagine a better illustration of the
panic and recklessness stringing ObamaCare along in the Senate than the
putative deal that Harry Reid announced this week. The Majority Leader is
claiming that a Medicare "buy-in" for people from ages 55 to 64 has overcome
the liberal-moderate impasse over the "public option." But if anything, this
gambit is an even faster road to government-run health care.
The public option—an insurance program open to
everyone, financed by taxpayers and run like Medicare—is intended as a
veiled substitute for "single-payer" Canada-style insurance. Under the cover
of "choice" and "competition," the entitlement would quickly squeeze out
private insurance as people gravitated to "free" coverage and the government
held down costs via price controls the way Medicare does now.
Mr. Reid's buy-in simply cuts out the middle man.
Why go to the trouble of creating a new plan like Medicare when Medicare
itself is already handy? A buy-in is an old chestnut of single-payer
advocate Pete Stark, and it's the political strategy liberals have tried
since the Great Society: Ratchet down the enrollment age for Medicare, boost
the income limits to qualify for Medicaid, and soon health care for the
entire middle class becomes a taxpayer commitment.
In the case of Medicare, this means expanding a
program that is already going broke. Medicare reimburses doctors and
hospitals at rates 70% to 80% below those of private insurers, which means
below the actual treatment costs in many cities and regions. Providers
either eat these losses—about half of U.S. hospitals are running a deficit
or close to it—or they raise prices for private payers. This cost-shifting
isn't dollar for dollar, but all empirical research shows that it adds tens
of billions of dollars to consumer health bills, and this will accelerate if
several million new patients are added to Medicare. That means higher prices
for health insurance.
Adverse selection will also be a big problem, as
the people who choose to join will inevitably be higher risk or in poorer
health. Mr. Reid hasn't released any details on his plan, if they even
exist, but would the sub-65 uninsured who join Medicare be subsidized? If
so, in what sense is this one-hand-subsidizes-the-other taxpayer
self-dealing a "buy-in"? It sounds simply like a huge Medicare expansion,
especially if employers decide to drop coverage for anyone older than 55.
As for costs, how does adding new beneficiaries
square with Democratic promises that they will cut Medicare spending on
paper by two percentage points a year for the next two decades—just as the
baby boomers retire and health costs continue to climb?
This last-minute, back-room ploy shows again that
Democrats are simply winging it as they rush to pass something—anything—that
can get 60 votes by Christmas. President Obama praised the proposal as "a
creative new framework," while Finance Chairman Max Baucus told the
Washington Post, "If there's 60 Senators who can reach agreement, I'm for
it." Now there's a model standard to use for reordering 17% of the U.S.
economy.
The latest polls show public support for the Senate
plan falling into the mid-30%-range. The remaining supporters must not be
paying attention.
Jensen Comment
Iowa Senator Chuck
Grassley said that the Reid Plan was like adding more people to the Titanic
when its already near submerged. Iowa's other Senator
Tom Harkin buys into the
Reid Plan hook, line, and Titanic sinker.
Keith Olbermann, host of MSNBC’s “Countdown,” said
Wednesday night that losing the pure public option is a “total and unmitigated
defeat without a war.” “All is over,” Olbermann declared near the top of his
show, channeling Winston Churchill following the 1939 Munich agreement appeasing
Adolf Hitler. “Silent, mournful, abandoned, broken, health care reform recedes
into the darkness,” adding that he hopes he is mistaken. “The people should know
that we have passed an awful milestone in our history, when the whole
equilibrium of the nation has been deranged and that the terrible words have for
the time being been pronounced against those who fight against the corporate
state,” he said. “Do not suppose that this is the end. This is only the
beginning of the reckoning, this is only the first sip, the first foretaste of a
bitter cup which will be proffered to us year by year, unless by a supreme
recovery of moral health and independent vigor we arise again and take our stand
for freedom.” Olbermann laid the blame on Senate Majority Leader Harry Reid for
not being able to attract enough support for the public option.
Watch the video on Politico, December 10, 2009 ---
http://www.politico.com/news/stories/1209/30443.html
"The Democrats' Assault On Seniors: Wrecking Medicare To Save
Obamacare," by Hugh Hewitt, Townhall, December 10, 2009 ---
Click Here
In an interview on my radio show
Wednesday, Arizona Senator Jon Kyl underscored the fact that Senate
Democrats do not have the 60 votes they need to pass Obamacare, and that
reports about the inevitability of Obamcare passing are part of the
Democrat's strategy. (The
transcript of the interview is here.) Kyl asserted
that Harry Reid routinely announces, and then the MSM echoes, statements
about the inevitability of the bill's passing, but then reality catches up.
This is happening again today as the premature
reports of an agreement to expand Medicare to those 55 and older are exposed
as more puff talk from a disappointed and reeling left that has seen its
dream of a public plan take some serious blows in the past few days.
David Drucker's and Emily Pierce's report in Roll Call
(subscription required) conveys the difficulty facing
Reid:
Democratic Senators involved in crafting
what Majority Leader Harry Reid (D-Nev.) described as a “broad
agreement” on health care policy appear to be at odds over both the
policy proscriptions and the notion that they had even reached such a
deal.
Though Reid announced late Tuesday that
negotiations among a group of 10 liberal and moderate Democratic
Senators had largely resolved the intraparty standoff over the public
insurance option, participants in the group said their “agreement” had
been mischaracterized and that they agreed only to send the proposal to
the Congressional Budget Office for a cost estimate, saying more
information was necessary before making any firm decisions.
Seniors especially have to hope that the new deal
falls apart as it represents a savaging of Medicare. The Obama-Pelosi-Reid
assault on Medicare has three parts now.
First, Obamacare proposes to loot Medicare of about
a half trillion dollars in benefits. Obamacare enthusiasts dismiss the
devastating impacts to Medicare Advantage enrollees as necessary to
rebalance the system, but the loss of benefits to those senior citizens will
be huge. So too will the cutbacks for hospitals treating the elderly if the
bill passes.
Second, Medicare payroll taxes are raised in the
Senate bill, but that massive flow of new revenue isn't going to secure the
financial future of Medicare, but to instead pay for new entitlements, thus
crowding out a source of future funding for Medicare when it hits the rocks
in a very few years.
And now, third, Democrats are proposing the
expansion of the nearly insolvent Medicare program to millions of new
enrollees 55 and older. This enormous mistake will not only quickly drain
the program of its remaining resources, it will accelerate the trend of
doctors heading into concierge practices, abandoning the low-paying Medicare
patients for the much more equitable payments provided by the dwindling
number of privately covered patients.
All of the versions of Obamacare are radical
assaults on seniors, but the latest version is a recipe for disaster for
Medicare, and seniors know it. The seniors' political punishment of all
Democrats will come in 47 weeks, but right now they have to act to alert the
few Democrats on the fence that voting for this reckless scheme is political
suicide.
Never ending fraud in Medicare billings:
Unaudited overpayments, unqualified items, and criminal vendors One spending sinkhole can be traced to large
medical-equipment suppliers, device makers, and pharmaceutical companies, which
government auditors and industry veterans describe as a recalcitrant bunch.
Medical manufacturers know public agencies generally pay first and ask questions
later—if ever. Medicare receives 4.4 million claims
daily; fewer than 3% are reviewed before being paid within the legally required
30 days.
President Barack Obama and his Democratic allies on
Capitol Hill say that a vast expansion of health coverage can be funded by
squeezing out waste and fraud rather than cutting benefits. Whether that
turns out to be true may help determine the success of the sweeping reform
package being debated by Congress. Slashing costs is no easy task, and
stopping fraud is even tougher. No less than $47 billion in Medicare
spending went to dubious claims in the year ended Sept. 30, according to the
U.S. Health & Human Services Dept. That's 10.7% of the $440 billion program
that subsidizes care for the elderly. Medicaid, the government program for
the poor, lets billions trickle away at roughly the same rate. The $10
million annual increase that Congress is allocating to fight fraud may not
be enough to do the trick.
One spending sinkhole can be traced to large
medical-equipment suppliers, device makers, and pharmaceutical companies,
which government auditors and industry veterans describe as a recalcitrant
bunch. Medical manufacturers know public agencies generally pay first and
ask questions later—if ever. Medicare receives 4.4 million claims daily;
fewer than 3% are reviewed before being paid within the legally required 30
days.
One way to get a sense of the scale of the
seepage—and the challenge facing the Administration—is to look at
whistleblower lawsuits filed under the federal False Claims Act. That law
allows company employees to sue on behalf of the government to recover
improperly claimed federal funds.
A suit filed by William A. Thomas, a former senior
sales manager at Siemens Medical Solutions USA, one of the nation's largest
medical suppliers and a unit of German engineering giant Siemens (SI),
offers a case study in the difficulty of containing costs. Thomas, a 15-year
Siemens Medical veteran, alleges in federal court in Philadelphia that for
years the company overbilled the Veterans Affairs Dept. and other government
agencies by hundreds of millions of dollars for MRI and CT scan machines and
other expensive equipment. These high-tech systems—used to examine
everything from damaged knees to suspected cancers—cost $500,000 to $3
million apiece, sometimes more. Thomas, who retired from Siemens in 2008,
claims that with no justification other than larger profits, his former
employer charged its government customers far more than private-sector
buyers for the same equipment.
"Billions and billions could be saved with the
right government regulation and oversight applied to health care," Thomas,
56, says in an interview. "But I think corporations will continue running
circles around the federal government."
In court filings, Siemens has denied any wrongdoing
and has sought to have the Thomas suit dismissed. A company spokesman, Lance
Longwell, declined to elaborate for this article, citing the litigation.
The Thomas suit illustrates some of the vagaries of
False Claims Act cases, hundreds of which are filed every year against
government contractors in a range of industries. As the plaintiff, Thomas
stands to pocket up to 30% of any court recovery, with the rest going to the
Treasury. The Justice Dept., which can intervene in such suits to help steer
them, announced last year that it will stay out of the case against Siemens
for now. Yet Thomas' allegations have helped drive a parallel criminal
investigation of Siemens' equipment marketing practices by the Defense Dept.
and the U.S. Attorney's Office in Philadelphia.
In April federal investigators searched for records
at the headquarters of Siemens Medical in Malvern, Pa., a suburb of
Philadelphia. Ed Bradley, special agent-in-charge of the Defense Criminal
Investigative Service, confirmed that the investigation is continuing but
declined to comment further.
Longwell, the Siemens Medical spokesman, says the
company is cooperating with criminal investigators. In March, just weeks
before the search of its offices, Siemens won a new $267 million contract to
provide radiology equipment to the U.S.
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Jensen Comment
The GAO has declared that many huge sink holes for fraud and waste are
unauditable --- the Pentagon, the IRS, Medicare, and the list goes on and on.
But the Congress that funds these programs is manipulated by special interest
groups who do not want these audits. The new sink hole on the block is almost
anything green.
The federal government is failing to meet the
financial reporting needs of taxpayers, falling short of expectations, and
creating a problem with trust, according to survey findings released by the
Association of Government Accountants (AGA). The survey, Public Attitudes to
Government Accountability and Transparency 2008, measured attitudes and
opinions towards government financial management and accountability to
taxpayers. The survey established an expectations gap between what taxpayers
expect and what they get, finding that the public at large overwhelmingly
believes that government has the obligation to report and explain how it
generates and spends its money, but that that it is failing to meet
expectations in any area included in the survey.
The survey further found that taxpayers consider
governments at the federal, state, and local levels to be significantly
under-delivering in terms of practicing open, honest spending. Across all
levels of government, those surveyed held "being open and honest in spending
practices" vitally important, but felt that government performance was poor
in this area. Those surveyed also considered government performance to be
poor in terms of being "responsible to the public for its spending." This is
compounded by perceived poor performance in providing understandable and
timely financial management information.
The survey shows:
The American public is most dissatisfied with
government financial management information disseminated by the federal
government. Seventy-two percent say that it is extremely or very important
to receive this information from the federal government, but only 5 percent
are extremely or very satisfied with what they receive.
Seventy-three percent of Americans believe that it
is extremely or very important for the federal government to be open and
honest in its spending practices, yet only 5 percent say they are meeting
these expectations.
Seventy-one percent of those who receive financial
management information from the government or believe it is important to
receive it, say they would use the information to influence their vote.
Relmond Van Daniker, Executive Director at AGA,
said, "We commissioned this survey to shed some light on the way the public
perceives those issues relating to government financial accountability and
transparency that are important to our members. Nobody is pretending that
the figures are a shock, but we are glad to have established a benchmark
against which we can track progress in years to come."
He continued, "AGA members working in government at
all levels are in the very forefront of the fight to increase levels of
government accountability and transparency. We believe that the traditional
methods of communicating government financial information -- through reams
of audited financial statements that have little relevance to the taxpayer
-- must be supplemented by government financial reporting that expresses
complex financial details in an understandable form. Our members are
committed to taking these concepts forward."
Justin Greeves, who led the team at Harris
Interactive that fielded the survey for the AGA, said, "The survey results
include some extremely stark, unambiguous findings. Public levels of
dissatisfaction and distrust of government spending practices came through
loud and clear, across every geography, demographic group, and political
ideology. Worthy of special note, perhaps, is a 67 percentage point gap
between what taxpayers expect from government and what they receive. These
are significant findings that I hope government and the public find useful."
This survey was conducted online within the United
States by Harris Interactive on behalf of the Association of Government
Accountants between January 4 and 8, 2008 among 1,652 adults aged 18 or
over. Results were weighted as needed for age, sex, race/ethnicity,
education, region, and household income. Propensity score weighting was also
used to adjust for respondents' propensity to be online. No estimates of
theoretical sampling error can be calculated.
You can read the
Survey Report, including a full methodology and associated
commentary.
1. Taxes:
Cheating Shows. The Internal Revenue Service estimates that the annual net
tax gap—the difference between what's owed and what's collected—is $290
billion, more than double the average yearly sum spent on the wars in Iraq
and Afghanistan.
About $59 billion of that figure results from the
underreporting and underpayment of employment taxes. Our broken system of
immigration is another concern, with nearly eight million undocumented
workers having a less-than-stellar relationship with the IRS. Getting more
of them on the books could certainly help narrow that tax gap.
Going after the deadbeats would seem like an
obvious move. Unfortunately, the IRS doesn't have the resources to
adequately pursue big offenders and their high-powered tax attorneys. "The
IRS is outgunned," says Walker, "especially when dealing with multinational
corporations with offshore headquarters."
Another group that costs taxpayers billions: hedge
fund and private equity managers. Many of these moguls make vast "incomes"
yet pay taxes on a portion of those earnings at the paltry 15 percent
capital gains rate, instead of the higher income tax rate. By some
estimates, this loophole costs taxpayers more than $2.5 billion a year.
Oil companies are getting a nice deal too. The
country hands them more than $2 billion a year in tax breaks. Says Walker,
"Some of the sweetheart deals that were negotiated for drilling rights on
public lands don't pass the straight-face test, especially given current
crude oil prices." And Big Oil isn't alone. Citizens for Tax Justice
estimates that corporations reap more than $123 billion a year in special
tax breaks. Cut this in half and we could save about $60 billion.
2. Healthy Fixes.
Medicare and Medicaid, which cover elderly and low-income patients
respectively, eat up a growing portion of the federal budget. Investigations
by Sen. Tom Coburn (R-OK) point to as much as $60 billion a year in fraud,
waste and overpayments between the two programs. And Coburn is likely
underestimating the problem.
The U.S. spends more than $400 per person on health
care administration costs and insurance -- six times more than other
industrialized nations.
That's because a 2003 Dartmouth Medical School
study found that up to 30 percent of the $2 trillion spent in this country
on medical care each year—including what's spent on Medicare and Medicaid—is
wasted. And with the combined tab for those programs rising to some $665
billion this year, cutting costs by a conservative 15 percent could save
taxpayers about $100 billion. Yet, rather than moving to trim fat, the
government continues such questionable practices as paying private insurance
companies that offer Medicare Advantage plans an average of 12 percent more
per patient than traditional Medicare fee-for-service. Congress is trying to
close this loophole, and doing so could save $15 billion per year, on
average, according to the Congressional Budget Office.
Another money-wasting bright idea was to create a
giant class of middlemen: Private bureaucrats who administer the Medicare
drug program are monitored by federal bureaucrats—and the public pays for
both. An October report by the House Committee on Oversight and Government
Reform estimated that this setup costs the government $10 billion per year
in unnecessary administrative expenses and higher drug prices.
The Tab* Wasteful Health Spending: $60 billion
(fraud, waste, overpayments) + $100 billion (modest 15 percent cost
reduction) + $15 billion (closing the 12 percent loophole) + $10 billion
(unnecessary Medicare administrative and drug costs) Total $185 billion
Running Tab: $352.5 billion +$185 billion = $537.5 billion
3. Military Mad Money.
You'd think it would be hard to simply lose massive amounts of money, but
given the lack of transparency and accountability, it's no wonder that eight
of the Department of Defense's functions, including weapons procurement,
have been deemed high risk by the GAO. That means there's a high probability
that money—"tens of billions," according to Walker—will go missing or be
otherwise wasted.
The DOD routinely hands out no-bid and cost-plus
contracts, under which contractors get reimbursed for their costs plus a
certain percentage of the contract figure. Such deals don't help hold down
spending in the annual military budget of about $500 billion. That sum is
roughly equal to the combined defense spending of the rest of the world's
countries. It's also comparable, adjusted for inflation, with our largest
Cold War-era defense budget. Maybe that's why billions of dollars are still
being spent on high-cost weapons designed to counter Cold War-era threats,
even though today's enemy is armed with cell phones and IEDs. (And that $500
billion doesn't include the billions to be spent this year in Iraq and
Afghanistan. Those funds demand scrutiny, too, according to Sen. Amy
Klobuchar, D-MN, who says, "One in six federal tax dollars sent to rebuild
Iraq has been wasted.")
Meanwhile, the Pentagon admits it simply can't
account for more than $1 trillion. Little wonder, since the DOD hasn't been
fully audited in years. Hoping to change that, Brian Riedl of the Heritage
Foundation is pushing Congress to add audit provisions to the next defense
budget.
If wasteful spending equaling 10 percent of all
spending were rooted out, that would free up some $50 billion. And if
Congress cut spending on unnecessary weapons and cracked down harder on
fraud, we could save tens of billions more.
4. Bad Seeds.
The controversial U.S. farm subsidy program, part of which pays farmers not
to grow crops, has become a giant welfare program for the rich, one that
cost taxpayers nearly $20 billion last year.
Two of the best-known offenders: Kenneth Lay, the
now-deceased Enron CEO, who got $23,326 for conservation land in Missouri
from 1995 to 2005, and mogul Ted Turner, who got $590,823 for farms in four
states during the same period. A Cato Institute study found that in 2005,
two-thirds of the subsidies went to the richest 10 percent of recipients,
many of whom live in New York City. Not only do these "farmers" get money
straight from the government, they also often get local tax breaks, since
their property is zoned as agricultural land. The subsidies raise prices for
consumers, hurt third world farmers who can't compete, and are attacked in
international courts as unfair trade.
5. Capital Waste.
While there's plenty of ongoing annual operating waste, there's also a
special kind of profligacy—call it capital waste—that pops up year after
year. This is shoddy spending on big-ticket items that don't pan out. While
what's being bought changes from year to year, you can be sure there will
always be some costly items that aren't worth what the government pays for
them.
Take this recent example: Since September 11, 2001,
Congress has spent more than $4 billion to upgrade the Coast Guard's fleet.
Today the service has fewer ships than it did before that money was spent,
what 60 Minutes called "a fiasco that has set new standards for
incompetence." Then there's the Future Imagery Architecture spy satellite
program. As The New York Times recently reported, the technology flopped and
the program was killed—but not before costing $4 billion. Or consider the
FBI's infamous Trilogy computer upgrade: Its final stage was scrapped after
a $170 million investment. Or the almost $1 billion the Federal Emergency
Management Agency has wasted on unusable housing. The list goes on.
The Tab* Wasteful Capital Spending: $30 billion
Running Tab: $657.5 billion + $30 billion = $687.5 billion
6. Fraud and Stupidity.
Sen. Chuck Grassley (R-IA) wants the Social Security Administration to
better monitor the veracity of people drawing disability payments from its
$100 billion pot. By one estimate, roughly $1 billion is wasted each year in
overpayments to people who work and earn more than the program's rules
allow.
The federal Food Stamp Program gets ripped off too.
Studies have shown that almost 5 percent, or more than $1 billion, of the
payments made to people in the $30 billion program are in excess of what
they should receive.
One person received $105,000 in excess disability
payments over seven years.
There are plenty of other examples. Senator Coburn
estimates that the feds own unused properties worth $18 billion and pay out
billions more annually to maintain them. Guess it's simpler for bureaucrats
to keep paying for the property than to go to the trouble of selling it.
The Tab* General Fraud and Stupidity: $2 billion
(disability and food stamp overpayment) Running Tab: $687.5 billion + $2
billion = $689.5 billion
7. Pork Sausage.
Congress doled out $29 billion in so-called earmarks—aka funds for
legislators' pet projects—in 2006, according to Citizens Against Government
Waste. That's three times the amount spent in 1999. Congress loves to deride
this kind of spending, but lawmakers won't hesitate to turn around and drop
$500,000 on a ballpark in Billings, Montana.
The most infamous earmark is surely the "bridge to
nowhere"—a span that would have connected Ketchikan, Alaska, to nearby
Gravina Island—at a cost of more than $220 million. After Hurricane Katrina
struck New Orleans, Senator Coburn tried to redirect that money to repair
the city's Twin Span Bridge. He failed when lawmakers on both sides of the
aisle got behind the Alaska pork. (That money is now going to other projects
in Alaska.) Meanwhile, this kind of spending continues at a time when our
country's crumbling infrastructure—the bursting dams, exploding water pipes
and collapsing bridges—could really use some investment. Cutting two-thirds
of the $29 billion would be a good start.
8. Welfare Kings.
Corporate welfare is an easy thing for politicians to bark at, but it seems
it's hard to bite the hand that feeds you. How else to explain why corporate
welfare is on the rise? A Cato Institute report found that in 2006,
corporations received $92 billion (including some in the form of those farm
subsidies) to do what they do anyway—research, market and develop products.
The recipients included plenty of names from the Fortune 500, among them
IBM, GE, Xerox, Dow Chemical, Ford Motor Company, DuPont and Johnson &
Johnson.
9. Been There,
Done That. The Rural Electrification Administration, created during the New
Deal, was an example of government at its finest—stepping in to do something
the private sector couldn't. Today, renamed the Rural Utilities Service,
it's an example of a government that doesn't know how to end a program. "We
established an entity to electrify rural America. Mission accomplished. But
the entity's still there," says Walker. "We ought to celebrate success and
get out of the business."
In a 2007 analysis, the Heritage Foundation found
that hundreds of programs overlap to accomplish just a few goals. Ending
programs that have met their goals and eliminating redundant programs could
comfortably save taxpayers $30 billion a year.
10. Living on Credit.
Here's the capper: Years of wasteful spending have put us in such a deep
hole, we must squander even more to pay the interest on that debt. In 2007,
the federal government carried a debt of $9 trillion and blew $252 billion
in interest. Yes, we understand the federal government needs to carry a
small debt for the Federal Reserve Bank to operate. But "small" isn't how we
would describe three times the nation's annual budget. We need to stop
paying so much in interest (and we think cutting $194 billion is a good
target). Instead we're digging ourselves deeper: Congress had to raise the
federal debt limit last September from $8.965 trillion to almost $10
trillion or the country would have been at legal risk of default. If that's
not a wake-up call to get spending under control, we don't know what is.
The Tab* Interest on National Debt: $194 billion
Final Tab: $789.5 billion + $194 billion = $983.5 billion
What YOU Can Do Many believe our system is
inherently broken. We think it can be fixed. As citizens and voters, we have
to set a new agenda before the Presidential election. There are three things
we need in order to prevent wasteful spending, according to the GAO's David
Walker:
• Incentives for people to do the right thing.
• Transparency so we can tell if they've done
the right thing.
• Accountability if they do the wrong thing.
Two out of three won't solve our problems.
So how do we make it happen? Demand it of our
elected officials. If they fail to listen, then we turn them out of office.
With its approval rating hovering around 11 percent in some polls, Congress
might just start paying attention.
Start by writing to your Representatives. Talk to
your family, friends and neighbors, and share this article. It's in
everybody's interest.
I have come to the conclusion that the real reason
this gifted communicator (Obama) has become
so bad at communicating is that he doesn't really believe a word that he is
saying. He couldn't convey that health-care reform would be somehow cost-free
because he knows it won't be. And he can't adequately convey either the
imperatives or the military strategy of the war in Afghanistan because he
doesn't really believe in it either. He feels colonized by mistakes of the past.
He feels trapped by the hand that has been dealt him.
Leftist Leaning Tina Brown, "Obama's Fog War," The
Daily Beast ---
http://www.thedailybeast.com/blogs-and-stories/2009-12-03/what-is-obama-talking-about/
Jensen Comment
And President Obama was the dealer.
Voters are increasingly worried about unemployment,
but Democratic leaders in Congress remain obsessed with passing health- care
reform. Senate Majority Whip Richard Durbin was asked recently if a health-care
bill would pass the Senate by the end of this month. "It must," he said. "We
have to finish it." Still, many in the trenches are uneasy about the sprawling,
complex bill they privately acknowledge has no bipartisan support, doesn't
seriously tackle soaring costs and will increase insurance premiums. That may
explain Majority Leader Harry Reid's haste—he has ordered a rare Sunday session
this weekend to hurry up the debate. Public support for the bill averages only
39.2% backing in all polls compiled by Pollster.com. John Fund, "Why Dems Are Obsessed by
Health Reform: They believe the liberal base expects them to deliver and
will punish them if they don't," The Wall Street Journal, December 4,
2009 ---
http://online.wsj.com/article/SB10001424052748704007804574575584229775884.html#mod=djemEditorialPage
Another day, another study confirming that
ObamaCare will increase the price of health insurance. The Blue Cross Blue
Shield Association has found that premiums in the individual market will
rise on average by 54% over the status quo, which translates into an extra
$3,341 a year for families and $1,576 for singles. The White House denounced
the report as a "sham" before it was even released, which shows how
seriously it takes such concerns.
The Congressional Budget Office also found this
week that ObamaCare will boost premiums in the individual market by as much
as 13%. But the White House called that a triumph because the higher costs
will be offset by taxpayer subsidies that will be transferred to the federal
balance sheet.
The Blue Cross study is in fact more precise than
CBO's because it is based on real market data, rather than modeling
assumptions. The association mined the actuarial data from its six million
individual or small-business policies, nearly one-eighth of those sold in
the U.S.
Continued in article
But The New York Times Turns a Blind Eye and Sticks to the Party
Line
"No Big Cost Rise in U.S. Premiums Is Seen in Study," by
Robert Pear and David M. Herszenhorn, The New York Times, November 30,
2009 ---
http://www.nytimes.com/2009/12/01/health/policy/01health.html?hpw
The Congressional Budget Office said
Monday that the Senate health bill could significantly reduce costs for many
people who buy health insurance on their own, and that it would not
substantially change premiums for the vast numbers of Americans who receive
coverage from large employers.
Alex Brandon/Associated Press Senator
Harry Reid, the majority leader, said the debate on health care was one of
the most significant in Senate history. The eagerly awaited report, which
came as the Senate began debate on the legislation, provided Democrats with
ammunition against Republicans who have criticized the bill on the ground
that it would raise costs for a majority of Americans.
Centrist Democrats like Senator Evan Bayh
of Indiana, whose votes are vital to President Obama’s hopes of getting the
bill approved, had feared that the measure would drive up costs for people
with employer-sponsored coverage. After reading the budget office report,
Mr. Bayh said he was reassured on that point.
Before taking account of federal subsidies
to help people buy insurance on their own, the budget office said the bill
would tend to drive up premiums. But as a result of the subsidies, it said,
most people in the individual insurance market would see their costs
decline, compared with the costs expected under current law. The subsidies,
a main feature of the bill, would cost the government nearly $450 billion in
the next 10 years and would cover nearly two-thirds of premiums for people
who receive them.
For most people who get health insurance
through employers — five-sixths of the total market — the budget office
concluded that there would be little change in their premiums relative to
the amounts projected under current law.
Administration officials said the report
provided a lift to the bill, which embodies Mr. Obama’s top domestic
priority.
“The C.B.O. has rendered a fundamental
judgment that this will reduce the deficit and reduce people’s premium
costs,” said Rahm Emanuel, the White House chief of staff, who huddled with
Senate Democratic leaders on Capitol Hill on Monday. “All the Republican
leadership will guarantee you is the status quo.”
But Republican senators like Charles E.
Grassley of Iowa and Mitch McConnell of Kentucky, the minority leader, said
the report validated their concerns. They focused on the prediction that
unsubsidized premiums in the individual insurance market, less than a fifth
of those with health insurance, would rise an average of 10 percent to 13
percent.
“The analysis by the Congressional Budget
Office confirms our worst fears,” Mr. Grassley said. “Millions of people who
are expecting lower costs as a result of health reform will end up paying
more in the form of higher premiums. For large and small employers that have
been struggling for years with skyrocketing health insurance premiums, C.B.O.
concludes this bill will do little, if anything, to provide relief.”
The Senate majority leader, Harry Reid,
Democrat of Nevada, said the highly partisan floor debate that opened Monday
afternoon was one of the most significant in the history of the Senate. It
is expected to continue for much of December, with supporters and opponents
alike offering a raft of amendments as the White House and Democratic
leaders seek to put together the 60-vote coalition necessary to win passage.
Administration officials continued to
reach out to lawmakers in both parties to try to build support. Senator
Susan Collins, Republican of Maine, said she met Monday for 45 minutes with
Nancy-Ann DeParle, director of the White House Office of Health Reform, to
discuss her concerns about the legislation.
In its report, the budget office compared
estimates of premiums in 2016 under the new legislation and under current
law. In either case, after seven years of inflation, premiums would be
substantially higher than they are today.
The budget office said the analysis of
premiums was extremely complex, so the experience of individuals and
families "could vary significantly from the average.”
“In general,” it said, “the proposal would
tend to increase premiums for people who are young and relatively healthy,
and decrease premiums for those who are older and relatively unhealthy.”
Under the legislation, it said, the
average premium per person in the individual insurance market would be 10
percent to 13 percent higher than under current law. But, it said, most
people in this market — 18 million of the 32 million people buying insurance
on their own — would qualify for federal subsidies, which would reduce their
costs well below what they would have to pay under current law.
For people receiving subsidies, the budget
office said, premiums would be 56 percent to 59 percent lower than under
current law.
Without subsidies, it said, premiums under
the bill would average $5,800 a year for individuals and $15,200 a year for
families buying coverage on their own. Under current law, the comparable
figures would be $5,500 and $13,100.
“This study indicates that, for most
Americans, the bill will have a modestly positive impact on their premium
costs,” Mr. Bayh said. “For the remainder, more will see their costs go down
than up.”
Under the bill, the budget office said,
individual policies would have to provide more benefits and pay a larger
share of costs than most existing policies do. In other words, it said, some
people would pay more, but would also get more.
Insurers, it said, would have to cover
certain services that, in many cases, are not covered by existing policies
in the individual insurance market. These include maternity care,
prescription drugs, mental health services and substance abuse treatment.
Moreover, it said, under the legislation, insurance would cover an average
of 72 percent of medical costs for people buying insurance on their own, up
from 60 percent under current law.
The budget office said it foresaw “smaller
effects on premiums for employment-based coverage.”
In groups with 50 or fewer employees, it
said, unsubsidized premiums in 2016 would average $7,800 a year for
individuals and $19,200 for families — scarcely any different from the
amounts expected under current law. Of the 25 million people receiving
coverage from small businesses, it said, 3 million would qualify for
subsidies, which would reduce their premiums by an average of 8 percent to
11 percent.
Large employers would generally not be
eligible for such assistance. Their premiums in 2016 under the bill would
average $7,300 for individual coverage and $20,100 for family coverage, the
report said. Under current law, the comparable figures would be $7,400 for
individual coverage and $20,300 for family coverage.
The Senate bill would impose an excise tax
on high-premium health plans offered by employers. People who remain in such
“Cadillac health plans” would pay higher premiums, but most people would
avoid the effect of the tax by enrolling in plans with lower premiums, the
budget office said.
Jensen Comment
If you believe this you will also believe the promises of President Obama to
have won the Afghanistan war in less than two years. And then there's that ocean
front property in Arizona.
There is a little-noticed provision buried deep in
both the House and Senate health-care reform bills that is intended to save
billions of dollars—but instead will hurt millions of seniors, impose new
costs on taxpayers, and charge employers millions in new taxes.
As part of the Medicare Modernization Act in 2003,
Congress created a new drug benefit—called Medicare Part D—for retirees at a
cost of about $1,900 per recipient per year. Many private employers already
provided drug coverage for their retirees, and the administration and
Congress did not want to tempt employers into dropping their coverage.
Actuaries calculated that if the government provided a subsidy of at least
$800, employers would not stop covering retirees.
The legislation created a $600 tax-free benefit
(the equivalent of $800 cash for employers), and it worked. Employers
continued to cover about seven million retirees who might have otherwise
been dumped into Medicare Part D.
It was a good arrangement for all involved. An $800
subsidy is cheaper than the $1,900 cost of providing drug coverage. And
millions of seniors got to keep a drug benefit they were comfortable with
and that in many cases was better than the benefit offered by the
government.
But now that subsidy is coming in to be clipped.
This fall congressional staff, looking for a new revenue source to pay for
health reform, proposed eliminating the tax deductibility of the subsidy to
employers. The supposed savings were estimated by congressional staff to be
as much as $5 billion over the next decade.
It sounds smart—except that nobody asked how many
employers will drop retiree drug coverage. Clearly, many will. The result is
that, instead of saving money, the proposed revenue raiser will force
Medicare Part D costs to skyrocket as employers drop retirees into the
program.
The careful calculation that was made in 2003 to
minimize federal spending and maximize private coverage will go out the
window if this provision becomes law. Any short-term cost savings that
Congress gets by changing the tax provision will be overwhelmed by higher
costs in the long run.
Some members in the House want to mitigate the cost
of this provision by mandating that employers maintain existing levels of
retiree coverage despite the reduced subsidy. But it's not that simple. A
mandate would increase costs on businesses, which in turn would make it
harder for those businesses to hire new employees. The mandate would
effectively be a tax on employers that provide retiree benefits; this in
turn will simply induce some unknown number of employers to terminate their
retiree drug programs before the mandate kicks in.
In short, if the changes that are proposed for
employer subsidies in the current Medicare Part D program are enacted,
everyone will lose. Unions will lose as employers seek ways to drop retiree
drug coverage. Seniors will lose as employers drop them into Medicare Part
D. Medicare and taxpayers will lose as they face higher costs. And employers
will lose as they find it harder to provide benefits.
To make matters worse, accounting rules for
post-retirement benefits will require companies that keep their retiree
benefits to record the entire accrued present value of the new tax the day
the provision is signed into law. This would cause many employers to
immediately post billions in losses, which could significantly impact our
financial markets.
There are many reasons to pass health-care reform.
There is no reason to hurt seniors, employers and taxpayers in the process.
Businesses are struggling, and the Medicare trust funds have plenty of
problems as it is. It makes no sense to make these problems worse.
Mr. Scully was the administrator of the Centers for Medicare and
Medicaid Services from 2001-04 and was one of the designers of the Medicare
Part D benefit.
Updates on November 25, 2009
To its credit, Newsweek includes this columnist's articles among what
is otherwise unfailing support for the House version of massive spending for
universal health care "reform."
"Obama's Malpractice: Why the health-care bill isn't reform," Robert J.
Samuelson (economist), Newsweek Magazine, November 23, 2009 ---
http://commons.aaahq.org/posts/570fd14ba7
There is an air of
absurdity to what is mistakenly called "health-care reform." Everyone knows
that the United States faces massive governmental budget deficits as far as
calculators can project, driven heavily by an aging population and
uncontrolled health costs. Recovering slowly from a devastating recession,
it's widely agreed that, though deficits should not be cut abruptly (lest
the economy resume its slump), a prudent society would embark on long-term
policies to control health costs, reduce government spending, and curb
massive future deficits. The president and his top economic advisers all say
this. (Click
here to follow Robert J. Samuelson).
So, what do they do? Just the opposite. Their
sweeping overhaul of the health-care system—which Congress is halfway toward
enacting—would almost certainly make matters worse. It would create new,
open-ended medical entitlements that would probably expand deficits and do
little to suppress surging health costs. The disconnect between what Obama
says and what he's doing is so glaring that most people could not abide it.
The president and his allies have no trouble. But reconciling blatantly
contradictory objectives requires them to engage in willful self-deception,
public dishonesty, or both.
The campaign to pass Obama's health-care plan has
assumed a false, though understandable, cloak of moral superiority. It's
understandable because almost everyone thinks that people in need of
essential medical care should get it; ideally, everyone would have health
insurance. The pursuit of these worthy goals can easily be projected as a
high-minded exercise in the public good.
It is false for two reasons. First, the country has
other goals—including preventing future financial crises and minimizing the
crushing effects of high deficits or taxes on the economy and younger
Americans—that "health-care reform" would jeopardize. And second, the
benefits of "reform" are exaggerated. Sure, many Americans would feel less
fearful about losing insurance; but there are cheaper ways to limit
insecurity. Meanwhile, improvements in health for today's uninsured would be
modest. They already receive substantial medical care; insurance would help
some individuals enormously, but studies find that, on average, gains are
moderate.
The pretense of moral superiority dissolves before
all the expedient deceptions used to sell the health-care agenda. Obama says
he won't sign legislation that adds to the deficit. One way to do this is to
put costs outside the legislation. So: doctors have long complained that
their Medicare reimbursements are too low; the fix for replacing the present
formula would cost $210 billion over a decade, says the Congressional Budget
Office. That cost was originally in the legislation. Now it's been moved to
another bill, but because there are no means to pay for it, deficits would
increase.
Another way to disguise the costs is to count
savings that, though they exist on paper, would probably never be realized
in practice. The House bill claims reductions in Medicare reimbursements of
$228 billion over a decade for hospitals and other providers. But Congress
has often prescribed reimbursement cuts that, under pressure from providers,
it's later rescinded. Claims of "fiscal responsibility" for the health-care
proposals reflect "assumptions that are totally unrealistic based on past
history," says David Walker, former U.S. comptroller general and now head of
the Peter G. Peterson Foundation.
Equally misleading, Obama's advisers assert that
the present proposals would slow the growth of overall national health
spending. Outside studies disagree. Three studies (two by the consulting
firm the Lewin Group and one by the Centers for Medicare & Medicaid
Services, a federal agency) conclude that various congressional plans would
increase national health spending compared with no legislation. The studies
estimate the extra spending, over the next decade, at $750 billion, $525
billion, and $114 billion, respectively. The reasoning: greater use of the
health-care system by the newly insured would overwhelm cost-saving measures
("bundled payments," "comparative effectiveness research," tort reform),
which are weak or experimental.
