Recently, President Obama signed into law a massive bill extending health care to millions of American citizens who would otherwise be unable to obtain insurance coverage. The authors tried, valiantly, to include even more citizens in the coming years. They did their best to reform private insurance regulations and create fair competition among medical insurance carriers. Though they fell short in this endeavor, someday, with portability across state lines and intelligent modification of anti-trust exemptions, they will, hopefully, create an even playing field for both the insurance industry and the customer.
This will not, however, solve the problem of paying for health care in this country without bankrupting the entire economy. Unfortunately, as Bill Thomas, retired Republican Congressman and chairman of the ways and means committee, explained to the naive President Bush, Medicare and Social Security are inextricably linked. Bankrupt one and the other will soon follow.
After years of Democrats and Republicans slowly bleeding both programs, President Clinton, on advice from staffers like Robert Reich, actually studied the research that had been done under the previous three presidents. To his amazement, he found that the system would not be insolvent in thirty years as so many had predicted, if only the funds were not constantly shifted into the general fund and wasted on less worthy projects. In fact, he found that the surplus taken in by Social Security, over the years, had amounted to almost a trillion dollars, yet not one penny of the money had been left at the end of each year! All that was left, each time, was a worthless IOU from a government with absolutely no accountability to its senior citizens, a government that had no intention of repaying its loan and that planned to embezzle every penny of any future surpluses. He realized that if he could actually balance the federal budget, that he would not have to loot the Social Security Fund.With both President Clinton and the Republican Congress actually trying to balance the budget without giving the other adversary any credit, the two sides managed to finally accomplish this daunting feat. True to his word, Mr. Clinton left over two hundred billion dollars of surplus in the Social Security coffers at the end of his second term.
For a short time, even with long awaited Republican tax cuts on the horizon, the surplus seemed safe. Then came 9/11 with unfunded wars in Afghanistan and Iraq. With relentless privatization, useless weapon systems and massive political corruption, Republicans, refusing to raise taxes for their wars, "borrowed" every penny of surplus funds and every penny for the next seven years. One-and-a-half trillion dollars of senior citizens' retirement funds looted for the sake of their government's foreign adventures, virtually ensured the approaching insolvency of the Social Security System, after all.
In a few short years, the "Baby Boomers" would reach "maturity," claiming their rightful share of the money that they, themselves, had "invested" in the retirement plan. The money was gone! The government would blame it on the "fact" that the previous, "undeserving" generation of Seniors had not contributed enough to the fund. In actuality, these citizens of both the "Greatest Generation" and the Korean War, had added to their sacrifices and unselfishly contributed more than two-and-one-half trillion dollars toward the welfare of their children and grandchildren. It is precisely what their generation had always done, sacrificing for future generations and to protect their government and their country's way of life.
The problem that this generation could not foresee, was that there had been a change, an imperceptible change in the workings of the government. It was not to be found in the childish antics of an incompetent president, here and gone in eight horrible years, but in the way the two major parties do business. Republicans, despite a keen understanding of the economics of "pay as you go," and knowing that they are the only deterrent to the Democrats' spending themselves into oblivion, don't seem to care. Busy hurling and condoning racial and sexual epithets aimed at their opponents, instead of lending their considerable expertise to a momentous, but mediocre bill, they did their best to destroy it. They are still doing their best to protect the insurance industry and to destroy Medicare, just as they contributed to the destruction of Social Security.
Until the introduction of Medicare Part D, after vehemently opposing the initial Medicare bill itself, Republicans did their best to ignore the Democrats' abuse of the program. Democrats, for years, controlled Medicare cost committees, preventing either competitive bidding or reasonable pricing for durable goods, oxygen and, especially, medical laboratory work. Over the years, they have been responsible for hundreds of billions of dollars in over-payments.
