Medicare Review

Current Issue

Palliative and End-of-Life Care

Panel Urges Overhauling Health Care at End of Life

September 23, 2014

The country's system for handling end-of-life care is largely broken and should be overhauled at almost every level, a national panel concluded in a report released on Wednesday, according to the New York Times.

According to some, the system is geared toward towards simply doing more toward the end of life which can be costly and not consistent with what the patients actually want. A report by a nonpartisan committee that was appointed by the Institute of Medicine has some recommendations for dealing with end of life care: 

· First, Reimburse health care providers for conversations on advanced care planning.

· Restructuring Medicare, Medicaid, and other health care delivery programs.

· Eliminate perverse financial incentives that encourage expensive hospital procedures when low-tech services like pain management and home health care are available.

· Finally, accredited medical schools and groups as well as health providers should greatly increase training in palliative care.

Some recommendations, like changing the reimbursement structure so that Medicare would pay for home health services would require congressional action. In all, however ,the 507-page report, titled "Dying in America," said its recommendations would improve the overall quality of care and save a significant amount of money for our health care system.

Some critics argue that end-of-life choices that stem from the standpoint of economic savings would prompt the medical establishment to pressure people into rejecting life-sustaining treatment. However, in a survey of doctors about their own end-of-life care, many wish to be at home and simply free from pain. The conclusion of the study would not necessarily prompt premature deaths, but instead provide more choices for an increasingly diverse set of wants from a growing American population.

To accommodate this shift to more end-of-life planning, higher health education needs to be completely revolutionized to teach more palliative care skills and teaching. As it stands, many doctors are uncomfortable or ill-equipped to deal with the subject.

Source: New York Times, "Panel Urges Overhauling Health Care at End of Life," September 17, 2014.

http://www.ncpa.org/sub/dpd/index.php?Article_ID=24879

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Government is not the solution to our problems, government is the problem.

- Ronald Reagan

 

Medicare Review

Previous Issue

The realities of government Medicine

Numbers You Need to Know About Medicare Advantage Cuts

Submitted by Randall Clough on Mon, 03/17/2014 - 11:41

1.      $420 to $540: Average Annual Premium Increase And/Or Benefit Reduction For Medicare Advantage Enrollee In Florida Due To Proposed Cuts From Obama Administration

2.      78%: Percent Of Seniors In Swing States That Say Medicare Advantage Cuts Will Be One Of The Most Significant Issues In Determining Their Vote If Cost Of Plans Rises

3.      50: Number Of DEMOCRATS In U.S. House Of Representatives Who Signed Letter To Center Of Medicare Services Out Of 194 Members Citing Concern Over Cuts To Medicare Advantage

4.      18: Number Of DEMOCRATS In U.S. Senate Who Signed Letter To Center Of Medicare And Medicaid Services Out Of 40 Members Citing Concern Over Cuts To Medicare Advantage

5.      74%: Percent Of Seniors In Swing States Expressing Concern That Medicare Advantage Rate Reduction Will Increase Cost Seniors Have To Pay

6.      1: Number Of Candidates For Governor Of Florida Denying That Medicare Advantage Cuts Will Harm Seniors

Ref: http://healthsprocket.com/node/9366

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Government is not the solution to our problems, government is the problem.

- Ronald Reagan

 

Medicare Review

Past Issue

The Patient Friendly Medicare Program may Not be so Patient Friendly

17 Medicare Facts

by Twila Brase, RN, PHN

1. Medicare is essentially compulsory.

People who refuse to join Medicare Part A are not allowed to receive their earned Social Security benefits.1 Brian Hall, et al. v. Kathleen Sebelius, et al, was filed October 9, 2008 and appealed June 14, 2011.

On June 30, 2011, U.S. Sen. Jim DeMint and 12 GOP colleagues introduced the Retirement Freedom Act to decouple Medicare from Social Security.2 On February 7, 2012, the D.C. Circuit Court of Appeals held that “because plaintiffs are entitled to Social Security benefits and are 65 or older, they are automatically entitled to Medicare Part A benefits. The statute offers no path to disclaim their legal entitlement to Medicare Part A benefits.”3

2. Medicare patients cannot pay cash for care. 

A 1997 law (Balanced Budget Act, section 4507) forbids private contracts between patients and doctors. With few exceptions, Medicare recipients cannot pay cash for a Medicare-covered service that Medicare denies until the doctor has opted out of Medicare.4 Most physicians cannot afford to opt out. Obamacare cut $716 billion from Medicare5 and enacted two administrative panels that are expected to advance rationing: the Independent Payment Advisory Board (IPAB)6 and the Patient-Centered Outcomes Research Institute (PCORI).7

3. Initial refusal to enroll in Medicare Part B leads to costly penalties.

Seniors are automatically enrolled in Medicare Part B. Those who refuse and later change their minds will pay a premium for the rest of their lives that is 10 percent higher for each year they were not enrolled.8

4. Citizens do not have a right to their Medicare contributions (payroll taxes)

There is no binding contract between the government and citizens for future payment of Medicare benefits.9 Congress can alter or eliminate Medicare benefits at its discretion.

5. Medicare comes in four parts.
Part A (hospitalization insurance) is funded through payroll taxes.10 In 2010, Obamacare increased the payroll tax for individuals earning more than $200,000 and couples earning more than $250,000.11 In 2006, Part B (coverage for physician services, diagnostic tests, and other services) was funded approximately 76% by federal income taxes and 21 percent by Medicare recipients.12 Under Part C, the Medicare Advantage HMO managed care plan, insurers receive approximately $800 per month per Medicare enrollee (12-18% more per individual than in traditional Medicare).13 Part D allows senior citizens to pay for and receive subsidized drug coverage.14

6. Medicare dependency is growing.


In 2003, there were 42 million Medicare recipients.15 In 2010, there were 46.5 million recipients.16 In 2011, the first of 77 million baby boomers began entering Medicare.17