Though these estimates could prove wrong, they are
more plausible than the administration's self-serving claims. Its
health-care plan is not "comprehensive" because it slights cost control; and
if its spending commitments worsened some future budget crisis, it wouldn't
qualify as "reform." It would be a self-inflicted wound.
Obama Criticizes Himself, Warns on High Deficits President Barack Obama gave his sternest warning yet
about the need to contain rising U.S. deficits, saying on Wednesday that if
government debt were to pile up too much, it could lead to a double-dip
recession. With the U.S. unemployment rate at 10.2 percent, Obama told Fox News
his administration faces a delicate balance of trying to boost the economy and
spur job creation while putting the economy on a path toward long-term deficit
reduction . . . As if things could not possibly get more weird and delusional,
President Obama now criticizes the very high government deficits he himself
supported, promoted, and helped create. I don’t think the word “pathological” is
sufficient to describe this man. We need to invent a new term. Reuters, November 18, 2009 ---
Click Here
Also see
http://www.foxnews.com/politics/2009/11/18/obama-warns-double-dip-recession/
When you knowingly pay someone to lie to
you, we call the deceiver an illusionist or a magician. When you unwittingly
pay someone to do the same thing, I call him a politician.
President Obama insists that health care
"reform" not "add a dime" to the
budget deficit, which daily grows to ever more
frightening levels. So the House-passed bill and the one the Senate now
deliberates both claim to cost less than $900 billion. Somehow "$900 billion
over 10 years" has been decreed to be a magical figure that will not
increase the deficit.
It's amazing how precise government gets
when estimating the cost of 10 years of subsidized medical care. Senate
Majority Leader Harry Reid's bill was scored not at $850 billion, but $849
billion. House Speaker Nancy Pelosi said her bill would cost $871 billion.
How do they do that?
The key to magic is misdirection, fooling
the audience into looking in the wrong direction.
I happily suspend disbelief when a
magician says he'll saw a woman in half. That's entertainment. But when
Harry Reid says he'll give 30 million additional people health coverage
while cutting the deficit, improving health care and reducing its cost, it's
not entertaining. It's incredible.
The politicians have a hat full of tricks
to make their schemes look cheaper than they are. The new revenues will pour
in during Year One, but health care spending won't begin until Year Three or
Four. To this the Cato Institute's
Michael Tanner asks, "Wouldn't it
be great if you could count a whole month's income, but only two weeks'
expenditures in your household budget?"
To be deficit-reducers, the health care
bills depend on a $200 billion cut in Medicare. Current law requires cuts in
payments to doctors, but let's get real: Those cuts will never happen. The
idea that Congress will "save $200 billion" by reducing payments for groups
as influential as doctors and retirees is laughable. Since 2003, Congress
has suspended those "required" cuts each year
Do you feel the leaked information from a
global warming alarmist organization is meaningful? This was an illegal
information leak that should be ignored It makes me question my belief in
global warming activists It's an example of dangerous scientific
politicization I haven't really heard about the controversy
This was an illegal information leak that
should be ignored (1 %)
It makes me question my belief in global
warming activists (8 %)
It's an example of dangerous scientific
politicization (86 %)
I haven't really heard about the
controversy (5 %)
Our pandering congressmen rarely cut. They
just spend. Even as the deficit grows, they vomit up our money onto new pet
"green" projects, bailouts for irresponsible industries, gifts for special
interests and guarantees to everyone.
Originally, this year's suspension, "the
doc fix," was included in the health care bills, but when it clearly pushed
the cost of "reform" over Obama's limit and threatened to hike the deficit,
the politicians moved the "doc fix" to a separate bill and pretended it was
unrelated to their health care work.
Megan McArdle of The Atlantic reports that
Rep. Paul Ryan of Wisconsin asked the Congressional Budget Office what the
total price would be if the "doc fix" and House health care overhaul were
passed together. "The answer, according to the CBO, is that together they'd
increase the deficit by $89 billion over 10 years." McArdle explains why the
"doc fix" should be included: "They're passing a bill that increases the
deficit by $200 billion in order to pass another bill that hopefully reduces
it, but by substantially less than $200 billion. That means that passage of
this bill is going to increase the deficit."
From the start, Obama has promised to pay
for half the "reform" cost by cutting Medicare by half a trillion over 10
years. But, Tanner asks, "how likely is it that those cuts will take place?
After all, this is an administration that will pay seniors $250 to make up
for the fact that they didn't get a Social Security cost-of-living increase
this year (because the cost of living didn't increase). And Congress is in
the process of repealing a scheduled increase in Medicare premiums."
Older people vote in great numbers. AARP
is the most powerful lobby on Capitol Hill. Like the cut in doctor's pay,
the other cuts will never happen.
I will chew on razor blades when Congress
cuts Medicare to keep the deficit from growing.
Medicare is already $37 trillion in the
hole. Yet the Democrats proudly cite Medicare when they demand support for
the health care overhaul. If a business pulled the accounting tricks the
politicians get away with, the owners would be in prison.
In the Testimony of a Former Congressional Budget Office Director
"The Coming Deficit Disaster: The president says he understands the
urgency of our fiscal crisis, but his policies are the equivalent of steering
the economy toward an iceberg." by Douglas Hotlz-Eagen, The Wall Street
Journal, November 20, 2009 ---
Click Here
President Barack Obama took office promising to
lead from the center and solve big problems. He has exerted enormous
political energy attempting to reform the nation's health-care system. But
the biggest economic problem facing the nation is not health care. It's the
deficit. Recently, the White House signaled that it will get serious about
reducing the deficit next year—after it locks into place massive new
health-care entitlements. This is a recipe for disaster, as it will create a
new appetite for increased spending and yet another powerful interest group
to oppose deficit-reduction measures.
Our fiscal situation has deteriorated rapidly in
just the past few years. The federal government ran a 2009 deficit of $1.4
trillion—the highest since World War II—as spending reached nearly 25% of
GDP and total revenues fell below 15% of GDP. Shortfalls like these have not
been seen in more than 50 years.
Going forward, there is no relief in sight, as
spending far outpaces revenues and the federal budget is projected to be in
enormous deficit every year. Our national debt is projected to stand at
$17.1 trillion 10 years from now, or over $50,000 per American. By 2019,
according to the Congressional Budget Office's (CBO) analysis of the
president's budget, the budget deficit will still be roughly $1 trillion,
even though the economic situation will have improved and revenues will be
above historical norms.
The planned deficits will have destructive
consequences for both fairness and economic growth. They will force upon our
children and grandchildren the bill for our overconsumption. Federal
deficits will crowd out domestic investment in physical capital, human
capital, and technologies that increase potential GDP and the standard of
living. Financing deficits could crowd out exports and harm our
international competitiveness, as we can already see happening with the
large borrowing we are doing from competitors like China.
At what point, some financial analysts ask, do
rating agencies downgrade the United States? When do lenders price
additional risk to federal borrowing, leading to a damaging spike in
interest rates? How quickly will international investors flee the dollar for
a new reserve currency? And how will the resulting higher interest rates,
diminished dollar, higher inflation, and economic distress manifest itself?
Given the president's recent reception in China—friendly but fruitless—these
answers may come sooner than any of us would like.
Mr. Obama and his advisers say they understand
these concerns, but the administration's policy choices are the equivalent
of steering the economy toward an iceberg. Perhaps the most vivid example of
sending the wrong message to international capital markets are the
health-care reform bills—one that passed the House earlier this month and
another under consideration in the Senate. Whatever their good intentions,
they have too many flaws to be defensible.
First and foremost, neither bends the health-cost
curve downward. The CBO found that the House bill fails to reduce the pace
of health-care spending growth. An audit of the bill by Richard Foster,
chief actuary for the Centers for Medicare and Medicaid Services, found that
the pace of national health-care spending will increase by 2.1% over 10
years, or by about $750 billion. Senate Majority Leader Harry Reid's bill
grows just as fast as the House version. In this way, the bills betray the
basic promise of health-care reform: providing quality care at lower cost.
Second, each bill sets up a new entitlement program
that grows at 8% annually as far as the eye can see—faster than the economy
will grow, faster than tax revenues will grow, and just as fast as the
already-broken Medicare and Medicaid programs. They also create a second new
entitlement program, a federally run, long-term-care insurance plan.
Finally, the bills are fiscally dishonest, using
every budget gimmick and trick in the book: Leave out inconvenient spending,
back-load spending to disguise the true scale, front-load tax revenues, let
inflation push up tax revenues, promise spending cuts to doctors and
hospitals that have no record of materializing, and so on.
If there really are savings to be found in
Medicare, those savings should be directed toward deficit reduction and
preserving Medicare, not to financing huge new entitlement programs. Getting
long-term budgets under control is hard enough today. The job will be nearly
impossible with a slew of new entitlements in place.
In short, any combination of what is moving through
Congress is economically dangerous and invites the rapid acceleration of a
debt crisis. It is a dramatic statement to financial markets that the
federal government does not understand that it must get its fiscal house in
order.
What to do? The best option would be for the
president to halt Congress's rush to fiscal suicide, and refocus on slowing
the dangerous growth in Social Security, Medicare and Medicaid. He should
call on Congress to pass a comprehensive reform of our income and payroll
tax systems that would generate revenue sufficient to fund its spending
desires in a pro-growth and fair fashion.
Reducing entitlement spending and closing tax
loopholes to create a fairer tax system with more balanced revenues is
politically difficult and requires sacrifice. But we will avert a
potentially devastating credit crisis, increase national savings, drive
productivity and wage growth, and enhance our international competitiveness.
The time to worry about the deficit is not next
year, but now. There is no time to waste.
Mr. Holtz-Eakin is former director of the Congressional Budget Office
and a fellow at the Manhattan Institute. This is adapted from testimony he
gave before the Senate Committee on the Budget on Nov. 10.
What's sad is that 2009 payola destroys the U.S. economy for our
grandchildren.
Makes you think Blue State Senators from NY, Massachusetts, Illinois, and
California Sold Out Too Cheap
But none of the rogue Senators are getting the tens of millions in earmarks
Nancy Pelosi doled out for votes.
"Health Care Payola: Harry Reid is passing out goodies in hopes of
garnering the 60 votes he needs," by John Fund, The Wall Street Journal,
November 21, 2009 ---
Click Here
Maneuvering on health care in the Senate may come
down to who wants it more -- and Republicans are drawing a line at some of
the more aggressive dilatory parliamentary tactics open to them.
On the Democratic side, Majority Leader Harry Reid
is passing out goodies in hopes of garnering the 60 votes he needs for a
motion to proceed to debate on the bill. Yesterday, Mr. Reid announced he'll
hold that vote on Saturday at 8 pm after a day-long debate. Whether he has
the 60 votes is uncertain at the moment, but you can bet he will open the
taxpayer spigots to secure those he needs.
Take Louisiana Senator Mary Landrieu. She's now
likely to vote with Mr. Reid on Saturday after an amendment was inserted to
increase her state's federal Medicaid subsidies by $100 million. The
amendment devotes two pages to language making certain that only Louisiana
would be entitled to the extra cash.
On the Republican side, Mr. Reid must be relieved
the GOP has apparently decided not to force a reading of the entire
2,074-page bill over the weekend. Instead, Republicans will settle for a
full day of debate before the Saturday night vote.
Republicans had the option of staying on the floor
and having Senator Tom Coburn of Oklahoma and others read the bill, a
process that would take at least two days. They opted for a less strenuous
path that will allow them to spend plenty of time at home during the
Thanksgiving holiday. "Republican members oppose the bill, but they don't
appear willing to stay up nights arguing against it," one former Hill
staffer told me.
Mr. Reid still has to be nervous as he corrals his
60 votes. He has no margin for error, since he needs all 58 Democrats plus
the two independents who caucus with the party to bring his health care bill
to the floor. He has to worry particularly about Senator Robert Byrd, who
turns 92 today, and has missed more than 130 roll call votes this year due
to illness. The old adage that every vote counts actually applies here as
the Senate sets about the task of reordering one-sixth of the nation's
economy.
"Where Are the Doctors to Implement ObamaCare? A University of California
chancellor warns that America could soon look like Massachusetts (Romney Care),"
by Timothy P. White, The Wall Street Journal, November 18, 2009 ---
Click Here
Health care reform will fail to achieve its promise
of affordable access to medical care unless the nation's physician workforce
is substantially expanded to meet the demand that newly insured patients
will place on an already over-burdened system.
A comprehensive strategy for growing the physician
workforce – as well as other allied health professionals such as nurses and
physicians' assistants – should be developed and supported with a federal
investment at the same time health insurance is expanded to cover millions
of additional people.
Without this, gaining access to prompt medical care
for all patients will become even more difficult. There will be longer wait
times for appointments, less face time with a physician and, in all
likelihood, delayed diagnoses leading to more expensive treatment and
increased risk of complications. One need only look at the experience of
Massachusetts, where the adoption of universal health coverage has
intensified the physician shortage.
Nationally, the physician shortage will persist for
the foreseeable future, even without adding tens of millions of people to
the ranks of insured. The Association of American Medical Colleges (AAMC)
forecasts a national physician shortage by 2025 of between 124,000 and
159,300, adding that universal health coverage could increase the shortage
by another 31,000 physicians.
Many regions of the U.S. already experience severe
physician shortages. Riverside County – located in the diverse and rapidly
growing Inland Southern California region – is the only county in the state
with a population greater than 1 million to have fewer than 100 M.D.s per
100,000 people, according to a recent report prepared for the California
HealthCare Foundation.
Furthermore, the physician workforce does not
reflect the ethnicity of the population, underscoring health disparities
that result in a higher incidence of chronic diseases and higher mortality
in minority and low-income populations. Because minority physicians are more
likely than non-minority physicians to practice in ethnically diverse
communities, it is vital for medical schools to train a diverse workforce of
physicians to practice with a clear emphasis on prevention, and with
cultural competency and sensitivity.
The AAMC has called for a 30 percent increase in
medical school enrollments by 2015, and higher education institutions are
responding, both by increasing enrollment at existing medical schools and by
establishing new schools of medicine, such as the one under development at
the University of California, Riverside, in the heart of one of the most
medically underserved regions in the state.
In the current recession, it is important to note
that these new enterprises will also bring new economic stimuli to their
regions for many decades to come. New medical schools, of course, bring new
jobs and new construction. But they are also generators of new funding in
the form of federal grants for biomedical research and clinical studies, the
most promising of which will complete the innovation pipeline to new
business formation. So, too, are they magnets for high tech industry in
fields such as biotechnology and pharmaceuticals.
In reaching consensus on how best to enact health
care reform, President Obama and Congress should be mindful and attentive to
the workforce impact of expanding health care coverage. Additional
scholarship funds and debt relief for aspiring physicians who choose primary
care fields and practice in medically underserved areas are a good start, as
is lifting the cap on Medicare-funded residency positions. Federal policy
should also reflect the need to develop a reimbursement structure that will
emphasize preventive care and entice physicians to practice primary care
medicine.
But it will take a much greater investment to
expand medical education opportunities. Economic stimulus funds directed at
this national crisis will reap both short- and long-term economic impetus,
in addition to the vast social benefits of a healthy and productive U.S.
populace.
Because it takes at least seven years to train an
independent practicing physician, the urgency is acute. We must start
training future physicians now. Only by producing more physicians and health
care practitioners and encouraging them to practice in the primary care
disciplines can this nation achieve the promise of affordable access to
high-quality health care for all.
Mr. White is chancellor of the University of California, Riverside.
There is a way around
"passing the trash" (high risk
health insurance patients), but it's not being discussed
in Washington or in town hall meetings.
"Why Health Care Reform Is
Vulnerable to Smart Analytics," by Tom
Davenport, Harvard Business Publishing, November 19, 2009 ---
Click Here
. . .
Increasingly, however, life and property & casualty
insurers have attempted to increase their profits by predicting just how
much risk a particular customer represents, and pricing the risk
accordingly. You'll pay more for life insurance, for example, if you're a
smoker or a private pilot. You'll pay more for automobile insurance in most
states if your credit score is low. (A low credit score has been found to
predict higher risk of dying or crashing your car.) Pooling the risk, it
seems, is no longer an attractive proposition for life and property
insurers.
It seems obvious that the same predictive
approaches to segmenting risk would eventually move into health insurance.
"But wait," you say. "Isn't information about my health confidential and
secure?" It's true that
HIPAA and other laws protect your medical history
data in doctors' offices and hospitals. But with predictive analytics, you
don't need to have access to anyone's medical records. All you need to know
is how much someone weighs, what kind of food he or she eats, how much
exercise they get, and so forth. Much of that information is publicly
available, can be bought, or can be legally requested in insurance
applications. One health insurance actuary told me that such "lifestyle"
data is a much better predictor than age of who is going to contract, say,
diabetes. Among 45-year olds, for example, there is an eightfold difference
in annual medical spending between the highest-risk lifestyle group and the
lowest.
Such predictions are already employed today by
health insurance firms, who use them to enroll certain customers in "disease
management" programs. In some cases, these programs recommend preventive
therapies to try to head off diseases before they happen, which is usually
good for both customer and insurer. However, it's a relatively short step to
using the predictions to refuse coverage, or to price coverage at a much
higher level.
Today most health insurance companies still
practice risk pooling, either because they insure large organizations with
group insurance coverage for many employees, or because their small group or
individual insurance is heavily regulated at the state level.
However, if we adopt universal coverage in the
United States with mandates to have insurance — as do most of the health
care reform plans under discussion — selection of the lowest-risk customers
may rise dramatically. Many more people will seek insurance as individuals,
rather than as members of groups. It will then be possible for insurance
firms to identify which customers will be profitable, and which will cost
them too much money to insure. They will seek the healthy (and those likely
to stay that way) and shun the sick (and those soon to become sick) as a
result. Since 15% of patients in the U.S. account for 75% of health care
costs, there will be plenty of financial incentives for insurers to do so.
Since some insurance companies will be better at
predicting health risk than others, and since everyone must be insured by
someone, this will lead to dramatic differences in performance between the
more and less analytical health insurers. Some will go out of business,
creating disruption for the entire industry and its consumers. If there is a
"public option" that takes consumers no one else wants, it will undoubtedly
get the citizens who are most likely to acquire expensive diseases.
Taxpayers will foot the bill, while the private health insurers who are good
at prediction will become much richer.
There is a way around this problem, but
it's not being discussed in Washington or in town hall meetings.
It's called "risk adjustment." Under such an approach, if one company (or
public insurance payer) takes on more risky customers and suffers losses as
a result, that company's losses would be paid for out of a risk adjustment
pool into which all insurers would pay — a sort of FDIC for health
insurance. That would dramatically reduce the incentive to select the least
likely customers to get sick.
Risk adjustment is already incorporated today into
Medicare Advantage — private plans that 10 million U.S. consumers use to
augment their basic Medicare coverage — which may be one reason why Medicare
Advantage is being criticized by some legislators as too costly.
The way to avoid all this complexity, of course, is
to have
a single-payer system. Then no insurance provider
can skim off the best customers. We generally say we prefer competition
between providers in this country, but that means we have to create
approaches to deal with the fact that some competitors are much more clever
than others.
Harvard Study (with tongue in cheek) Predicts Wall Street and Dow Recovery However, according to an only half-joking report
released last week, the low numbers of Harvard MBAs landing Wall Street jobs
could point to something else – an impending recovery. The “Harvard MBA
Indicator” is a market predictor designed by HBS alum Ray Soifer. According to
his somewhat facetious theory, the percentage of Harvard MBAs each year who take
market-sensitive jobs, generally those closely tied to investing, is inversely
related to the health of the stock market. In other words, the fewer HBS grads
that take jobs in banking, venture capital, leveraged buyouts, etc., the better
the Dow will do.
"Harvard MBA Indicator: Good Times Ahead for Finance Jobs?" by Geoff Gloeckler,
Business Week, November 11, 2009 ---
Click Here
Jensen Comment
I'm more inclined to attribute the rise in the Dow to the plunge in the value of
the U.S. dollar, which of course does not bode well for real economic recovery.
Menwhile the Fed continues to print free money for the big banks.
The Obamacare entitlement program may well add $40 trillion (anybody's guess
not mentioned in Congress) or more to unfunded entitlements obligations even if
politicians are claiming it will add much less than a ten-year trillion to the
booked U.S. National Debt standing above $12 trillion ---
-
http://www.usdebtclock.org/
Here's the Doomsday Graphic being shown around the U.S. by David Walker
(former Chief Accountant of the United States)
The Real National Debt (booked + unbooked entitlements without Obamacare) 2008
Source ---
http://www.pgpf.org/about/nationaldebt/
IOUSA (the most frightening movie in American history)
--- (see a 30-minute version of the documentary at
www.iousathemovie.com )
Some Democrats and analysts are raising alarms that
bills to reform the U.S. healthcare system fall short of President Obama's
pledge to slow health spending.
Obama has made cost containment a key leg to
healthcare reform. However, health economists say it isn't possible to know
whether the bills would meet that goal, with many saying they doubt they
would even come close, The New York Times reported Tuesday.
Both the House and the Senate propose cost-saving
measures. The House bill, which passed Saturday, projects $440 billion in
Medicare savings over 10 years. The Senate Finance Committee bill projects
about $420 billion. White House officials said additional savings in the
private sector would be realized as well.
Experts, even those whom the White House consulted,
said the measures represent only small steps toward revising the existing
fee-for-service system, which drives up costs by paying health providers for
each visit or procedure performed -- and some lawmakers are paying
attention, the Times said.
"My assessment at this point," said Sen. Ron Wyden,
D-Ore., and a member of the Finance Committee, "is that the legislation is
heavy on health and light on reform."
Sen. Susan Collins, R-Maine, during a news
conference Monday with Sen. Lamar Alexander, R-Tenn., shared her concern
about the cost-containment issue. Collins said she also has met with
moderate Democrats who share her view.
"I don't believe we need more pilot projects to
show us that healthcare delivery reforms are necessary," Collins told the
Times. "I think people are much more upset over the cost of care than the
administration is acknowledging."
As an American, I am embarrassed that the
U.S. House of Representatives has 220 members who actually believe the
government can successfully centrally plan the medical and insurance
industries.
I'm embarrassed that my representatives
think that government can subsidize the consumption of medical care without
increasing the budget deficit or interfering with free choice.
It's a triumph of mindless wishful
thinking over logic and experience.
The 1,990-page bill is breathtaking in its
bone-headed audacity. The notion that a small group of politicians can know
enough to design something so complex and so personal is astounding. That
they were advised by "experts" means nothing since no one is expert enough
to do that. There are too many tradeoffs faced by unique individuals with
infinitely varying needs.
Government cannot do simple things
efficiently. The bureaucrats struggle to count votes correctly. They give
subsidized loans to "homeowners" who turn out to be 4-year-olds. Yet
congressmen want government to manage our medicine and insurance.
Competition is a "discovery procedure,"
Nobel-prize-winning economist F. A. Hayek taught. Through the competitive
market process, we producers and consumers constantly learn things that
force us to adjust our behavior if we are to succeed. Central planners fail
for two reasons:
First, knowledge about supply, demand,
individual preferences and resource availability is scattered -- much of it
never articulated -- throughout society. It is not concentrated in a
database where a group of planners can access it.
Second, this "data" is dynamic: It changes
without notice.
No matter how honorable the central
planners' intentions, they will fail because they cannot know the needs and
wishes of 300 million different people. And if they somehow did know their
needs, they wouldn't know them tomorrow.
Proponents of so-called reform -- it's not
really reform unless it makes things better -- have shamefully avoided
criticism of their proposals. Often they just dismiss their opponents as
greedy corporate apologists or paranoid right-wing loonies. That's easier
than answering questions like these:
1) How can the government subsidize the
purchase of medical services without driving up prices? Econ 101 teaches --
without controversy -- that when demand goes up, if other things remain
equal, price goes up. The politicians want to have their cake and eat it,
too.
2) How can the government promise lower
medical costs without restricting choices? Medicare already does that. Once
the planners' mandatory insurance pushes prices to new heights, they must
put even tougher limits on what we may buy -- or their budget will be even
deeper in the red than it already is. As economist Thomas Sowell points out,
government cannot really reduce costs. All it can do is disguise and shift
costs (through taxation) and refuse to pay for some services (rationing).
3) How does government "create choice" by
imposing uniformity on insurers? Uniformity limits choice. Under House
Speaker Nancy Pelosi's bill and the Senate versions, government would
dictate to all insurers what their "minimum" coverage policy must include.
Truly basic high-deductible, low-cost catastrophic policies tailored to
individual needs would be forbidden.
4) How does it "create choice" by making
insurance companies compete against a privileged government-sponsored
program? The so-called government option, let's call it Fannie Med, would
have implicit government backing and therefore little market discipline. The
resulting environment of conformity and government power is not what I mean
by choice and competition. Rep. Barney Frank is at least honest enough to
say that the public option will bring us a government monopoly.
Advocates of government control want you
to believe that the serious shortcomings of our medical and insurance system
are failures of the free market. But that's impossible because our market is
not free. Each state operates a cozy medical and insurance cartel that
restricts competition through licensing and keeps prices higher than they
would be in a genuine free market. But the planners won't talk about that.
After all, if government is the problem in the first place, how can they
justify a government takeover?
Many people are priced out of the medical
and insurance markets for one reason: the politicians' refusal to give up
power. Allowing them to seize another 16 percent of the economy won't solve
our problems.
At Speaker Nancy Pelosi's Oct. 29th press
conference, a CNS News reporter asked, "Madam Speaker, where specifically
does the Constitution grant Congress the authority to enact an individual
health insurance mandate?" Speaker Pelosi responded, "Are you serious? Are
you serious?" The reporter said, "Yes, yes, I am." Not responding further,
Pelosi shook her head and took a question from another reporter. Later on,
Pelosi's press spokesman Nadeam Elshami told CNSNews.com about its question
regarding constitutional authority mandating that individual Americans buy
health insurance. "You can put this on the record. That is not a serious
question. That is not a serious question."
Suppose Congress was debating a mandate
outlawing tea-party-type protests and other large gatherings criticizing
Congress. A news reporter asks Nancy Pelosi where specifically does the
Constitution grant Congress the authority to outlaw peaceable assembly. How
would you feel if she answered, "Are you serious? Are you serious?" and
ignored the question. And what if, later on, someone from her office sent
you a press release, as was sent to CNS News, saying that Congress has
"broad power to regulate activities that have an effect on interstate
commerce," pointing out that demonstrations cause traffic jams and therefore
interferes with interstate commerce?
Speaker Pelosi's constitutional contempt,
perhaps ignorance, is representative of the majority of members of both the
House and the Senate. Their comfort in that ignorance and constitutional
contempt, and how readily they articulate it, should be worrisome for every
single American. It's not a matter of whether you are for or against
Congress' health care proposals. It's not a matter of whether you're liberal
or conservative, black or white, male or female, Democrat or Republican or
member of any other group. It's a matter of whether we are going to remain a
relatively free people or permit the insidious encroachment on our liberties
to continue.
Where in the U.S. Constitution does it
authorize Congress to force Americans to buy health insurance? If Congress
gets away with forcing us to buy health insurance, down the line, what else
will they force us to buy; or do you naively think they will stop with
health insurance? We shouldn't think that the cure to Congress'
unconstitutional heavy-handedness will end if we only elect Republicans.
Republicans have demonstrated nearly as much constitutional contempt as have
Democrats. The major difference is the significant escalation of that
contempt under today's Democratically controlled Congress and White House
with the massive increase in spending, their proposed legislation and the
appointment of tyrannical czars to control our lives. It's a safe bet that
if and when Republicans take over the Congress and White House, they will
not give up the massive increase in control over our lives won by the
Democrats.
In each new session of Congress since
1995, John Shadegg, R-Ariz.,) has introduced the Enumerated Powers Act, a
measure "To require Congress to specify the source of authority under the
United States Constitution for the enactment of laws, and for other
purposes." The highest number of co-sponsors it has ever had in the House of
Representatives is 54 and it has never had co-sponsors in the Senate until
this year, when 22 senators signed up. The fact that less than 15 percent of
the Congress supports such a measure demonstrates the kind of contempt our
elected representatives have for the rules of the game -- our Constitution.
If you asked the questions: Which way is
our nation heading, tiny steps at a time? Are we headed toward more liberty,
or are we headed toward greater government control over our lives? I think
the answer is unambiguously the latter -- more government control over our
lives. Are there any signs on the horizon that the direction is going to
change? If we don't see any, we should not be surprised. After all,
mankind's standard fare throughout his history, and in most places today, is
arbitrary control and abuse by government.
Speaker Nancy Pelosi has reportedly told
fellow Democrats that she's prepared to lose seats in 2010 if that's what it
takes to pass ObamaCare, and little wonder. The health bill she unwrapped
last Thursday, which President Obama hailed as a "critical milestone," may
well be the worst piece of post-New Deal legislation ever introduced.
In a rational political world, this
1,990-page runaway train would have been derailed months ago. With spending
and debt already at record peacetime levels, the bill creates a new and
probably unrepealable middle-class entitlement that is designed to expand
over time. Taxes will need to rise precipitously, even as ObamaCare so
dramatically expands government control of health care that eventually all
medicine will be rationed via politics.
Yet at this point, Democrats have dumped
any pretense of genuine bipartisan "reform" and moved into the realm of pure
power politics as they race against the unpopularity of their own agenda.
The goal is to ram through whatever income-redistribution scheme they can
claim to be "universal coverage." The result will be destructive on every
level—for the health-care system, for the country's fiscal condition, and
ultimately for American freedom and prosperity.
•The spending surge. The Congressional
Budget Office figures the House program will cost $1.055 trillion over a
decade, which while far above the $829 billion net cost that Mrs. Pelosi fed
to credulous reporters is still a low-ball estimate. Most of the money goes
into government-run "exchanges" where people earning between 150% and 400%
of the poverty level—that is, up to about $96,000 for a family of four in
2016—could buy coverage at heavily subsidized rates, tied to income. The
government would pay for 93% of insurance costs for a family making $42,000,
72% for another making $78,000, and so forth.
At least at first, these benefits would be
offered only to those whose employers don't provide insurance or work for
small businesses with 100 or fewer workers. The taxpayer costs would be far
higher if not for this "firewall"—which is sure to cave in when people see
the deal their neighbors are getting on "free" health care. Mrs. Pelosi
knows this, like everyone else in Washington.
Even so, the House disguises hundreds of
billions of dollars in additional costs with budget gimmicks. It "pays for"
about six years of program with a decade of revenue, with the heaviest costs
concentrated in the second five years. The House also pretends Medicare
payments to doctors will be cut by 21.5% next year and deeper after that,
"saving" about $250 billion. ObamaCare will be lucky to cost under $2
trillion over 10 years; it will grow more after that.
• Expanding Medicaid, gutting private
Medicare. All this is particularly reckless given the unfunded liabilities
of Medicare—now north of $37 trillion over 75 years. Mrs. Pelosi wants to
steal $426 billion from future Medicare spending to "pay for" universal
coverage. While Medicare's price controls on doctors and hospitals are
certain to be tightened, the only cut that is a sure thing in practice is
gutting Medicare Advantage to the tune of $170 billion. Democrats loathe
this program because it gives one of out five seniors private insurance
options.
As for Medicaid, the House will expand
eligibility to everyone below 150% of the poverty level, meaning that some
15 million new people will be added to the rolls as private insurance gets
crowded out at a cost of $425 billion. A decade from now more than a quarter
of the population will be on a program originally intended for poor women,
children and the disabled.
Even though the House will assume 91% of
the "matching rate" for this joint state-federal program—up from today's
57%—governors would still be forced to take on $34 billion in new burdens
when budgets from Albany to Sacramento are in fiscal collapse. Washington's
budget will collapse too, if anything like the House bill passes.
• European levels of taxation. All told,
the House favors $572 billion in new taxes, mostly by imposing a
5.4-percentage-point "surcharge" on joint filers earning over $1 million,
$500,000 for singles. This tax will raise the top marginal rate to 45% in
2011 from 39.6% when the Bush tax cuts expire—not counting state income
taxes and the phase-out of certain deductions and exemptions. The burden
will mostly fall on the small businesses that have organized as Subchapter S
or limited liability corporations, since the truly wealthy won't have any
difficulty sheltering their incomes.
This surtax could hit ever more earners
because, like the alternative minimum tax, it isn't indexed for inflation.
Yet it still won't be nearly enough. Even if Congress had confiscated 100%
of the taxable income of people earning over $500,000 in the boom year of
2006, it would have only raised $1.3 trillion. When Democrats end up soaking
the middle class, perhaps via the European-style value-added tax that Mrs.
Pelosi has endorsed, they'll claim the deficits that they created made them
do it.
Under another new tax, businesses would
have to surrender 8% of their payroll to government if they don't offer
insurance or pay at least 72.5% of their workers' premiums, which eat into
wages. Such "play or pay" taxes always become "pay or pay" and will rise
over time, with severe consequences for hiring, job creation and ultimately
growth. While the U.S. already has one of the highest corporate income tax
rates in the world, Democrats are on the way to creating a high structural
unemployment rate, much as Europe has done by expanding its welfare states.
Meanwhile, a tax equal to 2.5% of adjusted
gross income will also be imposed on some 18 million people who CBO expects
still won't buy insurance in 2019. Democrats could make this penalty even
higher, but that is politically unacceptable, or they could make the
subsidies even higher, but that would expose the (already ludicrous)
illusion that ObamaCare will reduce the deficit.
• The insurance takeover. A new "health
choices commissioner" will decide what counts as "essential benefits," which
all insurers will have to offer as first-dollar coverage. Private insurers
will also be told how much they are allowed to charge even as they will have
to offer coverage at virtually the same price to anyone who applies,
regardless of health status or medical history.
The cost of insurance, naturally, will
skyrocket. The insurer WellPoint estimates based on its own market data that
some premiums in the individual market will triple under these new burdens.
The same is likely to prove true for the employer-sponsored plans that
provide private coverage to about 177 million people today. Over time, the
new mandates will apply to all contracts, including for the large businesses
currently given a safe harbor from bureaucratic tampering under a 1974 law
called Erisa.
The political incentive will always be for
government to expand benefits and reduce cost-sharing, trampling any chance
of giving individuals financial incentives to economize on care.
Essentially, all insurers will become government contractors, in the
business of fulfilling political demands: There will be no such thing as
"private" health insurance.
*** All of this is intentional, even if it
isn't explicitly acknowledged. The overriding liberal ambition is to finish
the work began decades ago as the Great Society of converting health care
into a government responsibility. Mr. Obama's own Medicare actuaries
estimate that the federal share of U.S. health dollars will quickly climb
beyond 60% from 46% today. One reason Mrs. Pelosi has fought so ferociously
against her own Blue Dog colleagues to include at least a scaled-back
"public option" entitlement program is so that the architecture is in place
for future Congresses to expand this share even further.
As Congress's balance sheet drowns in
trillions of dollars in new obligations, the political system will have no
choice but to start making cost-minded decisions about which treatments
patients are allowed to receive. Democrats can't regulate their way out of
the reality that we live in a world of finite resources and infinite wants.
Once health care is nationalized, or mostly nationalized, medical rationing
is inevitable—especially for the innovative high-cost technologies and drugs
that are the future of medicine.
Mr. Obama rode into office on a wave of
"change," but we doubt most voters realized that the change Democrats had in
mind was making health care even more expensive and rigid than the status
quo. Critics will say we are exaggerating, but we believe it is no stretch
to say that Mrs. Pelosi's handiwork ranks with the Smoot-Hawley tariff and
FDR's National Industrial Recovery Act as among the worst bills Congress has
ever seriously contemplated.
"Transparency Mañana Nancy Pelosi backs off her commitment to a 72-hour
online," by John Fund, The Wall Street Journal, November 6, 2009 ---
Click Here
Back in September, House Speaker Nancy
Pelosi told reporters she was "absolutely" committed to having the final
language of any health care bill posted on the Internet for 72 hours before
a vote on the House floor.
Well, the bill isn't finished, with major
issues such as taxpayer funding of abortions and rules governing amendments
still unresolved. Nonetheless, the Speaker is rushing towards a Saturday
vote on the bill.
Back on September 24, the Weekly Standard
asked Ms. Pelosi at a news conference: "Do you support the measure to put
the final House bill online for 72 hours before it's voted on at the very
end?" Her response was "Absolutely. Without question."
But now Pelosi spokesman Brendan Daly
tells the Standard: "No, [the] pledge was to have manager's amendment online
for 72 hours and we will do that." The manager's amendment makes major
changes to a bill (witness the 309-page monstrosity dropped on Congress just
before July's vote on the "cap-and-trade" global warming bill). But it's not
the final bill, so Speaker Pelosi's pledge last September was hollow.
Mrs. Pelosi viewed rushing to judgment on
bills differently when she was in the minority. In 2004, she unveiled a
proposed "Bill of Rights" to protect House minority interests, which
included giving members enough time to read bills and a stop to the practice
of holding votes open well past the normal 15 minutes. She had a point: In
late 2003, Republican leaders held open a roll-call vote on the Medicare
drug entitlement for three hours until they bullied enough wavering members
into voting aye.
"When we [Democrats] are shut out, they
are shutting out the great diversity of America. We want a higher standard,"
Ms. Pelosi said at the time. In 2006, just before becoming speaker, she
reiterated her plans to promote "bipartisanship" and "to ensure the rights
of the minority."
That was then. Now Ms. Pelosi is intent on
using her political machine to run roughshod over opposition. Republican
consultant Alex Castellanos notes that Democrats are replicating the worst
practices of the Bush Republicans: "It is ironic that Obama and the
Democrats are becoming the very thing they worked so hard to reject.
Democrats criticized George W. Bush and the Republicans for not listening to
Americans and being blindly ideological and inflexible. They might as well
put on his swaggering Texas belt-buckle. They have caught the disease they
tried to cure."
Lie: Requiring private insurers to cover all pre-existing health
conditions from Day 1 will actually reduce the premiums for medical insurance.
We believe premiums would come down for several
reasons. Companies would no longer need to spend as much money on administrative
costs, to screen out people with pre-existing conditions (prohibited by all
reform bills). If they wanted to participate on the exchanges (and have access
to millions of new customers), the companies would also be forced to compete
with other private plans, and possibly a public option, encouraging them to
lower premiums and accept lower profits.
The New York Times Editorial, November 1, 2009 ---
http://www.nytimes.com/2009/11/01/opinion/01sun1.html?hp
Jensen Comment
You can argue for coverage of all new insureds irrespective of pre-existing
conditions on the basis of social equity, but the reasoning of the NYT editorial
above is pure hogwash. If this were true at least one medical insurance company
would've added to profits by ending pre-screening expenses. Pre-existing
conditions often require the most expensive kinds of treatment for such things
as organ transplants, cataracts, kidney dialysis, etc.