In 2003, the Republican legislature enacted measures to investigate competitive bidding and its effect on quality and availability of medicare products. Early results were encouraging, but the proposed bidding scheme was so complicated and incompetent that it proved to be untenable. Democrats fought bitterly against cost constraints in these areas. They could not afford to lose these cash cow donors to their campaigns.
At the same time, when it looked like Republicans would step up to the plate and actually provide Seniors with a long awaited prescription drug plan, they announced that the "authors" of part D would be none other than Tom Delay and Billy Tauzin. Democrats were all too familiar with the two congressmen who had gerrymandered so many congressional districts in Texas. In fact, except for Karl Rove, no two Texans were considered as unscrupulous as the two representatives. True to their reputations and to their inability to properly author a House bill, they asked the pharmaceutical lobby to write the bill for them. To make matters worse, Tauzin, not one to worry about political or moral correctness, accepted a $2 million a year position as president of the same lobby as soon as his retirement permitted.
The bill, of course, was a scam. the prescription drugs purchased with approximately 40-billion dollars, could have been purchased through either the Veterans Administration or the Military for far less than 20-billion dollars. This would have saved almost all seniors from falling into the dreaded doughnut hole. The bill forbade the use of the forty million Medicare members to negotiate better prices. Medicare Part D will thus overspend almost 40 billion dollars this year or approximately 60% of its 68 billion dollar budget! It is projected to squander at least 400-billion dollars in over-payments over the next decade.
The costs to Americans for Medicare's durable goods, oxygen and laboratory tests are not as obvious as prescription drugs. Yearly expenditures for these products must be traced through the quagmires known as Medicare Parts A and B. Expenditures for all of these products are buried in other expenditures. Why are durable goods lumped with physician charges and skilled nursing facility costs? Why are oxygen and laboratory tests buried in hospital, office and home health care statistics? Is it because competitive bidding for these services is so despised by both Democratic and Republican congressmen and senators? Why are competitive bidding schemes for these services so ridiculously complicated? Why can't the VA or Military competitive bidding formulas be used?
If necessary, why not employ Congressman Pete Stark's idea for durable goods and oxygen prices: check the internet and simply match the average retail prices for the exact same products? This would shave at least 50- to 60-percent off the price tags of many terribly expensive products without taxing the poor beleaguered, overworked members of the Medicare cost committee.
Of course, the crafty Mr. Stark, well-paid champion of medical laboratories, knows that there are no actual retail prices for lab work since the prices seem to be based on "Medicare allowable" reimbursements. Thus, a capitated contract with an HMO may call for $30 or $40 dollars a year per patient for in-house lab work while the same company's PPO or private contract calls for full payment per test. The difference is shocking! The HMO might pay $30,000 to $40,000 for yearly lab work for a thousand patients, while the PPO or regular group insurance is charged more than $400,000 for the exact same tests! As my friend's beloved father always misquoted Shakespeare: "There's something screwy in Denmark!"Recently, I had a patient admitted to a local hospital for a procedure called "kyphoplasty" in which a vertebra with a compression fracture is rebuilt. The patient was to be admitted as an "in-patient" for which Medicare reimburses the hospital $17,000. Against physician's orders, the admission was to be changed to an "out-patient procedure." For the out-patient procedure there is no set price. All aspects are itemized, from the $5 aspirin to the extra five minutes it takes the patient to fart. The reimbursement by Medicare to the hospital would then be $50,000! The patient was admitted to another hospital in the neighboring town where the admission was left as "in-patient" and the cost was $17,000.
Ironically, private insurances try to reimburse far less for out-patient procedures than for in-patient procedures. That is why so many of the out-patient surgeries are done in "out-patient surgery centers." Overall costs are drastically less than in the hospital setting. Not too long ago, I sat on an executive committee of a local hospital. I discussed the subject of the huge amount of business that the hospital was losing to these out-patient centers. I asked the CEO of the hospital why it was that the hospital could not match the price of the centers. Obviously, if given a choice, for the same price, most patients would prefer the safety of a hospital over a surgery center.