FedUpUSA

Archive for the ‘health care’ Category

We must tear down the entire medical system in this nation and imprison virtually all of the financial folks involved in it — especially Hospital-affiliated entities.

That’s a strong statement.  But it’s supported by reports like this in the NY Daily News, which illustrate nicely what I’ve talked about on The Ticker for a long time in relationship to health care, how it’s broken, and what we must do to fix it.

The charges, in fact, were mind-boggling. A statement the hospital sent to my insurance company, Aetna, showed that Good Samaritan billed $22,214.92 for a four-hour emergency room visit that included a physical exam, sedation, endoscopy and extraction of the stuck food.

Even more astonishing, Aetna agreed to pay only $2,885.67 for the services — just 13% of the bill — and the hospital settled for that amount.

This sort of game-playing, where the intent is to catch “uninsured” people and “gotcha” them into bankruptcy, would be felonious in virtually any other line of business.

Services contracted without a price?  Billing someone for services where they are in no position to negotiate before service is provided at nearly ten times what you later accept — from certain “favored” people — while you chase everyone else for the “full” price?

Let’s assume that you ran a gas station.  Your gas station posted no prices.  Further, the same gas was sold to different people, all of who were similarly situated at the time they pumped the gas, at different prices depending solely on who their employer was, and nobody would know the price of the gasoline until after they pumped it.  And if that wasn’t enough insult the price would be $3/gallon for most people who worked for a long list of companies but if you were a passer-through in town and didn’t work for any of those firms as a consequence the price would be $25/gallon.

This would run afoul of deceptive trade practices legislation virtually everywhere in any State.  You’d never get away with running a grocery store this way, or a cellphone company, or for that matter a hair salon.

It would be bad enough if the pricing was “just” 10x as high.  But in some cases it’s even worse.

As but one example of what I discovered, consider Ondansetron HCl, an anti-nausea medication that both hospitals administered to my son. Good Samaritan charged $439.90 for the drug; Aetna allowed $77.63. Somerset charged $6.52; Aetna paid $3.26.

Medicare pays 17 cents per dose.

Oh really?  That’s a factor of 2,582.  No, not 2,582% — that would be outrageous!

It’s actually charged at 258,200% of what Medicare pays.

And I’m willing to bet $1,000, right here and now, that the hospitals in question did not disclose (1) what the drug would be billed and cost before being administered and (2) what consequence, if any, would occur if you did not accept administration of that drug.

In this case the consequence could be that you vomit.

So to avoid puking you get overcharged by 258,000%.

THAT is enough to make you vomit all on its own.

The entire medical system in this country is a racket.  It is a scam designed to play on your fear of mortality or morbidity to rob you.  In any just society where the rule of law meant anything this sort of “billing system” and “practice” would lead to felony criminal charges and everyone involved would be sitting in a prison cell finding out all about the proper uses for anti-nausea medication to avoid throwing up as they were repeatedly instructed in the joys of gay prison sex.

If you want to know why our government is going broke and our financial system is headed for collapse within the next several years the reason is found right here.  This entire portion of our economy has become so imbued with graft, cost-shifting and scams that it is literally bankrupting everyone.

This is what the article claims Aetna said:

The driving force behind all this, according to Aetna, is the way hospitals and the government do business.

The rates that insurance companies pay are negotiated based on what they believe a hospital’s true costs are. But then those rates are jacked up an average of 30% to 50% to make up for money that hospitals lose in treating patients who don’t have private insurance — which is the majority of them. So to make up the difference, they overcharge patients who are insured. This practice is called cost-shifting.

This sort of collusive behavior by entities that have market power is illegal in virtually every line of business under the Sherman Act, among others.

So why haven’t these firms all been prosecuted?

Oh you know the answer — they went to Congress, “lobbied”, and got special dispensation to be able to screw you blind in both eye sockets through business behavior that would land you or I in prison for 20+ years were we to try it — including the collusion required to enforce this sort of ridiculous differential in billing — in essentially any other line of business.

Tear it down. 

All of it.

Here we go again….

Republican Rep. Paul Ryan plans to unveil a new Medicare proposal Thursday that would give future seniors the choice of purchasing private insurance coverage or staying in the traditional federal plan.

This will do exactly nothing.