Also eliminating pre-existing conditions coupled with the inevitable coverage
of illegal immigrants creates moral hazard in that when Grandma Lopez in Mexico
City needs an eye operation, her relatives will float her across the Rio Grande
primarily for immediate $25,000 eye surgery. If she wants to return she might
even walk back across the border unassisted after she can see better.
States like Texas that have capped punitive damages in medical lawsuits
probably may not keep their limiting caps according to pending Obamacare
legislation. Such caps purportedly have significantly lowered medical insurance
rates in those states. "Pelosi Health Care Bill Blows a Kiss to Trial
Lawyers," Andrew Breitbart, October 30, 2009 ---
Click Here
The health care bill recently unveiled by Speaker
Nancy Pelosi is over 1,900 pages for a reason. It is much easier to dispense
goodies to favored interest groups if they are surrounded by a lot of
legislative legalese. For example, check out this juicy morsel to the trial
lawyers (page 1431-1433 of the bill):
Section 2531, entitled “Medical Liability
Alternatives,” establishes an incentive program for states to adopt and
implement alternatives to medical liability litigation. [But]…… a state is
not eligible for the incentive payments if that state puts a law on the books
that limits attorneys’ fees or imposes caps on damages.
So, you can’t try to seek alternatives to lawsuits if
you’ve actually done something to implement alternatives to lawsuits. Brilliant!
The trial lawyers must be very happy today!
While there is debate over the details, it is clear
that medical malpractive lawsuits have some impact on driving health care costs
higher. There are likely a number of procedures that are done simply as a
defense against future possible litigation. Recall this from the
Washington Post:
“Lawmakers could save as much as $54 billion over the next decade by
imposing an array of new limits on medical malpractice lawsuits,
congressional budget analysts said today — a substantial sum that could
help cover the cost of President Obama’s overhaul of the nation’s health
system. New research shows that legal reforms would not only lower
malpractice insurance premiums for medical providers, but would also
spur providers to save money by ordering fewer tests and procedures
aimed primarily at defending their decisions in court, Douglas
Elmendorf, director of the nonpartisan Congressional Budget Office,
wrote in a letter to Sen. Orrin Hatch (R-Utah).”
The
St. Petersburg Times takes a look at the cost of
insurance in Canada for health care providers.
A neurosurgeon in Miami pays about $237,000 for medical malpractice
insurance. The same professional in Toronto pays about $29,200, reports
Susan Taylor Martin.
A Canadian orthopedic surgeon pays just over $10,000 for coverage that
costs a Miami physician $140,000. An obstetrician in Canada pays $36,353 for
insurance, while a Tampa Bay obstetrician pays $98,000 for medical
malpractice insurance.
Why the difference?
In the U.S., private for-profit insurance companies extend medical
malpractice coverage to doctors.
In Canada, physicians are covered through membership in a nonprofit. The
Canadian Medical Protective Association
offers substantially reduced fees for the same coverage, especially
considering that their payout is limited by caps in Canada just as in some
U.S. states.
In 1978, the Canadian Supreme Court limited pain and suffering awards to
just over $300,000, circumventing the opportunity for a jury to decide on an
award depending on the case before them.
Canadian Medical Protective Association
Here’s how it works.
Fees for membership vary depending on the region of the country in which
the doctor works and their specialty. All neurosurgeons in Ontario will pay
the same, for example. The number of claims they have faced for medical
malpractice does not figure into their premium
"We don't adjust our fees based on individual experience; it's the
experience of the group,'' says Dr. John Gray, the executive director,
"That's what the mutual approach is all about, and it helps keep the fees
down for everyone,” he tells the
St. Petersburg Times.
If a doctor is sued, the group pays the claim and
provides legal counsel.
In the U.S., the push has been on for limiting claims, no matter how
egregious the medical malpractice. President Obama was booed in June when,
before the American Medical Association, he said he would not limit a
malpractice jury award.
"We got a crazy situation where Obama is talking about the cost of
medicine but he said, 'I don't believe in caps,' " complains Dr. Dennis
Agliano, past president of the
Florida Medical Association. "If you don't have
caps, the sky's the limit and there's no way to curtail those costs.''
But the importance of limiting jury awards may not play into the big
picture on health care reform.
Malpractice lawsuits amount to
less than one percent of both the Canadian and the
U.S. healthcare system, meanwhile between 44,000 and 98,000 Americans die
each year due to medical errors in hospitals alone, while 16 times as many
suffer injuries without receiving any compensation, reports the group
Americans for Insurance Reform.
Major Difference
In Canada, an injured patient is often required to pay for the initial
investigation into his case. In the U.S. the contingency fee basis, usually
in the range of 30 percent, allows the injured party to proceed without a
financial downside.
In both the U.S. and Canada, the definition of medical negligence is that
a duty of care was owed to the patient by the physician, there was a breach
h of the standard of care and the patient suffered harm by the physician’s
failure to meet that standard of care.
A bad outcome in itself is not the basis of a lawsuit.
The Canadian Medical Protective Association insures virtually all of the
country’s 76,000 doctors, as opposed to the U.S. where private for-profit
insurance companies cover physicians for medical malpractice.
In Canada, the median damaged paid in 2007 was $91,999 and judgments
favored patients 25 times, doctors 70 times.
In the U.S., many physician groups are requiring patients to waive their
rights to a jury trial, even though malpractice litigation accounts for just
0.6 percent of healthcare costs.
Public Citizen, the consumer group, charges that
the facts don’t warrant the “politically charged hysteria surrounding
medical malpractice litigation.”
For the third straight year,
medical malpractice payments were at record lows
finds the group in a study released this month. The decline, however, is
likely due to fewer injured patients receiving compensation, not improved
health safety.
2008 saw the lowest number of medical malpractice payments since the
federal government’s
National Practitioner Data Bank began compiling
malpractice statistics. In 2008, payments were 30.7 percent lower than
averages recorded in all previous years.
In the report titled,
The 0.6 Percent Bogeyman, the nonprofit watchdog
group states, “between three and seven Americans die from medical errors for
every 1 who receives a payment for any type of malpractice claim.”
Public Citizen previously reported that about
five percent of doctors are responsible for half
of the medical malpractice in the U.S. that can result in permanent injury
or death. #
"The Return of the Inflation Tax: The Pelosi tax surcharge applies
to capital gains and dividends," The Wall Street Journal, November 6,
2009 ---
Click Here
All of those twentysomethings who voted
for Barack Obama last year are about to experience the change they haven't
been waiting for: the return of income tax bracket creep. Buried in Nancy
Pelosi's health-care bill is a provision that will partially repeal tax
indexing for inflation, meaning that as their earnings rise over a lifetime
these youngsters can look forward to paying higher rates even if their
income gains aren't real.
In order to raise enough money to make
their plan look like it won't add to the deficit, House Democrats have
deliberately not indexed two main tax features of their plan: the $500,000
threshold for the 5.4-percentage-point income tax surcharge; and the payroll
level at which small businesses must pay a new 8% tax penalty for not
offering health insurance.
This is a sneaky way for politicians to
pry more money out of workers every year without having to legislate tax
increases. The negative effects of failing to index compound over time,
yielding a revenue windfall for government as the years go on. The House tax
surcharge is estimated to raise $460.5 billion over 10 years, but only $30.9
billion in 2011, rising to $68.4 billion in 2019, according to the Joint Tax
Committee.
Americans of a certain age have seen this
movie before. In 1960, only 3% of tax filers paid a 30% or higher marginal
tax rate. By 1980, after the inflation of the 1970s, the share was closer to
33%, according to a Heritage Foundation analysis of tax returns.
These stealth tax increases—forcing ever
more Americans to pay higher tax rates on phantom gains in income—were
widely seen to be unjust. And in 1981 as part of the Reagan tax cuts, a
bipartisan coalition voted to index the tax brackets for inflation.
We also know what has happened with the
Alternative Minimum Tax. Passed to hit only 1% of all Americans in 1969, the
AMT wasn't indexed for inflation at the time and neither was Bill Clinton's
AMT rate increase in 1993. The number of families hit by this shadow tax
more than tripled over the next decade. Today, families with incomes as low
as $75,000 a year can be hit by the AMT unless Congress passes an annual
"patch."
The Pelosi-Obama health tax surcharge will
have a similar effect. The tax would begin in 2011 on income above $500,000
for singles and $1 million for joint filers. Assuming a 4% annual inflation
rate over the next decade, that $500,000 for an individual tax filer would
hit families with the inflation-adjusted equivalent of an income of about
$335,000 by 2020. After 20 years without indexing, the surcharge threshold
would be roughly $250,000.
And by the way, this surcharge has also
been sneakily written to apply to modified adjusted gross income, which
means it applies to both capital gains and dividends that are taxed at lower
rates. So the capital gains tax rate that is now 15% would increase in 2011
to 25.4% with the surcharge and repeal of the Bush tax rates. The tax rate
on dividends would rise to 45% from 15% (5.4% plus the pre-Bush rate of
39.6%).
As for the business payroll penalty, it is
imposed on a sliding scale beginning at a 2% rate for firms with payrolls of
$500,000 and rising to 8% on firms with payrolls above $750,000. But those
amounts are also not indexed for inflation, so again assuming a 4% average
inflation rate in 10 years this range would hit payrolls between $335,000
and $510,000 in today's dollars. Note that in pitching this "pay or play"
tax today, Democrats claim that most small businesses would be exempt. But
because it isn't indexed, this tax will whack more and more businesses every
year. The sales pitch is pure deception.
As for the Senate, instead of the 5.4%
surcharge, the Finance Committee bill raises taxes on "high-cost" health
care plans. But this too uses the inflation ruse. The Senate bill indexes
its tax proposal for the inflation rate plus one percentage point. But that
is only about half as high as the rate of overall health-care inflation,
i.e., the rate of increase in health-care premiums. So the Joint Tax
Committee has found that a Senate tax that starts in 2013 by hitting 13.8
million Americans will hit 39.1 million by 2019.
The return of the inflation tax
demonstrates once again the stealth radicalism that animates ObamaCare. In
the case of inflation indexing, Democrats would repeal a 30-year bipartisan
consensus that it is unfair to tax unreal gains in income, thus hitting
millions of middle-class Americans over time with tax rates advertised as
only hitting "the rich." Oh, and the House vote on this exercise in
dishonest government will come as early as Saturday.
First, we learned that a $500 billion cut in
Medicare will dramatically affect the quality and quantity of healthcare
available to America's senior citizens. Grandma's access is being slashed to
add illegal immigrants and twenty-somethings into the insurance system.
However, this revelation pales in relation to what we heard this week.
Here's the latest shock: Average current health
insurance premiums with likely triple under Obamacare.
The new data comes from a well regarded,
state-by-state study conducted for WellPoint, Inc. The most dramatic premium
boosts will hit young people. These are the actual individuals that often
opt out of insurance plans now.
Reaction from the Obama White House was swift and
harsh. Linda Douglass, Obama's healthcare spokesperson, had the audacity to
compare the health insurance firm with tobacco companies. Since the White
House refuses to argue the facts, they instead turned to using one of their
favorite tactics, which is demonizing any voices of dissent.
The reason for the dramatic insurance premium
increases is the result of Obamacare regulations. First cause is the mandate
that insurance companies take any customer. Insurance traditionally is an
actuarial business that rates different customers based on risk factors.
This is the reason a driver aged 19 with two speeding tickets pays more for
auto insurance than a customer aged 35 with no speeding tickets.
Nineteen-year-olds have more accidents. Therefore they pose more risk.
Traditionally, health insurance companies charged
customers with risk factors and chronic illness more than young, healthy
19-year-olds. Obamacare stands the concept of insurance on its head. Since
an insurance company will be forced to sell to any sick patient, the
incentive to buy insurance when you are healthy decreases. Why not wait
until you are sick; get cancer, diabetes or some other severe illness before
you buy? To circumvent this problem, Obama is riddling the program with
police-state mandates on healthy, younger citizens. Perverted, negative
incentives such as threats of large fines and even prison time will hang
over young people's heads to force them to join and stay enrolled in Obama's
healthcare scheme. Does this sound like America to you?
Democratic leaders in Congress are seeing support
slip through their fingers because Americans are learning that they will end
up paying more for less-adequate care. The beneficiaries of this plan are
still lobbying hard. Big business will likely dump most of their current
employee-based plans and pay the less expensive tax. Big unions are facing
the reality that they are going to be bankrupted by their generous
membership health plans. Many want to dump their responsibilities on the new
government option recently revived by Senate Majority Leader Harry Reid, D-Nev.
AARP is salivating at the money they will make selling new, bigger
Medicare-gap plans after the current program is gutted.
Nobel prize winning economist F.A.Hayek called
socialism "the fatal conceit."
Why conceit? Because socialism's basic premise,
according to Hayek, is that "man is able to shape the world around him
according to his wishes."
Why fatal? Because, like all falsehoods and
misconceptions, it leads to failure, and sometimes disaster.
Although the socialist label is being thrown around
a lot now, we must recognize this isn't new. This conceit has been inflating
in American hearts and minds for years, with the inexorable growth of
government and the ongoing change in American attitudes about what
government is about.
If there is anything new today, it's the extent to
which we're taking this.
The Declaration of Independence, signed by our
founders, states that man has the "unalienable rights" to "life, liberty and
the pursuit of happiness" and that men form government to "secure these
rights." According to Jefferson's words, the purpose of the government is to
protect me.
Now Congress is moving health-care legislation in
which the role of government will evolve to defining what health insurance
is, forcing me to buy a policy that covers what government dictates,
tracking my behavior through the IRS to see if I have complied, fining me if
I haven't, and sending me to jail if I refuse to do it.
Government will expand to tell employers that they
have to provide government-defined insurance to their employees or be fined.
And government will tell insurance companies who they have to insure and how
much they can charge to do it.
And we'll spend $1 trillion dollars or so that will
come one way or another out of taxpayer hides to subsidize individuals who
can't afford to buy this government defined health insurance.
Whoa! Wasn't this country supposed to be about
freedom?
Didn't Jefferson write those words because the
colonists who came to this then-unsettled continent wanted to get kings and
tyrants off their backs?
Most of the Declaration is a long list of King
George's violations of colonists' freedom.
It's worth being reminded of how it starts.
"The History of the present King of Great Britain
is a history of repeated Injuries and Usurpations, all having in direct
Object the Establishment of an absolute Tyranny over these States."
Continued in article
"Regarding Harry: The public option diverts attention from the
legislation's real," by Kimberly Strassel, The Wall Street Journal,
October 29, 2009 ---
Click Here
You couldn't swing a cat this week without
hitting a discussion of the public option. Somewhere, in some Capitol
office, Senate Majority Leader Harry Reid is grinning.
Two weeks ago, the subject of a
government-run insurance plan was a sore point with the Nevadan. He didn't
have the votes for it, his base was bitter, and he didn't want to talk about
it. This week, a transformed Mr. Reid devoted an entire news conference to
it. Americans support the public option! His caucus supports a public
option! He supports a public option! The public option is in! No problem!
In the real world, this kind of behavioral
shift lands you in a psych ward. In Washington, the press just marked it
down to forces bigger than Harry. The majority leader had been pushed into a
public option by his liberal members, we were told. Chuck Schumer was
scarier than Ben Nelson. The Huffington Post was even scarier than Chuck
Schumer. Poor Mr. Reid, clucked observers, had been backed into a corner.
Maybe. Then again, maybe he is majority
leader for a reason. Maybe Mr. Reid didn't just wander out of the Nevada
desert. Maybe he has a plan. Maybe, just maybe, he sees a big upside in
turning the public option into the centerpiece of the health-care debate.
After all, what does he have to lose?
Up for re-election next year, Mr. Reid is
facing Nevada polls that suggest he's lost most voters outside his base. His
base too, was slipping, with Moveon.org making him a punching bag for not
embracing the public option. With this week's announcement, he is once again
the hero of the left, and has that baboon off his back.
Who knows? It might even work. Mr. Reid
included the fig leaf of an "opt-out" for states that don't want the public
option. It's a ruse, but it might provide cover for votes. If not, he's got
room to maneuver. There's the "opt-in" alternative, which even some
Republicans claim to like. There's the fall-back "trigger," which re-earns
him Olympia Snowe.
And if it doesn't fly, well, is that so
bad? Mr. Reid can still say he gave it the varsity try. He'll get it to the
floor and let those swing-state Democrats amend the public option away. Not
his fault! What he also knows, even if the press doesn't, is that for all
the big talk of his liberal members, they are the more likely to give way.
Even without a public option, this bill is a big step toward a single-payer
system. And it isn't as if any of them risk losing their seats by voting
"only" for a $1 trillion health expansion.
Better yet, by turning the public option
into the big, bad bogeyman, he makes it more likely he'll snag those
swing-state votes in the end. Nebraska's Mr. Nelson, Arkansas's Blanche
Lincoln, Indiana's Evan Bayh—they can all claim victory for stripping the
bill of a national insurance plan, then feel comfortable voting for all the
tax hikes and Medicare cuts that remain.
Speaking of tax hikes, premium jumps and
Medicare cuts, notice how nobody is today talking about them? Mr. Reid
surely has. The public option might be controversial in D.C., but the
majority leader knows most of the country doesn't understand it, or assumes
it doesn't apply to them. Most Americans already have health care that they
like, and polls show their real fear is that this experiment will leave them
paying more for less. This, not the public option, is ObamaCare's exposed
jugular.
The insurers get this, which is why (as
they now try to bottle the genie they helped loose) they are issuing reports
on how "reform" will double or triple premium prices. It is why America's
Health Insurance Plans, the lobby group, has run ads in swing states warning
about huge cuts to Medicare Advantage. Some of the grass roots get it, too,
which is why Americans for Tax Reform is now live on TV in Nebraska noting
Sen. Nelson has signed its taxpayer pledge and that he'd violate it by
voting for the bill's nearly $500 billion in tax increases.
If Mr. Reid had pulled the plug on the
public option, these highly unpopular policy issues would be front and
center. As it is, the public-option sideshow is sucking up all the air, and
will continue to. It even overshadowed liberal divisions, such as union
pushback on Cadillac-plans taxes. Maybe, just maybe, Mr. Reid likes it that
way.
Granted, this is the cynic's view of
Democrats' health-care strategy. Mr. Reid did, after all, goof last week,
failing to round up the votes to pass his party's proposed "fix" to Medicare
reimbursement rates. Maybe he doesn't know which way is up. Maybe he is
taking a flier.
Then again, anyone who has watched this
debate has earned the right to cynicism. Democrats are determined to get a
health bill, and Mr. Reid is no rube. His opponents—those trying to save the
country from this wreck of a bill—would be wise not to forget it
PricewaterhouseCoopers (PwC) has found itself at
the center of a controversy over its estimates of cost increases in private
health insurance premiums if certain provisions of the heath care reform
bill passed by the Senate Finance Committee become law. PwC was engaged to
conduct the study, "Potential
Impact of Health Reform on the Cost of Private Health Insurance Coverage,"
by the American Health Insurance Plans (AHIP).
Critics have questioned the methodology used by PwC, saying it does not take
into consideration some of the cost containment measures in the bill and
potential behavioral responses that could affect premium increases.
AHIP president and CEO Karen Ignagni told ABC News,
"One of the most important things that should be done is for
PricewaterhouseCoopers, a world class firm, to speak for itself about
methodology."
PwC defends its analysis and conclusions in a
statement provided to AccountingWEB, citing the specific parameters of the
study, saying that "America's Health Insurance Plans engaged
PricewaterhouseCoopers to prepare a report that focused on four components
of the Senate Finance Committee proposal:
* Insurance market reforms and consumer protections
that would raise health insurance premiums for individuals and families if
the reforms are not coupled with an effective coverage requirement.
* An excise tax on employer-sponsored high value health plans.
* Cuts in payment rates in public programs that could increase cost shifting
to private sector businesses and consumers.
* New taxes on health sector entities.
The study concluded that collectively the four
provisions would raise premiums for private health insurance coverage. As
the report itself acknowledges, other provisions that are part of health
reform proposals were not included in the PwC analysis."
By 2019, the study says, after analysis of these
four provisions, the cost of single coverage is expected to increase by
$1,500 more than it would under the current system and the cost of family
coverage is expected to increase by $4,000 more than it would under the
current system. This amounts to an additional 18 percent increase in
premiums by 2019. The overall 18 percent increase is a composite of
increases by market segment as follows:
* 49% increase for the non-group (individual)
market;
* 28% increase for small employers (those firms with fewer than 50
employees);
* 11% increase for large employers with insured coverage; and,
* 9% increase for self-insured employers.
The highest increase would be for individuals
covered by private insurance.
In its discussion of a "Strong Workable Coverage
Requirement," the study acknowledges it methodology as it does elsewhere in
the report. "The reform packages under consideration have other provisions
that we have not included in this analysis. We have not estimated the
impact of the new subsidies on the net insurance cost to households. Also,
if other provisions in health care reform are successful in lowering costs
over the long term, those improvements would offset some of the impacts we
have estimated." The analysis of the coverage requirement shows the
potential impact on premiums for individuals without a broad coverage
requirement."
PwC says that impacts identified in the study
assume payment of tax on high-value plans, cost-shifting of cuts to public
programs, and full pass-through of industry taxes.
The PwC study also states that it factored in the
excise tax but not any anticipated behavioral changes: "We have estimated
the potential impact of the tax on premiums," the study says. "Although we
expect employers to respond to the tax by restructuring their benefits to
avoid it, we demonstrate the impact assuming it is applied."
In an earlier study based on AHIP data, PwC
estimated that structural reforms, such as improved wellness and prevention,
disease management, value based payment reform, improvements in health
information technology, comparative effectiveness, and malpractice reform,
could mitigate growth in healthcare costs by between 0.5 and 1.0 percent per
year after an initial investment period. See PricewaterhouseCoopers "A
Review of AHIP Savings Estimates" in Appendix to AHIP, "A Shared
Responsibility," 2008.
Some of the headlines in recent days are
not worthy of belief. No, I'm not referring to the headlines that Barack
Obama won the Nobel Peace Prize, however odd that many seem to many
(including, it seems, Obama himself). I'm referring to the headlines earlier
in the week to the effect that the health care bill sponsored by Senate
Finance Committee Chairman Max Baucus will cut the federal deficit by $81
billion over the next 10 years.
Yes, that is what the Congressional Budget
Office estimated. But, as the CBO noted, there's no actual Baucus bill, just
some "conceptual language." Actual language, CBO noted, might result in
"significant changes" in its estimates. No wonder Democratic congressional
leaders killed requirements that the actual language be posted on the
Internet for 72 hours before Congress votes.
More significant is the number most
publications did not put in their headlines and lead paragraphs: CBO's
estimate that the Baucus "conceptual language" would increase federal
spending by $829 billion over 10 years. So how do you increase federal
spending and cut the deficit at the same time?
One way is taxes. The Baucus conceptual
language includes a tax on high-cost insurance plans ($210 billion),
penalties for not having insurance ($27 billion) and "indirect offsets"
(whatever they are -- $83 billion).
In addition, costs are fobbed off on state
governments in the form of more Medicaid spending, and savings are projected
from future reductions in Medicare that will surely turn out to be imaginary
(Congresses of both parties have acted to prevent such reductions every year
since 2003).
We know from past experience that cost
estimates of all government health care programs (except the 2003 Medicare
Part D prescription drug benefit, which has private market competition) tend
to understate actual costs. So the Baucus bill -- er, conceptual language --
if enacted is likely to expand government spending by more than the
estimated $829 billion.
And perhaps quite a bit more. The Baucus
measure enables families without employer-provided insurance to obtain it at
exchanges with subsidies that make it cost less than what those with
employer-provided insurance pay. The latter are a majority of voters -- how
long are their elected representatives going to let this disadvantage stand?
The Baucus measure subsidizes low-income
families. Say you make $48,000 a year and get a $900 subsidy. As your income
rises, this subsidy would be phased out, raising your effective marginal tax
rate to as much as 70 percent. How long will Congress let this stand?
What if the Obama health-care proposal
turned out to be the biggest public-policy mistake in 125 years?
Yesterday, these columns discussed the
Congressional Budget Office's efforts to push the square peg of the Obama
plan through the round hole of affordability. Meanwhile in Germany, often
cited by American liberals as the "model" of a well-run health-care plan,
the political debate is running in the opposite direction. Chancellor Angela
Merkel's new coalition partner, the Free Democratic Party, is pressing her
to claw back the state's participation in a system that now insures nine of
10 Germans.
Germany's health-care system was brought
to life in 1883 by Otto von Bismarck and became the model for virtually
every such state-directed national insurance plan since. Alas, the German
system is starting to come apart at the financial seams. Germany's system
relies on a handful of state-supported health insurers. This week they
informed the government that the system was on the brink of a financial
shortfall equal to nearly $11 billion.
Pointedly, the insurers made clear that
cutbacks alone won't solve the problem. They said the government would have
to consider raising premiums on the insured or, you guessed it, raise taxes.
Currently, German workers pay a fixed-rate premium into the insurance
scheme; that rate is now set at 14.9% of gross pay.
Chancellor Merkel, something of a
political acrobat, was previously allied in coalition with leftist Social
Democrats. She's now resisting calls from the Free Democrats to get off the
state-pulled health-care train. The FDP's spokesman on health, Daniel Bahr,
wants a "shift in direction away from state-run medicine." Why? Because "the
current financial figures have showed us that the health-care fund doesn't
work."
With Congress inching ever closer to
passing a greater federal presence in providing health insurance under
ObamaCare, let's hope it doesn't take the U.S. until the year 2134 to figure
out it isn't working.
Baucus' bill would impose $829 billion in
added costs, financed by a variety of taxes and spending cuts that are just
as dubious. One is a tax on so-called Cadillac health insurance plans. But
unions that have negotiated such plans are opposed, and House Democratic
leaders are uninterested. Another is a tax on makers of medical devices that
will be paid for by consumers. Critics have pointed out that most of these
taxes will fall on people with ordinary incomes, far below the $250,000-plus
moguls that Barack Obama said would bear all his tax increases.
Another Baucus tax is the penalties that
would be paid by those who don't buy health insurance. But the penalties in
his bill are so low that many will choose to pay them and go uninsured, thus
foiling the goal of lowering the uninsured percentage. And as the insurers'
lobbying group has pointed out, this will increase premium costs for those
who are insured -- a form of tax on those behaving the way Baucus wants.
Then there are the Medicare cuts that
supposedly would finance the Baucus bill. But this Congress can't bind
future Congresses, and Congresses controlled by both parties have regularly
cancelled projected cuts in reimbursement rates. Democratic leaders have
made this easier by exempting such actions from its pay-go rules.
So as Michael Cannon of the Cato Institute
points out, "Universal coverage is so expensive that Congress can't get
there without taxing Democrats." So when those taxes are cut on low and
middle earners, there's not enough money to finance the deals the White
House has been making with health care interest groups.
The insurers and medical device people are
squawking now -- look for more squawking from pharmaceutical companies,
hospitals and physicians' groups when they get targeted. House Speaker Nancy
Pelosi has made it clear that she doesn't feel bound by deals the White
House has made.
The Senate Finance Committee got
bipartisan cover from Maine Republican Olympia Snowe. But Snowe says she was
just voting to "continue the process" and won't necessarily vote for the
bill Senate leaders will meld from the Finance and Health committee
versions.
So the learning process may not be over.
We know now that it costs a lot of money to pay for insurance policies with
expanded coverage for an expanded number of people. And we know that no one
wants to pay the price.
We may be in the process of learning
something else. Which is that insurance coverage that further insulates
patients from costs results in unanticipated increases in health care
spending. Yes, it bends the cost curve, but in the wrong direction. That's
what has happened with the much-praised Massachusetts system.
Democratic leaders may still have the
votes to jam something through. In which case it could, as the Atlantic's
Megan McArdle predicts, "spin out of control and eat a gigantic hole in the
deficit." Who's going to pay for that?
"The Greatest Show on Earth: Step Right Up to the Entitlement That
Cuts the Deficit," The Wall Street Journal, October -, 2009 ---
Click Here
Washington spent the week waiting for the
Congressional Budget Office to roll in with its new cost estimates of the
Senate health-care bill, and what a carnival. Behold: a new $829 billion
entitlement that will subsidize insurance for tens of millions of people—and
reduce deficits by $81 billion at the same time. In the next tent, see the
mermaid and a two-headed cow.
The political and media classes are
proving they'll believe anything, as they are now pronouncing that this
never-before-seen miracle is a "green light" for ObamaCare. (What isn't
these days?) The irony is that the CBO's guesstimate exposes the fraudulence
and fiscal sleight-of-hand underlying this whole exercise. Anyone who reads
beyond the top-line numbers will find that the bill creates massive new
spending commitments that will inevitably explode over time, and that this
is "paid for" with huge tax increases plus phantom spending cuts that will
never happen in practice.
The better part of the 10-year $829
billion overall cost will finance insurance "exchanges" where individuals
and families could purchase coverage at heavily subsidized rates. Senate
Finance Chairman Max Baucus kept a lid on the cost by making this program
non-universal: Enrollment is limited to those who aren't offered
employer-sponsored insurance and earn under 400% of the poverty level, or
about $88,000 for a family of four. CBO expects some 23 million people to
sign up by 2019.
But this "firewall" is unlikely to last
even that long. Liberals are demanding heftier subsidies, and once people
see the deal their neighbors are getting on "free" health care, they too
will want in. Even CBO seems to find this unrealistic, noting "These
projections assume that the proposals are enacted and remain unchanged
throughout the next two decades, which is often not the case for major
legislation." Scratch "often."
Then there are the many budget gimmicks.
Take the "failsafe budgeting mechanism" that would require automatic cuts in
exchange spending if it increases the deficit. CBO expects 15% reductions in
exchange subsidies each year from 2015 to 2018, even though the exchanges
don't open until 2014. That kind of re-gifting should have been laughed out
of the committee room, but the ruse helps to move future spending off the
current budget "score."
Mr. Baucus spends $10.9 billion to
eliminate the scheduled Medicare cuts to physician payments—but only for
next year. In 2011, he assumes they'll be reduced by 25%, with even deeper
cuts later. Congress has overridden this "sustainable growth rate" every
year since 2003 and will continue to do so because deeper cuts in Medicare's
price controls will cause many doctors to quit the program. Fixing this
alone would add $245 billion to the bill's costs, according to an earlier
CBO estimate.
The Baucus bill also expands ailing
Medicaid by $345 billion—even as it busts state budgets by imposing an
additional $33 billion unfunded mandate. The only Medicare cut that isn't
made merely on paper is $117 billion in Medicare Advantage, which Democrats
hate because it gives one of five seniors private insurance options.
Recall that when President Obama started
the health-care debate, the goal was "bending the curve"—finding a way to
reduce both Medicare and overall health spending. Budget director Peter
Orszag talked about "game changers," which CBO has now outed as nonchangers.
Comparative effectiveness research about what treatments work best? That
will save all of $300 million in Medicare, even as it costs $2.6 billion in
new taxes on premiums. More prevention and primary care will increase
spending by $4.2 billion.
Meanwhile, the bill piles on new taxes,
albeit on health-care businesses so the costs are hidden from customers.
Insurance companies offering policies that cost more than $8,000 for
individuals and $21,000 for families will pay $201 billion per a 40% excise
tax, which will be passed down to all policy holders in higher premiums.
Another $180 billion will hit the likes of drug and device makers, including
$29 billion because companies won't be allowed to deduct these "fees" from
their corporate income taxes. Then there's the $4 billion in penalty
payments on those who don't buy insurance because all of ObamaCare's other
new taxes and mandates have made it more expensive.
Senate Finance votes next week, and no
doubt this freak of political nature will pass amid fanfare and
self-congratulation that their new entitlement will reduce deficits. Never
mind that such a spectacle has never happened in the history of the
republic. P.T. Barnum had nothing on this crowd, and the bill hasn't even
hit the Senate floor yet.
VooDoo Accounting for Obamacare?
"Too Good to Check Want to cut the deficit? Just spend $829 billion!" by James
Taranto, The Wall Street Journal Best of the Web Today Newsletter, October 8,
2009
But here's something
CNN has not, to our knowledge, bothered to
fact-check:
A
compromise health care proposal widely seen as having the best chance to win
Democratic and Republican support would cost $829 billion over the next 10
years, nonpartisan budget analysts concluded Wednesday.
It also would reduce the federal deficit by more than $80 billion, according
to a report from the Congressional Budget Office.
So Congress is going to reduce the
deficit by increasing spending $829,000,000,000.00? Doesn't this sound
like--well, a joke? Too good a joke to check, evidently.
Through what
voodoo exactly does the CBO surmise Congress will cut the deficit while spending close to a trillion
dollars? CNN does not even attempt to detail the argument. Instead we have
to turn to
Megan McArdle of The Atlantic:
Virtually all of the extra benefit
appears to come from estimating that employers will see their health
care costs fall, mostly because they put those workers into
federally subsidized programs, pass the resulting savings along to
their workers in the form of higher wages and salaries, and that the
Treasury will thereby gain, at a rough guess, about $12-15 billion a
year in tax revenues.
This is somewhat confusing to me.
The CBO seems to be assuming it will get just about 20% of the
amount spent on subsidies back in the form of tax revenues. But the
effective income tax rate on the quintiles covered by the subsidies,
according to the CBO, is less than 5%. Perhaps the savings comes
from the payroll tax, but even including the payroll tax, it's less
than 15%. And the tax rates are directly proportional to the size of
the income, while the subsidies are inversely proportional. I'm sure
I'm missing something that would make the math work, but I can't
figure out what.
"New Math Boosts Health Plan Budget Office Says: Senate Bill Will Trim
Deficit; Democrats Still Split on Key Details," by Janet Adamy and Jonathan
Weisman, The Wall Street Journal, October 8, 2009 ---
The latest Senate health bill will cost
$829 billion over a decade and slightly reduce the federal budget deficit,
congressional budget crunchers said Wednesday, marking a major step forward
for Democrats' plans to overhaul American health care.
The nonpartisan Congressional Budget
Office found the sweeping measure will cover 94% of nonelderly legal U.S.
residents, up from about 83% currently. The bill will cut the deficit by $81
billion over the 10-year period, owing to trims in Medicare spending and new
taxes.
The widely awaited report paves the way
for the Senate Finance Committee to approve its bill in the next few days.
After appearing in peril in August, the
health-care overhaul has cleared a series of hurdles in recent weeks that
have given Democrats increased confidence they will pass a bill. Lobbyists
on both sides of the issue have shifted their focus to what the bill will
look like rather than questioning whether a measure can succeed.
But plenty of potential pitfalls remain.
Democrats are still divided over core elements, including whether to create
a public health insurance plan and how to pay for the overhaul. The hospital
industry, a key ally, says the latest bill from the Senate doesn't expand
health insurance broadly enough to meet the terms of its pledge to
contribute $155 billion to the effort.
According to the budget office, the bill
spends $461 billion over a decade to give tax credits to low- and
middle-income Americans to offset the cost of buying insurance. It spends
$345 billion to expand the Medicaid insurance program to cover a larger
swath of the poor.
The bill, introduced by Senate Finance
Committee Chairman Max Baucus, calls for the government to fund a series of
new nonprofit health-insurance cooperatives designed to increase competition
with private insurance companies. It gives doctors and hospitals incentives
to improve the quality of their care and to offer fewer unnecessary tests
and treatments.
Most of the bill's funding comes from $404
billion in cuts to Medicare and other government insurance programs that
Democrats say will reduce waste but won't hurt recipients' benefits. An
additional $201 billion comes from a 40% excise tax on particularly generous
health-insurance plans levied on insurers. The rest comes from annual fees
on insurers, medical-device makers and pharmaceutical companies, as well as
a series of other changes to the tax treatment of health expenses.
Senator John D. Rockefeller IV of West
Virginia is upset that a health care bill poised for approval by the Finance
Committee would turn nearly a half-trillion dollars over to insurance
companies, whose profits he says are “out of sight.”
Senator Olympia J. Snowe of Maine worries
that the bill would require people to buy insurance they cannot afford.
Senator Blanche Lincoln of Arkansas fears that the bill would be too costly
for the government.
And Senator Ron Wyden of Oregon warns that
the bill would lock many workers into health plans selected by their
employers, without allowing them to shop for better, cheaper plans, an
alternative that could help drive down costs for everyone.
Those senators — three Democrats and one
Republican, Ms. Snowe — have not indicated how they will vote on the Finance
Committee legislation and said Tuesday that they were agonizing over the
decision.
White House officials and the committee
chairman expect the Democrats to support the bill, if only to advance it to
the next stage of the legislative process, the Senate floor, for what is
likely to be a raucous, riveting and unpredictable debate.
Taken together, the four senators
represent the spectrum of concerns Democrats will face in trying to assemble
the 60 votes they need to get a bill through the full Senate using regular
procedure. Satisfying each of them, without alienating the others, is the
challenge facing Democratic leaders.
The committee chairman, Senator Max
Baucus, Democrat of Montana, predicted Tuesday that Mrs. Lincoln, Mr.
Rockefeller and Mr. Wyden would be with him “when the final votes are cast”
in committee. Other Democrats said, with less certainty, that they expected
Ms. Snowe to support the bill in committee as well.
While the four senators do seem genuinely
undecided, by declining to commit in advance they also maximize their
leverage: their ability to win changes in the legislation later on.
“I’m pondering,” Mr. Rockefeller said.
“It’s an imperfect bill, with a lot of pluses and minuses.”
Mr. Rockefeller said the committee had
improved the bill over the last two weeks by preserving the Children’s
Health Insurance Program and by preventing taxes on expensive insurance
policies for some people in high-risk occupations, like coal miners
Mrs. Lincoln, Mr. Rockefeller and Ms.
Snowe said that in deciding how to vote, they would be influenced by a cost
estimate soon to be completed by the Congressional Budget Office. President
Obama has insisted that whatever final legislation emerges from Congress
must not add to the federal budget deficit and must slow the growth of
health spending in the long term.
On health care, Mr. Rockefeller
illustrates the views of liberal Democrats. Under the bill, he said,
insurance companies would receive more than $460 billion over 10 years to
help pay for the coverage of low- and middle-income people. Congress, he
said, must create a new government-run health plan, to compete directly with
private insurers. The Finance Committee last week rejected his proposal to
create such a public option.
Although she is a Republican, Ms. Snowe’s
views reflect the concerns of many centrist Democrats. She worries that some
middle-income families will find insurance unaffordable, even with federal
subsidies. And she wants to give the private insurance market an opportunity
to work, under new federal rules, before setting up a government plan in
states where affordable coverage proves unavailable.
Centrist Democrats like Senator Thomas R.
Carper of Delaware have similar ideas. Rather than setting up a single
national government health plan, they would prefer to let states decide what
to do.