7. Medicare is heading toward bankruptcy.

In 1965, 4.6 workers/taxpayers supported each Medicare recipient.18 In 2005, 3.8 workers supported each recipient.19 In 2010, there were less than three workers per retiree. In 2030, only 2.3 workers/taxpayers are estimated per Medicare recipient.20 Medicare is expected to grow from 3.7% of GDP in 2011 to 5.7% in 2035 to 6.7% of GDP by 2086.21

8. Medicare is not health insurance.

Medicare does not pay for hospitalization longer than 150 days, and there is no cap on out-of-pocket expenses.22 “Medigap” insurance is often purchased to cover out-of-pocket costs, including coinsurance and copays, and to protect against huge medical bills not covered by Medicare. In 2011, there is a choice of ten standardized Medigap policies.23

9. Medicare Advantage is HMO coverage.

With the 1965 enactment of Medicare, 19 million seniors received free access to health care without having paid a penny for it. To stem the run on the U.S. Treasury, the HMO Act of 1973 was enacted, providing $375 million for the development of HMOs nationwide and the eventual placement of Medicare recipients into HMOs to limit access to care.24

10. Medicare recipients pay much less in Medicare taxes than they receive in care.

An average-wage, two income couple together earning $89,000 a year that retires in 2011 will have paid $114,000 in Medicare payroll taxes and can expect to receive services, including prescriptions, worth $355,000.25

Read all 17 Medicare Facts at http://www.cchfreedom.org/pdf/17%20Medicare%20Facts.pdf

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Government is not the solution to our problems, government is the problem.

- Ronald Reagan

 

Medicare Review

Past Issue

Social Security’s missed opportunity of 2000

When I turned 65, I debated whether to apply for Social Security Retirement Benefits. Since, I planned to practice until age 72; I knew that I would lose a major portion of my benefits since I was still working. But I found out that not applying for benefits would cost me far more than the income lost by keeping on with the practice of Medicine. Essentially all of my colleagues who entered practice about the same time as I, had similarly decided to keep on working. Why begin to take retirement benefits at age 65 when 75 is the new life expectancy rather than age 65 which was the life expectancy when Social Security was implemented and lose one dollar for every two dollars earned? 

And then President Clinton announced that full benefits would be available to those turning 65 regardless of income. We had all assumed a 2 for 1 reduction in benefits from age 65 to age 72 by staying in the program.  Hence, we all began receiving benefits at age 65 even though life expectance was now 75. The average American would now receive an additional 10 years of full benefits that had not been factored in when FD Roosevelt had implemented the program in 1935. But wouldn’t ten years of extra yearly income for every American bankrupt the country? Why couldn’t the Clintons have utilized this information to guarantee the future of Social Security?

Just by delaying the partial benefits of age 62 to age 65 and delaying full benefits from age 65, and now from age 68, to age 72, when all professionals, successful business men, corporate executives and entrepreneurs were expecting they would receive full benefits, the Social Security Armageddon of the 21st century could have been avoided.

In the relative quiet political climate of the mid 1990’s, this could have been feasible. However, in our present political climate it cannot even be mentioned. Social Security has again become the third rail of any politician who even mentions this correction in predictions from the 1930s.

This is another example of a president trying to be kind and to purchase votes, causes far more misery to American’s after he’s dead and gone, rather than become a hero in the annals of American History.

There are only brief interludes in history during which an error of this magnitude can be corrected with the least amount of pain. And Clinton missed it. Had he done nothing, our country would be better off.

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Government is not the solution to our problems, government is the problem.

- Ronald Reagan

 

Medicare Review

Past Issue

Lifts the ban on Sex-Reassignment surgery

Medicare Ban on Sex-Reassignment Surgery Lifted

Decisions on Procedure Now Will be Made on Case-by-Case Basis

By Stephanie Armour, WSJ, June 1, 2014

WASHINGTON—Transgender people who receive Medicare benefits will no longer be automatically denied coverage for sex-reassignment surgery, a federal review board ruled Friday.

The decision means that Medicare, the federal health insurance program for seniors and those with disabilities, will now cover sex-reassignment surgery on a case-by-case basis rather than routinely denying the surgery under guidance adopted during the 1980s.

Although the Department of Health and Human Services appeals-board decision involved a single case—a New Mexico woman who sought gender-reassignment surgery—it could have broad ramifications because private insurance companies and Medicaid, the state-federal program for the poor, often follow Medicare's lead on coverage.

The surgery is often the last step in a long process toward gender-reassignment. Some people call themselves transgender even if they haven't had the operation.

"It's pretty clear there's no basis for the arbitrary discriminatory rule they established in the 1980s when they wouldn't cover it," said Mara Keisling, executive director at the National Center for Transgender Equality, an advocacy organization in Washington, D.C. "It's not up to bureaucrats anymore. It's up to doctors and patients. It's very important."

While the ruling doesn't require Medicare to pay for the surgery, it does mean coverage decisions will be made on a case-by-case basis by doctors and other Medicare contractors, based on clinical evidence that the procedure is medically appropriate, according to the Centers for Medicare and Medicaid Services.

The case decided Friday involved Denee Mallon, a 74-year-old transgender woman from Albuquerque, N.M., who was born as a male.

Her doctors agreed she should have sex-assignment surgery, but Medicare denied the procedure two years ago.

"Medicare determined there is no medical reassurance for this exclusion," said Ms. Mallon's attorney, Jennifer Levi, who heads the Transgender Rights Project of Gay and Lesbian Advocates and Defenders in Boston.

"This brings Medicare policy into the 21st century," Ms. Levi said.

America's Health Insurance Plans, a trade association for the health-insurance industry, said coverage for sex-reassignment surgeries varies by plan.

The total cost of transgender-specific care for one person is estimated at between $25,000 and $75,000, according to the Human Rights Campaign, an advocacy group for lesbian, gay, bisexual, and transgender people. The organization also said that many providers of gender-reassignment surgery might not accept Medicare coverage, posing a challenge to those seeking the procedure.

http://online.wsj.com/articles/medicare-ban-on-sex-reassignment-surgery-lifted-1401478303?KEYWORDS=Medicare+ban+on+Sex-reassignment

Editorial Comment:

We have one sexual dysphoria patient in our practice who was married, had three children and thought she was really a man trapped in a female body. She divorced her husband and had sex-reassignment surgery at a prestigious medical center. She is now a DAD (although a biologic mom) to her three children who also have another dad.