Senator Ben Nelson of Nebraska, describing
himself as a “Jeffersonian Democrat, someone who believes the laboratories
of democracy typically work,” said it might make sense for states to act as
a testing ground for a public option. That way, Mr. Nelson said, if the
public option failed, it would do so on a small scale, and problems might be
easier to fix.
But reflecting divisions that could lie
ahead on the Senate floor, Mr. Rockefeller said this approach was
unacceptable to him. State health plans would not be strong enough to
compete effectively with big private insurance companies, he said.
Mrs. Lincoln, who is up for re-election
next year in a state that voted heavily Republican in the 2008 presidential
race, said she and her constituents in Arkansas would focus on the cost of
the legislation and its effect on the country’s fiscal condition.
“We have got probably one of the lowest
median incomes in the country,” Mrs. Lincoln said. “We have got people who
know what it means when you spend beyond your means and you hit difficult
economic times.”
Mrs. Lincoln said her constituents were
“enormously alarmed about the amount of debt that we have.” And she said she
worried that the cost of the bill could rise further as a result of
amendments that might be added by her Democratic colleagues on the Senate
floor.
As for how she would vote in the
committee, Mrs. Lincoln said the budget office analysis would be crucial. “I
am going to wait and see what the scores are,” she said.
Mr. Wyden noted that the committee’s bill
would not offer additional options to the overwhelming majority of Americans
who already have insurance. His concern is shared by some Democrats and also
by many Republicans, who say the bill does not do enough to let the
marketplace spur competition, and he said he would continue fighting on the
Senate floor to make changes to the measure.
“Democrats from the president on talk
about how the American people ought to have choices like a member of
Congress,” Mr. Wyden said. “Now under consideration is an idea that millions
and millions won’t get any choice at all, let alone what a member of
Congress gets.”
“When you think about where this is
headed,” he added, “you are still seeing additional patches added to the
crazy quilt that is American health care.”
How to lie with statistics These Democrats are all over the map on where
precisely Americans place in the life-expectancy rankings. We're 24th,
according to Vice President Joe Biden and Sen. Barbara Boxer; 42nd,
according to Pennsylvania Gov. Ed Rendell; 35th, according to Washington
Post columnist Eugene Robinson; and 47th, according to Rep. Dennis Kucinich.
So the U.S. may have less of a "life expectancy" problem than a "Democratic
math competency" problem. (Coulter mentions other widely varying
medical statistics reported in the media) Ann Coulter, "Would Your Company
Like to Sponsor the Next Installment of Liberal Lies on National Health
Care?" , Townhall, October 7, 2009 ---
Click Here
Well, the Senate side, we can`t expect very much
from them. I don`t think they`re going to have public option in their final
bill. But I want to tell you something, Joy. We`re going to get it on the house
side. It`s going to be a terrible fight if we don`t get this, I mean, you know,
the bricks are going to fly. We have got to have public option. Maxine Waters, CNN October 7, 2009
---
http://transcripts.cnn.com/TRANSCRIPTS/0910/07/joy.01.html
Updates for October 5, 2009
If the government can cobble together a cheaper
insurance policy that gives the same benefits, I see that as a plus.
Bill O'Reilly, Fox News
Jensen Comment
I think O'Reilly still holds President Obama to his pledge of new new taxes or
added national debt for Obamacare. The catch phrase is "same benefits." At a
minimum this would mean the same freedom to choose doctors and other benefits of
Medicare. The fact that Medicare is now $33 trillion dollars in the hole and
riddled with fraud probably means that no Obama is seeking to do the impossible.
I personally favor a single-payer government insurance program
but dread the years of chaos and waste that would arise from a sudden shift to
having the government process the gazillion claims of 300 million patients. That
would not be a pretty sight.
"How Congress Is Cooking the Books," by Michael Tanner, The New
York Post, September 30, 2009 ---
Click Here
LAST week, the Senate Finance Committee voted 12-11
not to wait for the Congressional Budget Office to "score" its health-care
bill before the committee votes on it. Imagine that: Some senators actually
wanted to know how much the bill costs before voting on it.
Let them get away with something like that, and
before you know it they'll be demanding honest accounting practices --
sending the whole legislative process to hell in a hand basket.
When it comes to the health-care-reform debate, you
see, honest budgeting is nowhere to be seen.
Start with the simple matter of how much
health-care reform will cost. The House bill, HR 3200, will cost roughly
$1.3 trillion over 10 years -- or so we're told. By the same token, the
Senate Finance Committee bill is supposed to cost just under $900 billion.
Sure, that's a lot of money -- but it still badly understates the true cost.
The CBO provides 10- year projections of a bill's
cost. But most provisions of the health bill don't take effect until 2014.
So the "10-year" cost projection only includes six years of the bill.
Plus, the costs ramp up slowly. In its first year,
the House bill would only cost about $6 billion; in its first three, less
than $100 billion. The big costs are in the final years of the 10-year
budget window -- and beyond. In fact, over the first 10 years that the House
bill would be in existence (2014 to 2024), its costs would be closer to $2.4
trillion. Similarly, the real cost of the Senate bill over 10 years of
operation is estimated at $1.5 trillion.
Worse, the trajectory of the costs after 10 years
rises dramatically -- meaning "reform" would cost even more in its second 10
years and beyond.
Such gimmicks also infest the projections of how
much reform will add to the deficit. CBO says the House bill adds $235
billion to the deficit. But that, again, cuts off arbitrarily in 2019.
Beyond that date, the bill adds enormously to the deficit, about $1.5
trillion in the second 10 years. In fact, if the health-reform bill were
treated like other entitlements, such as Social Security and Medicare, which
are required to have a 75-year actuarial forecast, its unfunded liabilities
would exceed $9.2 trillion.
Of course, the Senate Finance Bill is supposed to
be deficit-neutral. But that claim relies on other forms of budgetary
flimflam.
For example, the Senate bill relies on Medicare
"savings" that Congress keeps refusing to make. Specifically, Medicare has
long been ordered to cut 21 percent from what it pays health-care providers
-- yet, each year since 2003, for reasons both good and bad, Congress has
voted to defer the cuts.
Does anyone else really think that Congress is
simply going to slash payments to doctors and hospitals by 21 percent across
the board?
Of course, President Obama has long said we can cut
Medicare by $500 billion simply by eliminating fraud, waste and abuse. That
would be the same "fraud, waste and abuse" that the government has been
cutting since Ronald Reagan first used the term.
The truth is that health-care reform is going to
cost us a lot. And we're going to pay for it in higher taxes and more debt.
No wonder they don't want us to know.
Why Medical Malpractice Is Off Limits in Terms of Health Care Reform The upshot is simple: A few thousand trial lawyers are
blocking reform that would benefit 300 million Americans. This is not just your
normal special-interest politics. It's a scandal—it is as if international-trade
policy was being crafted in order to get fees for customs agents. Trial lawyers
are agents, and their claims are only as valid as those they represent. They
argue, of course, that they are champions of malpractice victims. As Anthony
Tarricone, president of the trial lawyers association (called the American
Association of Justice) put it: "Trial attorneys see first-hand the effects
medical errors have on patients and their families. We should keep those injured
people in mind as the debate moves forward." But under the current system, 54
cents of the malpractice dollar goes to lawyers and administrative costs,
according to a 2006 study in the New England Journal of Medicine. And because
the legal process is so expensive, most injured patients without large claims
can't even get a lawyer. "It would be hard to design a more inefficient
compensation system," says Michelle Mello, a professor of law and public health
at Harvard, "or one which skewed incentives more away from candor and good
practices." Philip K. Howard, "Why Medical
Malpractice Is Off Limits: A few thousand lawyers have a lock on
Democrats, who refuse any legal reform," The Wall Street Journal,
September 29, 2009 ---
http://online.wsj.com/article/SB10001424052970204488304574432853190155972.html?mod=djemEditorialPage
"Dean says Obamacare authors don't want to challenge trial lawyers,"
by: Mark Tapscott, Washington Examiner, August 26, 2009 ---
Click Here
Whatever else he said Wednesday
evening at the town hall hosted by Rep. Jim Moran, D-VA, former
Democratic National Committee chairman and presidential candidate Howard
Dean let something incredibly candid slip out about President Obama's
health-care reform bill in Congress.
Asked by an audience member why the
legislation does nothing to cap medical malpractice class-action
lawsuits against doctors and medical institutions (aka "Tort reform"),
Dean responded by saying: “The reason tort reform is not in the [health
care] bill is because the people who wrote it did not want to take on
the trial lawyers in addition to everybody else they were taking on. And
that’s the plain and simple truth,”
Dean is a former physician, so he
knows about skyrocketing medical malpractice insurance rates, and the
role of the trial lawyers in fueling the "defensive medicine" approach
among medical personnel who order too many tests and other sometimes
unneeded procedures "just to be sure" and to protect themselves against
litigation.
Texas Gov. Rick Perry recently
described in an Examiner oped the medical-malpractice caps enacted by
the state legislature at his urging that reversed a serious decline in
the number of physicians practicing in the Lone Star state and the
resulting loss of access to quality medical care available to Texas
residents. Mississippi Gov. Haley Barbor also shared some of his
successes in this area in a recent Examiner oped.
Credit goes to the American Tort
Reform Association's Darren McKinney for catching this momentary
outbreak of political honesty by Dean. McKinney has conveniently posted
an audio recording of Dean speaking here, so you can listen for
yourself. Mckinney has also offered more comment here, helpfully even
including a link to the Examiner's recent analysis of the degree to
which trial-lawyer political contributions go to Democrats in Congress.
Those contributions are why Dean knows
it would be a difficult task indeed for Obama to persuade congressional
Democrats to do anything that might offend the trial-lawyers lobby. The
Examiner's David Freddoso and Kevin Mooney did the reporting on this
link here.
Jensen Comment Reports are that the Texas cap on punitive damages has been quite
successful in restraining outrageous settlements of malpractice
lawsuits.
"The President's Tort Two-Step Special-interests and the health-care
status," by Kimberly Strassel, The Wall Street Journal, September 11,
2009 ---
Click Here
Tort reform is a policy
no-brainer. Experts on left and right agree that defensive
medicine—ordering tests and procedures solely to protect against Joe
Lawyer—adds enormously to health costs. The estimated dollar
benefits of reform range from a conservative $65 billion a year to
perhaps $200 billion. In context, Mr. Obama's plan would cost about
$100 billion annually. That the president won't embrace even modest
change that would do so much, so quickly, to lower costs, has left
Americans suspicious of his real ambitions.
It's also a political no-brainer.
Americans are on board. Polls routinely show that between 70% and
80% of Americans believe the country suffers from excess litigation.
The entire health community is on board. Republicans and swing-state
Democrats are on board. State and local governments, which have
struggled to clean up their own civil-justice systems, are on board.
In a debate defined by flash points, this is a rare area of
agreement.
The only folks not on board are a
handful of powerful trial lawyers, and a handful of politicians who
receive a generous cut of those lawyers' contingency fees. The legal
industry was the top contributor to the Democratic Party in the 2008
cycle, stumping up $47 million. The bill is now due, and Democrats
are dutifully making a health-care down payment.
During the markup of a bill in the
Senate Health Committee, Republicans offered 11 tort amendments that
varied in degree from mere pilot projects to measures to ensure more
rural obstetricians. On a party line vote, Democrats killed every
one. Rhode Island senator and lawyer Sheldon Whitehouse went so far
as to speechify on the virtues of his tort friends. He did not, of
course, mention the nearly $900,000 they have given him since 2005,
including campaign contributions from national tort powerhouses like
Baron & Budd and Motley Rice.
Even Senate Finance Chair Max
Baucus, of bipartisan bent, has bowed to legal powers. The past two
years, Mr. Baucus has teamed up with Wyoming Republican Mike Enzi to
offer legislation for modest health-care tort reform in states. That
Enzi-Baucus proposal had been part of the bipartisan health-care
talks. When Mr. Baucus released his draft health legislation this
weekend, he'd stripped out his own legal reforms. The Montanan is
already in the doghouse with party liberals, and decided not to
further irk leadership's Dick Durbin ($3.6 million in lawyer
contributions), the Senate's patron saint of the trial bar.
Over in the House the discussion
isn't about tort reform, but about tort opportunities. During the
House Ways & Means markup of a health bill, Texas Democrat Lloyd
Doggett ($1.5 million from lawyers) introduced language to allow
freelance lawyers to sue any outfit (say, McDonald's) that might
contribute to Medicare costs. Only after Blue Dogs freaked out did
the idea get dropped, though the trial bar has standing orders that
Democrats make another run at it in any House-Senate conference.
It says everything that Mr. Obama
wouldn't plump for reform as part of legislation. The president
knows the Senate would never have passed it in any event. Yet even
proposing it was too much for the White House's legal lobby. Mr.
Obama is instead directing his secretary of health and human
services to move forward on test projects. That would be Kathleen
Sebelius, who spent eight years as the head of the Kansas Trial
Lawyers Association.
The issue has assumed such
importance that even some Democrats acknowledge the harm. With
bracing honesty, former DNC chair Howard Dean recently acknowledged
his party "did not want to take on the trial lawyers." Former
Democratic Sen. Bill Bradley, in a New York Times piece, suggested a
"grand bipartisan compromise" in which Democrats got universal
coverage in return for offering legal reform. The White House
yawned, and moved on.
It isn't clear if Republicans
would or should take that deal, but we won't know since it won't be
offered. The tort-reform issue has instead clarified this
presidency. Namely, that the bipartisan president is in fact very
partisan, that the new-politics president still takes orders from
the old Democratic lobby.
So, let's talk about the basic questions YOU should
have answered to your satisfaction before you consider supporting any health
care bill that comes out of Congress. As you read these questions, keep in
mind that every one has been inspired by bills that are moving through
Congress as we speak.
1) Medicare and Social Security are driving this
country into bankruptcy. Can we afford another gargantuan government
entitlement program when we know we can't pay for the programs we already
have?
2) Given that the Medicare system will soon be
going into the red, does it make sense to attempt to cut
500 billion dollars in funds out of the
program to move over to another entitlement program?
3) One of the biggest selling points of government
run health care is that it will reduce costs. How can anyone believe the
same federal government that is running an almost 2 trillion dollar deficit
is going to be financially responsible enough to cut health care costs.
4) Will people who have previously decided not to
get health care coverage be forced to spend a significant portion of their
income on mandated coverage or risk huge fines or perhaps even jail time?
5) Will abortions be covered under the health care
plan?
6) Will illegal aliens be able to get coverage?
7) Will you have to deal with the IRS in order to
pay your medical bills?
8) Would you be able to keep your current doctor
under a new plan?
9) If you like your insurance plan, will you be
allowed to keep it?
10) If the health care bill passes, will dozens of
government bureaucrats suddenly have access to your private medical records,
which are zealously guarded under our current laws?
11) Given that the cost of lawsuits and tort reform
significantly drive up the cost of medical care for all Americans, why is
tort reform not being included in these bills?
12) By simply giving tax breaks to individuals
instead of employers, Congress could make health care portable; so you
wouldn't risk losing your health care when you lose your job. Why isn't that
being considered?
13) The employee mandates in the bill could cost as
many as 1.5 million people their jobs. Does it make
sense to do that in a recession?
15) Will the health care bill destroy the insurance
industry and leave the country with a single payer system run by the
government?
16) There has been a lot of talk about making
insurance companies compete. In fact, that is the biggest stated rationale
for the public option. However, if this is so, why aren't these health plans
allowing insurance companies to compete across state lines? That would
inspire real market based competition.
17) You can sue an insurance company if they
illegally deny your claim. Will you be able to do the same if the government
is running things?
18) Obama is promising
that insurance companies can't turn you down for
coverage if you're sick, drop you if you lie about your coverage, or place
any kind of cap on how much coverage you can get. Do you really believe
insurance companies can continue to exist and function under those
circumstances?
19) There are only roughly 8-10 million people who
want insurance but can't afford it. Why not concentrate on helping those
people instead overhauling the whole system?
20) What guarantees do the American people have
that senior citizens won't be denied life saving treatment to save money as
they are in nations like Britain?
The Republicans lie! They want to see you dead!
They’d rather make money off your dead corpse! They kinda like it when that
woman has cancer and they don’t have anything for her…My God, Democrats, what’s
wrong with you?! You can’t deal with these people, at all! . . . Sometimes
I think they [conservatives] want Obama to get shot. I do! I really think that
there are conservative broadcasters in this country who would love to see Obama
taken out. They fear socialism. They fear Marxism.
MSNBC Commentator Ed Schultz --- Watch the Video ---
http://www.msnbc.msn.com/id/21134540/vp/32992075#32992075
On the Wednesday evening edition of “The Ed Show,”
MSNBC commentator Ed Schultz stated that Republicans want Americans to die,
and that they enjoy it when middle-aged women contract cancer. He then
suggested that moderate Republican Sen. Olympia Snowe of Maine should allow
tumors to spread through her body if she ever gets cancer. Schultz, whose
program runs between episodes of Hardball, began his program by discussing
the story of a woman who came to a health-care town hall meeting sponsored
by Rep. Eric Cantor, R-VA. The woman told of her uninsured friend, a
middle-aged woman with stomach tumors. Incensed that Cantor did not
immediately suggest socializing one-sixth of the nation’s economy as a
result, an increasingly unhinged Schultz began screaming (starting at
5:14 in
this clip):
Jensen Comment
Ed Schultz has become the nuttiest of the nut cases at MSNBC.
On September 14th, he lied that 9/12 protesters carried signs that
read
“Bury Obama with Kennedy,” as the television screen showed a full-screen
shot of the correct sign, which read, “Bury ObamaCare
with Kennedy.”
Fearful that they're losing ground on immigration
and health care, a group of House Democrats is pushing back and arguing that
any health care bill should extend to all legal immigrants and allow illegal
immigrants some access, The Washington Times reported on Monday.
The Democrats, trying to stiffen their party's
spines on the contentious issue, say it's unfair to bar illegal immigrants
from paying their own way in a government-sponsored exchange. Legal
immigrants, they say, regardless of how long they've been in the United
States, should be able to get government-subsidized health care if they meet
the other eligibility requirements.
"Legal permanent residents should be able to
purchase their plans, and they should also be eligible for subsidies if they
need it. Undocumented, if they can afford it, should be able to buy their
own private plans. It keeps them out of the emergency room," said Rep.
Michael M. Honda, California Democrat and chairman of the Congressional
Asian Pacific American Caucus.
Honda was joined by more than 20 of his colleagues
in two letters laying out the demands.
Coverage for immigrants is one of the thorniest
issues in the health care debate, and one many Democratic leaders would like
to avoid. But immigrant rights groups and the Democrats who sent the letters
say they have to take a stand now.
Jensen Comment
The key absurdity here is the statement "pay their own way." If a foreigner in
need of a $50,000 eye implant surgeries sneak into the U.S. for the main purpose
of paying $100 in premiums for each $50,000 surgery and then return to their
home countries, these aliens have hardly "paid their own way." They've taken on
illegal alien status mainly for getting expensive health care on the cheap.
"Max's Mad Mandate The Baucus health bill will break 50 state budgets via
Medicaid," The Wall Street Journal, September 27, 2009 ---
Click Here
The more we inspect Max Baucus's health-care bill,
the worse it looks. Today's howler: One reason it allegedly "pays for
itself" over 10 years is because it would break all 50 state budgets by
permanently expanding Medicaid, the joint state-federal program for the
poor.
Democrats want to use Medicaid to cover everyone up
to at least 133% of the federal poverty level, or about $30,000 for a family
of four. Starting in 2014, Mr. Baucus plans to spend $287 billion through
2019—or about one-third of ObamaCare's total spending—to add some 11 million
new people to the Medicaid rolls.
About 59 million people are on Medicaid today—which
means that a decade from now about a quarter of the total population would
be on a program originally sold as help for low-income women, children and
the disabled. State budgets would explode—by $37 billion, according to the
Congressional Budget Office—because they would no longer be allowed to set
eligibility in line with their own decisions about taxes and spending. This
is the mother—and father and crazy uncle—of unfunded mandates.
This burden would arrive on the heels of an
unprecedented state fiscal crisis. As of this month, some 48 states had
shortfalls in their 2010 budgets totaling $168 billion—or 24% of total state
budgets. The left-wing Center for Budget and Policy Priorities expects total
state deficits in 2011 to rise to $180 billion. And this is counting the $87
billion Medicaid bailout in this year's stimulus bill.
While falling revenues are in part to blame,
Medicaid is a main culprit, even before caseloads began to surge as
joblessness rose. The National Association of State Budget Officers notes
that Medicaid spending is on average the second largest component in state
budgets at 20.7%—exceeded only slightly by K-12 education (20.9%) and
blowing out state universities (10.3%), transportation (8.1%) and prisons
(3.4%).
In some states it is far higher—39% in Ohio, 27% in
Massachusetts, 25% in Michigan, Rhode Island and Pennsylvania. Forcing
states to spend more will crowd out other priorities or result in a wave of
tax increases, or both, even as Congress also makes major tax hikes
inevitable at the national level.
The National Governors Association is furious about
Mr. Baucus's Medicaid expansion, and rightly so, given that governors and
their legislatures will get stuck with the bill while losing the leeway to
manage or reform their budget-busters. NGA President Jim Douglas of Vermont
recently said at the National Press Club that the Baucus plan poses a
"tremendous financial liability" and doesn't "respect that no one size fits
all at the state level." He added: "Unlike the federal government, states
can't print money."
Mr. Baucus hopes to use his printing press to bribe
the governors, at least for a time. Currently, the federal government pays
about 57 cents out of every dollar the states spend on Medicaid, though the
"matching rate" ranges as high as 76% in some states. That would rise to
95%—but only for five years. After that, who knows? It all depends on which
budget Congress ends up ruining. Either the states will be slammed, or
Washington will extend these extra payments into perpetuity—despite the fact
that CBO expects purely federal spending on Medicaid to consume 5% of GDP by
2035 under current law.
As for the poor uninsured, they'll be shunted off
into what Democratic backbencher Ron Wyden calls a "caste system." While
some people will be eligible for subsidized private health insurance,
everyone in the lowest income bracket will be forced into Medicaid, the
country's worst insurance program by a long shot. States try to control
spending by restricting access to prescription drugs and specialists. About
40% of U.S. physicians won't accept Medicaid at all.
Why? One reason is that Medicaid's price controls
are even tighter than Medicare's, which in turn are substantially below
private payers. In 2009 or 2010, 29 states will have either reduced or
frozen their reimbursement rates to providers. Democrats love Medicaid
because is it much cheaper than subsidizing private insurance, but that is
true only because of this antimarket brute force. Of course, such coercion
will be extended to the rest of the health market under ObamaCare.
*** The states aren't entirely victims here. Both
Republican and Democratic state houses regularly game the Medicaid funding
formula—which itself is designed to reward higher spending—to steal more
money from national taxpayers. Then when tax collections fall during
downturns, budget gaskets blow all over the place. This dynamic helps
explain the spectacular budget catastrophes in New York and California. We'd
prefer a policy of block grants, which would extricate Washington from state
accounting and encourage Governors to spend more responsibly.
That's not going to happen any time soon, but the
least Mr. Baucus can do is not make things worse. Instead, his Medicaid
expansion is a disaster on every level—like the rest of ObamaCare.
Updates for September 24, 2009
One woman Michelle Obama will not mention
Yes, First Lady Michelle Obama is now aggressively crusading for her husband’s
health care takeover under the guise of championing woman who have been
“crushed” by the system . . . I blogged about Michelle Obama’s role in creating
a patient-dumping scheme for the University of Chicago Medical Center back in
March. With her husband and the Democrats unleashing
health care horror story anecdotesto gin up public
fear and build support for the beleaguered Obamacare plan, my syndicated column
today revisits the kind of “reform” the Obamas and their Chicago cronies
champion — and who benefits.Here’s a challenge to the ABC News Obamacare
infomercialproducers. I dare you to ask President
Obama this question: What have you done for
Dontae Adams, lately? One
woman Mrs. Obama won’t be spotlighting? The mother of Dontae Adams. Michelle Malkin, September 18, 2009 ---
http://michellemalkin.com/2009/09/18/one-woman-michelle-obama-will-not-mention/
ACORN could open Pandora's box In the wake of Fox News reporting on the unfolding
ACORN scandal, ACORN is now threatening to sue the network. Now that Fox is
actually breaking news on this story by showing new videos, ACORN might just do
it. Fox News should pray that ACORN does sue, because it would blow the doors
off this story, possibly destroying ACORN and erupting into a political scandal
in Washington. Ken Blackwell and Ken Klukowski,
Townhall, September 21, 2009 ---
http://townhall.com/columnists/KenBlackwell/2009/09/21/acorn_could_open_pandoras_box
In 2005, Citibank and ACORN Housing Corporation --
which received tens of millions of tax dollars under the Bush administration
alone -- began recruiting Mexican illegal aliens for a lucrative program
offering loans with below-market interest rates, down-payment assistance and no
mortgage insurance requirements. Instead of the Social Security numbers required
of law-abiding citizens, the program allows illegal alien applicants to supply
loosely monitored tax identification numbers issued by the IRS . . . And ACORN
advisory council member Eric Eve of Citigroup is a champion of the
ACORN/Citibank illegal alien loan program that openly undermines immigration
laws and integrity in banking. The truth is more sordid than any fictional
scenarios caught on tape: ACORN is a corrupt enterprise. Michelle Malkin, "ACORN's Illegal
Alien Home Loan Racket," Frontpage, September 18, 2009 ---
http://townhall.com/columnists/MichelleMalkin/2009/09/18/acorns_illegal_alien_home_loan_racket
President Barack Obama used only-in-Washington
accounting Wednesday when he promised to overhaul the nation's health care
system without adding "one dime" to the deficit. By conventional arithmetic,
Democratic plans would drive up the deficit by billions of dollars.
The president's speech to Congress contained a
variety of oversimplifications and omissions in laying out what he wants to
do about health insurance.
A look at some of Obama's claims and how they
square with the facts or the fuller story:
---
OBAMA: "I will not sign a plan that adds one dime
to our deficits either now or in the future. Period."
THE FACTS: Though there's no final plan yet, the
White House and congressional Democrats already have shown they're ready to
skirt the no-new-deficits pledge.
House Democrats offered a bill that the
Congressional Budget Office said would add $220 billion to the deficit over
10 years. But Democrats and Obama administration officials claimed the bill
actually was deficit-neutral. They said they simply didn't have to count
$245 billion of it - the cost of adjusting Medicare reimbursement rates so
physicians don't face big annual pay cuts.
Their reasoning was that they already had decided
to exempt this "doc fix" from congressional rules that require new programs
to be paid for. In other words, it doesn't have to be paid for because they
decided it doesn't have to be paid for.
The administration also said that since Obama
already had included the doctor payment in his 10-year budget proposal, it
didn't have to be counted again.
That aside, the long-term prognosis for costs of
the health care legislation has not been good.
CBO Director Douglas Elmendorf had this to say in
July: "We do not see the sort of fundamental changes that would be necessary
to reduce the trajectory of federal health spending by a significant
amount."
---
OBAMA: "Nothing in this plan will require you or
your employer to change the coverage or the doctor you have."
THE FACTS: That's correct, as far as it goes. But
neither can the plan guarantee that people can keep their current coverage.
Employers sponsor coverage for most families, and they'd be free to change
their health plans in ways that workers may not like, or drop insurance
altogether. The Congressional Budget Office analyzed the health care bill
written by House Democrats and said that by 2016 some 3 million people who
now have employer-based care would lose it because their employers would
decide to stop offering it.
In the past Obama repeatedly said, "If you like
your health care plan, you'll be able to keep your health care plan,
period." Now he's stopping short of that unconditional guarantee by saying
nothing in the plan "requires" any change.
---
OBAMA: "The reforms I'm proposing would not apply
to those who are here illegally." One congressman, South Carolina Republican
Joe Wilson, shouted "You lie!" from his seat in the House chamber when Obama
made this assertion. Wilson later apologized.
THE FACTS: The facts back up Obama. The House
version of the health care bill explicitly prohibits spending any federal
money to help illegal immigrants get health care coverage. Illegal
immigrants could buy private health insurance, as many do now, but wouldn't
get tax subsidies to help them. Still, Republicans say there are not
sufficient citizenship verification requirements to ensure illegal
immigrants are excluded from benefits they are not due.
---
OBAMA: "Don't pay attention to those scary stories
about how your benefits will be cut. ... That will never happen on my watch.
I will protect Medicare."
THE FACTS: Obama and congressional Democrats want
to pay for their health care plans in part by reducing Medicare payments to
providers by more than $500 billion over 10 years. The cuts would largely
hit hospitals and Medicare Advantage, the part of the Medicare program
operated through private insurance companies.
Although wasteful spending in Medicare is widely
acknowledged, many experts believe some seniors almost certainly would see
reduced benefits from the cuts. That's particularly true for the 25 percent
of Medicare users covered through Medicare Advantage.
Supporters contend that providers could absorb the
cuts by improving how they operate and wouldn't have to reduce benefits or
pass along costs. But there's certainly no guarantee they wouldn't.
---
OBAMA: Requiring insurance companies to cover
preventive care like mammograms and colonoscopies "makes sense, it saves
money, and it saves lives."
THE FACTS: Studies have shown that much preventive
care - particularly tests like the ones Obama mentions - actually costs
money instead of saving it. That's because detecting acute diseases like
breast cancer in their early stages involves testing many people who would
never end up developing the disease. The costs of a large number of tests,
even if they're relatively cheap, will outweigh the costs of caring for the
minority of people who would have ended up getting sick without the testing.
The Congressional Budget Office wrote in August:
"The evidence suggests that for most preventive services, expanded
utilization leads to higher, not lower, medical spending overall."
That doesn't mean preventive care doesn't make
sense or save lives. It just doesn't save money.
---
OBAMA: "If you lose your job or change your job,
you will be able to get coverage. If you strike out on your own and start a
small business, you will be able to get coverage."
THE FACTS: It's not just a matter of being able to
get coverage. Most people would have to get coverage under the law, if his
plan is adopted.
In his speech, Obama endorsed mandatory coverage
for individuals, an approach he did not embrace as a candidate.
He proposed during the campaign - as he does now -
that larger businesses be required to offer insurance to workers or else pay
into a fund. But he rejected the idea of requiring individuals to obtain
insurance. He said people would get insurance without being forced to do so
by the law, if coverage were made affordable. And he repeatedly criticized
his Democratic primary rival, Hillary Rodham Clinton, for proposing to
mandate coverage.
"To force people to get health insurance, you've
got to have a very harsh penalty," he said in a February 2008 debate.
Now, he says, "individuals will be required to
carry basic health insurance - just as most states require you to carry auto
insurance."
He proposes a hardship waiver, exempting from the
requirement those who cannot afford coverage despite increased federal aid.
---
OBAMA: "There are now more than 30 million American
citizens who cannot get coverage."
THE FACTS: Obama time and again has referred to the
number of uninsured as 46 million, a figure based on year-old Census data.
The new number is based on an analysis by the Kaiser Commission on Medicaid
and the Uninsured, which concluded that about two-thirds of Americans
without insurance are poor or near poor. "These individuals are less likely
to be offered employer-sponsored coverage or to be able to afford to
purchase their own coverage," the report said. By using the new figure,
Obama avoids criticism that he is including individuals, particularly
healthy young people, who choose not to obtain health insurance.
Jensen Comment
In fairness, a single-payer medical insurance provider that covered all
Americans would probably result in cost savings in the long run. However,
President Obama realistically proclaims that such an abrupt changeover with lead
to unprecedented turmoil and inefficiencies, to say nothing of quality of care,
if the U.S. Government abruptly decided to insure 300 million Americans in one
fell swoop.
And the cost of phasing in a single-payer system would cause massive
deficits, including the windfall profits that government would have to pay
present medical insurance companies to operate efficiently over the years before
they must operate before being terminated.
The fact of the matter is that we will be forced to live with inefficient
private insurers until they are shut down or take over by government. In the
meantime, government spending deficits will soar due to increased numbers of
insured Americans, illegal immigrants, and expanded scope of coverage (mental
health, pre-existing conditions, marriage counseling, and expanded social
services).
The Lie: AARP perpetuates a
lie that government run insurance, like Medicare, is a good deal for patients
and taxpayers. To put the reader at ease the (AARP) article says that
government run health care can’t be so bad since, after all, Medicare is
government run health care and everybody loves it. The article omits the fact
that Medicare is $38 trillion in the red. Yes, trillion with a “tr”) and by
Obama’s own admission is overrun by $500 billion of waste, fraud and abuse.
Obama says Medicare and Medicaid are responsible for our deficits. So what does
he do? He proposes the vast expansion of the Medicare and Medicaid programs to
further balloon our deficits and our health care inflation. Herb Dennenberg, "AARP: The Hype,
The Lies, The Facts," The Bulletin (Philadelphia's oldest newspaper),
September 21, 2009 ---
Click Here
The AARP Bulletin (September 2009)
has a front-page headline on Obamacare: “The Hype, the Lies, the Facts:
How to Tune Out the Fear-mongering and Misinformation and Make Sense of
the Health Care Reform.” I’d add only one amendment to that AARP
headline: “If you want to avoid the hype, the lies, and get the facts on
Obamacare, don’t read the biased one-sided propaganda that AARP
publishes in its Bulletin.”
The article is supposed to answer the
question of AARP readers, “How do I know what to believe?” Anyone who
reads the article critically or studies AARP history on this matter,
knows they are in the tank for Obamacare, and in the guise of fair and
balanced journalism they are presenting the Obamacare party line.
The article starts out by quoting
Kathleen Hall Jamieson, director of he Annenberg Public Policy Center at
the University of Pennsylvania, who runs FactCheck.org, a website that
examines specious claims from all sides of the political spectrum. She
says that health care reform has “serious consequences to people’s lives
and it would be useful if as many people as possible actually understood
what the proposals are about.” But, then she identifies the rise of the
Internet and the decline of the mainstream press as a prime source of
information which have put that prospect at risk.
Poor, pathetic Ms. Jamieson is saying,
in effect, that the public was only getting the truth when they were
relying on the biased, fraudulent, dishonest, and ultra-liberal
mainstream media. That poor, pathetic “expert” who is “fact checking for
the public” feels the truth is threatened now that multiple points of
view, some of which are the opposing point of view, are presented by the
Internet and now that the public is slowly beginning to realize that you
can’t trust the mainstream media. (I would agree with Bernard Goldberg
that the mainstream media is no longer mainstream. Until a good
alternative description emerges, I’ll call it the biased, fraudulent,
dishonest, and ultra liberal mainstream media.)
So, the AARP article is doing its
readers a great public service by demonstrating that you can’t trust the
AARP, FactCheck.org, Ms. Jamieson, and the Annenberg Public Policy
Center at the University of Pennsylvania if you want fair and balanced
information about such matters as Obama and Obamacare.
The article goes on to perpetuate
every fraud and deceit that people like House Speaker Nancy Pelosi and
the leadership of the Democratic Party have put forth to stigmatize and
demonize dissent. For example, the article asks, “Could rumor-mongering
affect the outcome? Recent violent interruptions at lawmakers’ town hall
meetings suggest it might.” So, the AARP, which is supposed to represent
senior citizens, is joining the chorus that sees those who oppose
Obamacare and who exercise their First Amendment Rights at Tea Parties
as mobsters, prone to violence, Nazis, Brown Shirts and all the rest.
They are proving that AARP, the Democratic leadership, and the
mainstream media believe in the First Amendment only for those in
agreement with its radical, far-left policies.
The AARP and its editors and officers
clearly have no conscience and no sense, as they would not carry forward
such blatant propagandizing for Obamacare and hurl insults at their own
membership. If they are in the business of informing their diverse
membership, they should provide both sides of an issue, not just give
the appearance of doing so while residing in the pocket of the pro-Obamacare
forces.
No wonder AARP been losing membership
by the tens of thousands. Sometime ago, it was estimated at 60,000
members lost and that figure is probably much higher by now. Their
stance on this did not surprise me. I have already reported in one
column how they, along with AMA and others, have sold out to Obama and
Company to support his vision of health care reform. I’ve also reported
how the AARP is not in the business of representing the interests of
senior citizens, but is, in fact, a phony membership organization in the
business of selling its members insurance, credit cards, mutual funds,
and other services. In fact, facing the first page of the propaganda
piece in question is a full-page ad for life insurance sold by AARP. The
same issue carries ads for AARP mobile home insurance, AARP Medicare
insurance supplements, and AARP auto insurance.
I want to be fair to AARP and its
article on health care reform. It did have four words of truth in it.
The inside headline reads, “The Assault on Truth.” Of course, that was
intended to characterize the critics of Obamacare. However, it perfectly
characterizes the article in question and AARP. Let me give you a few
examples involving the questions asked and answered by the article:
Will The Government Take Over Health
Care So We End Up With Socialized Medicine?
The answer is the standard party line:
“No. Neither the president nor the congressional committees have
suggested anything remotely resembling a government takeover of health
care.”
This answer is based on the fact that
Mr. Obama says he doesn’t want the single-payer, government-takeover
system that is used in Canada. The article fails to state that Obama has
long been on record as favoring the discredited single-payer system and
has even said we will have to get there gradually. But the article
doesn’t explain that you can have a government takeover without a
single-payer system.
When you look at what some of these
proposals do, you will see they involve the federal government deciding
what kind of policies will be written, what kind of rates will be
charged, what kind of government insurance companies will be
established, what kind of end-of-life counseling will be provided for
senior citizens. What’s more, when you start setting up dozens of new
agencies and commissions to control the health care system and to decide
on what is the “best” medical practice, you don’t need single-payer to
bring about a government takeover. When you grant insurance to 47
million “uninsured,” you assure a shortage of health care providers that
sets the stage for rationing. As Dick Morris pointed out, contrary to
the view of Obama press secretary Robert Gibbs, “You don’t have to be a
medical school graduate to figure that out. That’s an elementary school
problem.”
If that’s not quite enough to convince
you, when you populate the White House with radicals, communists,
socialists and advocates of such things as compulsory abortion,
compulsory sterilization, and providing medical care based on quality of
life years remaining, meaning seniors will be locked out, you are
setting the stage for something worse than single-payer.
The article also tries to refute the
fact of government takeover by saying “socialized” medicine is also off
the table. The article says socialized medicine involves government
ownership of hospitals and employment of doctors, as in the United
Kingdom. It says that’s not contemplated. But, again, when government
and federal bureaucrats control virtually every aspect of the health
care system, you don’t need formal ownership. Comprehensive control is
the equivalent of government ownership, of socialized medicine, and of
the discredited systems of Canada and the United Kingdom.
To put the reader at ease the article
says that government run health care can’t be so bad since, after all,
Medicare is government run health care and everybody loves it. The
article omits the fact that Medicare is $38 trillion in the red. Yes,
trillion with a “tr”) and by Obama’s own admission is overrun by $500
billion of waste, fraud and abuse. Obama says Medicare and Medicaid are
responsible for our deficits. So what does he do? He proposes the vast
expansion of the Medicare and Medicaid programs to further balloon our
deficits and our health care inflation.
Will Private Insurance Be Outlawed Or
Wither On The Vine?
Needless to say, the AARP article
answers, “No. Obama and the congressional committees say their objective
is to build on the current system – keeping employer-sponsored group
insurance and giving more consumer protections to people who are
employed by small businesses or buy insurance as individuals.”
The AARP article argues that those
with employer-sponsored insurance are ineligible for the public plan.
But the article forgets that many employers would stop giving coverage,
as the penalty for not providing it is smaller than the cost of
providing it. Even the New York Times, a lap dog for Obama, in an
editorial dedicated to selling Obamacare, admitted that the public
option would likely be less costly than many alternatives.
The article also ignores the fact that
the public option, a government insurer, would be subject to rules made
by the government, so the umpire of the marketplace would be on the side
of the government insurer. That is not likely to produce a level playing
field for private insurers.
Finally, the article ignores the ways
proposed in Republican-sponsored bills that would encourage competition.
For example, opening up a nationwide market for health insurance would
be an obvious and easy way to increase competition. Now, the consumer is
limited to companies admitted to do business in his state. The insurance
exchanges, proposed in many bills, would also make sense, as they would
ratchet up competition.
Incidentally, it is important to
remember that with or without a public option or some variation of it in
the form of co-ops, Obamacare still involves a government takeover. So,
don’t think it is a big deal to delete the public option. The bill
spells catastrophe with or without that provision.
All the other questions asked in the
article also provide the wrong answers. For example, “Will Medicare be
eliminated or gutted to pay for reforms?” The article answers, “No. It’s
inconceivable that any lawmaker would commit political suicide by
proposing to get rid of Medicare.” But the AARP article forgets that
Obama has said that he would cut $500 billion in waste, fraud, abuse,
and inefficiency out of Medicare. We’ve heard that line since the days
of President Nixon, and we’re still waiting for that waste, fraud,
abuse, and inefficiency to be eliminated. If Obama knows how to do it,
what is he waiting for? Why hasn’t he proceeded to cut that waste,
fraud, abuse and inefficiency out of the system to prove he knows what
he’s doing and can give more than campaign speeches? He’s been in office
about seven months, and yet he’s done nothing to solve this problem
which he says is bankrupting the country and is responsible for the
deficits. When you cut $500 billion out of Medicare and grant coverage
to 47 million previously uninsured, you’re going to have to ration
medical care, and that means rationing medical care for senior citizens.
The biggest barrels of red ink have
been generated by Medicare and Medicaid to the tune of tens of trillions
of dollars. So what does Obama do? He proposes, in effect, to vastly
expand Medicare and Medicaid and to compound our problems.
The president and chief executive
officer of AARP, in an editorial accompanying the article in question,
endorse the lies, hype, and exaggeration in the article by writing that
there has been too much fear-mongering and misinformation involved in
the debate. They continue to give the false impression that they are
above the fray, but then echo the party line coming from Obama and the
Democratic leadership in Congress. AARP and its leadership have
continued to demonstrate they are the ones getting in the way of a fair,
balanced, and honest debate on heath care reform.
Meanwhile, we have the case of the
Association for the Advancement of Retired Persons (AARP), and its fanciful
Medicare claims. The self-styled seniors lobby is using all its money and
influence to cheer on ObamaCare, even though polls show that most retired
persons oppose it. AARP has spent millions of dollars on its TV ad campaign
and bulletins and newsletters to its members, including eight million
direct-mail letters over Labor Day. The AARP Web site claims that it is a
"myth" that "health care reform will hurt Medicare," while it is a "fact"
that "none of the health care reform proposals being considered by Congress
will cut Medicare benefits or increase your out-of-pocket costs."
"Medicare and Gag Orders Humana gets whacked for telling the
truth, AARP gets a pass for spreading falsehoods," The Wall Street
Journal, September 24, 2009 ---
Click Here
Rarely has the Atlantic seemed as wide as
when America's health-care debate provoked a near unanimous response from
British politicians boasting of the superiority of their country's National
Health Service. Prime Minister Gordon Brown used Twitter to tell the world
that the NHS can mean the difference between life and death. His wife added,
"we love the NHS." Opposition leader David Cameron tweeted back that his
plans to outspend Labour showed the Conservatives were more committed to the
NHS than Labour.
This outbreak of NHS jingoism was brought
to an abrupt halt by the Patients Association, an independent charity. In a
report, the association presented a catalogue of end-of-life cases that
demonstrated, in its words, "a consistent pattern of shocking standards of
care." It provided details of what it described as "appalling treatment,"
which could be found across the NHS.
A few days later, a group of senior
doctors and health-care experts wrote to a national newspaper expressing
their concern about the Liverpool Care Pathway, a palliative program being
rolled out across the NHS involving the withdrawal of fluids and nourishment
for patients thought to be dying. Noting that in 2007-08, 16.5% of deaths in
the U.K. came after "terminal sedation," their letter concluded with the
chilling observation that experienced doctors know that sometimes "when all
but essential drugs are stopped, 'dying' patients get better" if they are
allowed to.
The usual justification for socialized
health care is to provide access to quality health care for the poor and
disadvantaged. But this function can be more efficiently performed through
the benefits system and the payment of refundable tax credits.
The real justification for socialized
medicine is left unstated: Because health-care resources are assumed to be
fixed, those resources should be prioritized for those who can benefit most
from medical treatment. Thus the NHS acts as Britain's national triage
service, deciding who is most likely to respond best to treatment and
allocating health care accordingly.
It should therefore come as no surprise
that the NHS is institutionally ageist. The elderly have fewer years left to
them; why then should they get health-care resources that would benefit a
younger person more? An analysis by a senior U.K.-based health-care expert
earlier this decade found that in the U.S. health-care spending per capita
goes up steeply for the elderly, while the U.K. didn't show the same
pattern. The U.K.'s pattern of health-care spending by age had more in
common with the former Soviet bloc.
A scarcity assumption similar to the
British mentality underlies President Barack Obama's proposed health-care
overhaul. "We spend one-and-a-half times more per person on health care than
any other country, but we aren't any healthier for it," Mr. Obama claimed in
his address to Congress last Wednesday, a situation that, he said,
threatened America's economic competitiveness.
This assertion is seldom challenged. Yet
what makes health care different from spending on, say, information
technology—or any category of consumer service—such that spending on health
care is uniquely bad for the American economy? Distortions like malpractice
suits that lead to higher costs or the absence of consumer price
consciousness do result in a misallocation of resources. That should be an
argument for tackling those distortions. But if high health-care spending
otherwise reflects the preferences of millions of consumers, why the fuss?
The case for ObamaCare, as with the NHS,
rests on what might be termed the "lump of health care" fallacy. But in a
market-based system triggering one person's contractual rights to health
care does not invalidate someone else's health policy. Instead, increased
demand for health care incentivizes new drugs, new therapies and better ways
of delivering health care. Government-administered systems are so slow and
clumsy that they turn the lump of health-care fallacy into a reality.
According to the 2002 Wanless report, used
by Tony Blair's government to justify a large tax hike to fund the higher
spending, the NHS is late to adopt and slow to diffuse new technology.
Still, NHS spending more than doubled to £103 billion in 2009-10 from £40
billion in 1999-2000, equivalent to an average growth rate of over 7% a year
after inflation.
In 1965, economist (and future Nobel
laureate) James Buchanan observed of the 17-year old NHS that "hospital
facilities are overcrowded, and long delays in securing treatment, save for
strictly emergency cases, are universally noted." Forty-four years later,
matters are little improved. The Wanless report found that of the five
countries it looked at, the U.S. was the only one to be both an early
adopter and rapid diffuser of new medical techniques. It is the world's
principal engine driving medical advance. If the U.S. gets health-care
reform wrong, the rest of the world will suffer too.
Mr. Darwall, a London-based strategist, is
currently writing a book on the history of global warming, to be published
by Quartet Books in Spring 2010.
Jensen Comment
If and when I become gaga please sedate me to the max.
The Lie: The health insurance mandate is not a tax.
President Obama absolutely refuses to
acknowledge there is a huge middle-class tax in the Senate Finance
Committee's healthcare bill. The president flatly denies the legislation
that the White House supports contains a stiff penalty tax that would
hit uninsured middle-income people the hardest -- the very folks he
promised would never see their taxes rise under his presidency.
Obama has repeatedly stated that
promise throughout the healthcare debate, despite evidence to the
contrary, and no one in the national news media has called him on it.
That is, until George Stephanopoulos raised the issue with him Sunday on
ABC's "This Week."
First, Stephanopoulos reminded the
president that in his campaign for the presidency he was "against the
individual mandate" that all Americans be required to buy health
insurance.
"Yes," Obama replied.
Then Stephanopoulos hit him with the
question no one apparently had asked him before. Pointing out that the
Finance Committee plan contained just such a mandate whereby "the
government is forcing people to spend money, fining you if you don't,"
he asked, "How is that not a tax?"
Obama replied, "No, but ... but,
George, you ... can't just make up that language and decide that that's
called a tax increase."
"You reject that it's a tax increase?"
Stephanopoulos asked. Obama said, "I absolutely reject that notion."
But if Obama looked on page 29 of
Senate Finance Committee Chairman Max Baucus' legislation -- the bill he
hopes will enact his healthcare plans into law -- he would have read
this line: "The consequence for not maintaining (health) insurance would
be an excise tax."
What part of those two words doesn't
he understand? The government imposes a raft of excise taxes on all of
us: the tires for our cars, alcoholic beverages, jewelry and many other
purchases. Now it wants to add health insurance to the tax-revenue list
as a penalty for those who do not purchase a product the feds insist you
must buy or else face fines up to $950 for an individual and up to
$3,800 a year for a family.
Continued in article
Updates for September 15, 2009
Updates for September 3, 2009
Under H.R. 676
[Text of Bill],
Medicare would be extended and improved so that all individuals residing in the
United States would receive high quality and affordable health care services.
They would receive all medically necessary services by the physicians of their
choice, with no restrictions on what providers they could visit. If implemented,
the United States National Health Insurance Act would cover primary care,
dental, mental health, prescription drugs, and long term care.
Michael Moore ---
http://www.michaelmoore.com/sicko/what-can-i-do/petitions/pnum649.php
Jensen Comment
Mike will never understand that there will be no decent health care for anyone
in the United States when the annual budget deficit hits $20 trillion and nobody
will invest in our National Debt. He never took Economics 101.
There are times when Americans’ attitude toward
health-care reform seems a bit like St. Augustine’s take on chastity: Give it to
us, Lord, but not yet. In theory, the public overwhelmingly supports
reform—earlier this year, polls showed big majorities in favor of fundamental
change. But, when it comes to actually making fundamental change, people go all
wobbly. Just about half of all Americans now disapprove of the way the Obama
Administration is handling health care. James Surowiecki, "Status-Quo
Anxiety," The New Yorker, August 31, 2009 ---
http://www.newyorker.com/talk/financial/2009/08/31/090831ta_talk_surowiecki
Jensen Comment
The fact of the matter is that liberals like Surowiecki cannot mention universal
health care, economic disaster, and deficit spending in the same article.
Opponents are all ignorant sheep being guided by the demonizing GOP. Not once
does Surowiecki discuss how to pay for the many costly provisions in H.R. 3200.
"Dean says Obamacare authors don't want to challenge trial lawyers,"
by: Mark Tapscott, Washington Examiner, August 26, 2009 ---
Click Here
Whatever else he said Wednesday evening at
the town hall hosted by Rep. Jim Moran, D-VA, former Democratic National
Committee chairman and presidential candidate Howard Dean let something
incredibly candid slip out about President Obama's health-care reform bill
in Congress.
Asked by an audience member why the
legislation does nothing to cap medical malpractice class-action lawsuits
against doctors and medical institutions (aka "Tort reform"), Dean responded
by saying: “The reason tort reform is not in the [health care] bill is
because the people who wrote it did not want to take on the trial lawyers in
addition to everybody else they were taking on. And that’s the plain and
simple truth,”
Dean is a former physician, so he knows
about skyrocketing medical malpractice insurance rates, and the role of the
trial lawyers in fueling the "defensive medicine" approach among medical
personnel who order too many tests and other sometimes unneeded procedures
"just to be sure" and to protect themselves against litigation.
Texas Gov. Rick Perry recently described
in an Examiner oped the medical-malpractice caps enacted by the state
legislature at his urging that reversed a serious decline in the number of
physicians practicing in the Lone Star state and the resulting loss of
access to quality medical care available to Texas residents. Mississippi
Gov. Haley Barbor also shared some of his successes in this area in a recent
Examiner oped.
Credit goes to the American Tort Reform
Association's Darren McKinney for catching this momentary outbreak of
political honesty by Dean. McKinney has conveniently posted an audio
recording of Dean speaking here, so you can listen for yourself. Mckinney
has also offered more comment here, helpfully even including a link to the
Examiner's recent analysis of the degree to which trial-lawyer political
contributions go to Democrats in Congress.
Those contributions are why Dean knows it
would be a difficult task indeed for Obama to persuade congressional
Democrats to do anything that might offend the trial-lawyers lobby. The
Examiner's David Freddoso and Kevin Mooney did the reporting on this link
here.
Jensen Comment
Reports are that the Texas cap on punitive damages has been quite successful
in restraining outrageous settlements of malpractice lawsuits.
Some little-known facts about
the federal budget deficit: It grew slower than was expected just a few
months ago, stimulus spending accounts for only a small sliver of its total,
and the leading health care reform proposal would provide coverage for most
uninsured Americans without adding a penny to its total. Although the
federal deficit is commonly dangled as the reason to block further public
investment or comprehensive health care reform, that argument ignores some
basic truths about the deficit.
On August 25, the White House
released an updated estimate of the federal budget deficit, which shows it
now totals $1.6 trillion or 11.2% of GDP. This is $262 billion less than
what was estimated in May. The Congressional Budget Office showed a smaller
improvement. In anticipation of that release, EPI produced a series of
reports (see below) examining the roots of the deficit and the potential
impact that health care reform would have on it.
Don’t blame Obama
For all the criticism President Obama has received for running up the
deficit, it turns out that Obama’s policies have been a very small factor in
the expansion of the federal budget deficit. Bush-era policies, including
aggressive tax cuts and spending on the wars in Iraq and Afghanistan, have
added significantly more to the total
In
The 2009 Budget Deficit: How Did We Get Here?
EPI's Research and Policy Director John Irons
notes that George Bush inherited a budget surplus
in 2001. Irons and a team of researchers parsed the data to show that 42% of
the $2 trillion reversal of fortunes since then reflects Bush-era policies.
Another 42% of that $2 trillion reflects the impact of the recession on tax
revenues and spending on programs such as unemployment insurance. By
contrast, the American Recovery and Reinvestment Act (ARRA), which so often
is blamed for the growing deficit, accounts for just 7.6% of the total.
Irons sums up his findings in the
analysis
Roots of Deficit Pre-Date Obama, where he
notes that Bush-era tax cuts combined with revenues lost during the current
recession will produce a level of federal revenue in 2009 which, as a
portion of GDP, is the lowest since 1950. “An economic downturn will
automatically create deficits because job loss and income declines reduce
tax revenues, and because they create more demand for public services such
as unemployment, nutrition assistance, and increased Medicaid spending,”
Irons writes.
Health care reform and the deficit
Economist Josh Bivens,
meanwhile, notes in
Reform We Can Afford that efforts to block
health care reform out of fear of the swelling deficit are misguided for a
number of reasons, mainly because the House bill outlines ways to fully pay
for the reforms it proposes, meaning that it would provide health insurance
to the majority of Americans who do not have it, without adding to the
deficit. The reform bill also ends a longstanding budget gimmick that
projects steep cuts in Medicare reimbursement rates and then rescinds them
at the last minute. Including those costs, which have really been in the
budget all along (though largely disguised), would result in the reform bill
adding about $239 billion to the deficit over the next 10 years. To put that
figure in context, it is roughly 15% of the cost of the tax cuts passed
during the Bush administration, or 25% of the cost of spending on wars in
Iraq and Afghanistan to date, Bivens notes.
Numbers aside, Bivens makes the
point that a philosophical opposition to spending that could increase the
deficit is as misguided as, say, an opposition to borrowing money to buy a
home or pay for a college education. During an extremely steep economic
downturn, curtailing spending to protect the deficit is especially
foolhardy. “Green eyeshades just have no place at all in current economic
debates,” Bivens writes. “The U.S. economy has lost 6.7 million jobs in the
past 19 months as private spending has collapsed. Literally the only thing
keeping another economic depression at bay has been the very large rise in
the federal budget deficit…. Normally, it would be considered a bad idea to
dump a bucket of water on your living room rug. When that rug is on fire,
however, it’s not just a good idea, it’s absolutely necessary.” Indeed,
EPI’s recent report
The Recovery Package in Action by Irons and
Policy Analyst Ethan Pollack
outlines how spending made this year under the
Recovery Act has been integral in stopping the economy from going into “a
full-blown nose dive.”
Replacing No Child Left Behind
EPI Research Associate Richard Rothstein
recently published a piece in Education Week
magazine outlining some of the recommendations made by the
Broader, Bolder Approach to Education
campaign for providing students a well-rounded education that would help
them succeed in life, rather than just on standardized tests. Rothstein’s
opinion piece is available on
EPI’s Web site.
In the news
As a debate heats up over whether an economic recovery is underway, a number
of news stories discussing the persistently weak job market quote EPI. An
Arizona Republic story cites EPI data showing
that the United States has lost virtually all the jobs gained since the last
recession ended in 2001. A
Seattle Times story quotes EPI’s analysis on
the high ratio of job seekers to job openings. EPI Vice President
Ross Eisenbrey
was interviewed for a
Nightly Business Report story on the same
topic. Eisenbrey pointed out that large numbers of unemployed have not
received unemployment insurance, or will soon exhaust those benefits.
The Lie: Obama's relationship with tort lawyers is the real
driver of Obamacare costs
According to a 2007
studyby McKinsey&Company, physician compensation
bumps up health care spending in America by $58 billion annually,on average,
because U.S. doctors make twice as much as their OECD peers. And even the
poorest in
specializationslike radiology and surgery
routinely rake in around $400,000 annually. Doctors—and many
Republicans—constantly carp about the costs of "defensive medicine" because it
forces providers to perform unnecessary procedures and tests to insulate them
from potential lawsuits. But excessive physician salaries contribute nearly
three times more to wasteful health care spending than the $20 billion or so
that defensive medicine does. "While the U.S. malpractice system is
extraordinary," the study notes, "it is only a small contributor to the higher
cost of health care in the United States." Meanwhile, other studies have found
that doctors' salaries contribute more to soaring medical costs than the
$40 billion or so that
the uninsured cost in uncompensated care--the president's bete noir. Shikha Dalmia, "The
Evil-Mongering of the American Medical Association: Obama's cozy
relationship with Big Medicine will hurt patients," Reason Magazine,
August 27, 2009 ---
http://www.reason.com/news/show/135682.html
From Former Liberal Senator Bill
Bradley The bipartisan trade-off in a viable health care
bill is obvious: Combine universal coverage with malpractice tort reform in
health care. Universal coverage can be obtained in many ways — including the
so-called public option. Malpractice tort reform can be something as
commonsensical as the establishment of medical courts — similar to bankruptcy or
admiralty courts — with special judges to make determinations in cases brought
by parties claiming injury. Such a bipartisan outcome would lower health care
costs, reduce errors (doctors and nurses often don’t report errors for fear of
being sued) and guarantee all Americans adequate health care. Whenever Congress
undertakes large-scale reform, there are times when disaster appears certain —
only to be averted at the last minute by the good sense of its sometimes
unfairly maligned members. What now appears in Washington as a special-interest
scrum could well become a triumph for the general interest. But for that to
happen, the two parties must strike a grand bargain on universal coverage and
malpractice tort reform. The August recess has given each party and its
constituencies a chance to reassess their respective strategies. One result, let
us hope, may be that Congress will surprise everyone this fall.
Bill Bradley, "Tax Reform’s Lesson for Health Care Reform,"
The New York Times, August 30, 2009 ---
http://www.nytimes.com/2009/08/30/opinion/30bradley.html?_r=1
"Dean says Obamacare authors don't want to challenge trial lawyers,"
by: Mark Tapscott, Washington Examiner, August 26, 2009 ---
Click Here
Whatever else he said Wednesday
evening at the town hall hosted by Rep. Jim Moran, D-VA, former
Democratic National Committee chairman and presidential candidate Howard
Dean let something incredibly candid slip out about President Obama's
health-care reform bill in Congress.
Asked by an audience member why the
legislation does nothing to cap medical malpractice class-action
lawsuits against doctors and medical institutions (aka "Tort reform"),
Dean responded by saying: “The reason tort reform is not in the [health
care] bill is because the people who wrote it did not want to take on
the trial lawyers in addition to everybody else they were taking on. And
that’s the plain and simple truth,”
Dean is a former physician, so he
knows about skyrocketing medical malpractice insurance rates, and the
role of the trial lawyers in fueling the "defensive medicine" approach
among medical personnel who order too many tests and other sometimes
unneeded procedures "just to be sure" and to protect themselves against
litigation.
Texas Gov. Rick Perry recently
described in an Examiner oped the medical-malpractice caps enacted by
the state legislature at his urging that reversed a serious decline in
the number of physicians practicing in the Lone Star state and the
resulting loss of access to quality medical care available to Texas
residents. Mississippi Gov. Haley Barbor also shared some of his
successes in this area in a recent Examiner oped.
Credit goes to the American Tort
Reform Association's Darren McKinney for catching this momentary
outbreak of political honesty by Dean. McKinney has conveniently posted
an audio recording of Dean speaking here, so you can listen for
yourself. Mckinney has also offered more comment here, helpfully even
including a link to the Examiner's recent analysis of the degree to
which trial-lawyer political contributions go to Democrats in Congress.
Those contributions are why Dean knows
it would be a difficult task indeed for Obama to persuade congressional
Democrats to do anything that might offend the trial-lawyers lobby. The
Examiner's David Freddoso and Kevin Mooney did the reporting on this
link here.
Jensen Comment
Reports are that the Texas cap on punitive damages has been quite
successful in restraining outrageous settlements of malpractice
lawsuits.
"The President's Tort Two-Step Special-interests and the health-care
status," by Kimberly Strassel, The Wall Street Journal, September 11,
2009 ---
Click Here
Tort reform is a policy
no-brainer. Experts on left and right agree that defensive
medicine—ordering tests and procedures solely to protect against Joe
Lawyer—adds enormously to health costs. The estimated dollar
benefits of reform range from a conservative $65 billion a year to
perhaps $200 billion. In context, Mr. Obama's plan would cost about
$100 billion annually. That the president won't embrace even modest
change that would do so much, so quickly, to lower costs, has left
Americans suspicious of his real ambitions.
It's also a political no-brainer.
Americans are on board. Polls routinely show that between 70% and
80% of Americans believe the country suffers from excess litigation.
The entire health community is on board. Republicans and swing-state
Democrats are on board. State and local governments, which have
struggled to clean up their own civil-justice systems, are on board.
In a debate defined by flash points, this is a rare area of
agreement.
The only folks not on board are a
handful of powerful trial lawyers, and a handful of politicians who
receive a generous cut of those lawyers' contingency fees. The legal
industry was the top contributor to the Democratic Party in the 2008
cycle, stumping up $47 million. The bill is now due, and Democrats
are dutifully making a health-care down payment.
During the markup of a bill in the
Senate Health Committee, Republicans offered 11 tort amendments that
varied in degree from mere pilot projects to measures to ensure more
rural obstetricians. On a party line vote, Democrats killed every
one. Rhode Island senator and lawyer Sheldon Whitehouse went so far
as to speechify on the virtues of his tort friends. He did not, of
course, mention the nearly $900,000 they have given him since 2005,
including campaign contributions from national tort powerhouses like
Baron & Budd and Motley Rice.
Even Senate Finance Chair Max
Baucus, of bipartisan bent, has bowed to legal powers. The past two
years, Mr. Baucus has teamed up with Wyoming Republican Mike Enzi to
offer legislation for modest health-care tort reform in states. That
Enzi-Baucus proposal had been part of the bipartisan health-care
talks. When Mr. Baucus released his draft health legislation this
weekend, he'd stripped out his own legal reforms. The Montanan is
already in the doghouse with party liberals, and decided not to
further irk leadership's Dick Durbin ($3.6 million in lawyer
contributions), the Senate's patron saint of the trial bar.
Over in the House the discussion
isn't about tort reform, but about tort opportunities. During the
House Ways & Means markup of a health bill, Texas Democrat Lloyd
Doggett ($1.5 million from lawyers) introduced language to allow
freelance lawyers to sue any outfit (say, McDonald's) that might
contribute to Medicare costs. Only after Blue Dogs freaked out did
the idea get dropped, though the trial bar has standing orders that
Democrats make another run at it in any House-Senate conference.
It says everything that Mr. Obama
wouldn't plump for reform as part of legislation. The president
knows the Senate would never have passed it in any event. Yet even
proposing it was too much for the White House's legal lobby. Mr.
Obama is instead directing his secretary of health and human
services to move forward on test projects. That would be Kathleen
Sebelius, who spent eight years as the head of the Kansas Trial
Lawyers Association.
The issue has assumed such
importance that even some Democrats acknowledge the harm. With
bracing honesty, former DNC chair Howard Dean recently acknowledged
his party "did not want to take on the trial lawyers." Former
Democratic Sen. Bill Bradley, in a New York Times piece, suggested a
"grand bipartisan compromise" in which Democrats got universal
coverage in return for offering legal reform. The White House
yawned, and moved on.
It isn't clear if Republicans
would or should take that deal, but we won't know since it won't be
offered. The tort-reform issue has instead clarified this
presidency. Namely, that the bipartisan president is in fact very
partisan, that the new-politics president still takes orders from
the old Democratic lobby.
Dr. Anne Doig (incoming President of the
Canadian Medical Association) says patients are getting
less than optimal care and she adds that physicians from across the country -
who will gather in Saskatoon on Sunday for their annual meeting - recognize that
changes must be made. "We all agree that the system is imploding, we all agree
that things are more precarious than perhaps Canadians realize," Jennifer Graham, "Overhauling
health-care system tops agenda at annual meeting of Canada's doctors," The
Canada Press, August 15, 2009 ---
Click Here
[Waste is about] half of the $2.2 trillion
the United States spends on health care each year, according to the most recent
data from accounting firm PricewaterhouseCoopers'
Health Research Institute. What counts as waste?
The report identified 16 different areas in which health care dollars are
squandered. But in talking to doctors, nurses, hospital groups and patient
advocacy groups, six areas totaling nearly $500 billion stood out as issues to
be dealt with in the health care reform debate . . . "Sometimes the motivation
is to avoid malpractice suits, or to make more money because they are
compensated more for doing more," said Dr. Arthur Garson, provost of the
University of Virginia and former dean of its medical school. "Many are also
convinced that doing more tests is the right thing to do." "But any money that
is spent on a patient that doesn't improve the outcome is a waste," said Garson.
Some conservatives have suggested that capping malpractice awards would help
solve the problem. President Obama doesn't agree; instead, his reform proposal
encourages doctors to practice "evidence-based" guidelines as a way to scale
back on unnecessary tests. Parija B. Kavilanz, CNN Money,
August 10, 2009 ---
Click Here
http://money.cnn.com/2009/08/10/news/economy/healthcare_money_wasters/index.htm?section=money_news_economy
Jensen Comment Another excess cost is the number of
support staff needed to process claims forms. Erika and I have doctor in a
clinic that has four doctors (the only source of revenue) and 24 staff (a major
source of expense), many of whom are just there to process reimbursement forms
sent to private insurance companies, Medicare, and Medicaid.
Since much of the added paperwork is for fraud
prevention and detection, this is a classic problem of calculating the cost of
fraud plus fraud prevention plus billing errors juxtaposed against losses
expected to be incurred with less costly prevention and alternate delivery
systems. Our doctor is contemplating opening a new practice, but front end costs
of setting up a small practice makes this virtually impossible. For example,
just setting up an Medicare billing system and Medicare Supplemental Claims
authorization takes thousands of pages and tens of thousands of dollars. Then
there’s the nearly impossible cost of malpractice insurance for a solo doctor
practice.
Since all proposed health care reform
legislation calls for continued private health insurance coverage and continued
high cost of malpractice insurance, it’s doubtful that anything on the table
comes anywhere close to the savings obtained from national health care plans
(such as in Canada) for bureaucratic efficiency and caps and other restraints on
malpractice awards.
Add all this to the fact that the GAO refuses
to sign off on audits of the Pentagon on the grounds that defense spending
cannot be audited with any degree of confidence. This is not accountancy’s
finest era.
The actual economic costs of the proposed
health care surtax and the expiration of the 2001 and 2003 tax cuts will be
twice the amount of revenue the government intends to collect. According to
a new analysis from the Tax Foundation, the higher tax rates are estimated
to raise $88 billion in 2011, but the economy will incur an additional
burden of $76 billion—or "deadweight loss"—as a result, which raises the
total cost of the tax increases to $164 billion, roughly double what
lawmakers intend to raise.
Tax Foundation Special Report No. 170,
"The Excess Burden of Taxes and the Economic Cost of High Tax Rates,"
attempts to put a price tag on the cost of pending rollbacks of the Bush tax
cuts (which would raise the top tax rate to 39.6%) as well as the proposed
health care surtax (ranging from 1% to 5.4%). This loss in economic
efficiency is also known as the "excess burden" or "deadweight loss" of
taxes—the income that would need to be given to people to compensate them
for the resources that are lost due to the distorting effect of taxes. The
Special Report is available online at http://www.taxfoundation.org/news/show/25003.html.
"The notion that the total burden is
nearly twice the revenue collected should give lawmakers some pause when
considering these higher tax rates," said Tax Foundation Senior Fellow
Robert Carroll, Ph.D., who authored the paper.
"Lawmakers need to understand that the
current income tax system already costs the economy between $110 billion and
$150 billion above and beyond the $1 trillion the government actually
collects in taxes," Carroll said. "This means the actual economic cost of
our income tax system is at least $1.10 for every dollar the government
collects. The proposed higher tax rates could boost those deadweight costs
to more than $1.20 for every dollar of tax revenues collects."
"The burden is particularly high for the
higher income tax rates being considered by the Congress," says Carroll.
"With every dollar in additional revenue, these tax increases impose an
extra burden of 86 cents." For example, in 2011 a couple earning $500,000
will pay $112,437 in income taxes. But the excess burden to them of that tax
payment is $16,664, about 15% of their tax burden. The increase in the top
two tax rates plus the health care surtax would boost their income tax
payment an additional $7,719 to $120,156. However, that tax hike would also
increase their excess burden by $8,748, larger than the tax increase itself.
"When totaled over all taxpayers, this
means," says Carroll, "that the total economic cost of the higher tax rates
will be close to twice the amount lawmakers hope to collect."
"Lawmakers should be wary of policies that
are purported to make higher-income taxpayers 'pay their fair share' but
that impose very substantial burdens on all taxpayers—nearly twice the
revenue that is raised—and waste substantial economic resources," Carroll
concluded.
The Tax Foundation is a nonpartisan,
nonprofit organization that has monitored fiscal policy at the federal,
state and local levels since 1937.
"Ingrates! The Angry Left turns its wrath on President Obama," by
James Taranto, The Wall Street Journal Newsletter, August . 24, 2009
The Angry Left is angry at the president of the United States. That makes it
official. Nothing changed when Barack Obama became president.
"A backlash in the progressive base--which pushed President Obama over the
top in the Democratic primary and played a major role in his general
election victory--has been building for months," writes former Enron adviser
Paul Krugman, the Angry Left's tribune, in
the New York Times. Krugman faults the Obama administration for being
insufficiently tender to terrorists and not harsh enough with bankers--but
it's clear that what's brought the anger to the surface is the political
failure of ObamaCare:
On the issue
of health care itself, the inspiring figure progressives thought
they had elected comes across, far too often, as a dry technocrat
who talks of "bending the curve" but has only recently begun to make
the moral case for reform. Mr. Obama's explanations of his plan have
gotten clearer, but he still seems unable to settle on a simple,
pithy formula; his speeches and op-eds still read as if they were
written by a committee. . . .
There's a
point at which realism shades over into weakness, and progressives
increasingly feel that the administration is on the wrong side of
that line. It seems as if there is nothing Republicans can do that
will draw an administration rebuke: Senator Charles E. Grassley
feeds the death panel smear, warning that reform will "pull the plug
on grandma," and two days later the White House declares that it's
still committed to working with him.
It's hard to
avoid the sense that Mr. Obama has wasted months trying to appease
people who can't be appeased, and who take every concession as a
sign that he can be rolled.
As we
all know, you can't appease terrorists. Oh wait, sorry--appeasing terrorists
is worth a try. It's Republicans you can't appease.
Krugman's colleague
Bob Herbert echoes the complaint:
Mr. Obama, who
has a command of the English language like few others, has been
remarkably opaque about his intentions regarding health care. He
left it up to Congress to draft a plan and he has not gotten behind
any specific legislation. He has seemed to waffle on the public
option and has not been at all clear about how the reform that is
coming will rein in runaway costs. At times it has seemed as though
any old "reform" would be all right with him.
It's still
early, but people are starting to lose faith in the president.
What
ingrates! Obama has been courting political ruin by pushing for the policies
these guys want, but do they give him any credit? Far from it. Instead they
damn him for not being clear or forceful enough in his advocacy.
What would a clear and forceful case for ObamaCare look like? We don't have
to look very far. Here's former Enron adviser Paul Krugman in a
YouTube medley we've cited before:
Politically,
it's hard to do in one step. You have to convince people to give up
the insurance--forget about mollifying the insurance companies;
that's not going to happen. But you're going to have to convince
people to completely give up the insurance they have, whereas
something that lets people keep the insurance they have but then
offers the option of a public plan may evolve into single-payer, but
you can do it politically.
Under
the "public option," the central provision of ObamaCare, the government
would become a health-insurance company. Under "single payer," Krugman's
ideal, the government would have a monopoly on health insurance. As
the YouTube video demonstrates, Krugman is far from alone in hoping that the
"public option" would "evolve" into the only "option."
"You
can do it politically," Krugman opines, but it's clear that you can do it
only if you are able to conceal your true aims--hence the opacity that
frustrates Herbert. If Obama is failing, it is not because he has been too
accommodating but because people have managed to figure out that he has been
pushing for a bad and unpopular policy--Krugman's policy--despite his best
efforts to make it sound palatable.
Instead
of denouncing the president, Krugman ought to be honoring him for the
political sacrifice he has made in what appears likely to be a losing
effort. But then some people just can't be appeased.
I have not
said that I was a single-payer supporter because, frankly, we
historically have had a employer-based system in this country with
private insurers, and for us to transition to a system like that I
believe would be too disruptive. So what would end up happening
would be, a lot of people who currently have employer-based health
care would suddenly find themselves dropped, and they would have to
go into an entirely new system that had not been fully set up yet.
And I would be concerned about the potential destructiveness of that
kind of transition.
All right? So
I'm not promoting a single-payer plan.
As we
noted
last week, this contradicts what Obama said in
2003:
I happen to be
a proponent of a single-payer universal health care program. I see
no reason why the United States of America, the wealthiest country
in the history of the world, spending 14% of its gross national
product on health care, cannot provide basic health insurance to
everybody. And that's what Jim is talking about when he says
everybody in, nobody out. A single payer health care plan, a
universal health care plan. And that's what I'd like to see. But as
all of you know, we may not get there immediately. Because first we
have to take back the White House, we have to take back the Senate,
and we have to take back the House.
Now he says he does see a reason, namely the "destructiveness of that kind
of transition." This is his rebuttal to people who say he supports a
government insurance monopoly. Tellingly, though, on Jan. 21, 2008, when he
was running against Hillarly Clinton, the Web site of his "grass-roots"
outfit, Organizing for America, featured an item titled "Fact
Check: Obama Consistent in His Position on Single Payer Health Care":
Rhetoric: "Today, he opposes single payer health
care, and attacks Sen. Clinton for proposing a plan that covers
everyone"
Reality: Obama Has Consistently Said That If We
Were Starting From Scratch, He Would Support A Single Payer System,
But Now We Need To Build On The System We Have
If Obama Were Starting From
Scratch, He Would Support A Single Payer System.
The New Yorker wrote, " 'If you're starting from scratch,' he
[Obama] says, 'then a single-payer system'-a government-managed
system like Canada's, which disconnects health insurance from
employment-'would probably make sense. But we've got all these
legacy systems in place, and managing the transition, as well as
adjusting the culture to a different system, would be difficult to
pull off. So we may need a system that's not so disruptive that
people feel like suddenly what they've known for most of their lives
is thrown by the wayside.' " [New
Yorker, 5/7/07]
If Obama Were Starting From Scratch, He Would
Support A Single Payer System. "At a
roundtable with a handful of invited guests at Lindy's Diner in
Keene, Obama said if he were starting from scratch, he would
probably propose a single payer health care system, but because of
existing infrastructure, he created a proposal to improve the
current system." [Concord Monitor, 8/14/07]
If Obama Were Starting From
Scratch, He Would Support A Single Payer System.
Obama said, "Here's the bottom line. If I were designing a system
from scratch I would probably set up a single-payer system...But
we're not designing a system from scratch...And when we had a
healthcare forum before I set up my healthcare plan here in Iowa
there was a lot of resistance to a single-payer system. So what I
believe is we should set up a series of choices. . . . Over time it
may be that we end up transitioning to such a system. For now, I
just want to make sure every American is covered . . . I don't want
to wait for that perfect system . . . The one thing you should ask
about the candidates though is who's gonna have the capacity to
actually deliver on the change? . . . I believe I've got a better
capacity to break the gridlock and attract both Independents and
Republicans to work together."
And
indeed Obama's position in 2008 is consistent with his position in 2009--but
back then, it was a rebuttal to those who said he opposed a
government insurance monopoly. Given that so many pro-monopoly politicians
and commentators have enthusiastically endorsed the so-called public option,
it seems to us there is ample reason to believe that Obama was more honest
about his intentions in 2008 and 2003 than he is in 2009.
Barrack Obama and his pals in the
mainstream media are doing everything in their power to keep people from
finding out the truth about the health care bills that are winding their way
through Congress.
Rather than engaging in an honest debate
about the pluses and minuses of socialized medicine, they've abandoned all
significant attempts to work with the GOP, they've demonized American
citizens who've dared to voice their concern at townhalls, and they have
lied more than Bill Clinton probably did the first time Hillary mentioned
the name "Gennifer Flowers" to him.