After the surgery, she married another female, and her clitoris, now with hormone treatment, is a small male phallus. He is able to insert his clitoris, after hormone therapy, into his wife’s vagina and achieve an orgasm. He has no ejaculation and cannot urinate through his penis since there is no urethra inside the shaft of his clitoris, now his penis. His urethra is still beneath the clitoral phallus, and does not go through it. Hence, he empties his bladder as she (he) did when he was still a woman. He had a scrotum built behind the clitoris which is now his phallus, and the urethra is behind his two aluminum testicles resting in his newly built scrotum. Since a female urinates straight down, the urinary stream does miss his aluminum testicles. He enjoyed showing the nurses on his last hospitalization where they had to insert the catheter by elevating his scrotum with the aluminum testicles, which are always in the male tight ejaculating position, even though he (she) does not ejaculate during his clitoral orgasm.

Of course, he had the rest of the transforming surgery. His breasts were amputated, his vagina was removed. He had a hysterectomy and a bilateral oophorectomy. And voila, he thought he was now in a male body. After hormone therapy, he was able to grow a beard, mustache, pubic hair, and his clitoris began to enlarge. It is now about 4 cm long. Which he states is long enough to stimulate his new wife’s clitoris and give her an orgasm.

He went through a psychiatric crisis. He was treated as a schizophrenic for a few years and on his last visit, his female wife states he is no longer schizophrenic, but was given a new diagnosis.

Was she really a male trapped in a female body? Or was she primarily homoerotic and liked girls better than boys? In our current open society, could she not have achieved her current status in a lesbian relationship without such mutilating surgery? Or is he now really a genetic female trapped in a female body modified to look like a male but still with the x-x chromosome which ultimately defines him as a genetic female. And she (he) is married to a genetic female with all the secondary female sex characteristics. Doesn’t this define the lesbian relationship, genetic female having sex with a true genetic female? Couldn’t she have this relationship without the operations and years of psychotherapy which more likely than not cost taxpayers more than $100,000.

Are sex-reassignment operations for sexual dysphoria ever indicated in our present society?

And now Medicare pays for these sex change operations?

How does a sex change operation in a 74-year-old transgender person bring us into the 21st century?


Feel free to email any comments to delmeyermd@ix.netcom.com We may publish several. We’ll be happy to include your name and position with your permission.
PHI has to be sent through the Practice Fusion website.

Be sure to go to the WSJ site to read a large number of comments.

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Government is not the solution to our problems, government is the problem.

- Ronald Reagan

It may also make the problem worse!

 

Medicare Review

Past Issue

And Other Government Programs: War On Poverty

Why We Lost the War on Poverty

By John Goodman | Health Alerts | May 7, 2014 –

See more at: http://healthblog.ncpa.org/why-we-lost-the-war-on-poverty/#sthash.oKZ8tgWI.dpuf

Take a look at the graph below. From the end of World War II until 1964 the poverty rate in this country was cut in half. Further, 94% of the change in the poverty rate over this period can be explained by changes in per capita income alone. Economic growth is clearly the most effective antipoverty weapon ever devised by men. The dotted line shows what would have happened had this trend continued. Economic growth would have reduced the poverty rate to a mere 1.4% of the population today ― a number so low that private charity could probably have taken care of any unmet needs. But we didn’t continue the trend. In 1965 we launched a War on Poverty. And as the graph shows, in the years that followed the portion of Americans living in poverty barely budged. In 1965, 18% of the population lived in poverty. Today we are at 15%, or 50 million Americans. That’s after spending $15 trillion on antipoverty programs and continuing to spend $1 trillion a year. 

Now here is something you may not know. Early on ― in the first decade of our 50-year experiment with an expanded welfare state ― carefully controlled experiments funded by the federal government established without question that welfare changes behavior. It leads to the very behavioral changes that keep people in a state of poverty and dependency. Think about that. Any serious social science debate about the effects of welfare on the behavior of the recipients was resolved four decades ago! We now know a lot about how behavior affects poverty. In fact, if you do these four things, it’s almost impossible to remain poor: Finish high school, Get a job, Get married, and Don’t have children until you get married. So how does welfare affect behavior? In the late 1960s the federal government sought to find that out in what Charles Murray calls “the most ambitious social science experiment in history.” The experiments were all conducted by social scientists that believed in the welfare state and had no doubt about its capacity to be successful. In other words, they were confident of the answers before the experiments ever began. Their goal was to prove that popular wisdom was all wrong ― that welfare would not cause people to reduce their work effort, to get married less often, divorce more quickly or engage in other dysfunctional behavior. The experiments were all controlled. Randomly selected people were assigned to a “control group” and an “experimental group.” The latter received a guaranteed income, and the program even used Milton Friedman’s term for it: a negative income tax. The largest, longest and best-evaluated of these experiments was SIME/DIME (Seattle Income Maintenance Experiment/Denver Income Maintenance Experiment) in Seattle and Denver. And the results were not pretty. To the dismay of the researchers, they largely confirmed what conventional wisdom had thought all along. As I reported in “Privatizing the Welfare State“: The number of hours worked dropped 9% for husbands and 20% for wives, relative to the control group. For young male adults it dropped 43% more. The length of unemployment increased 27% among husbands and 42% for wives, relative to the control group. For single female heads of households it increased 60% more. Divorce increased 36% more among whites and 42% more among blacks. (In a New Jersey experiment, the divorce rate was 84% higher among Hispanics.) BTW, these results have been studied and studied over and over again and there is a large literature on them ― almost all of it written by researchers who detested the outcomes. Good summaries are provided by Charles Murray and Martin Anderson. Both authors point out that the results are even worse than they appear at first. For one thing, the “control group” had access to conventional welfare available in the 60s and 70s. So this was by no means a pure (welfare free) control group. Also, the enrollees were given different instructions about how long they could expect their guaranteed income to last. It turns out that the longer the guarantee, the worse the negative effects. So far as I can tell there was no marriage penalty in these experiments ― certainly nothing like we have today ― and little or no penalty for earning a higher income. With the passage of time all these incentives have become increasingly more perverse. For example, over the past 50 years we have added one marriage penalty after another to welfare benefits. There is a very strong marriage penalty in ObamaCare, for example. And even Paul Krugman concedes that the marginal tax rate faced by low-income families is in excess of 80% today. (It actually goes above 100% in many cases.) And ObamaCare will make the penalty for working and earning even higher. So here is the important public policy question: If it is well established that self-sufficiency is closely related to working and being married, why are we “fighting poverty” by doing things that social scientists have known for decades lead to less work and fewer marriages? And here is a public discourse question: Why are New York Times columnists Paul Krugman and Nicholas Kristof declaring the War on Poverty a success when it is so obviously a failure? Both columnists claim that if we count goods-in-kind (food stamps, housing, Medicaid, etc.), the actual poverty rate would be lower by one-third. Of course, if we give people enough stuff and count it as income, we could declare victory and claim that there is no more poverty. Dylan Matthews makes much the same point that Krugman and Kristof make. After citing a Columbia University study on the different ways of measuring poverty, he zeroes in on the key point (how much difference does government make?) and says this: …[T]he most noticeable trend here is that the gap between before-government and after-government poverty just keeps growing. In fact, without government programs, poverty would have actually increased over the period in question. Government action is literally the only reason we have less poverty in 2012 than we did in 1967. Reviewing some of the early literature, I find it very difficult to determine what Lyndon Johnson would have called “success” in the War on Poverty. But there is no doubt in my mind what the average citizen thinks success is. The goal is to have people earning enough and saving enough to support themselves above a poverty level income without any help from government. So by that measure, there has been no progress at all ― despite spending $1 trillion a year on the effort. - See more at: http://healthblog.ncpa.org/why-we-lost-the-war-on-poverty/#sthash.oKZ8tgWI.dpuf