Liberal claim:
The public option won't kill private health insurance. When that sleazy old
terrorist Yasser Arafat was alive, he was famous for telling Westerners he
wanted peace in English, while telling his own people in Arabic to kill the
Jews. Liberals are using the same tactic with the public option.
When they're talking to the general
public, they assure them that the public option won't kill private insurance
and if people like the plans they have, they'll be able to keep them.
But when liberals talk to each other, they
explicitly admit that the public option is designed to kill private
insurance so the government can take complete control.
There are many examples of this, but this
quote from Barney Frank is so crystal clear about what they're doing that no
more examples are really needed,
I think if we get a good public
option, it could lead to single payer and that's the best way to reach
single payer. Saying you'll do nothing until you reach single payer is a
sure way never to get it.
Liberal Claim:
Illegal aliens won't be covered If you want to know why Americans don't
believe Congress or the mainstream media, the sort of slick deception that's
being practiced here is typical of what's driving the distrust.
There is indeed a clause in the House bill
that says illegal aliens aren't covered. The mainstream media looks at that
clause and then dutifully reports, as if it were a fact, that illegal aliens
won't be getting taxpayer funded health care.
However, here's the catch: there's no
enforcement provision. Texas Congressman Lamar Smith explains how the scam
will work:
The Democrats’ bill in the House, H.R.
3200, contains gaping loopholes that will allow illegal immigrants to
receive taxpayer-funded benefits. And these loopholes are no accident.
The legislation contains no verification
mechanism to ensure that illegal immigrants do not apply for benefits.
Republicans offered an amendment to close this loophole — it would have
required verification using the existing methods that are already in place
to verify eligibility for other federal benefits programs. But when they
were asked to put the language of the bill where their words were, in a
party-line vote, House Democrats rejected the amendment to require
verification and close this loophole.
In other words, the Democrats can claim
that illegal aliens won't be covered by the bill and even point to a
provision in it that says it won't happen. Meanwhile, if the health care
bill passes, millions of illegals aliens will have their health care picked
up on the taxpayer's dime -- just as the Democrats planned all along.
Want a preview of ObamaCare in action? Sneak a look
at what has happened in Maine. In 2003, the state to great fanfare enacted
its own version of universal health care. Democratic Governor John Baldacci
signed the plan into law with a bevy of familiar promises. By 2009, it would
cover all of Maine's approximately 128,000 uninsured citizens. System-wide
controls on hospital and physician costs would hold down insurance premiums.
There would be no tax increases. The program was going to provide insurance
for everyone and save businesses and patients money at the same time.
After five years, fiscal realities as brutal as the
waves that crash along Maine's famous coastline have hit the insurance plan.
The system that was supposed to save money has cost taxpayers $155 million
and is still rising.
Here's how the program was supposed to work. Two
government programs would cover the uninsured. First the legislature greatly
expanded MaineCare, the state's Medicaid program. Today Maine families with
incomes of up to $44,000 a year are eligible; 22% of the population is now
in Medicaid, roughly twice the national average.
Then the state created a "public option" known as
DirigoChoice. (Dirigo is the state motto, meaning "I Lead.") This plan would
compete with private plans such as Blue Cross. To entice lower income
Mainers to enroll, it offered taxpayer-subsidized premiums. The plan's
original funding source was $50 million of federal stimulus money the state
got in 2003. Over time, the plan was to be "paid for by savings in the
health-care system." This is precisely the promise of ObamaCare. Maine saved
by squeezing payments to hospitals and physicians.
The program flew off track fast. At its peak in
2006, only about 15,000 people had enrolled in the DirigoChoice program.
That number has dropped to below 10,000, according to the state's own
reporting. About two-thirds of those who enrolled already had insurance,
which they dropped in favor of the public option and its subsidies. Instead
of 128,000 uninsured in the program today, the actual number is just 3,400.
Despite the giant expansions in Maine's Medicaid program and the new,
subsidized public choice option, the number of uninsured in the state today
is only slightly lower that in 2004 when the program began.
Why did this happen? Among the biggest reasons is a
severe adverse selection problem: The sickest, most expensive patients
crowded into DirigoChoice, unbalancing its insurance pool and raising costs.
That made it unattractive for healthier and lower-risk enrollees. And as a
result, few low-income Mainers have been able to afford the premiums, even
at subsidized rates.
This problem was exacerbated because since the
early 1990s Maine has required insurers to adhere to community rating and
guaranteed issue, which requires that insurers cover anyone who applies,
regardless of their health condition and at a uniform premium. These
rules—which are in the Obama plan—have relentlessly driven up insurance
costs in Maine, especially for healthy people.
The Maine Heritage Policy Center, which has tracked
the plan closely, points out that largely because of these insurance rules,
a healthy male in Maine who is 30 and single pays a monthly premium of $762
in the individual market; next door in New Hampshire he pays $222 a month.
The Granite State doesn't have community rating and guaranteed issue.
One proposal to get people into the DirigoChoice
system is to reduce the premiums, presumably to give the uninsured a larger
incentive to join. But that would explode the program's costs when it
already can't pay its bills. A program that was supposed to save money by
reducing health-care waste and inefficiencies has seen a 74% increase in
premiums. But even those inflated payments can't keep the program out of the
red.
Last year, DirigoCare was so desperate for cash
that the legislature broke its original promise of no tax hikes and proposed
an infusion of funds through a beer, wine and soda tax, similar to what has
been floated to pay for the Obama plan. Maine voters rejected these taxes by
two to one. Then this year the legislature passed a 2% tax on paid health
insurance claims. Taxing paid insurance claims sounds a tad churlish, but
the previous funding formula was so complicated that it was costing the
state $1 million a year in lawsuits.
Unlike the federal government, Maine has a balanced
budget requirement. So out of fiscal necessity, the state has now capped the
enrollment in the program and allowed no new entrants. Now there is a
waiting list. DirigoChoice has become yet another expensive, failed
experiment in government-run health care, alongside similar fiascoes in
Massachusetts and Tennessee.
Not everyone sees it this way. Noting the
similarities between the Maine program and the Congressional initiative,
Karynlee Harrington, the executive director of the Dirigo Health Agency,
boasted recently: "DirigoChoice is consistent with what we think the
definition of a public health option is." It certainly is.
What if a health care bill actually passes
in the Congress, and President Obama signs it into law?
Given the ways in which his “hope” and
“change” are being embraced across the nation right now, such a legislative
“victory” for Mr. Obama could be the worst thing, politically, for his
presidency and his party.
Earlier this year, I contemplated here in
this column how Obama’s behavior tends to be woefully inconsistent with his
rhetoric, and how our President has a propensity for “doing the opposite” of
what he says. For example, as a candidate Obama insisted that he is not a
“big government” advocate, but then as President proposed a federal budget
in excess of $3.5 trillion (Treasury Secretary Tim Geithner is now asking
Congress to raise the federal debt ceiling above $12 trillion for fear that
there won‘t be money to fund Obama‘s budget after October of this year). As
a candidate Obama decried the “petty distractions” and “partisan politics as
usual” that stifle honest dialog, and prevent people from focusing on the
real important issues. Yet from the White House Obama unleashed an
intentional and strategic game of publicly demonizing talk show host Rush
Limbaugh earlier this year; it appeared that members of his Administration
“organized” their “friends” to demonstrate in front of the private homes of
AIG Executives to harrass them for having earned bonuses from their employer
last Spring; and last week Obama himself told participants in a faith-based
organizing conference call that he needed their help to sell his health care
take-over plans, admonishing that “I need you to knock on doors, talk to
neighbors, spread the facts and speak the truth” (great “community
organizing,” but not particularly presidential).
But just as President Obama has
established a clear pattern of ignoring many of his campaign promises and
“doing the opposite” in so many areas of his presidency, it is also true
that on many economic matters, Obama is essentially in lock-step with what
he promised on the campaign trail. He campaigned as an economic
redistributionist. As President, he has most certainly been a
redistributionist, and has displayed little comprehension or respect for the
free-market economy.
As a candidate he expressed all-out
disdain for business, and repeatedly promised to dramatically increases
taxes and regulations on corporations, expressed anger and “outrage” when
corporations reported profits that were “too big,” and promised to “give
back” corporate profits to “the American people.”
So for those who have been paying
attention, “Obamacare” should be no surprise. The candidate promised a
“single payer” health insurance plan, and even once lamented that it may
take “ten to fifteen years” to get private insurance companies out of the
health insurance market entirely. When single-payer proposals began emerging
in Congress and were met with staunch opposition from American citizens,
President Obama changed his position on single-payer insurance, insisting
that all he wanted was an “option” of government funded insurance.
And now it appears that Congress, owing to
Obama’s community organizer instincts, is about to begin demonizing health
insurance company executives, trashing their lavish lifestyles and
portraying them as perpetrators (you thought the treatment of the AIG folks
was rough? Stay tuned).
So what if some form of “Obamacare”
actually comes to pass? It will likely be woefully unpopular, it could cost
the Democrats dearly in the 2010 election, and could set-off an uprising far
greater than anything we’ve seen in this summer’s congressional “townhall”
meetings. Yet such a “reform” plan would likely be consistent with President
Obama’s big-government, centrally-controlled economic sensibilities,
complete with governmental conrols over what procedures physicians will
perform, and how much money they will be compensated for performing them.
If “Obamacare” comes to pass, it will be a
significant fulfillment of President Obama’s vision of a “transformed”
America. But it will not be what Americans want.
America, what is happening to you? “One thing seems probable to me,” said Peer Steinbrück,
the German finance minister, in September 2008....“the United States will lose
its status as the superpower of the global financial system.” You don’t have to
strain too hard to see the financial crisis as the death knell for a
debt-ridden, overconsuming, and underproducing American empire. Richard Florida, "How the Crash Will
Reshape America," The Atlantic, March 2009 ---
http://www.theatlantic.com/doc/200903/meltdown-geography
We hear the trillion-dollar figure all the time, but
how much would ObamaCare really end up costing? If we've learned
anything fromprevious
government programs, it's that the actual price
almost always shoots far beyond the advertised price. Is there any reason to
think things would be different this time around?
Watch the video ---
http://reason.com/blog/show/135279.html
The Lie: The public health insurance
option is essential to having efficient private alternatives To the Democrats, I say this: If you want
competition in health care, you won’t get it if the public option can make deals
its competitors can’t. So either give the Republicans hard assurances that the
public option would have to break even and not get special treatment, or, better
yet, just give it up to ensure that some useful health care reform is passed. A
public option is neither necessary nor sufficient for achieving the real goals
of reform, and those goals are too important to risk losing the war. Professor Richard Thaler, "A Public
Option Isn’t a Curse, or a Cure," The New York Times, August 16, 2009 ---
Click Here
So the present (health care) system is an
unsustainable disaster, but you can keep your piece of it if you want. And the
Democrats wonder why selling health care reform to the public has been so hard?
Ramesh Ponuru, "Obamacare's Fatal
Flaw: Democrats claim their plans will save money, but they have too many conflicting
goals," Time Magazine August 17, 2009, Page 35
Jensen Comment
The problem is that they keep adding expensive medical services that sound great
on paper, but few people, companies, and certainly not government can afford
these uncapped benefits.
Obama Must Condemn NY Times Race-Baiting Tactics, Black Group Says The Project 21 black leadership network, New York Times
liberal columnist Paul Krugman Obama Must Condemn NY Times Race-Baiting Tactics,
Black Group Says Washington D.C. — The Project 21 black leadership network is
condemning New York Times liberal columnist Paul Krugman (Nobel
Economist and Princeton University Professor) for
scurrilously pinning racist motives on critics of President Obama’s health care
proposals. The group is calling upon President Obama to condemn all efforts to
derail legitimate public debate, specifically including this effort to stifle
debate with race-baiting tactics. Bob Parker, Canada Free Press,
August 8, 2009 ---
http://canadafreepress.com/index.php/article/13533
Jensen Comment
There will be ice caves in Hell before President Obama criticizes the GOP-hating
New York Times.
Democrats are trying to explain opposition
to ObamaCare as a sinister conspiracy controlled by the hidden hand of the
health-care industry. Psychologists call this projection. Why bother with a
new conspiracy when you’ve already clinched a secret deal with the
President?
Part of the Obama health strategy has been
to assiduously co-opt the key health “stakeholders,” primarily with the
leverage that legislation was inevitable so they might as well negotiate.
Doctors, hospitals, insurers and the drug makers bought it—or perhaps it is
more accurate to say were bought. This week it emerged that the
pharmaceutical industry’s supposedly voluntary peace offering to cut drug
costs by $80 billion to help finance ObamaCare was an explicit quid pro quo
in exchange for White House protection.
After the industry trade group PhRMA
announced the plan in the Rose Garden in June, liberals on Capitol Hill
promptly declared that they were “not bound” by it, as Henry Waxman and
Nancy Pelosi repeatedly put it. If the industry could do Mr. Obama the favor
of $80 billion, liberals wanted it to eat $100 billion in cuts, or $160
billion, or more.
“The President made the agreements he
made,” Mrs. Pelosi said. “And maybe we’ll be limited by that. But maybe
not.” Sure enough, the House health bill pockets the money and then imposes
price controls in Medicare and other “rebates” from manufacturers, much like
Medicaid requires now.
Chief pharma lobbyist Billy Tauzin’s
clients were probably wondering about the return on their investment. Then,
lo, Mr. Tauzin disclosed this week in a page-one story in the New York Times
that, yes, the concessions were capped at $80 billion, no further. “We were
assured: ‘We need somebody to come in first. If you come in first, you will
have a rock-solid deal,’” Mr. Tauzin said. “Adding other stuff changes the
deal.” The White House confirmed Mr. Tauzin’s account.
It’s astonishing to watch the press corps
pass all this off as just another day at the Oval Office. During the Bush
years, even eye contact with a business, CEO or lobbyist was treated as
prima facie evidence of corruption. There was the furor over Dick Cheney’s
“secret energy task force,” and even the Iraq war was engineered to benefit
Halliburton, Blackwater and Big Oil. But apparently having corporate America
dictate public policy is fine as long as it’s the largest expansion of the
welfare state since the Great Society.
As for Mr. Tauzin’s gambit that playing
nice would spare his industry, he evidently missed the sign hanging above
Congress’s chambers: “Abandon all hope, ye who enter here.” Mr. Waxman
responded, “PhRMA would like to see if they can get a bargain. I think that
PhRMA should contribute more than PhRMA wants to contribute.” Senator Dick
Durbin chimed in that “I don’t think any, if many, of us feel bound by any
understanding or agreement along those lines.”
What this Abbott and Costello routine
exposes is the industry folly of thinking that liberals could be appeased.
By now it is beyond obvious that Democrats view whole segments of the
health-care industry as expendable. After all, what do insurers really do,
besides bilk consumers? Government already pays Medicare bills; it can
handle the under-65 crowd too. Over time doctors can be transferred into the
civil service, but if they’re good sports maybe at a higher pay grade than
the DMV. As for drug research and development, the National Institutes of
Health can fill in—and as a bonus, all those government-funded professors
won’t care about profits either. For the Democrats running Congress, merely
allowing a business to continue to exist is a concession.
Even if Mr. Tauzin’s strategy works this
time around, it will only push his clients deeper into Mr. Waxman’s embrace
as government pays for the majority of American medicine. If ObamaCare is
defeated, it will be due to the common sense of the American people, not to
the health-care lobbies that have become its political partners.
The Poster Child of Universal Health Care is In Financial Troubles
"France Fights Universal Care's High Cost," David Gauthier-Villars, The Wall
Street Journal, August 7, 2009 ---
http://online.wsj.com/article/SB124958049241511735.html
France claims it long ago achieved much of
what today's U.S. health-care overhaul is seeking: It covers everyone, and
provides what supporters say is high-quality care. But soaring costs are
pushing the system into crisis. The result: As Congress fights over whether
America should be more like France, the French government is trying to
borrow U.S. tactics.
In recent months, France imposed
American-style "co-pays" on patients to try to throttle back
prescription-drug costs and forced state hospitals to crack down on
expenses. "A hospital doesn't need to be money-losing to provide
good-quality treatment," President Nicolas Sarkozy thundered in a recent
speech to doctors.
And service cuts -- such as the closure of
a maternity ward near Ms. Cuccarolo's home -- are prompting complaints from
patients, doctors and nurses that care is being rationed. That concern echos
worries among some Americans that the U.S. changes could lead to rationing.
The French system's fragile solvency shows
how tough it is to provide universal coverage while controlling costs, the
professed twin goals of President Barack Obama's proposed overhaul
"French people are so attached to their
health-insurance system that they almost never support changes," says
Frédéric Van Roekeghem, Assurance Maladie's director.
Both patients and doctors say they feel
the effects of Mr. Sarkozy's cuts. They certainly had an impact on Ms.
Cuccarolo of the firetruck birth.
She lives near the medieval town of Figeac,
in southern France. The maternity ward of the public hospital there was
closed in June as part of a nationwide effort to close smaller, less
efficient units. In 2008, fewer than 270 babies were born at the Figeac
maternity ward, below the annual minimum required of 300, says Fabien
Chanabas, deputy director of the local public hospital.
"We were providing good-quality obstetric
services," he says. "But at a very high cost." Since the maternity closed,
he says, the hospital narrowed its deficit and began reallocating resources
toward geriatric services, which are in high demand.
In the Figeac region, however, people feel
short-changed. "Until the 1960s, many women delivered their babies at home,"
says Michel Delpech, mayor of the village where Ms. Cuccarolo lives. "The
opening of the Figeac maternity was big progress. Its closure is perceived
as a regression."
For Ms. Cuccarolo, it meant she would have
to drive to Cahors, about 30 miles away. "That's fine when you can plan in
advance," she says. "But my little girl came a month earlier than expected."
France launched its first national
health-care system in 1945. World War II had left the country in ruins, and
private insurers were weak. The idea: Create a single health insurer and
make it compulsory for all companies and workers to pay premiums to it based
on a percentage of salaries. Patients can choose their own doctors, and --
unlike the U.S., where private health insurers can have a say -- doctors can
prescribe any therapy or drug without approval of the national health
insurance.
Private insurers, both for-profit and
not-for-profit, continued to exist, providing optional benefits such as
prescription sunglasses, orthodontics care or individual hospital rooms.
At a time when the U.S. is considering
ways of providing coverage for its entire population, France's blending of
public and private medical structures offers important lessons, says Victor
Rodwin, professor of health policy and management at New York University's
Wagner School. The French managed to design a universal system incorporating
physician choice and a mix of public and private service providers, without
it being "a monolithic system of Soviet variety," he says.
It took decades before the pieces fell
into place. Only in 1999 did legislation mandate that anyone with a regular
residence permit is entitled to health benefits with no strings attached.
Also that year, France clarified rules for illegal residents: Those who can
justify more than three months of presence on French territory, and don't
have financial resources, can receive full coverage.
That made the system universal.
In the U.S., health-overhaul bills
don't attempt to cover illegal immigrants. Doing so would increase costs and
is considered politically difficult.
The President Bombs in Peoria His news conference the other night was bad. He was
filibustery and spinny and gave long and largely unfollowable answers that
seemed aimed at limiting the number of questions asked and running out the
clock. You don’t do that when you’re fully confident. Far more seriously, he
didn’t seem to be telling the truth. We need to create a new national
health-care program in order to cut down on government spending? Who would
believe that? Would anybody? The common wisdom the past week has been that
whatever challenges health care faces, the president will at least get something
because he has a Democratic House and Senate and they’re not going to let their
guy die. He’ll get this or that, maybe not a new nationalized system but some
things, and he’ll be able to declare some degree of victory. And this makes
sense. But after the news conference, I found myself wondering if he’d get
anything Peggy Noonan, "Common Sense May Sink
ObamaCare: It turns out the president misjudged the nation’s mood, The
Wall Street Journal, July 24, 2009 ---
http://online.wsj.com/article/SB10001424052970203517304574306533556532364.html#mod=djemEditorialPage
"What disturbs Americans of all ideological
persuasions is the fear that almost everything, not just government, is
fixed or manipulated by some powerful hidden hand," Frank Rich wrote in
Sunday's New York Times. That manipulation should disturb us. But contrary
to Rich, it is not the work of "corporatists" who have sprung up to attack
progressive reforms proposed by Obama and the Democratic majority.
Manipulation is what we got many years ago when we traded a more or less
free market for the "progressive" interventionist state. When government is
big, the well-connected always have an advantage over the rest of us.
"Big Business for Health-Care Reform," by John Stossel, ABC News,
August 11, 2009 ---
http://blogs.abcnews.com/johnstossel/2009/08/big-business-for-healthcare-reform.html
Wal-Mart Does a Flip Flop on Obamacare in a Quest for Greater Monopoly
Power
Here's Wal-Mart's Plan Before Obama Care "I have diabetes, a pre-existing condition that requires regular
doctor’s appointments. Wal-Mart suggests that I take its insurance and wait the
two years until I become eligible. This means that I would pay about $2,000 or
more and still not be covered for two years." http://walmartspeakout.com/speak-out/stories/c/health_care
Here's Wal-Mart's Plan After Obama Care In what some see
as an about face, Wal-Mart is now in favor of Obamacare, but the suspected
reasons is that its smaller competitors will be put out of business because of
the higher costs. “It will drive their smaller, less efficient competitors out of
business. There are a lot of mom and pop operations — and some that are their
own small, regional chain stores — that are struggling to stay afloat right now.
This new requirement will cause at least some of them to throw in the towel.”
--- http://pajamasmedia.com/blog/why-wal-mart-embraced-obamacare/
The most insidious part of Obamacare
is the backdoor taxes, and defacto control of our healthcare by the
nanny state that President Obama’s plan is loaded with. And here is
another one that is not getting much play. Employers would be socked
with requirements to pay for 72.5 percent of the cost of insurance
premiums for their full-time employees under the plan being considered
in the House.
They would also be required to pick up
an as yet undetermined percentage of the insurance plans for part-time
employees, as well. This alone will insure that part-time jobs across
the nation are terminated for the destructive cost involved in having
them.
Or, conversely, many full-time jobs
will be eliminated if the costs of insurance is so steep and that of
part-timers less so. Either way, jobs will be lost because of these new,
never before seen expenses. According to the draft legislation in the
House, businesses would be required to pay the federal government a fine
of 8 percent of their payroll if they do not offer a basic insurance
package to their employees. The House bill has yet to determine how
large a small business must be before they are forced into this
requirement.
Let’s think about what this means,
though. This new mandatory expenditure will greatly drive up the costs
of business for small and medium sized businesses and force many of them
to close up shop. They will not be able to compete with the larger
corporations that will have the resources to offer insurance plans even
for part-time workers.
This means the permanent elimination
of mom-and-pop business nationwide and the proliferation of large,
corporate held shops of all sorts. From the corner market and small book
store to the local garage and sandwich shop, small businesses will be
hounded out of business by overweening government mandates. This will
naturally open the business to even more national chains of all sorts.
It seems to me that the self-same people that claim they want
nationalized healthcare are the same sort that decry the giants like
WalMart. But here they are pushing an idea that will give them more
WalMats from sea to shining sea!
Jensen Comment
As of August 3, 2009 we still don't have final passage of an Obamacare
package such that it is not clear what things might be added to or
deleted from the bill to protect smaller businesses. In my mind, Huston
is entirely correct unless some type of relief is given to the mom and
pop stores that provide more U.S. employment than the national chain
stores. There also is an issue of seasonal business that needs to be
resolved. Will business firms that are only open for three or four
months each season have to pay year-around health insurance for
full-time and part-time employees?
The 8% of gross payroll good-deal-penalty
still sounds like a great opt-out for millions of mom and pop stores
across the U.S. As I've said repeatedly, however, the massive
bureaucracy needed to process enrollment of between 100 million and 200
million people into the new Government Health Insurance Agency (GHIA)
and process possibly billions GHIA claims for their health care each
year just is not feasible for over a decade or more.
Hence I think the 8% good-deal-penalty is a
bait and switch fraud just to get the plan passed in 2009. In
order to keep private insurance companies afloat and reduce the number
GIAA enrollments of working people down to a manageable number, the 8%
bait used to get Obamacare legislation passed will be switched around
2014 to a much higher penalty such as X=50% that either forces employers
to enroll employees into private medical insurance plans, go out of
business, or move the business to another country such as Mexico (if
that is possible for that line of business).
The X% no-longer-good-deal penalty will probably be bifurcated
between full-time and part-time employees. Employers will have to
provide private-plan coverage for their full-time employees because the
X% is too high for opting out of the system entirely. The X% of gross
payroll
may still be the best deal for part-time employees when the percentage
of work time (such as 20 hours per week divided by 40 hours per week)
and number of weeks worked (such as 20 weeks divided by 52) are factored
into the penalty payment for part-time workers.
There are some other disturbing features that I found in the current
House Bill, but I will not dwell on them now except to say that
There is rationing of health care treatment (which I don't
object to in principle),
Equalization of payments for services such that brain surgeons
who spent 12 years in medical school may not get any more income
than primary care physicians who spent four years in medical school
(which I object to in principle because there is no incentive to
sacrifice time and money to become a specialist),
Various expensive social services built into health care (such
as coverage of marriage and family counseling).
Probably the most disturbing to me is the increased opportunity for
fraud. This bill is a bonanza for community organizing groups in from
big cities to tiny villages. ACORN (by whatever its series of deceitful
name changes) and other "organizing groups" will have an unbelievable
cash cow for signing up real and fictional people and providing home
services to both real and fictional people. For example, people who
aren't really married will probably get a lot of ACORN-reimbursable
counseling where half goes to the fraudulent client and half goes to an
ACORN-like counseling firm manned by professionals with phony diplomas.
People who aren't really crippled will get a lot of scooters for
their new scooter street ball games. Many will get expensive elevators
(lifts) installed in their houses. What we now call Medicare fraud for
home equipment and medications will be a drop in the bucket compared to
the fraud to come. And the multiple-trillion dollar cash cow will be
impossible to police given the cleverness of the fraudsters we cannot
now detect in the Medicare claims service.
The major stumbling block, apart from political gaming, is how to
finance health care. Clearly, there's a limit to stacking more trillions on
the trillions of budget deficits already in place. It's naive to think that
any one cohort such as the top 3% of wage earners can pay for health care
reform of the masses. Surtaxes on higher income people have enormous adverse
impacts on employment opportunities in small business companies, incentives
to take financial risks for new ventures, support of charities and colleges,
tax cheating, etc. Even worse is that costs of universal health care are
being so fraudulently underestimated that even total confiscation of high
incomes would only be a drop in the bucket. For example, the massive fraud
losses in Medicare will increase 100-fold under universal health care, and
these new fraud losses have not been factored into the present cost
estimates.
The only sensible solution is to spread the pain of universal health care
among virtually all recipients of the health insurance coverage. This means
significant increases in taxes for all wage earners at all income levels,
much like the cost of health care is spread out in Canada even if total
nationalization of health care in the U.S. is not politically feasible at
the moment.
Moral Hazards of Precondition Coverage in Employer Health Insurance
My major concern in the proposed universal health insurance legislation is
the disastrous proposal that employers must pay for health insurance
coverage of preconditions. This presents all sorts of moral hazards and
financial risks that will either force employers out of business or force
employers to shift to replacing nearly all full-time employees with
part-time employees who do not have to be covered in the employer's health
insurance plan.
As an illustration of the moral hazard, consider the following scenario.
A nurse-mom makes high wages as an excellent, albeit part-time, physician’s
assistant. The wages are so high that she now affords to buy private health
insurance that will not cover organ transplants. She discovers that one of
her children needs a heart transplant. She then switches jobs to a become a
minimum wage full-time filing clerk at a small private college in the
community just so she can get precondition coverage the heart transplant.
The small private college that has its own employee insurance coverage pool
is now stuck with having to fund a child’s million dollar heart transplant
as a precondition required by law by employers who hire new employees. Even
if the college has a major medical kick-in policy, the cost of such a major
medical policy will sky rocket when preconditions are required by law to be
covered.
Her income as a full-time filing clerk is about a tenth of her income as
a part-time physician's assistant. After her child's heart transplant this
nurse-mom goes back to being a highly paid part-time physician’s assistant.
In other words a worker who would not otherwise sneak into the U.S. to
become an illegal alien is motivated to do so just for the health insurance
coverage of very expensive procedures such as organ transplants and neuro
surgeries. The family might then return to their own home country after
beating the U.S. health care system.
Actually this scenario is unrealistic because, after the universal health
care legislation requires employers to cover preconditions, the local
college will probably adopt a new policy of hiring only part-time employees,
including faculty, so that the new hires do not have to be covered in the
health insurance plan.
Many contracts that write in pre-existing coverage greatly limit the
amounts to be paid out for pre-existing conditions relative to conditions
arising after the insurance goes into effect. I grant you that it is more of
a problem in individual plans but you’ve oversimplified the complications
---
http://snipurl.com/preexistingissues [www_medsave_com]
Title I of HIPPA currently limits restrictions that a group health plan
can place on benefits for preexisting conditions. Group health plans may
refuse to provide benefits relating to preexisting conditions for a period
of 12 months after enrollment in the plan or 18 months in the case of late
enrollment. This moral hazard protection will of course all change under the
proposed health care legislation.
Do we want to become a nation of part-time workers having to carry
multiple jobs?
Do we want to require health coverage for
part-time and seasonal workers such that there are no part-time or seasonal
jobs available?
I would prefer that the government take over all health
insurance coverage and seriously tax everybody covered in the system. But if
the mess of private and government insurance coverage comes into place, it
is extremely important for government to somehow pick up the coverage of
expensive preconditions such as organ transplants, AIDs, and severe mental
health needs of some family members. To shunt these precondition costs onto
employers will destroy full-time career opportunities throughout the land as
employers fear the financial risks of preconditions. The repercussions will
be enormous.
Below is a message I recently sent out to the AECM listserve.
Hi James,
Health care is politically charged at the moment and should probably
be avoided on the AECM. I would like to add that some studies contend
that government-administered health insurance will be more expensive in
terms of administrative costs per person covered.
It’s probably unfair to compare private versus public health
insurance if the two are not direct competitors. For example, private
health insurance often, these days, is mostly administering
employer-funded insurance that employers keep a close eye on for cost
efficiency often by capping such risks as mental health coverage to
$10,000 or less. I know of one small university that had seven children
of employees who, in less than a year, wiped out the entire
multi-million balance set up in a health coverage fund. After that a cap
was placed on certain types of coverage. Medical costs for the seven
children were shifted to taxpayers.
I’m reminded of the guy whose only reason for committing a felony was
to get into a California prison so he could get a “free” heart
transplant. Who was really being held up here?
I think the big issue in the short run will focus
on preconditions that may soon be required by law to be funded by
employers. These leads to real moral hazards.
Medicare covers most people on permanent disability. These persons
often have more frequent medical billings that require more costs to
administer. My wife has been on permanent disability for over twenty
years at a Medicare cost of over $2 million not counting the enormous
cost of administering her claims ---
http://faculty.trinity.edu/rjensen/Erika2007.htm
Erika now has special-alloyed metal from her hips to her neck that
costs more than the metal in a Mercedes. I tease her by trying to figure
out what I could get on eBay by selling her as scrap. She jokes back
that I’m worth zero in the scrap market.
By the way, I disagree with you regarding quality of care at U.S.
hospitals and surgeons and home therapy. I can’t think of any other
nation where I would want to send her for better care from year-to-year.
If we leave health insurance out of the debate, there is evidence
that privatization has led to many innovations and efficiencies in
various, but not all, industries. Certainly not much good in the way of
innovation tends to come from private or public monopolies that do not
have to maintain a competitive edge in terms of effectiveness and
efficiency.
Heads of state in other nations are frequently sent to the U.S. for
medical treatments that are just not as good in their own nations.
The U.S. has advanced medical services more than
any other nation. And many poor people have access to the best services,
especially people of all ages and income declared permanently disabled
that automatically get Medicare coverage. The problem is
making the best services available to everybody at price they can
afford.
I'm tempted to say that being declared permanently disabled and
getting Medicare at a young age is a ticket to heaven. But that's
probably going a bit too far. Certainly there's a lot of fraud where
people are declared disabled who are not in the least disabled. They
simply managed to game the system.
Others like Erika live in constant severe pain and have no bowel or
bladder control.
One media myth is that that the cost of having to cover preconditions
must be picked up by fat cat health insurance companies. Since so many
employers are now funding (177 million workers under this 1974 Erisa
provision of the law) their own employee health insurance, the employers
themselves will have to absorb the expensive precondition costs such as
the need for organ transplants. State universities can pass these costs
along to their states, but small private universities will have to cover
the possibly huge costs with higher tuition and appeals to benefactors.
I fully anticipate that some private colleges will go out of business
because of changes in the health insurance law.
Certainly employers will move more and more into a part-time labor
force because of changes in the health insurance law. This, in turn,
will force more and more “ weary workers” with three or four part time
jobs into the government’s insurance plan. The tragedy is that they
can't get full time jobs because of potential employers would be paying
far more on average for workers' family medical coverage, especially
with precondition coverage, than for the labor cost per se.
Health care will have to be rationed no matter what ---
http://www.nytimes.com/2009/07/19/magazine/19healthcare-t.html?pagewanted=1&em
I'm reminded of a former colleague with advanced bone cancer who was
given two hip transplants just weeks before he died. This made no sense
to me since he was in more misery after the transplants as he was before
the transplants.
In Canada the average Canadian is willing to give 40% tax revenues a National Health Care Plan,
where taxpayers at nearly all levels pay substantially for health care
thereby restricting the number of free riders in the system. This is the only way to go in the U.S.
for either a nationalized health plan or a nationalized insurance plan.
The current proposal of taxing less than three percent of the people of
for government insurance for the other 97% is absurd.
The most absurd situation is to keep borrowing trillions of dollars
and passing the bills along to future generations. That will bankrupt
the entire United States. Welcome to Zimbabwe!
It will be painful, but even people earning minimum wage must give up
a significant portion of earnings to pay for health care. Illegal
immigrants must pay a large portion of their earnings toward health care
that is now free to them in emergency rooms. Middle income people must
pay about 50% of their total earnings for health care. That’s the only
way it will be a sustainable system.
Perhaps 50% won’t even be enough!
We need a better system. I think socialized medicine is the answer
with high taxes and no private insurance companies. It will be rough for
a while with 30% or higher unemployment for a time due to tax rises, but
with Democrats in monopoly control of Congress now is the time to bite
the tax bullet.
Taxes Must Increase On Average (for everybody) Nearly 50% to
Balance the Federal Budget
(that does not include added taxes for universal health care and carbon
capping legislation trillion dollar costs)
(that does not include added taxes for unbalanced state budgets)
And if you think high taxes are bad, wait until you experience
Zimbabwe-like inflation?
"The Real Era of Big Government," by Robert Samuelson, American
Issues Project, July 13, 2009 ---
Click Here
Bob Jensen
PS
One added worry about moral hazard that is extremely controversial.
In other words a foreign worker who would not
otherwise sneak into the U.S. to become an illegal alien is motivated to
do so just for the health insurance coverage of very expensive
procedures such as organ transplants and neurosurgeries. The family
might then return to their own home country after beating the U.S.
health care system.
One thing that is not clear to me is how private
insurance will survive since, under the proposed House Bill, employers
can opt out of providing health insurance for workers by paying an 8%
penalty to the government. For virtually all employers this 8% option is
by far the cheapest alternative and is much less that virtually all
employer insurance benefit programs will cost when pre-condition health
needs are factored into the coverage.
I’m beginning to think the 8% parameter in the
House Bill is really a blatant bait and switch
fraud designed to only obtain passage of the legislation in 2009.
After universal health care insurance is mandated the government will in
no way be able, at least for the next couple of decades, to administer
health insurance for hundreds of millions of worker families plus the
families of all unemployed persons plus the illegal immigrants and their
families.
The bait and switch will be to increase the 8%
employer-penalty parameter dramatically to something like 50% such that,
even when paying for precondition coverage, employers have little choice
but to cover full-time workers. The adverse externality here, however,
is that employers will increasingly shift from full-time to part-time
workers where part-time workers have little choice but to enroll in the
government insurance plan. Full-time employees will then not be allowed
into the government insurance program and are left with zero choice
other to enroll in the employer’s plan (which will be funded in most
instances by private insurance companies making a profit).
Of course the government will not make a profit on
health insurance. It will be quite the opposite because government will
have to cover both fraud and tens of millions of unemployed and very low
income people who can only get part time jobs. The government plan
eventually will add trillions of dollars to deficit spending in spite of
what Obama is promising unless covered people at all levels of income
share the pain of health care insurance taxation. But a huge increase in
taxation for health care may permanently inhibit economic recovery in
the United States.
The only answer in the long run will be inferior
health care which is all this nation can afford if it wants universal
health care in the presence of its $100 trillion unfunded entitlement
programs before passing universal health care legislation. We all can
expect waiting rooms filled to capacity that spill out into hallways
while weary physicians dispense with assembly-line medicine limiting
each patient to five minutes. Expensive procedures such as organ
transplants and neurosurgeries will be dispensed by lottery so that the
system is indeed fair to one and all.
But the system will never be fair to one and all.
The rich will simply pay for excellent medical care offshore. Medicine
will become a booming business in places like Sweden, France, India, and
yes even Cuba.
And in the long run fewer foreigners will be
sneaking into the U.S. because the medical system in the U.S. will
become too inferior relative to alternatives in their own countries.
Then again a foreigner might sneak in just to take a chance on the
health care organ transplant and neurosurgery lottery.
The
crazy thing is that all of these negatives will not make me vote against
some form of universal health care. The current system is just too
unjust and inefficient. Perhaps we need to sacrifice quality for
quantity at this juncture. But then I only have to worry about all this
for two more decades or less. And if need be I can afford a trip
to Cuba.
I’m really glad I’m not
young any more.
July 20, 2009 message sent to Trinity University on July 20, 2009
I forget who said
“there are lies and then there are damned lies.”
Whoever said this is absolutely correct with respect to media coverage
of the health care debate that seldom, if ever, mentions the huge
adverse impact of the changed rules of the game such as new rules for
preconditions and new rules for how big the self-insured insurance pool
would have to become to continue self insurance like Trinity presently
uses to fund health care coverage.
Everybody at Trinity
should read the “Repealing Erisa” article below, because Trinity
University still has (I think) Erisa-enabled self insurance with a major
medical kick-in. It will virtually impossible for Trinity to continue an
Erisa-enabled health plan if the present House Bill is not revised to
make it easier to keep such plans. But keeping such plans is probably
out of the question anyway because of the risks of frequent and large
precondition claims.
In order to keep its
present health coverage plan, I think that the universal health care
legislation will have to exclude coverage of preconditions (as is the
case under Trinity’s present coverage). Secondly, the universal health
care legislation would have to encourage rather than discourage
Erisa-enabled plans. I don’t think this Congress will save Erisa-enabled
plans for organizations the size of Trinity University. It might be
possible to save such plans if governmental insurance picks up the
precondition claims.
Actually Trinity will
be between a rock and a hard place, because going back to coverage by
large insurance companies will be much more expensive even if
preconditions are excluded. Adding on premium costs for preconditions
will make employer medical insurance premiums out of sight. I anticipate
a huge migration to part-time employees at Trinity.
An employee at Trinity
University asked, in a private response, why doctor shortage is not
being raised as a huge issue in the health care debate.
Doctor shortage has
been one of the enormous problems encountered in the Massachusetts
Universal Health Care Plan initiated by, then, Gov. Romney. People line
up in emergency rooms because they cannot find primary care physicians.
Another problem is that Boston’s leading hospital is now suing the State
because the cost of providing minimal health care to poor people greatly
exceeds what the hospital is being paid by the State under the MUHCP.
But doctor shortage is
a “no-no” in the health care debate. The legitimate argument is that the
poor should have equal opportunity access to the limited supply of
doctors. The irony here is that the proposed reduction of fees paid to
doctors reimbursed by Medicare (and presumably the forthcoming
government insurance fund for others) will drive more doctors out of
participating in the plans. This exacerbates the doctor shortage
problem. But such fee reductions are necessary as another ruse to
cost-justify the proposed universal health care plan.
Unless we bite the
bullet and move entirely to a Canadian-style nationalized health care
program, anything less will be an absolute disaster.
There’s one factor
Trinity University should plan for is the likely impossibility of
continuing its self-funded health insurance plan under Erisa. Partly due
to required coverage of preconditions, it will be very, very hard for
organizations the size of Trinity to fund its own Erisa-allowed claims
(backed by a major medical kick-in for enormous claims).
Trinity officials
involved in health care alternatives should carefully read the following
article:
One by one, President Obama’s health-care promises
are being exposed by the details of the actual legislation: Costs
will explode, not fall; taxes will have to soar to pay for it; and
now we are learning that you won’t be able to “keep your health-care
plan” either.
The reality is that the House health bill, which the
Administration praised to the rafters, will force drastic changes in
almost all insurance coverage, including the employer plans that
currently work best. About 177 million people—or 62% of those under
age 65—get insurance today through their jobs, and while rising
costs are a problem, according to every survey most employees are
happy with the coverage. A major reason for this relative success is
a 1974 federal law known by the acronym Erisa, or the Employee
Retirement Income Security Act.
Erisa allows employers that self-insure—that is,
those large enough to build their own risk pools and pay benefits
directly—to offer uniform plans across state lines. This lets
thousands of businesses avoid, for the most part, the costly federal
and state regulations on covered treatments, pricing, rate setting
and so on. It also gives them flexibility to design insurance to
recruit and retain workers in a competitive labor market. Roughly
75% of employer-based coverage is governed by Erisa’s “freedom of
purchase” rules.
Goodbye to all that. The House bill says that after a
five-year grace period all Erisa insurance offerings will have to
win government approval—both by the Department of Labor and a new
“health choices commissioner” who will set federal standards for
what is an acceptable health plan. This commissar—er,
commissioner—can fine employers that don’t comply and even has
“suspension of enrollment” powers for plans that he or she has
vetoed, until “satisfied that the basis for such determination has
been corrected and is not likely to recur.”
In other words, the insurance coverage of 132 million
people—the product of enormously complex business and health-care
decisions—will now be subject to bureaucratic nanomanagement. If
employers don’t meet some still-to-be-defined minimum package,
they’ll have to renegotiate thousands of contracts nationwide to
Washington’s specifications. The political incentives will of course
demand an ever-more generous “minimum” benefit and less
cost-sharing, much as many states have driven up prices in the
individual insurance market with mandates. Erisa’s pluralistic
structure will gradually constrict toward a single national
standard.
Yet a computer programming firm, say, and a grocery
store chain have very different insurance needs, and in any case may
not be able to afford the same kind and level of benefits.
Innovation in insurance products will also be subject to political
tampering. Likely casualties include the wellness initiatives that
give workers financial incentives to take more responsibility for
their own health, such as Safeway’s. Some politicians will claim
that’s unfair. High-deductible plans with health savings accounts
are also out of political favor, therefore certain to go overboard.
If you have one of those and like it, too bad.
The new Erisa regime will be especially difficult to
meet for businesses that operate with very slim profit margins or
have large numbers of part-time or seasonal workers. They may simply
“cash out” and surrender 8% of their payroll under the
employer-mandate tax. A new analysis by the Lewin Group, prepared
for the Heritage Foundation, finds that some 88.1 million people
will be shifted out of private employer health insurance under the
House bill. If those people preferred their prior plan, well, too
bad again.
The largest employers—though not all—may clear the
minimum bar, at least at first. But in addition to the “health
choices” administrative burden, the cost of labor will rise because
the House guts another key section of Erisa. Currently, lawsuits
about employee benefits are barred under the law, allowing large
employers to avoid the state tort lotteries in disputes over
coverage. No longer. As a gratuity to the trial bar, Democrats will
now subject businesses to these liabilities in the name of health
“reform.”
So when Mr. Obama says that “If you like your
health-care plan, you’ll be able to keep your health-care plan,
period. No one will take it away, no matter what,” he’s wrong.
Period. What he’s not telling the American people is that the
government will so dramatically change the rules of the insurance
market that employers will find it impossible to maintain their
current coverage, and many will drop it altogether. The more we
inspect the House bill, the more it looks to be one of the worst
pieces of legislation ever introduced in Congress.
Jensen Comment
Several people responded with questions or comments about universal health
care in Massachusetts (that was enacted in 2006 under the guidance of
Governor Mitt Romney) which I will refer to here as MITT. Firstly I would
like to note that danger lurks in comparing the MITT with any universal
health care plan being proposed at the Federal level. Firstly, none of the
50 states has the power to simply print money to pay its bills, as is being
done on a relatively small scale by the U.S. Treasury at the moment to pay
for its excesses. Secondly, MITT is not universal in that it is restricted
to low income residents of the state. Thirdly, MITT survives heavily on
Federal subsidies, whereas nobody will subsidize any Federal health care
plan from above, although a small number of wealthy people may one day make
benevolent contributions toward universal health care. Thus far Bill Gates
and Warren Buffett have been focused more on Africa's health issues such as
TB and polio.
An excellent, albeit brief, summary of MITT is provided at
http://en.wikipedia.org/wiki/Massachusetts_health_care_reform
Health coverage is very limited in scope and the number of insured has
increased substantially. But many uninsured poor people still manage to slip
through the cracks.
An enormous problem has been the shortage of primary care physicians such
that those with newly-acquired MITT insurance cannot find a primary care
doctor. Most specialists refuse to treat patients who are not referred to
them by a primary care physician. Hence, there were and are long lines at
Emergency Rooms both before and after MITT was enacted even though many in
those lines have MITT coverage. The lines could be worse. MITT will not
cover many costly procedures.
The MITT program is in deep financial stress at the moment and has had to
make cuts in scope of coverage and in amounts paid to doctors and hospitals
during the current economic crisis ---
http://liveshots.blogs.foxnews.com/2009/07/17/massachusetts-universal-health-care-cuts/
Hospitals complain that the promised coverage is far from sufficient to
cover their costs. Some, including the huge Boston General Hospital, are now
suing or plan to sue the State to recover some of their losses under MITT.
Under financial stress hospitals in Massachusetts have had to take huge
budget cuts. Rather than spread those cuts across the board to all
departments, some hospitals have decided to concentrate on dropping the most
money-losing departments. You probably can guess the leading candidate for
being eliminated --- the obstetrics department.
My neighbor down the road has a second home up here in the White
Mountains. However, he still practices cardiology in a Boston suburb. He
says that obstetrics departments are leading candidates for elimination, in
large measure, because of the high cost of malpractice insurance covering
obstetrics services.
Lawyers file cookie-cutter lawsuits against doctors, nurses, and
hospitals for every defective baby irrespective of the facts in any given
case. The reason is the tendency of sympathetic juries to make multimillion
dollar awards to a mother of a defective baby irrespective of the facts in
the case. Many juries feel that fat cat insurance companies owe it to the
unlucky woman (and her lucky lawyers) who must nurture and raise a severely
handicapped child. Juries make such awards even when the doctors, nurses,
and hospitals performed perfectly under the circumstances. Paul Newman
showed us how to love it when lawyers beat the medical system in favor of
the "poor and powerless" in The Verdict ---
http://www.youtube.com/watch?v=zVZFlBJftgg
But fat cat insurance companies adjust rates based upon financial risks.
The rates became so high for obstetrics that across most of the U.S. (less
so in states that cap punitive damages) thousands of gynecologists dropped
the obstetrics part of their services. And under MITT in Massachusetts some
strained hospitals dropped obstetrics services.
Health Care Reform Will Indeed Be Universal --- Tort Lawyers Are Fully
Covered
This raises the whole issue of costs of malpractice insurance in the entire
health system of the United States. Although a few states like Texas have
managed to put some restraints on punitive damages, President Obama wants no
such restraints placed on the tort system for virtually any legislation
under his term of office. Obama is a lawyer, and he can attribute much of
his political success to the financial and other support from tort law firms
across the land. He owes them and most of our legislators are themselves
lawyers. As a result there's virtually zero chance that any restraints will
be placed upon the number of malpractice lawsuits and sizes of awards in any
universal health care legislation. In fairness the U.S. Congress and some
states years ago put some restraints on runaway malpractice claims ---
http://www.redorbit.com/news/science/2593/house_passes_medical_malpractice_limits/
But in 2009 in Washington DC there is no sentiment for putting further
malpractice insurance cost restraints into the forthcoming universal health
care legislation.
In 2009 lawmakers in Washington DC are taking no lessons from malpractice
stinginess in the Canadian National Health Plan. Perhaps stinginess is what
comes with national health care plans that eliminated private insurance
company fat cats.
"Why 98 percent of Canadian Medical Malpractice Victims Never Receive a
Penny in Compensation," by John McKiggan ---
Click Here
Of course, the public is right. In the midst of
the worst economic crisis in seventy years, why waste enormous political
capital battling to pass a healthcare plan that is modeled on a proven
failure in Massachusetts, as voters there clearly registered? Meanwhile,
the president has dropped the ball in the effort to make bankers act
responsibly by forcing them to forego outrageous bonuses and help
homeowners stay in their homes. Again quoting the message of that Wall
Street Journal/NBC poll: "The president's focus on health care amid
heightened job concerns could be hurting his ratings. At the one-year
mark of his presidency, 35 percent of Americans said they were 'quite or
extremely' confident he had the right priorities to improve the economy,
down from 46 percent at midyear." The Journal noted that a majority
disapproved of the government's response to the financial crisis,
adding, "The related problem for Mr. Obama is the public's lingering
anger about the bailouts of 2008 and 2009, which helped boost bank
profits even as unemployment grew--a toxic political problem."
This week it became impossible in Massachusetts for
small businesses and individuals to buy health-care coverage after Governor
Deval Patrick imposed price controls on premiums. Read on, because under
ObamaCare this kind of political showdown will soon be coming to an
insurance market near you.
The Massachusetts small-group market that serves
about 800,000 residents shut down after Mr. Patrick kicked off his
re-election campaign by presumptively rejecting about 90% of the premium
increases the state's insurers had asked regulators to approve. Health costs
have run off the rails since former GOP Governor Mitt Romney and Beacon Hill
passed universal coverage in 2006, and Mr. Patrick now claims price controls
are the sensible response to this ostensibly industry greed.
Yet all of the major Massachusetts insurers are
nonprofits. Three of largest four—Blue Cross Blue Shield, Tufts Health Plan
and Fallon Community Health—posted operating losses in 2009. In an emergency
suit heard in Boston superior court yesterday, they argued that the
arbitrary rate cap will result in another $100 million in collective losses
this year and make it impossible to pay the anticipated cost of claims. It
may even threaten the near-term solvency of some companies. So until the
matter is resolved, the insurers have simply stopped selling new policies.
A court decision is expected by Monday, but state
officials have demanded that the insurers—under the threat of fines and
other regulatory punishments—resume offering quotes by today and to revert
to year-old base premiums. Let that one sink in: Mr. Patrick has made the
health insurance business so painful the government actually has to order
private companies to sell their products (albeit at sub-market costs).
One irony is that Mr. Patrick's own Attorney
General and his insurance regulators have concluded—to their apparent
surprise—that the reason Massachusetts premiums are the highest in the
nation is the underlying cost of health care, not the supposed industry
abuses that Mr. Patrick and his political mentor President Obama like to
cite.
On top of that, like ObamaCare, integral to the
Massachusetts overhaul are mandates that require insurers to cover anyone
who applies regardless of health status or pre-existing conditions and to
charge everyone about the same rates. This allows people to wait until
they're about to incur major medical expenses before buying insurance and
transfer the costs to everyone else. This week Blue Cross Blue Shield
reported a big uptick in short-term customers who ran up costs more than
four times the average, only to drop the coverage within three months.
Last July, Charlie Baker detailed similar gaming at
Harvard Pilgrim, the health plan he used to run. Between April 2008 and
March 2009, about 40% of its new enrollees stayed with it for fewer than
five months and on average incurred costs about 600% higher than the company
would have otherwise expected.
Mr. Baker is almost certain to be Mr. Patrick's GOP
opponent in the fall election. The Governor's lurch toward price controls is
obviously part of a bid to tar the former CEO as an industry villain. David
Plouffe, the architect of Mr. Obama's Presidential campaign, has signed on
as a Patrick 2010 consultant. These kinds of collisions between politics and
health care are going to occur constantly across the country as ObamaCare
kicks in.
On paper, it looks as though the state has made
major progress in insuring the uninsured. From 6.4% of the population in
2006, the uninsured hover around 2% today. However, one
study found that nearly all of the newly
insured are either on Medicaid, in a state-subsidized plan or in an
employer subsidized plan. Only 7% of the newly insured, or about 30,000
people, are directly paying their own way. It’s relatively easy to get
people to sign up for insurance when coverage is free or almost free.
And it’s not very expensive if you pay for the subsidies using money you
would have spent anyway on free care for those who can’t pay their
medical bills.
But aside from moving money from one bucket to
another, have any real problems been solved? The evidence isn’t
positive.
There are three major problems in health care
all over the world: cost, quality and access. Since nothing in the
Massachusetts reform addressed the problems of rising costs and less
than adequate quality, those problems have remained more or less
unchanged. What about access to care? Surely, newly insured people have
more options in the medical marketplace.
The trouble is that almost all of the newly
insured are in health plans that pay doctors and hospitals a lot less
than what private insurance pays. Like other places around the country,
Massachusetts Medicaid (called MassHealth) pays providers so little that
patients often turn to hospital emergency rooms and community health
centers for their care when they can’t find doctors who will see them.
People in the newly subsidized private insurance plans aren’t faring
much better because these plans pay only slightly more than what
Medicaid pays.
The only solid analysis of what has actually
happened to patients at this point is
a study by Sharon Long and Paul Masi published
in the journal Health Affairs. According to the study:
• There has been no significant change in the
number of Massachusetts patients seeking care in hospital emergency
rooms since the reform was implemented, and there has actually been an
increase in emergency room use by people with incomes below 300% of the
poverty level.
• There has been an increase in doctor visits
but no change in visits to specialists and an actual decrease in
“medical tests, treatment and follow up care,” which I assume is care
for the chronically ill.
• There has been no change in the percent of
the population reporting a failure to “get needed care for any reason
within the past 12 months” and remarkably that includes one-third of
those with incomes below 300% of the poverty level.
The problem with counting up doctor visits is
that a visit is not always a visit. Nationally, in the state children’s
health insurance program (CHIP) doctors have responded to an increase in
the demand for their services by scheduling more appointments, but
spending less time with patients. Also, you
would think that the Massachusetts reform would shift health care
resources from the general population to those with less income. But
there is no evidence that has happened. On measures of access, the gap
between the poor plus the near poor and everyone else appears not to
have changed at all!
Ask yourself why you care whether other people
have health insurance? The most likely reason is that you want people to
have access to health care. But lack of access to care is a huge problem
in Massachusetts right now. As I
previously reported more than half of all
family doctors and more than half of all internists are not accepting
new patients. The wait is more than a month before a new patient is able
to see a family doctor, and the wait to see an internist averages 48
days. The average wait in
Boston to see a family doctor is more than two
months.
What I am now reporting will be different than
what you may have read in the newspapers or at other health blogs. MIT
Professor
Jon Gruber calls
Massachusetts an unqualified success, citing some of the very same
studies I am citing. But since Gruber was one of the architects of the
Massachusetts health reform, this is like a student grading his own
exam.
What about elevating the Massachusetts reforms
to the national level in the form of ObamaCare? As I have previously
reported, ObamaCare is likely to result in less access to care for our
most vulnerable populations: the disabled and
the elderly on Medicare, the poor on Medicaid and the near poor in newly
subsidized private insurance. But that is only the beginning.
It is almost unbelievable that this Bill could have any
chance of being adopted, but Obama is working hard to have the Federal
Government dictate all matters relating to our health care. Since so much
money is spent on the elderly toward the end of their lives and on special
needs children these persons are considered to be expendable under this
Bill. Their helth care will be rationed. However, illegal immigrants will
be well taken care of. What a disaster this administration is. They want
to take over every aspect of our lives.
Subject:
Health Care or
confiscation (H.R. 3200 - All 1017 Pages)
Must be widely circulated. Extremely frightening!!!!
-----
Absolutely
incredible...it is difficult for me to comprehend that this could have any
possibility of being put into place......
Subject: Fwd: Health Care or confiscation (H.R. 3200 - All 1017 Pages)
Attached is the H. R. 3200 - all 1017 pages with comments by Peter
Fleckstein. He has only covered the first 500 pages so far.
Peter Fleckstein (aka Fleckman) is reading it and has been posting his
findings on Twitter. This is from his postings (Note: All comments are
Fleckman’s).
Pg 22 of the HC Bill
MANDATES the Govt will audit books of ALL EMPLOYERS that self insure!!
Pg 30 Sec 123
THERE WILL BE A GOVT COMMITTEE that decides what treatments/benefits you get
Pg 29 lines 4-16
YOUR HEALTHCARE IS RATIONED!!!
Pg 42
The Health Choices Commissioner will choose UR HC Benefits for you. You have
no choice!
PG 50 Section 152
HC will be provided to ALL non US citizens, illegal or otherwise
Pg 58
Govt will have real-time access to individual's finances & a National ID
Healthcard will be issued!
Pg 59 lines 21-24
Govt will have direct access to your banks accts for electronic funds
transfer
PG 65 Sec 164
Is a payoff subsidized plan for retirees and their families in Unions &
community orgs (ACORN).
Pg 72 Lines 8-14
Govt is creating an HC Exchange to bring private HC plans under Govt
control.
PG 84 Sec 203
Govt mandates ALL benefit packages for private HC plans in the Exchange
PG 85 Line 7
Specs for of Benefit Levels for Plans = The Govt will ration your
Healthcare!
PG 91 Lines 4-7
Govt mandates linguistic approp services. Example - Translation for illegal
aliens
Pg 95 Lines 8-18
The Govt will use groups i.e., ACORN & Americorps to sign up individuals for
Govt HC plan
PG 85 Line 7
Specs of Benefit Levels 4 Plans. #AARP members - Your Healthcare WILL be
rationed
PG 102 Lines 12-18
Medicaid Eligible Individuals will be automatically enrolled in Medicaid. No
choice
PG 124 lines 24-25
No company can sue GOVT on price fixing. No “judicial review” against Govt
Monopoly
PG 127 Lines 1-16
Doctors/ #AMA - The Govt will tell YOU what you can make.
Pg 145 Line 15-17
An Employer MUST auto enroll employees into public opt plan. NO CHOICE
Pg 146 Lines 22-25
Employers MUST pay for HC for part time employees AND their families.
Pg 149 Lines 16-24
ANY Employer with payroll 400k & above who does not provide public opt. pays
8% tax on all payroll
PG 150 Lines 9-13
Business with payroll between 251k & 400k who doesn't provide public opt
pays 2-6% tax on all payroll
Pg 167 Lines 18-23
ANY individual who doesn't have acceptable HC according to Govt will be
taxed 2.5% of income
Pg 170 Lines 1-3
Any NONRESIDENT Alien is exempt from individual taxes. (Americans will pay)
Pg 195
Officers & employees of HC Admin (GOVT) will have access to ALL American's
financial/personal records
PG 203 Line 14-15
“The tax imposed under this section shall not be treated as tax” Yes, it
says that
Pg 239 Line 14-24
Govt will reduce physician services for Medicaid. Seniors, low income, poor
affected
Pg 241 Line 6-8
Doctors, doesn't matter what specialty you have, you’ll all be paid the same
PG 253 Line 10-18
Govt sets value of Doctor’s time, prof judg, etc. Literally value of humans.
PG 265 Sec 1131
Govt mandates & controls productivity for private HC industries
PG 268 Sec 1141
Fed Govt regulates rental & purchase of power driven wheelchairs
PG 272 SEC. 1145.
TREATMENT OF CERTAIN CANCER HOSPITALS - Cancer patients - welcome to
rationing!
PG 280 Sec 1151
The Govt will penalize hospitals for what Govt deems preventable
readmissions.
PG 298 Lines 9-11
Doctors, treat a patient during initial admission that results in a
readmission - Govt will penalize you.
PG317 L 13-20
OMG!! PROHIBITION on ownership/investment. Govt tells Doctors what/how much
they can own.
PG 317-318 lines 21-25,1-3
PROHIBITION on expansion- Govt is mandating hospitals cannot expand
PG 321 2-13
Hospitals have option to apply for exception BUT community input required.
Can you say ACORN?!!
PG 335 L 16-25 Pg 336-339
Govt mandates establishment of outcome based measures. HC the way they want.
Rationing
PG 341 Lines 3-9
Govt has authority to disqualify Medicare Adv Plans, HMOs, etc. Forcing
peeps into Govt plan
PG 354 Sec 1177
Govt will RESTRICT enrollment of Special needs people! WTF. My sis has
down's syndrome!!
Pg 379 Sec 1191
Govt creates more bureaucracy - Telehealth Advisory Committee. Can you say
HC by phone?
PG 425 Lines 4-12
Govt mandates Advance Care Planning Consultant. Think Senior Citizens end of
life
Pg 425 Lines 17-19
Govt will instruct & consult regarding living wills, durable powers of atty.
Mandatory!
PG 425 Lines 22-25, 426 Lines 1-3
Govt provides approved list of end of life resources, guiding you in death
PG 427 Lines 15-24
Govt mandates program for orders for end of life. The Govt has a say in how
your life ends
Pg 429 Lines 1-9
An “adanced care planning consultant” will be used frequently as patient's
health deteriorates
PG 429 Lines 10-12
“advanced care consultation” may include an ORDER for end of life plans. AN
ORDER from GOV
Pg 429 Lines 13-25 -
The govt will specify which Doctors can write an end of life order.
PG 430 Lines 11-15
The Govt will decide what level of treatment you will have at end of life
Pg 469
Community Based Home Medical Services=Non profit orgs. Hello, ACORN Medical
Svcs here!!?
Page 472 Lines 14-17
PAYMENT TO COMMUNITY-BASED ORG. 1 monthly payment to a community-based org.
Like ACORN?
PG 489 Sec 1308
The Govt will cover Marriage & Family therapy. Which means they will insert
Govt into your marriage
Pg 494-498
Govt will cover Mental Health Services including defining, creating,
rationing those services
More facts about Obamacare sent to me by my good
neighbors
New Health Plan From Obama
TOP TEN INDICATORS THAT YOUR EMPLOYER HAS CHANGED TO OBAMA'S
HEALTH CARE PLAN.
(10) Your annual breast exam is done at Hooters.
(9) Directions to your doctor's office include "Take a left
when you enter the trailer park."
(8) The tongue depressors taste faintly of Fudgesicles.
(7) The only proctologist in the plan is "Gus" from Roto-Rooter.
(6) The only item listed under Preventive Care Coverage is "an
apple a day..."
(5) Your primary care physician is wearing the pants you gave
to Goodwill last month.
(4) "The patient is responsible for 200% of out-of-network
charges," is not a typographical error.
(3) The only expense covered 100% is "embalming."
(2) Your Prozac comes in different colors with little M's on
them.
AND THE NUMBER ONE SIGN YOU'VE JOINED A GOVERNMENT HEALTH CARE
PLAN:
(1) You ask for Viagra and they give you a Popsicle stick and
Duct Tape.
Hi Zafar,
By now I'm used to your innuendos and insults of my intelligence. My issue
with medical malpractice lawyers has zero to do with political party
affiliation. I have two issues with lawyers. One is political in the sense
that they traditionally vote in laws favorable to themselves whenever they
dominate state and federal legislatures --- which most of the time.
My second issue with medical malpractice lawyers is that they prefer to work
on a contingency fee basis in the punitive damages legal lottery. These same
lawyers then play to the sympathies of judges and/or juries to award
multimillion dollar sympathy settlements even when the medical service
providers did absolutely nothing wrong. This, in turn, unfairly damages
their reputations and in some instances drives them out of the medical
service business such as when obstetricians either quit altogether or drop
obstetrics from their OB/GYN combined practices.If you want one absurd case
with a lot of skin in the game (even the plaintiff's lawyer conceded the
initial $60 million awarded for loose skin was absurd) go to
http://www.chicagomedicalmalpracticelawyerblog.net/2011/08/court-lowers-60-million-medica.html
The above two issues is at the heart of my disagreement with lawyers.
Firstly, lawyer-legislators made the legal system so complicated that in
order to file a malpractice claim into the legal system you need to employ a
lawyer.
Secondly, the lawyers prefer to be paid on a contingency fee bases such that
in states like Texas that took the punitive damage legal lottery out of
malpractice lawsuits, the lawyers must now charge on an hourly basis rounded
upward by the week.
Insert Figure 1
When the lawyers charge on an hourly basis instead of playing a legal
lottery, this hurts poor people who cannot afford even a few hours of law
firm time. Hence, when the punitive damage, contingency fee lottery was
taken out of the equation by constitutional amendment in Texas, many poor
people cannot afford to file medical malpractice lawsuits.
Here's where I differ from Jagdish
I differ from Jagdish on the basis of who determines the settlements. In
Finland and other parts of Europe, professional medical boards determine the
settlements rather than the legal system.
Jagdish wants to leave lawyers in the malpractice claims business either on
a contingency fee or hourly fee basis. I want to cut lawyers and the legal
system out of the claims filing process and have the medical system deal
directly with malpractice claims, thereby making it possible for poor people
to file claims even when the state or nation does not have a punitive
damages legal lottery.
My model is the malpractice claims process that modifies the Canadian
process
In both Texas and Canada the punitive damages are severely capped to a point
that the punitive damages legal lottery is taken out of the equation. But
both systems require even poor people to pay up front investigation costs
and filing fees.
I think investigation and filing fees should be paid for by the medical
system as a shared cost spread among all medical service billing fees (which
in Canada ultimately spreads it among taxpayers). There should be no up
front cost for filing a claim, although the system might impose penalties of
some sort for claims found to be fraudulent or frivolous.
This is not entirely the way it works in Canada at the moment.
The
St. Petersburg Times takes a look at the cost
of insurance in Canada for health care providers.
A neurosurgeon in Miami pays about $237,000 for medical malpractice
insurance. The same professional in Toronto pays about $29,200, reports
Susan Taylor Martin.
A Canadian orthopedic surgeon pays just over $10,000 for coverage
that costs a Miami physician $140,000. An obstetrician in Canada pays
$36,353 for insurance, while a Tampa Bay obstetrician pays $98,000 for
medical malpractice insurance.
Why the difference?
In the U.S., private for-profit insurance companies extend medical
malpractice coverage to doctors.
In Canada, physicians are covered through
membership in a nonprofit. The
Canadian Medical Protective Association
offers substantially reduced fees for the same coverage, especially
considering that their payout is limited by caps in Canada just as in
some U.S. states.
In 1978, the Canadian Supreme Court limited
pain and suffering awards to just over $300,000, circumventing the
opportunity for a jury to decide on an award depending on the case
before them.
Canadian Medical Protective Association
Here’s how it works.
Fees for membership vary depending on the region of the country in
which the doctor works and their specialty. All neurosurgeons in Ontario
will pay the same, for example. The number of claims they have faced for
medical malpractice does not figure into their premium
"We don't adjust our fees based on individual
experience; it's the experience of the group,'' says Dr. John Gray, the
executive director, "That's what the mutual approach is all about, and
it helps keep the fees down for everyone,” he tells the
St. Petersburg Times.
If a doctor is sued, the group pays the claim
and provides legal counsel.
In the U.S., the push has been on for limiting claims, no matter how
egregious the medical malpractice. President Obama was booed in June
when, before the American Medical Association, he said he would not
limit a malpractice jury award.
"We got a crazy situation where Obama is
talking about the cost of medicine but he said, 'I don't believe in
caps,' " complains Dr. Dennis Agliano, past president of the
Florida Medical
Association. "If you don't have caps, the
sky's the limit and there's no way to curtail those costs.''
But the importance of limiting jury awards may not play into the big
picture on health care reform.
Malpractice lawsuits amount to
less than one percent of both the Canadian and
the U.S. healthcare system, meanwhile between 44,000 and 98,000
Americans die each year due to medical errors in hospitals alone, while
16 times as many suffer injuries without receiving any compensation,
reports the group
Americans for Insurance Reform.
Major Difference
In Canada, an injured patient is often required to pay for the
initial investigation into his case. In the U.S. the contingency fee
basis, usually in the range of 30 percent, allows the injured party to
proceed without a financial downside.
In both the U.S. and Canada, the definition of medical negligence is
that a duty of care was owed to the patient by the physician, there was
a breach h of the standard of care and the patient suffered harm by the
physician’s failure to meet that standard of care.
A bad outcome in itself is not the basis of a lawsuit.
The Canadian Medical Protective Association insures virtually all of
the country’s 76,000 doctors, as opposed to the U.S. where private
for-profit insurance companies cover physicians for medical malpractice.
In Canada, the median damaged paid in 2007 was $91,999 and judgments
favored patients 25 times, doctors 70 times.
In the U.S., many physician groups are
requiring patients to waive their rights to a jury trial, even though
malpractice litigation accounts for just 0.6 percent of healthcare costs.
Public Citizen,
the consumer group, charges that the facts don’t
warrant the “politically charged hysteria surrounding medical
malpractice litigation.”
For the third straight year,
medical malpractice payments were at record
lows finds the group in a study released this month. The decline,
however, is likely due to fewer injured patients receiving compensation,
not improved health safety.
2008 saw the lowest number of medical
malpractice payments since the federal government’s
National
Practitioner Data Bank began compiling
malpractice statistics. In 2008, payments were 30.7 percent lower than
averages recorded in all previous years.
In the report titled,
The 0.6 Percent Bogeyman, the nonprofit
watchdog group states, “between three and seven Americans die from
medical errors for every 1 who receives a payment for any type of
malpractice claim.”
Public Citizen previously reported that about
five percent of doctors are responsible for
half of the medical malpractice in the U.S. that can result in permanent
injury or death. #
Prof. Jensen,
While it's true our spending on health-care is much lower than the US in
terms of percentage of GDP and we don't have the level of malpractice
suits as in the USA there are severe problems with the healthcare
system. The federal government has a guaranteed I think 6% accelerator,
much higher than inflation, transfer payment to the provinces for health
care. I doubt the federal government can guarantee that kind of spending
in the next negotiations between the provinces and the federal
government.
Then again federal government transfers amount
to only about 15-20% of most provincial health spending and provinces
spend about 40-50% of their budget on the health budget and growing
larger as the boomers age. Provinces especially Ontario and Quebec but
even Alberta with it's oil and natural gas royalties will not be able to
keep this up,
Ontario has a bigger deficit at $21 billion
Canadian than California I think and Ontario only has 12-13 million
people. Quebec which is usually a very socialist province, has actually
liberalized the private element of health care services the most, there
are many Ontarians who go to Quebec to get treated including private MRI
scans etc. British Columbia is also following Quebec and has allowed
private clinics to serve patients.
There are two cures for reducing the deficits
of the provinces, one is to stop the increase in health spending so per
capita spending goes down along with co-payments for superficial
emergencies like colds and coughs to the doctor or emergencies. Other is
to create a two tier system with a fully private one along with the
public system. All three federal parties, even the governing
Conservatives who are most similar to your Republicans and the Bloc
Quebecois (the Quebec nationalists-separatists) are against a private
system but there is a lot of support for it from the more conservative
elements in Canada, including Preston Manning, the former leader of the
populist Reform and former Conservative premier of Ontario Mike Harris.
Note I am not saying I agree with them or
disagree with either way but they do have some valid points.
Regards,
Ramesh Fernando
CMA Candidate
Ottawa, Ontario, Canada
International comparison (personal income tax)
Comparison of taxes
paid by a household earning the country's average wage (as of 2005),
including social security contributions paid by employer
Country
Single
no children
Married
2 children
Country
Single
no children
Married
2 children
Australia
28.3%
16.0%
Korea
17.3%
15.2%
Austria
47.4%
35.5%
Luxembourg
35.3%
12.2%
Belgium
55.4%
40.3%
Mexico
18.2%
18.2%
Canada
31.6%
21.5%
Netherlands
38.6%
29.1%
Czech Republic
43.8%
27.1%
New Zealand
20.5%
14.5%
Denmark
41.4%
29.6%
Norway
37.3%
29.6%
Finland
44.6%
38.4%
Poland
43.6%
42.1%
France
50.1%
41.7%
Portugal
36.2%
26.6%
Germany
51.8%
35.7%
Slovakia
38.3%
23.2%
Greece
38.8%
39.2%
Spain
39.0%
33.4%
Hungary
50.5%
39.9%
Sweden
47.9%
42.4%
Iceland
29.0%
11.0%
Switzerland
29.5%
18.6%
Ireland
25.7%
8.1%
Turkey
42.7%
42.7%
Italy
45.4%
35.2%
United Kingdom
33.5%
27.1%
Japan
27.7%
24.9%
United States
29.1%
11.9%
Source: OECD,
2005 data
To
this we must add other taxes such as a corporate capital tax, corporate income
tax, VAT tax, personal and general sales taxes, and "taxes" collected that are
dedicated for specific purposes such as health care and unemployment taxes.
1 in British Columbia and Ontario, the PST and GST was integrated
into a federally-administered HST on 1 July 2010 2 in Nova Scotia, the HST was increased to 15% on 1 July 2010 3 in Québec and PEI, PST is calculated on the total price including
GST 4 in Québec the PST was increased to 8.5% on 1 January 2011 and will
increase to 9.5% on 1 January 2012 5 Since the PST is applied first, then the GST to the subsequent
amount, the PST is also being taxed. This results in a tax being taxed which
calculates to more than the Total Tax amount indicated in the table above,
depending on the amount being taxed.
Ontario levies a payroll tax on employers, the "Employer Health Tax", of
1.95% of payroll. Eligible employers are exempt on the first $400,000 of
payroll. This tax was designed to replace revenues lost when health insurance
premiums, which were often paid by employers for their employees, were
eliminated in 1989.
Quebec levies a similar tax called the "Health Services Fund". For those who
are employees, the amount is paid by employers as part of payroll. For those who
are not employees such as pensioners and self-employed individuals, the amount
is paid by the taxpayer.
Premiums for the
Employment Insurance system and the
Canada Pension Plan
are paid by employees and employers. Premiums for
Workers' Compensation are paid by employers. These premiums account for 12%
of government revenues. These premiums are not considered to be taxes because
they create entitlements for employees to receive payments from the programs,
unlike taxes, which are used to fund government activities. The funds collected
by the Canada Pension Plan and by the Employment Insurance are in theory
separated from the general fund. It should be noted that Unemployment Insurance
was renamed to Employment Insurance to reflect the increased scope of the plan
from its original intended purpose.
Employment Insurance is unlike private insurance because the individual's
yearly income impacts the received benefit. Unlike private insurance, the
benefits are treated as taxable earnings and if the individual had a mid to high
income for the year, they could have to repay up to the full benefit received.
Americans at all levels of income
should have to agree to much higher taxes
The average Canadian family spends more money on taxes than on necessities of
life such as food, clothing, and housing, according to a study from The Fraser
Institute, an independent research organization with offices across Canada. The
Canadian Consumer Tax Index, 2007, shows that even though the income of the
average Canadian family has increased significantly since 1961, their total tax
bill has increased at a much higher rate. The Fraser Institute, April 16, 2007 ---
http://www.newswire.ca/en/releases/archive/April2007/16/c5234.html
Jensen Comment
Canadians control health care costs much better than the United States. Canadian
health care claims and payments costs are negligible whereas in the United Sates
a vast private and public bureaucracy exists just for accounting purposes.
Malpractice coverage and government fraud is greatly controlled relative to the
United States. Canada greatly restricts the number of free riders in the system
and negotiates much lower prescription drug prices relative to insurance
companies and Medicare in the United States. Malpractice awards in Canada are
tightly controlled.
Canada's heath care costs and services
vary by province such that there is no single national service. In general the
system is much more equitable for lower income citizens but often delays
virtually all claims for elective procedures such as knee replacements. Relative
to the United States, Canada has a much lower cost to bear for illegal
immigrants in terms of welfare support and medical services. This, however, also
means that Canada has a much lower population of illegals to exploit in low-wage
occupations such as maid services, construction trades, and migrant farm
workers.
Although taxes are higher in Canada, the Canadians are more on a pay-as-you
go system whereas the U.S. now has deficits of over $1.5 trillion per year that
we are adding to close to $100 trillion in entitlement obligations that we're
forcing upon future generations ---
http://faculty.trinity.edu/rjensen/Entitlements.htm
International comparison (personal income tax)
Comparison of taxes
paid by a household earning the country's average wage (as of 2005),
including social security contributions paid by employer
Country
Single
no children
Married
2 children
Country
Single
no children
Married
2 children
Australia
28.3%
16.0%
Korea
17.3%
15.2%
Austria
47.4%
35.5%
Luxembourg
35.3%
12.2%
Belgium
55.4%
40.3%
Mexico
18.2%
18.2%
Canada
31.6%
21.5%
Netherlands
38.6%
29.1%
Czech Republic
43.8%
27.1%
New Zealand
20.5%
14.5%
Denmark
41.4%
29.6%
Norway
37.3%
29.6%
Finland
44.6%
38.4%
Poland
43.6%
42.1%
France
50.1%
41.7%
Portugal
36.2%
26.6%
Germany
51.8%
35.7%
Slovakia
38.3%
23.2%
Greece
38.8%
39.2%
Spain
39.0%
33.4%
Hungary
50.5%
39.9%
Sweden
47.9%
42.4%
Iceland
29.0%
11.0%
Switzerland
29.5%
18.6%
Ireland
25.7%
8.1%
Turkey
42.7%
42.7%
Italy
45.4%
35.2%
United Kingdom
33.5%
27.1%
Japan
27.7%
24.9%
United States
29.1%
11.9%
Source: OECD,
2005 data
To
this we must add other taxes such as a corporate capital tax, corporate income
tax, VAT tax, personal and general sales taxes, and "taxes" collected that are
dedicated for specific purposes such as health care and unemployment taxes.