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Government is not the solution to our problems, government is the problem.

- Ronald Reagan

 

Medicare Review

Past Issue

Characteristics Of An Ideal Health Care System

Studies | Health http://www.ncpa.org/pub/st242 | by John C. Goodman | Monday, April 30, 2001

Executive Summary

Why should government be involved at all in our health care system? Aside from providing care for low-income families, the most persuasive argument is that in the absence of coercion people will have an incentive to be uninsured "free riders." In our society, people who choose not to pay for insurance know that they are likely to get health care anyway - even if they can't pay for it. The reason is that there is a tacit, widely shared agreement that no one will be allowed to go without care. As a result, the willfully uninsured impose external costs on others - through the higher taxes or higher prices which subsidize the cost of their care.

What evidence is there that free riders are a problem? One piece of evidence is the number of uninsured:

·   According to the Census Bureau, in 1999 there were 42.6 million people who were uninsured at any one time, a larger percentage of the population than a decade ago.

·     The rise in the number of uninsured has occurred during a time when per capita income and wealth, however measured, have been rising.

Although it is common to think of the uninsured as having low incomes, many families who lack insurance are solidly middle class. And the largest increase in the number of uninsured in recent years has occurred among higher-income families: 

·     About one in seven uninsured persons lives in a family with an income between $50,000 and $75,000, and almost one in six earns more than $75,000.

·     Further, between 1993 and 1999, the bulk of the increase in the number of uninsured was among the households earning more than $50,000.

·     By contrast, in households earning less than $50,000 the number of uninsured decreased by about 5 percent.

In deciding to be uninsured by choice, many healthy individuals are undoubtedly responding to perverse incentives created by government policies.

·     On the one hand, we make an enormous amount of free care available to the uninsured; in Texas, for example, it totals $1,000 per uninsured person every year, on the average.

·     Also, federal and state laws are making it increasingly easy for people to obtain insurance after they get sick - thus removing the incentive to buy insurance when they are healthy.

·  Finally, although the federal government generously subsidizes employer-provided insurance, most of the uninsured are not eligible for an employer plan, and they get virtually no tax relief when they buy insurance on their own.

Far from solving the free rider problem, most government interventions these days are making the problem worse. Indeed, we might be better off under a policy of laissez faire.

If we accept the free rider argument, however, what policy implications logically follow from it? One commonly proposed solution is to have government require people to purchase insurance. However, this is neither necessary nor sufficient. Instead, a complete solution would have 10 characteristics. Adhering to each of them would lead to a system that provides a reasonable form of universal coverage for everyone without adding to national health care spending and without intrusive and unenforceable government mandates. . .

Read Goodman’s entire study at the NCPA . . .

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Government is not the solution to our problems, government is the problem.

- Ronald Reagan

 

Medicare Review

Past Issue

Is Uncle Sam Bankrupt?

by Laurence J. Kotlikoff, Sn Fellow, NCPA

Brief Analyses No 689 | Federal Spending | Government

When it comes to nondisclosure, the United States government is the father of all financial malfeasants.  Indeed, Uncle Sam has been misrepresenting the nation's finances for decades.  In the process, he has run up an undisclosed bill that makes the financial bailout and economic stimulus spending look paltry.

Federal Financial Obligations.  According to David M. Walker, former chief comptroller general of the United States, the federal government's current liabilities to Medicare, Social Security and the federal debt total $56.4 trillion.  To put this in perspective:

·         The average Social Security, Medicare and Medicaid benefit payment per retiree is currently $30,250 - or about 80 percent of per capita U.S. gross domestic product (GDP).

·         In 20 years, when the baby boomers are fully retired, the average benefit per retiree will be the equivalent of $50,000 today (adjusted for inflation).  [See the figure.]

·         Multiplied by 78 million (the approximate number of baby boomers in the United States), the total would be equivalent to $4 trillion per year today.

But the $50,000 estimate assumes that the Medicare plus Medicaid real average benefit will grow at only 3.6 percent per year, whereas between 1970 and 2002 the average level of real Medicare plus Medicaid age-specific benefits grew at a rate of 4.6 percent annually.  In contrast, real per capita GDP grew at a rate of only 2 percent per year. 

Estimating the Fiscal Gap Using Generational Accounting.  Generational accounting is a well-established methodology to measure the burden of government.  A generational account for any given generation measures the generation's remaining lifetime net tax bill as a present value - what the generation will pay net of what it will receive, all valued as of today.  If the generational accounts of all current and future generations are added together, assuming no change in fiscal policy, the sum amounts to what all current and future citizens are going to pay, on net, in taxes to the government (measured as a present value).  This amount has to cover the government's official debt plus the present value of all future government purchases of goods and services (discretionary spending). 

The fiscal gap is the difference between the government's official debt plus discretionary spending and the amount of taxes current and future citizens will pay.  It incorporates all of the government's fiscal activities - including its financial obligations under Medicare, Medicaid, Social Security, welfare, unemployment, and interest and principal on government debt. 

Taking into consideration all of the government's financial liabilities and projected future tax receipts, the current fiscal gap in the United States is estimated by Jagadeesh Gokhale of the Cato Institute and Kent Smetters of the University of Pennsylvania at $77 trillion - more than five times the United States' present GDP.  In order to close a gap of this size, the Federal Insurance Contribution Act (FICA) payroll tax - currently 15.3 percent - would need to be more than doubled immediately and permanently.

To understand how this figure can be so large, consider:

·         There are now roughly 33 million adults in the United States receiving retirement benefits.

·         When the 78 million baby boomers retire, there will be more than twice the number of retirees receiving benefits than there are currently.

·         While there will be a significant increase in those dependent on government programs like Social Security and Medicare when the boomers retire, there will only be about 2.7 workers per retiree to help pay the benefits - down from 3.28 workers per retiree in 1985 and 3.43 in 2000.

Adjusting for Risk.  There is reason to believe that the $77 trillion figure would be even larger were the government's future cash flow discounted, taking into account that future benefit payment outlays appear to be more certain than do future tax receipts.

For example, according to the Social Security Trustees Report, Social Security is 27 percent underfunded.  That is, achieving long-term solvency would require an immediate and permanent 27 percent increase in the 12.4 percent employer and employee payroll tax rate that funds Social Security. 

Social Security's long-term solvency estimate also fails to adjust for the riskiness of the system's cash flow.  Periods of high unemployment, for example, might require increased borrowing by the Treasury in order to fund benefits.  Preliminary analysis from a recent Boston University study suggests that Social Security's failure to risk-adjust its cash flow understates its long-term financial gap by more than 20 percent.  Thus, if Gokhale's and Smetters' projections of all the federal government's unfunded obligations were risk-adjusted, they would undoubtedly be much higher.

Conclusion. 
Given the magnitude of the fiscal gap, the country is broke.  The United States is currently short more than $77 trillion and this figure will only increase . . .  The United States government, through its various financial agencies, is assuming away the country's fiscal problems rather than confronting and correcting them. Without dramatic and immediate changes in policy, future generations are likely to face lifetime net tax rates that are twice those imposed now.

Laurence J. Kotlikoff
 is a professor of economics at Boston University and a senior fellow with the National Center for Policy Analysis.  This article is adapted from his forthcoming book,
Jimmy Stewart Is Dead: Ending the World's Ongoing Financial Plague with Limited Purpose Banking.

Read the entire Analysis 689. . .

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Government is not the solution to our problems, government is the problem.

- Ronald Reagan

 

Medicare Review

Past Issue

Medicare uses two obsolete models for coverage

NCPA – Goodman, et. al.

The modern era has inherited two models of health insurance: the fee-for service model and the HMO model. Neither is appropriate to the Information Age.

Both models assume that (1) the amount of sickness is limited and largely outside the control of the insureds, (2) methods of treating illness are limited and well defined, and (3) because of patient ignorance and asymmetry of information, treatment decisions will always be filtered by physicians, based on their own knowledge and experience or clinical practice guidelines.

However, an explosion of technological innovation and the rapid diffusion of knowledge about the potential of medical science to diagnose and treat disease have rendered these assumptions obsolete. In this chapter, we briefly outline the type of insurance we believe would emerge if we rely on markets, rather than regulators, to solve our problems.

WHY TECHNOLOGICAL CHANGE AND THE DIFFUSION OF KNOWLEDGE HAVE MADE

TRADITIONAL HEALTH INSURANCE MODELS OBSOLETE

Although the HMO model is often viewed as the more contemporary, it is actually the less compatible with the changes the medical marketplace is undergoing. The traditional HMO model is fundamentally based on patient ignorance. The basic idea is a simple one: make health care free at the point of consumption and control costs by having physicians ration care, eliminating options that are judged “unnecessary” or at least not “cost effective.”

But this model works only as long as patients are willing to accept their doctor’s opinion. And that only works as long as patients are unaware of other (possibly more expensive) options.

As we argued in the Introduction, we could spend our entire gross domestic product on health care in useful ways. In fact, we could probably spend the entire GDP on diagnostic tests alone—without ever treating a real disease.

The information reality is that patients are becoming as informed as their doctors—not about how to practice medicine, but about how the practice of medicine can benefit them. Combine the potential of modern medicine to benefit patients with a general awareness of these benefits and zero out-of- pocket payments, and the HMO model is simply courting disaster. The fee-for-service model is only a slight improvement. It tries to control demand by introducing deductibles and copays. But even it offers strong incentives for patients to over consume health care.

Some believe that managed care can solve these problems. They are wrong. Imagine grocery insurance that allows you to buy all the groceries you need; but as you stroll down the supermarket aisle, you are confronted with a team of bureaucrats, prepared to argue over your every purchase.

Would anyone want to buy such a policy? Traditional health insurance isn’t designed to work much better.

Stay tuned . . .

Goodman, et al, NCPA

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Government is not the solution to our problems, government is the problem.

- Ronald Reagan

 

Medicare Review

Past Issue

Is ObamaCare Paving the Way for Universal Poor Quality HealthCare?

Sally Pipes

August 14, 2013

Suffering from illness or injury? Good thing you're not British. U.K. police recently investigated the deaths of 300 patients at one hospital. The suspected cause is? Neglect. That could never happen in America, right? On the contrary. ObamaCare's new insurance exchanges and expansion of Medicaid represent the building blocks of a British-style, government-run health care system in this country, says Sally C. Pipes, president, CEO and Taube Fellow in Health Care Studies at the Pacific Research Institute.