1 in British Columbia and Ontario, the PST and GST was integrated
into a federally-administered HST on 1 July 2010 2 in Nova Scotia, the HST was increased to 15% on 1 July 2010 3 in Québec and PEI, PST is calculated on the total price including
GST 4 in Québec the PST was increased to 8.5% on 1 January 2011 and will
increase to 9.5% on 1 January 2012 5 Since the PST is applied first, then the GST to the subsequent
amount, the PST is also being taxed. This results in a tax being taxed which
calculates to more than the Total Tax amount indicated in the table above,
depending on the amount being taxed.
Ontario levies a payroll tax on employers, the "Employer Health Tax", of
1.95% of payroll. Eligible employers are exempt on the first $400,000 of
payroll. This tax was designed to replace revenues lost when health insurance
premiums, which were often paid by employers for their employees, were
eliminated in 1989.
Quebec levies a similar tax called the "Health Services Fund". For those who
are employees, the amount is paid by employers as part of payroll. For those who
are not employees such as pensioners and self-employed individuals, the amount
is paid by the taxpayer.
Premiums for the
Employment Insurance system and the
Canada Pension Plan
are paid by employees and employers. Premiums for
Workers' Compensation are paid by employers. These premiums account for 12%
of government revenues. These premiums are not considered to be taxes because
they create entitlements for employees to receive payments from the programs,
unlike taxes, which are used to fund government activities. The funds collected
by the Canada Pension Plan and by the Employment Insurance are in theory
separated from the general fund. It should be noted that Unemployment Insurance
was renamed to Employment Insurance to reflect the increased scope of the plan
from its original intended purpose.
Employment Insurance is unlike private insurance because the individual's
yearly income impacts the received benefit. Unlike private insurance, the
benefits are treated as taxable earnings and if the individual had a mid to high
income for the year, they could have to repay up to the full benefit received.
Americans at all levels of income
should have to agree to much higher taxes
The average Canadian family spends more money on taxes than on necessities of
life such as food, clothing, and housing, according to a study from The Fraser
Institute, an independent research organization with offices across Canada. The
Canadian Consumer Tax Index, 2007, shows that even though the income of the
average Canadian family has increased significantly since 1961, their total tax
bill has increased at a much higher rate. The Fraser Institute, April 16, 2007 ---
http://www.newswire.ca/en/releases/archive/April2007/16/c5234.html
Jensen Comment
Canadians control health care costs much better than the United States. Canadian
health care claims and payments costs are negligible whereas in the United Sates
a vast private and public bureaucracy exists just for accounting purposes.
Malpractice coverage and government fraud is greatly controlled relative to the
United States. Canada greatly restricts the number of free riders in the system
and negotiates much lower prescription drug prices relative to insurance
companies and Medicare in the United States. Malpractice awards in Canada are
tightly controlled.
Canada's heath care costs and services
vary by province such that there is no single national service. In general the
system is much more equitable for lower income citizens but often delays
and rations virtually all claims for elective procedures such as knee replacements. Relative
to the United States, Canada has a much lower cost to bear for illegal
immigrants in terms of welfare support and medical services. This, however, also
means that Canada has a much lower population of illegals to exploit in low-wage
occupations such as maid services, construction trades, and migrant farm
workers.
Although taxes are higher in Canada, the Canadians are more on a pay-as-you
go system whereas the U.S. now has deficits of over $1.5 trillion per year that
we are adding to close to $100 trillion in entitlement obligations that we're
forcing upon future generations ---
http://faculty.trinity.edu/rjensen/Entitlements.htm
Dr. Anne Doig (incoming
President of the Canadian Medical Association) says
patients are getting less than optimal care and she adds that physicians from
across the country - who will gather in Saskatoon on Sunday for their annual
meeting - recognize that changes must be made. "We all agree that the system is
imploding, we all agree that things are more precarious than perhaps Canadians
realize," Jennifer Graham, "Overhauling
health-care system tops agenda at annual meeting of Canada's doctors," The
Canada Press, August 15, 2009 ---
Click Here
Of course it's also possible to find horror stories of
medical service denial/rationing in the United States, especially for people
with too much income for Medicaid coverage and too little income for a decent
private medical insurance plan. Since Medicare does not pay for nursing home
coverage, there are also many horror stories of care for the elderly in U.S.
long-term care nursing homes. I think Canada provides better nursing care of its
long-term disabled citizens.
The
St. Petersburg Times takes a look at the cost of
insurance in Canada for health care providers.
A neurosurgeon in Miami pays about $237,000 for medical malpractice
insurance. The same professional in Toronto pays about $29,200, reports
Susan Taylor Martin.
A Canadian orthopedic surgeon pays just over $10,000 for coverage that
costs a Miami physician $140,000. An obstetrician in Canada pays $36,353 for
insurance, while a Tampa Bay obstetrician pays $98,000 for medical
malpractice insurance.
Why the difference?
In the U.S., private for-profit insurance companies extend medical
malpractice coverage to doctors.
In Canada, physicians are covered through membership in a nonprofit. The
Canadian Medical Protective Association
offers substantially reduced fees for the same coverage, especially
considering that their payout is limited by caps in Canada just as in some
U.S. states.
In 1978, the Canadian Supreme Court limited pain and suffering awards to
just over $300,000, circumventing the opportunity for a jury to decide on an
award depending on the case before them.
Canadian Medical Protective Association
Here’s how it works.
Fees for membership vary depending on the region of the country in which
the doctor works and their specialty. All neurosurgeons in Ontario will pay
the same, for example. The number of claims they have faced for medical
malpractice does not figure into their premium
"We don't adjust our fees based on individual experience; it's the
experience of the group,'' says Dr. John Gray, the executive director,
"That's what the mutual approach is all about, and it helps keep the fees
down for everyone,” he tells the
St. Petersburg Times.
If a doctor is sued, the group pays the claim and
provides legal counsel.
In the U.S., the push has been on for limiting claims, no matter how
egregious the medical malpractice. President Obama was booed in June when,
before the American Medical Association, he said he would not limit a
malpractice jury award.
"We got a crazy situation where Obama is talking about the cost of
medicine but he said, 'I don't believe in caps,' " complains Dr. Dennis
Agliano, past president of the
Florida Medical Association. "If you don't have
caps, the sky's the limit and there's no way to curtail those costs.''
But the importance of limiting jury awards may not play into the big
picture on health care reform.
Malpractice lawsuits amount to
less than one percent of both the Canadian and the
U.S. healthcare system, meanwhile between 44,000 and 98,000 Americans die
each year due to medical errors in hospitals alone, while 16 times as many
suffer injuries without receiving any compensation, reports the group
Americans for Insurance Reform.
Major Difference
In Canada, an injured patient is often required to pay for the initial
investigation into his case. In the U.S. the contingency fee basis, usually
in the range of 30 percent, allows the injured party to proceed without a
financial downside.
In both the U.S. and Canada, the definition of medical negligence is that
a duty of care was owed to the patient by the physician, there was a breach
h of the standard of care and the patient suffered harm by the physician’s
failure to meet that standard of care.
A bad outcome in itself is not the basis of a lawsuit.
The Canadian Medical Protective Association insures virtually all of the
country’s 76,000 doctors, as opposed to the U.S. where private for-profit
insurance companies cover physicians for medical malpractice.
In Canada, the median damaged paid in 2007 was $91,999 and judgments
favored patients 25 times, doctors 70 times.
In the U.S., many physician groups are requiring patients to waive their
rights to a jury trial, even though malpractice litigation accounts for just
0.6 percent of healthcare costs.
Public Citizen, the consumer group, charges that
the facts don’t warrant the “politically charged hysteria surrounding
medical malpractice litigation.”
For the third straight year,
medical malpractice payments were at record lows
finds the group in a study released this month. The decline, however, is
likely due to fewer injured patients receiving compensation, not improved
health safety.
2008 saw the lowest number of medical malpractice payments since the
federal government’s
National Practitioner Data Bank began compiling
malpractice statistics. In 2008, payments were 30.7 percent lower than
averages recorded in all previous years.
In the report titled,
The 0.6 Percent Bogeyman, the nonprofit watchdog
group states, “between three and seven Americans die from medical errors for
every 1 who receives a payment for any type of malpractice claim.”
Public Citizen previously reported that about
five percent of doctors are responsible for half
of the medical malpractice in the U.S. that can result in permanent injury
or death. #
"Make no mistake about it, this generation is a
generation of thieves and the people who stole their parents and their
children’s money to make their own lives cushier are at it again. This time
the target is their grandchildren." --
Evan Sayet
Throughout American history, generations
of our countrymen took pride in leaving the country better than the one they
grew up in. Their attitude about sacrifice was summed up by this classic
quotation from
Tom Paine:
"If there must be trouble, let it be in
my day, that my child may have peace."
That is no longer the spirit that animates
our leaders or much of our country. Today, it's,
"If there must be trouble, let our
children and grandchildren handle it, so that I am not inconvenienced."
History is full of great nations that have
fallen from their lofty perches back into the ranks and the United States is
likely to be among them unless we change our attitude about the following
issues:
1) Takers Vs. Producers:
"In 1985, just
16.5% of filers paid no income tax." Today,
"roughly
120 million Americans – 40
percent of the U.S. population – are outside of the federal income tax
system."
Meanwhile, the top 50% of income earners
pay 97% percent of the income taxes. "In 1945, 41.9 workers supported each
(Social Security recipient), while today
only 3.3 workers support each retiree."
That number will continue to shrink.
In other words, we're developing into a
two-tiered society. Some people like to think of it as the "haves" and "have
nots." However, it would be more apt to describe it as the people who pay
the bills and the people who live off of the fruits of their labor.
This is an extraordinarily dangerous
development for our country. It makes us overly dependent on workers and
entrepreneurs who may flee the country or simply stop working as the burden
on them grows. It also leads to class warfare, with the producers becoming
increasingly resentful of an ever more demanding class of sows dining at the
government troth.
Of course, it's easy to be demanding when
you don't have to pay the full value of the services you receive. It's also
easy to be resentful when you don't get your money's worth in government
services and are treated as selfish for wanting to keep more of the money
you earned for yourself. This is not a recipe either for societal stability
or for long-term prosperity.
2) A degenerating society:
America's success has been because of our people, not because of our
government. It is almost impossible to overestimate the value our country
has gotten out of having a hard working, honest, charitable, patriotic,
culturally homogenous population.
Yet, the cultural elements that have made
this a great nation are under attack on every level. The stigma for taking
government assistance is fading, government is taking over the role of
charity, many liberals mock the idea of patriotism, divorce rates have grown
perilously high, support for gay marriage has increased, the percentage of
the population that's Christian is dropping, and multi-culturalism and even
dislike of America is replacing the idea of the Melting Pot.
The culture of a nation often tends to be
more resilient than people realize, but that doesn't mean it can be taken
for granted. If the bonds that hold us together disintegrate or the
fundamental decency of the American people is no longer a given, our nation
will no longer be great. As
Samuel Adams said back in 1779:
"A general dissolution of principles and
manners will more surely overthrow the liberties of America than the
whole force of the common enemy. While the people are virtuous they
cannot be subdued; but when once they lose their virtue then will be
ready to surrender their liberties to the first external or internal
invader."
3) Mounting debt: There's no peril
greater to this country's future than our rapidly increasing debt. We have
no idea how to pay for our Social Security and Medicare obligations, we seem
to be running larger and larger deficits every year, and neither political
party has the guts to make significant cuts in spending. Meanwhile, the
politicians in DC are so irresponsible that they're obsessed with adding yet
another cripplingly expensive entitlement program on top of the others we
already have now, despite the objections of the American people.
Could this lead to hyperinflation that
dramatically lessens the worth of a dollar? Could it, over the long haul,
give nations like China so much economic leverage over us that it would be
difficult to refuse them? Could the amount of money we have to pay in
interest on the debt become so odious that it could dramatically reduce
economic growth? Sadly, all of these scenarios are becoming more plausible
by the day.
4) Nuclear proliferation:
If we don't have the will to stop a "death to America" chanting terrorist
regime run by religious fanatics from getting nuclear weapons,
then
we don't have the will to stop any nation.
That's how it will be read across the Middle-East and across the world as
well if Iran gets nukes. Mahmoud Ahmadinejad and company wouldn't be alone
either. If they get nukes, we should expect at a minimum Egypt, Iraq,
Kuwait, Saudi Arabia to also build nuclear weapons. Once that genie is out
the bottle, it'll never be put back in and the United States will suffer
horribly as a result.
That's not just because of the much
greater potential for nuclear war and nuclear blackmail, but because the
strongest of all nations will always have a target on its back. Imagine
terrorists smuggling nuclear bombs into Los Angeles, DC, Chicago, and
Houston and then, after the explosion, not even being able to determine
which rogue nation produced the weapons that killed millions of Americans.
That's the future we're headed towards unless Iran is stopped and the
consequences will be more devastating than most Americans can imagine.
President Obama often states that the
federal budget cannot be balanced without health insurance reform. Even if
that were true, the real crisis that exists already and will only worsen
over time comes from the horrendous obligations taken on by state and local
governments for public employee pension plans.
Keith Richman caught on to this problem
while a California Assemblyman. He has formed the non-profit California
Foundation for Fiscal Responsibility to educate elected officials and the
public on the looming budget disaster. Fortunately, he is not the only one
touting this pending mess. Ron Seeling, the Chief Actuary for CalPERS (the
California public employees’ retirement program), has stated the plan is
unsustainable. CalPERS represents state employees and 1,500 local
governmental entities.
Some would say the pension problem starts
with the unionization of public employees. In California, the major catalyst
was SB400, signed by Gray Davis in his first year in office, 1999. The bill
lowered retirement age for public safety employees to 50 years old and to
non-public safety employees to 55 years old. We are in an era when people
are living on average until around 80 years old.
The law gives the employee pension
benefits of 3.0% of their final income for each year of service. It also
made the 3.0% amount retroactive to the beginning of their employment
period. That means if you work 20 years you receive a pension benefit equal
to 60% of your final income. The problem was compounded by how they
calculated the income on which to base the pension.
Everything including the kitchen sink adds
to the final income level. Things such as auto allowance and bonuses boost
the final number. If the employee did not use vacation pay or holiday pay
for the prior 10 years that adds to the base salary to determine the income.
Understanding that in most private sector jobs when you do not use your
vacation, you lose your vacation, the ability to accumulate vacation time
opens up the system for vast manipulation. Peter Nowicki, the Moraga Orinda
fire chief, retired at age 50. His final salary was a whopping $185,000, but
small compared to his annual pension benefit of $241,000. Making that matter
worse, Nowicki was hired as a consultant to the fire department for an
additional $176,000 per year -- on top of his retirement benefit.
This is not an isolated case. In Los
Angeles County there are over 3,000 people receiving greater than $100,000
per year in pension benefits. In San Francisco, it was found that 25% of
employees’ income spiked up over 10% in the final year of their work. The
San Francisco grand jury found that amount cost the city $132 million.
Some would argue why not game the system?
Let’s say you start working for the government when you are 30 years old and
work for 25 years. Your final income with all the fancy calculations ends up
at $120,000. That means you would receive $90,000 plus full health care
benefits. You can either live on that very nice retirement or you are free
to get another position. After all, being 55 years old, you are still in
your prime earnings years. Where in the private sector are there comparative
opportunities?
These kinds of retirement ages and
benefits are why the estimated unfunded liability is soaring. California has
estimated unfunded pension and health care liabilities ranging from $100 to
$300 billion. The school systems operate under their separate pension
program – CalSTRS. The Los Angeles Unified School System estimate for
unfunded retiree benefits comes in at about $10 billion. That is one school
system, be it the largest, in one state. Estimates show that the LAUSD will
soon carve out 30% of its budget for combined retiree health and pension
benefits.
California may be the worst example, but
not the only example of deplorable financial planning by governmental
entities. The original justification for rich benefits for public employees
centered on lower salaries, but that no longer rings true. A recent analysis
by the U.S. Bureau of Economics shows that federal employees receive
compensation that is double the average of the private sector. Other studies
have shown state and government employees to be receiving like levels of
compensation.
The genesis of this pending disaster comes
from the right of public employees to unionize. This was not always so. The
first opportunity occurred in 1958 in New York City under Mayor Robert
Wagner. President Kennedy instituted the right for federal employees to
unionize in 1962. Since then the right for public employees to unionize has
spread, but is not universal. States that have more restrictive laws have
blocked public employee unions and thus have not suffered the consequences.
In states like California, the public
employee unions fund huge political campaigns. To most observers, the unions
have a stranglehold on the state legislature, Los Angeles and San Francisco
city governments, and most if not all of the school districts in the state.
When the employees control the employers, the results are uncontrollable
obligations.
A recent report stated that children born
today will live an average life span of 100 years. With public employees
retiring at 50 or 55 years of age, it doesn’t take a deep thinker to
extrapolate that these retirement benefit programs are unsustainable.
Private sector employees now receive less
annual income than their public counterparts. Private sector employees will
have to work well into their seventies to pay for these public sector
employees’ retirement benefits which far exceed what the private sector
offers. The public will, little by little, become aware of this upside-down
arrangement. Heroes like Keith Richman are sacrificing to make the public
aware of this coming debacle. Our elected officials need to heed his
warnings.
Jensen Choice
Given all the heated debate and in spite of my conservative philosophy on most
matters, I actually lean toward Bill Bradley's recommendation and hope that it
would eventually make the U.S. health insurance system more like that of Canada.
From Former Liberal Senator Bill
Bradley The bipartisan trade-off in a viable health care
bill is obvious: Combine universal coverage with malpractice tort reform in
health care. Universal coverage can be obtained in many ways — including the
so-called public option. Malpractice tort reform
can be something as commonsensical as the establishment of medical courts —
similar to bankruptcy or admiralty courts — with special judges to make
determinations in cases brought by parties claiming injury. Such a bipartisan
outcome would lower health care costs, reduce errors (doctors and nurses often
don’t report errors for fear of being sued) and guarantee all Americans adequate
health care. Whenever Congress undertakes
large-scale reform, there are times when disaster appears certain — only to be
averted at the last minute by the good sense of its sometimes unfairly maligned
members. What now appears in Washington as a special-interest scrum could well
become a triumph for the general interest. But for that to happen, the two
parties must strike a grand bargain on universal coverage and malpractice tort
reform. The August recess has given each party and its constituencies a chance
to reassess their respective strategies. One result, let us hope, may be that
Congress will surprise everyone this fall.
Bill Bradley, "Tax Reform’s Lesson for Health Care Reform,"
The New York Times, August 30, 2009 ---
http://www.nytimes.com/2009/08/30/opinion/30bradley.html?_r=1
At the same time taxpayers at all levels of income and
wealth should be forced to pay heavy taxes for such national health insurance.
The poor should not get a free ride since they burden the health system as much
or more than everybody else.
And much greater effort must be made to prevent fraud. Not
enough is being done at the moment to prevent fraud in the system, especially in
Medicare and Medicaid where heirs siphon off granny's wealth and then dump her
on taxpayers.
Lastly there must be tight controls preventing illegal
immigration that is motivated primarily to obtain our taxpayer-subsidized health
care. At most illegal immigrants should obtain minimal services much like they
now receive in emergency rooms. If a citizen of Mexico can sneak across the
border just to get a lens transplant or dialysis or liver and kidney transplants
in El Paso then we might end up will half of South American lined up in
hospitals in El Paso and elsewhere in the U.S.
John was in the fertilized egg business. He had several hundred young layers
(hens), called 'pullets,' and ten roosters to fertilize the eggs.
He kept records, and any rooster not performing went into the soup pot and
was replaced.
This took a lot of time, so he bought some tiny bells and attached them to
his roosters.
Each bell had a different tone, so he could tell from a distance, which
rooster was performing.
Now, he could sit on the porch And fill out an efficiency report by just
listening to the bells.
John's favourite rooster, old Butch, was a very fine specimen, but this
morning he noticed old Butch's bell hadn't rung at all!
When he went to investigate, he saw the other roosters were busy chasing
pullets, bells-a-ringing, but the pullets, hearing the roosters coming, could
run for cover.
To John's amazement, old Butch had his bell in his beak, so it couldn't ring.
He'd sneak up on a pullet, do his job and walk on to the next one. John was
so proud of old Butch, he entered him in the Renfrew County Fair and he became
an overnight sensation among the judges.
The result was the judges not only awarded old Butch the No Bell Piece Prize
but they also awarded him the Pulletsurprise as well. Clearly old Butch was a
politician in the making. Who else but a politician could figure out how to win
two of the most highly coveted awards on our planet by being the best at
sneaking up on the populace and screwing them when they weren't paying
attention.
Forwarded by Maureen
The Perfect Solution to Senior Health Care
While discussing the upcoming Universal Health Care Program with my friend
the other day, I think we have found the solution. I am sure you have heard the
ideas that if you �re a senior you need to suck it up and give up the idea
that you need any health care. A new hip? Unheard of. We simply can't afford to
take care of you anymore. You don't need any medications for your high blood
pressure, diabetes, heart problems, etc. Let�s take care of the young people.
After all, they will be ruling the world very soon.
So here is the solution. When you turn 70, you get a gun and 4 bullets. You
are allowed to shoot 2 senators and 2 representatives. Of course, you will be
sent to prison where you will get 3 meals a day, a roof over your head and all
the health care you need! New teeth, great! Need glasses, no problem. New hip,
knee, kidney, lung, heart? Well bring it on. And who will be paying for all of
this. The same government that just told you that you are too old for health
care. And, since you are a prisoner, you don't have to pay any income tax.
And if we all do our part we can end up in the same prison and have one hell
of a social life.
I really think we have found a Perfect Solution!
Mary Putnam Jacobi and the Politics of Medicine in
Nineteenth-Century America by Carla Bittel (University of North
Carolina Press; 2009, 352 pages; $40). A biography of the New York physician,
educator, and feminist (1842-1906).
Practice Under Pressure: Primary Care Physicians
and Their Medicine in the Twenty-First Century by Timothy Hoff (Rutgers
University Press; 2009, 235 pages; $72 hardcover, $24.95 paperback). A
sociological analysis of the primary-care system in the United States; pays
particular attention to three groups coming to dominate the practice: female
physicians, young physicians, and international medical graduates.
Who's in Charge? Leadership During Epidemics,
Bioterror Attacks, and Other Public Health Crises by Laura H. Kahn (Praeger
Publishers; 2009, 235 pages; $49.95). Examines "leadership confusion" during
five public-health emergencies, beginning with the anthrax attacks in 2001.
In the context of changing demographics, the
increasing cost of health care services, and continuing federal budgetary
pressures, Medicare has become one of the most controversial federal
programs. To facilitate an informed debate about the future of this
important public initiative, this article examines and debunks the following
ten myths surrounding Medicare: (1) there is one Medicare program, (2)
Medicare is going bankrupt, (3) Medicare is government health care, (4)
Medicare covers all medical cost for its beneficiaries, (5) Medicare pays
for long-term care expenses, (6) the program is immune to budgetary
reduction, (7) it wastes much of its money on futile care, (8) Medicare is
less efficient than private health insurance, (9) Medicare is not
means-tested, and (10) increased longevity will sink Medicare.
Jensen Comment
I don't agree with every conclusion in this paper, but it is one of the best
summaries of Medicare that I can recommend.
Waste, Fraud, and Abuse: The gap between
payments and payees in Medicare makes it a criminal's piñata
It should be emphasized at the outset that this
contention is not about the ever-present specter of “waste, fraud, and
abuse” that haunts governmental programs generally. That Medicare is
targeted by scammers and schemers of all sorts is both indisputable and
hardly surprising. As the famed bank robber, Willie Sutton, reportedly
replied when asked why he robbed banks: “That’s where the money is.”101
Indeed, Medicare is where the money is—specifically $509 billion in fiscal
year 2010 alone.102 Any program that pays out this amount of money to a wide
variety of service providers in literally every county in America will be
very difficult to police. That reality notwithstanding, such violations of
the public trust as are encapsulated in the phrase “waste, fraud, and abuse”
should be ferreted out whenever possible and eliminated. No one excuses
these leakages, just as no one has a sure-fire solution to stem them once
and for all. Kaplan, Page 19
One thing to think about is why
Medicare may be losing hundreds of billions of dollars relative to the national
health care plans of Canada, Europe, etc. The obvious thing to pick on is that
Medicare is a third party payment system where medical services, medications,
equipment such as battery-powered scooters and home hospital beds, and medical
care centers are not directly managed by the government. This opens the
door to millions of fraudulent claims, often by extremely clever criminals,
unscrupulous physicians, etc. The gap between payments and payees in Medicare
makes it more vulnerable to abuse and waste.
This and other articles make a
big deal about how administrative costs of Medicare are significantly less that
the administrative costs of private insurance carriers like Blue Cross. However,
what this article and related articles almost always fail to mention is that the
major component of administrative cost to companies like Blue Cross lies in
operating controls to prevent waste, fraud, and abuse.
National plans like those in
Canada have both lower administrative costs and less waste, fraud, and abuse
because the government provides most of the services directly without the moral
hazards that arise from the gap between funding and delivery of services.
Personally, I favor national plans. Of course, in some nations like Germany
there are premium alternatives where people that can afford it can pay for
premium services not covered in the national plans.
http://faculty.trinity.edu/rjensen/Health.htm
Futile Care Waste: My
former University of Maine colleague was given thirty days to live (because of
Stage Four bone cancer) received two new hips but never walked again and died in
less than two weeks
But the issue of “futile care” is very different
from “waste, fraud, and abuse.” The claim that Medicare should not pay for
pointless medical interventions presumes that funds were indeed spent on
actual medical procedures. The issue is whether those procedures should not
have been done for reasons of inefficacy or insufficient “bang for the
buck.” It is certainly true that Medicare spends a disproportionate amount
of its budget on treatments in the final months of its beneficiaries’ lives.
Some twenty-eight percent of the entire Medicare budget is spent on medical
care in enrollees’ final year of life,103 and nearly forty percent of that
amount is spent during a patient’s last month. The critical issue, of
course, is whether these expenditures are pointless.
In one respect, it is not surprising that the cost
of a person’s final medical episode is unusually expensive. That person’s
presenting condition must have been especially severe because he or she did
in fact die during or shortly after treatment. Moreover, when circumstances
are particularly bleak, more intensive and often much more expensive
procedures, tests, and interventions seem appropriate. After all, the
patient was literally fighting off death at that point, so medical personnel
try everything in their armamentarium to win what was ultimately the
patient’s final battle. Only after the fact does one know that the battle in
question was indeed the patient’s last episode. Does that mean that the
effort expended, and the attendant costs, were wasted?
This question is more difficult than some might
suspect. A recent study of Medicare claims data examined the association
between inpatient spending and the likelihood of death within thirty days of
a patient’s being admitted to a hospital.It found that for most of the
medical conditions examined, including surgery, congestive heart failure,
stroke, and gastrointestinal bleeding, a ten percent increase in inpatient
spending was associated with a decrease in mortality within thirty days of
3.1 to 11.3%, depending upon the specific medical condition in question.
Only for patients who presented with acute myocardial infarction was there
no association of increased inpatient spending and improved outcomes. Thus,
the authors concluded, “the amount [of waste] may not be as large as
commonly believed, at least for hospitalized Medicare patients.” To be sure,
the results might not be as encouraging in non-hospital settings, but
Medicare does not cover the cost of nursing home patients who are lingering
at death’s door while receiving “custodial care.”In any case, hospital costs
represent the single largest component of Medicare’s expenditures— fully
twenty-seven percent in the most recent year for which such data are
available.
That is not to say that some of Medicare’s
expenditures near the end of beneficiaries’ lives provide insufficient
benefit to justify their cost. But the tough questions are how to determine
those wasteful expenditures in advance and who should make that
determination. Such considerations are beyond the scope of this Article,but
suffice it to note that end-of-life care discussions are extraordinarily
contentious and easily demagogued. After all, former Vice Presidential
candidate Sarah Palin effectively scuttled a rather benign effort to include
payment for end-of-life counseling in Medicare’s newly provided “annual
wellness visit[s]” by contending that such counseling was a first step to
rationing health care by “death panels” run by government bureaucrats. Thus,
while patients can individually indicate in advance how much treatment they
want at the end of their lives, any comprehensive effort to root out
Medicare’s wasteful expenditures on “futile care” might face serious
political opposition.
In any case, an authoritative analysis published in
The New England Journal of Medicine concluded that “the hope of
cutting the amount of money spent on life-sustaining interventions for the
dying in order to reduce overall health care costs is probably vain.” The
authors noted that “there are no reliable ways to identify the patients who
will die” and that “it is not possible to say accurately months, weeks, or
even days before death which patients will benefit from intensive
interventions and which ones will receive ‘wasted’ care.” That leaves
age-based rationing of care or more precisely, denial of medical services on
the basis of chronological age, as the only easily implemented pathway to
eliminate what some might regard as inefficacious expenditures of medical
resources. Such age-based rationing of health care is practiced in other
national health care systems, even though studies of prognostic models have
demonstrated that “age alone is not a good predictor of whether treatment
will be success ful.” In any case, polls of Americans have shown little
support and significant opposition to the concept. One survey undertaken in
late 1989 sought agreement with the following statement: “Lifeextending
medical care should be withheld from older patients to save money to help
pay for the medical care of younger patients.” Only 5.7% of respondents
under age sixty-five strongly agreed with this statement while 38.3% of that
group strongly disagreed with it.120 Interestingly, among respondents who
were themselves age sixty-five and older, the gap between these opposing
viewpoints was narrower: 8.8% strongly agreed with the statement in question
while 35.4% strongly disagreed.
Whether results would be substantially different
today when the range of medical interventions has increased significantly
and when the nation’s budgetary situation has worsened considerably is an
open question. Yet, when the 2010 health care reform legislation created an
Independent Payment Advisory Board to reduce Medicare’s expenses, the
enabling statute was explicit that this Board may not make proposals that
would “ration health care.” Clearly, the prospect of eliminating Medicare
expenditures that are medically futile will not be an easy task to
accomplish. Kaplan, pp. 19-22
Jensen Comment
My former University of Maine
colleague on Medicare was given thirty days to live (because of Stage Four bone
cancer) received two new hips but never walked again and died in less than two
weeks. I don't think he would've received those two useless and very expensive
hips on any of the national plans of Canada or Europe.
Where Did Medicare Go So Wrong?
Medicare is a much larger and much more complicated entitlement burden relative
to Social Security by a ratio of about six to one or even more. The Medicare
Medical Insurance Fund was established under President Johnson in1965.
Note that Medicare, like Social Security in general, was intended to be
insurance funded by workers over their careers. If premiums paid by workers and
employers was properly invested and then paid out after workers reached
retirement age most of the trillions of unfunded debt would not be precariously
threatening the future of the United States. The funds greatly benefit when
workers die before retirement because all that was paid in by these workers and
their employers are added to the fund benefits paid out to living retirees.
The first huge threat to sustainability arose beginning in 1968 when medical
coverage payments payments to surge way above the Medicare premiums collected
from workers and employers. Costs of medical care exploded relative to most
other living expenses. Worker and employer premiums were not sufficiently
increased for rapid growth in health care costs as hospital stays surged from
less than $100 per day to over $1,000 per day.
A second threat to the sustainability comes from families no longer concerned
about paying up to $25,000 per day to keep dying loved ones hopelessly alive in
intensive care units (ICUs) when it is 100% certain that they will not leave
those ICUs alive. Families do not make economic choices in such hopeless cases
where the government is footing the bill. In other nations these families are
not given such choices to hopelessly prolong life at such high costs. I had a
close friend in Maine who became a quadriplegic in a high school football game.
Four decades later Medicare paid millions of dollars to keep him alive in an ICU
unit when there was zero chance he would ever leave that ICU alive.
On November 22, 2009 CBS Sixty Minutes aired a video featuring experts
(including physicians) explaining how the single largest drain on the Medicare
insurance fund is keeping dying people hopelessly alive who could otherwise be
allowed to die quicker and painlessly without artificially prolonging life on
ICU machines.
"The Cost of Dying,"CBS Sixty Minutes Video, November 22, 2009
---
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
What is really sad is the way Republicans are standing in the way of making
rational cost-benefit decisions about dying by exploiting the "Kill Granny"
political strategy aimed at killing a government option in health care reform.
See the "Kill Granny" strategy at ---
www.defendyourhealthcare.us
The third huge threat to the economy commenced in when disabled persons
(including newborns) tapped into the Social Security and Medicare insurance
funds. Disabled persons should receive monthly benefits and medical coverage
in this great land. But Congress should've found a better way to fund disabled
persons with something other than the Social Security and Medicare insurance
funds. But politics being what it is, Congress slipped this gigantic
entitlement through without having to debate and legislate separate funding for
disabled persons. And hence we are now at a crossroads where the Social Security
and Medicare Insurance Funds are virtually broke for all practical persons.
Most of the problem lies is Congressional failure to sufficiently increase
Social Security deductions (for the big hit in monthly payments to disabled
persons of all ages) and the accompanying Medicare coverage (to disabled people
of all ages). The disability coverage also suffers from widespread fraud.
Other program costs were also added to the Social Security and Medicare
insurance funds such as the education costs of children of veterans who are
killed in wartime. Once again this is a worthy cause that should be funded. But
it should've been separately funded rather than simply added into the Social
Security and Medicare insurance funds that had not factored such added costs
into premiums collected from workers and employers.
The fourth problem is that most military retirees are afforded full lifetime
medical coverage for themselves and their spouses. Although they can use
Veterans Administration doctors and hospitals, most of these retirees opted for
the underfunded
TRICARE plan the pushed most of the hospital and physician costs onto the
Medicare Fund. The VA manages to push most of its disabled veterans onto the
Medicare Fund without having paid nearly enough into the fund to cover the
disability medical costs. Military personnel do have Medicare deductions from
their pay while they are on full-time duty, but those deductions fall way short
of the cost of disability and retiree medical coverage.
The fifth threat to sustainability came when actuaries failed to factor in
the impact of advances in medicine for extending lives. This coupled with the
what became the biggest cost of Medicare, the cost of dying, clobbered the
insurance funds. Surpluses in premiums paid by workers and employers disappeared
much quicker than expected.
http://www.cbsnews.com/news/the-cost-of-dying-end-of-life-care/
A sixth threat to Medicare especially has been widespread and usually
undetected fraud such as providing equipment like motorized wheel chairs to
people who really don't need them or charging Medicare for equipment not even
delivered. There are also widespread charges for unneeded medical tests or for
tests that were never really administered. Medicare became a cash cow for
crooks. Many doctors and hospitals overbill Medicare and only a small proportion
of the theft is detected and punished.
The seventh threat to sustainability commenced in 2007 when the costly
Medicare drug benefit entitlement entitlement was added by President George W.
Bush. This was a costly addition, because it added enormous drains on the fund
by retired people like me and my wife who did not have the cost of the drug
benefits factored into our payments into the Medicare Fund while we were still
working. It thus became and unfunded benefit that we're now collecting big time.
In any case we are at a crossroads in the history of funding medical care in
the United States that now pays a lot more than any other nation per capita and
is getting less per dollar spent than many nations with nationalized health care
plans. I'm really not against Obamacare legislation. I'm only against the lies
and deceits being thrown about by both sides in the abomination of the current
proposed legislation.
Democrats are missing the boat here when they truly have the power, for now
at least, in the House and Senate to pass a relatively efficient nationalized
health plan. But instead they're giving birth to entitlements legislation that
threatens the sustainability of the United States as a nation.
The New York Times Timeline History of Health Care Reform in the
United States ---
http://www.nytimes.com/interactive/2009/07/19/us/politics/20090717_HEALTH_TIMELINE.html
Click the arrow button on the right side of the page. The biggest problem with
"reform" is that it added entitlements benefits without current funding such
that with each reform piece of legislation the burdens upon future generations
has hit a point of probably not being sustainable.
Call it the fatal arithmetic of imperial decline.
Without radical fiscal reform, it could apply to America next. Niall Ferguson, "An Empire at Risk: How Great Powers Fail," Newsweek
Magazine Cover Story, November 26, 2009 ---
http://www.newsweek.com/id/224694/page/1
. . .
In other words, there is no end in sight to the
borrowing binge. Unless entitlements are cut or taxes are raised, there will
never be another balanced budget. Let's assume I live another 30 years and
follow my grandfathers to the grave at about 75. By 2039, when I shuffle off
this mortal coil, the federal debt held by the public will have reached 91
percent of GDP, according to the CBO's extended baseline projections.
Nothing to worry about, retort -deficit-loving economists like Paul Krugman.
. . .
Another way of doing this kind of exercise is to
calculate the net present value of the unfunded liabilities of the Social
Security and Medicare systems. One recent estimate puts them at about
$104 trillion, 10
times the stated federal debt.
Continued in article
This is now President Obama's problem with or without new Obamacare
entitlements that are a mere drop in the bucket compared to the entitlement
obligations that President Obama inherited from every President of the United
States since FDR in the 1930s. The problem has been compounded under both
Democrat and Republican regimes, both of which have burdened future generations
with entitlements not originally of their doing.
Professor Niall Ferguson and David Walker are now warning us that by year
2050 the American Dream will become an American Nightmare in which Americans
seek every which way to leave this fallen nation for a BRIC nation offering some
hope of a job, health care, education, and the BRIC Dream.
Question
Should we keep increasing the government spending deficit and the national debt
every year ad infinitum?
Answers
Although in these down economic times, the liberal's Keynesian hero and Nobel
Prize economist, Paul Krugman, thinks recovery is stalled because the government
is not massively increasing spending deficits. But he's not willing to commit
himself to never reducing deficits or never paying down some of the national
debt. Hence, he really does not answer the above question ---
http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html
So let's turn to a respected law professor who advocates increasing the
government spending deficit and the national debt every year ad infinitum?
Abstract:
Calls either to balance the federal budget on an annual basis, or to pay
down all or part of the national debt, are based on little more than
uninformed intuitions that there is something inherently bad about borrowing
money. We should not only ignore calls to balance the budget or to pay down
the national debt, but we should engage in a responsible plan to increase
the national debt each year. Only by issuing debt to lubricate the financial
system, and to support the economy’s healthy growth, can we guarantee a
prosperous future for current and future citizens of the United States.
Student Assignment
Since many of the most liberal economists are not quite
willing to assert that "we should never pay down the national debt," what
questionable and unmentioned assumptions have been made by Neil H. Buchanan
that need to be addressed?
Are some of these assumptions unrealistic in any world
other than a utopian world?