If that system metastasizes, rationed care and subpar health outcomes will follow.

  • Less than four in 10 Americans say they support "single-payer" health care.

  • But the idea remains a hobbyhorse for many Democrats. A single-payer bill has been introduced in Congress every year since 2003.

  • Vermont Gov. Peter Shumlin (D) recently signed a single-payer bill into law. And former Congressman Anthony Weiner (D) is pushing for a citywide single-payer system as part of his campaign for New York City mayor.

Initiatives like these could lead to a piecemeal government takeover of the health care system. Consider ObamaCare's health insurance exchanges, which are scheduled to open for enrollment on October 1. Each was intended to be a state-run marketplace offering affordable coverage options. The exchanges haven't unfolded as planned.

  • Just 17 states are operating their own exchanges.

  • Seven states asked for federal help running their exchanges, and 27 left the task to the feds altogether.

  • So the federal government will soon effectively control the individual and small-group insurance markets in more than half the states.

Those markets won't function properly if people don't enroll. That outcome is looking increasingly likely. The exchanges are designed to take premiums from the young and healthy, who typically consume less care, to subsidize coverage for the aged. The individual mandate was designed to force these young folks to participate. But if they ignore the mandate, the exchanges will crumble.

Without young people's premiums to cover costs for older people, the insurance prices will skyrocket. The federal government may feel compelled to reduce premiums, or simply insure everyone directly.

Add the 13 million new Medicaid enrollees to the nearly 63 million people already enrolled and the 50 million people on Medicare, and more than 40 percent of the country will be on publicly financed insurance.

Source: Sally C. Pipes, "Is ObamaCare Paving the Way for Single-Payer System?" San Diego Union Tribune, August 1, 2013.

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Government is not the solution to our problems, government is the problem.

- Ronald Reagan

 

Medicare Review

Past Issue

Ten Steps to Achieve Health Care Reform

Steps to Free Our Health Care System
by John C. Goodman, PhD, President, NCPA

To confront America's health care crisis, we do not need more spending, more regulations or more bureaucracy.  We do need to liberate every American, including every doctor and every patient, to use their intelligence, creativity and innovative abilities to make the changes needed to create access to low-cost, high-quality health care.

Here are 10 steps to achieve these goals.

1.  Free the Doctor. Medicare pays for more than 7,000 specific tasks, and only for those tasks. Blue Cross, employer plans and most other insurers pay the same way. Notably absent from this list are such important items as talking to patients by telephone or e-mail, or teaching patients how to manage their own care or helping them become better consumers in the market for drugs. Further, as third-party payers suppress reimbursement fees, doctors find it increasingly difficult to spend any time on unbillable services. This is unfortunate, since it means that doctors cannot provide the type of low-cost, high-quality services that are normal in other professions.  

To make matters worse, providers often face perverse incentives. When  they lower costs and raise the quality of care, their income typically goes down, not up. For example, Geisinger Health System in central Pennsylvania gives heart patients a "warranty" on their surgeries. Patients who have to be readmitted because of complications pay nothing for the second admission. Whereas most hospitals make money on their mistakes, the warranty forces Geisinger's staff to provide higher quality care (to avoid readmissions) but lowers Geisinger's income from Medicare and other payers. 

To change these perverse incentives, Medicare should be willing to pay for innovative improvements that save taxpayers money. And doctors and hospitals should be able to repackage and reprice their services (the way other professionals do), provided that the total cost to government does not increase and  the quality of care does not decrease. This change in Medicare would almost certainly be followed by similar changes in the private sector.

2.  Free the Patient. Many patients have difficulty seeing primary care physicians. All too often, they turn to hospital emergency rooms, where there are long waits and the cost of care is high. Part of the reason is that third-party payer (insurance) bureaucracies decide what services patients can obtain from doctors and what doctors will be paid. To correct this problem, patients should be able  to purchase services not paid for by traditional health insurance, including telephone and e-mail consultations and patient education services. This can be done by allowing them to manage more of their own health care dollars in a completely flexible Health Savings Account.

3.  Free the Employee. It is now illegal in almost every state for employers to purchase the type of insurance which employees most want and need: individually owned insurance that travels with the employee from job to job, as well as in and out of the labor market. We need to move in the opposite direction - making it as easy as possible for employees to obtain portable health insurance.

4.  Free the Employer. Liberating employees would have the indirect effect of liberating employers as well. Employers have been put in the position of having to manage their employees' health care costs, even though many businesses lack the experience or expertise. Instead, employers could make a fixed-dollar contribution to each employee's health insurance each pay period. Like 401(k) accounts, the health plans would be owned by employees and travel with them as they move from job to job and in and out of the labor market.   

5.  Free the Workplace.  If a new employee has coverage under her spouse's health plan, she doesn't need duplicate coverage. But the law does not allow her employer to pay higher wages instead. On the other hand, a part-time employee might be willing to accept lower wages in return for the opportunity to enroll in the employer's health plan. The law does not allow that either. The answer:  Employers should be free to give employees the option to choose between benefits and wages, where appropriate.

6.  Free the Uninsured. Most uninsured people do not have  access to employer-provided health insurance, purchased with pretax dollars. If they obtain insurance at all, they must buy it with after-tax dollars, effectively doubling the after-tax price for middle-income families. The answer: People who must purchase their own insurance should receive the same tax relief as employees who obtain insurance through an employer. 

7.  Free the Kids. The recent expansion of the State Children's Health Insurance Plan (S-CHIP) to cover four million additional children will result in up to half losing private coverage, according to the Congressional Budget Office. However, under S-CHIP, children have access to fewer doctors and medical facilities than children in private plans. 

These incentives should be reversed. S-CHIP money should be used to encourage parents to enroll their children in their employer's plan or another plan of the parents' choosing.

8.  Free the Parents. Under the current system, a child could be enrolled in S-CHIP, a mother could be enrolled in Medicaid and a father could be enrolled in an employer's plan. However, medical outcomes are likely to be better with a single insurer. The answer:  Medicaid and S-CHIP funds should be used to subsidize private health insurance, so that low-and moderate-income families are able to see the same doctors and enter the same facilities as other citizens. 

9.  Free the Chronically Ill. Under current regulations, insurers are not allowed to adjust premiums to reflect higher expected health care costs. This encourages insurers to seek the healthy and avoid the sick before enrollment. After enrollment, insurers have an incentive to over-provide care to the healthy and under-provide to the sick. These incentives need to be reversed. For example, in the Medicare Advantage program, the government pays higher premiums for seniors with more expensive health needs. This encourages insurance companies  to create specialized plans - especially for chronic illnesses - that compete with each other. 

Chronic patients also need to be able to manage more of their health care dollars directly. For example, "Cash and Counsel" programs in many states allow homebound, disabled Medicaid patients to hire and fire the vendors who provide them with services. Patient satisfaction in these programs is almost 100 percent.

10.  Free the Early Retiree. Most baby boomers will retire early, before eligibility for Medicare. Two-thirds will not get health insurance from their former employer and even those who have been promised employer coverage may see those promises broken, since there is almost no prefunding of benefits. Under current law, an employer can include early retirees in its regular health plan, but cannot contribute to more economical, individually owned plans. 

The answer: Employers should be able to contribute pretax dollars to the individually owned insurance of their retirees. Early retirees should be able to pay their share of premiums with pretax dollars. Both the employer and the employee should be able to save (pretax) in preparation for these events.

John C. Goodman is president and Kellye Wright Fellow at the National Center for Policy Analysis.

Read the entire report at http://www.ncpa.org/pub/ba669

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Government is not the solution to our problems, government is the problem.

- Ronald Reagan

 

Medicare Review

Past Issue

A Framework for Medicare Reform

John C. Goodman, PhD, President, NCPA

Executive Summary

Health care is the most serious domestic policy problem we have, and Medicare is the most important component of that problem. Every federal agency that has examined the issue has affirmed that we are on a dangerous, unsustainable spending path:

  • According to the Medicare Trustees, by 2012 the deficits in Social Security and Medicare will require one out of every 10 income tax dollars.

  • They will claim one in every four general revenue dollars by 2020 and almost one in two by 2030.

  • Of the two programs, Medicare is by far the most burdensome — with an unfunded liability five times that of Social Security.

  • On the current path, health care spending (mainly Medicare and Medicaid) will crowd out every other activity of the federal government by mid-century.

There are three underlying reasons for this dilemma: 

  • Since Medicare beneficiaries are participating in a use-it-or-lose-it system, patients can realize benefits only by consuming more care; they receive no personal benefit from consuming care prudently and they bear no personal cost if they are wasteful.

  • Since Medicare providers are trapped in a system in which they are paid predetermined fees for prescribed tasks, they have no financial incentives to improve outcomes, and physicians often receive less take-home pay if they provide low-cost, high-quality care.

  • Since Medicare is funded on a pay-as-you-go basis, many of today’s taxpayers are not saving and investing to fund their own post-retirement care; thus, today’s young workers will receive benefits only if future workers are willing to pay exorbitantly high tax rates.

Ideas Changing the World, National Center for Policy Analysis, John Goodman, PhD, President

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Government is not the solution to our problems, government is the problem.

- Ronald Reagan

 

Medicare Review

Past Issue

Medicaid: Another loss of access caused by Obamacare: When will it end?

The significant promotion of Obama’s Health Plan initiative was to provide greater access to health care for the poor and poorly covered Americans. California was at the forefront of placing their Medicaid recipients into HMOs. These patients were thrilled with having a health insurance card like most middle class American. They did not notice the GMS at the end of their ID numbers which they interpreted as still being part of the government Medical service. We didn’t either when we were asked to have 500 of these added to our panel. We have always had an average of 20 percent of our practice from Medicaid rolls as our fair contribution to the down and trodden since the reimbursement never equaled our cost of caring for them.

We were asked by our IPA (independent practice association) to accept 500 of these Medicaid/Welfare --recipients into the HMO portion of our practice, which was approximately half of our practice. We were promised improve reimbursement to the Medicare fee system for the first visit and a 10% improvement for the follow up visits. We had assumed that several of these would enter our practice on a weekly basis. It should not have been a problem with our single employee practice in the final years before retirement. She was my receptionist, publicists, patient scheduler, buyer/purchaser of all office supplies, inventory control officer, accounts manager, and my sole office manager for a very controlled practice. There were the usual phone calls from a half dozen patients to schedule appoints, reps to be scheduled for five minutes of my time, daily charts to be processed, and filed. She was busy.

The very first day after these 500 welfare patients were added to our obligations, we had 65 messages on the phone the next morning instead of the usual three or four.  These messages came in at all hours of the day and night. It took her two hours to record all the messages and another three hours to process all the messages.  This rate continued on a daily basis. It was then that we realized that these patients did not have jobs. But they all had cell phones and could call from any place they were, day or night. We found that most of these had not been to a physician for three to 15 years. So there were no significant records to be transferred most of the basic informational data which greatly reduces the initial consultation in the usual new patient. It takes about twice as much time to obtain a complete medical history from the medically unsophisticated. Just to record the dates of a patient’s operations takes seconds to record from a prior record or from the medically informed as it does from a medical illiterate who begins to answer such a question with let’s see, we were living in Oklahoma at the time, my eldest was just starting the first grade, and . . . . . the year of her cholecystectomy took five minutes instead of five seconds.  So the first initial office consultation, examination, ordering lab testing, x-ray requests and prescription writing grew from 45 minutes to 75 minutes. But we got paid Medicare rates of $85. But when these patients returned for their office visits to review their status, response to drugs, go over their lab and x-ray data, make plans for their future care, the office call increased from 15 minutes to 25 minutes. But remember we would get a 10% boost in payment. It took a few months before the data came in and we noticed that the HMO vs Medicaid reimbursement for office visits had increased from $18 to $19.80 under the HMO coverage.

We also found out that our referral arrangements were no longer valid. Some of them noted the GMS at the end of their ID number and tracked them immediately and found the reimbursement was not significantly different than Medicaid and refused to see them. So these patients had far less access to care in their new arrangements than they had with Medicaid. The HMO had to find consultants for these patients in more remote areas. We felt uncomfortable to refer patients to consultants we didn’t know. This increases our liability also. When the HMO said that they could not find any consultants in one specialty that we needed for our patient in the Sacramento area, and gave us the name of a physician in San Francisco, about a hundred miles west of here, we were convinced that Obama’s promised of improved access in his plan was a blatant lie, we sorrowfully knew we had to make plans for withdrawal from this component of humanity.

These patients also gave us greater cause for concern. I always greeted these patients in the waiting room, welcomed them to my practice with a nice warm and friendly hand shake. One patient complained that I held her hand too long. Another asked me at the end of her exam, what could she do about her obesity, I pointed to her abdomen and gave my usual spiel (which is identical to the one Weight Watchers uses) that to maintain her weight of 180 pounds, she was eating 1800 calories. If she would reduce that by 500 calories a day, then in a 7 day week, she would lose 3500 calories which equals one pound. She complained to her HMO that I had called her a fatty, which then directs it to the State Department of Health Services, and hours can be spent on clearing this complaint that never happened. The state feels they need to pacify their “members” and makes such recommendations as “we have advise your doctor to take a course in sensitivity training” or take a course on “HIPAA Compliance.” Such little items on an evaluation form can cause great jeopardy to one’s license and we knew we had to make changes.

We also have completed 40-years of hospital and critical care pulmonary medicine practice having had as many as ten patients on life support in several hospitals at the same time. About five years ago, we moved our office into suburban Sacramento in Carmichael and continued with an ambulatory practice. This was reasonable since the hospitals had all established hospitalists to take care of inpatients. This has been common practice for decades for most physicians. However, our IPA and HMO were so desperate to become an Accountable Care Organization under Obamacare, that they used force to place patients. We were threatened to accept a patient on a gurney. We tried to reason with the HMO that such patients do not belong in an ambulatory care setting, but in a practice that saw hospital patients on a regular basis.

And so after six months, when my one person office staff gave me notice, I had to give my IPA notice that we had to withdraw from the remainder of the 500 welfare patients and extended to the President our apologies that his plan was not working. Their access to care was far worse despite our valiant attempts to improve it, they took more than twice as much professional time to deliver less than a quality of care that they did not understand and generally did not appreciate, that their hostility to my services were hazardous to my professional health, and the reimbursement for our professional care was less than their cost to me.

We should have followed the practice of Sandy Marcus, MD, President of the Physician’s Union, who accepted welfare as 10 percent of his practice, but never added the cost of billing and general harassment from Medicaid which he felt would exceed the 10% contribution to welfare by seeing these patient free.

So we decided it was good policy to see our long term welfare patients, which are 20% of our practice, avoid the cost of billing and make it a true charity. As long as physicians accept any welfare payments, no one recognizes our work. By eliminating  accepting payment, the public recognizes this as charity, gains respect and profession status, with no loss in income.

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Government is not the solution to our problems, government is the problem.

- Ronald Reagan

 

Medicare Review

Past Issue

In Government medicine, there is a perverse incentive to be uninsured "free riders."

As we move into the 21st century, it is clear that we are living with a number of institutions that were not designed for the Information Age. One of these institutions is our health care system.

Characteristics of an Ideal Health Care System

By John C. Goodman, President

National Center for Policy Analysis

NCPA Policy Report No. 242

Web site: www.ncpa.org/studies/s242/s242.html

Why should government be involved at all in our health care system? Aside from providing care for low-income families, the most persuasive argument is that in the absence of coercion people will have an incentive to be uninsured “free riders.” In our society, people who choose not to pay for insurance know that they are likely to get health care anyway — even if they can’t pay for it. The reason is that there is a tacit, widely shared agreement that no one will be allowed to go without care. As a result, the willfully uninsured impose external costs on others — through the higher taxes or higher prices which subsidize the cost of their care. 

What evidence is there that free riders are a problem? One piece of evidence is the number of uninsured:

  • According to the Census Bureau, in 1999 there were 42.6 million people who were uninsured at any one time, a larger percentage of the population than a decade ago.
  • The rise in the number of uninsured has occurred during a time when per capita income and wealth, however measured, have been rising.

Although it is common to think of the uninsured as having low incomes, many families who lack insurance are solidly middle class. And the largest increase in the number of uninsured in recent years has occurred among higher-income families:

  • About one in seven uninsured persons lives in a family with an income between $50,000 and $75,000, and almost one in six earns more than $75,000.
  • Further, between 1993 and 1999, the bulk of the increase in the number of uninsured was among the households earning more than $50,000.
  • By contrast, in households earning less than $50,000 the number of uninsured decreased by about 5 percent.

In deciding to be uninsured by choice, many healthy individuals are undoubtedly responding to perverse incentives created by government policies.

  • On the one hand, we make an enormous amount of free care available to the uninsured; in Texas, for example, it totals $1,000 per uninsured person every year, on the average.
  • Also, federal and state laws are making it increasingly easy for people to obtain insurance after they get sick — thus removing the incentive to buy insurance when they are healthy.
  • Finally, although the federal government generously subsidizes employer-provided insurance, most of the uninsured are not eligible for an employer plan, and they get virtually no tax relief when they buy insurance on their own.

Far from solving the free rider problem, most government interventions these days are making the problem worse. Indeed, we might be better off under a policy of laissez faire.

If we accept the free rider argument, however, what policy implications logically follow from it? One commonly proposed solution is to have government require people to purchase insurance. However, this is neither necessary nor sufficient. Instead, a complete solution would have 10 characteristics. Adhering to each of them would lead to a system that provides a reasonable form of universal coverage for everyone without adding to national health care spending and without intrusive and unenforceable government mandates. . .

To read Dr. Goodman’s Ten Recommendations, go to . . . .

“People who fail to insure are likely to get health care anyway — even if they can’t pay for it.”

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Government is not the solution to our problems, government is the problem.

- Ronald Reagan

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