Here’s the underlying problem that nobody is offering a legislative agenda to address: Medical spending in the Federal Budget has expanded at a compounded rate of 9% since 1980 and is projected to continue to do so.

The reason for this is that medical care generally in the private economy (e.g. health insurance premiums) is expanding in price at roughly that rate or better for the last 30 years as well, and as such so is the government side of it.

At present the government spends about $800 billion a year (up from ~$53 billion in 1980!) on medical care in all of its programs.  At 9% compounded rates of growth for the 50 year old by the time he reaches 85 (35 years from now) this spending is projected to increase to $16.3 trillion.

That obviously won’t happen — the entire federal budget is currently $3.8 trillion and the entire economy is $15 trillion.  If the economy grows at 3% annually every year for the next 35 years the economy will be $42 trillion in size; with the government being ~20% of the economy ($8.4 trillion) this would still leave medical care totaling twice the entire federal budget.

Again, that obviously won’t happen because you can’t spend more than 100% of something as a subset of that thing.

This has to be stopped — right here and now.

The expansion is being caused by the massive cost-shifts through all areas of the medical system.  As I detail in Leverage these cost-shifts are pervasive and outrageous — we effectively in America pay for the development of every advanced technology and treatment and subsidize government-run health care worldwide!  This is a very profitable model for pharmaceutical and device makers, not to mention all the other providers who look at the provision of these products as “cost plus” — the higher the price, the greater in dollars the “plus” percentage is.

There are too many points of debate to cover in one ticker on this; you can go back through my various points in this regard using the Archive function if you wish, or buy a copy of Leverage and read it for a more-succinct yet reasonably-complete treatment of the problem.

What we cannot do is continue to sit back and watch partisans like Ryan continue to lie through his teeth, along with the others in Congress on both the Left and Right.  If we do not get our arms around this portion of the Federal Budget in the immediate future it will lead to the destruction of the US Government and our way of life.

I know, I know, the market was up something like 800 DOW points this week, with two huge spikes – one probably on the back of a leak that Bernanke and pals were going to intervene, and the second (about 50 S&P handles) when they actually did.

Here’s the problem: Desperation is not a good reason to buy a market.  In fact, it’s a good reason to sell it.

And we were, my friends, talking about desperation here.

Anyone who thinks otherwise has rocks in their head.  And if you think what was done was a “bazooka” you’re dumber than a bag of hammers.  In point of fact the change in the swap rate did a gigantic effective nothing!

So why do it?  Confidence, basically.  No other reason.

Let’s not kid ourselves though.  The people who made the correct bet — that this was going to blow up in everyone’s face — got rammed last week.  That means their liquidity that they provided to the market is now gone, as it was lost to the handful of insiders who were told first before it happened, just like Paulson told his buddies that Fannie and Freddie were going to be destroyed.

So once again we have had liquidity taken out of the market by an attempt to lie, cheat and steal.  This is bad, not good, but if there was some fundamental change in the sustainability of the situation it might be worth it.

Unfortunately nothing at that level has changed.  And what needs to change is quite simple: Governments cannot continue to spend more than they take in via taxes.  That’s the beginning and end of it.

The discussion that must take place — here in the United States, in Europe, in Japan, everywhere — is the same.  Whatever services the people want they must pay for with current taxation.  Not taxes tomorrow (e.g. “Payroll tax cuts paid for over 10 years”) but right here, right now, in taxes, and that which the people refuse to pay for in current taxes government must not spend.

That is, these governments must not only stop deficit spending they must cut spending below parity with taxes because tax receipts are going to decline when the deficit spending stops and the artificial support ends!

I don’t think most people have any idea exactly how bad this really is.  In 2000 we could have cut the size of government by something like 10 or 15% and been ok.  In 2007 it was about 20%.

Today it is approximately half.

That’s bad.  Now let’s talk about what’s worse.

Federal “Health Care” spending for FY13 will be about $920 billion.  This on a cost-adjusted basis will likely go up about 10% annually.  Think it won’t?  Nice try: In FY 2012 the claim is $866 billion; the projection is for about a 7% increase.

Let’s use their projection – a 7% increase forward.

Now let’s run those numbers out 30 years.

Doing so puts health care spending at the federal level at $7 trillion in 2033.

Do you actually believe that anything approaching that can happen?

If so, you’re nuts.

By the way, if you think this is unrealistic in terms of the actual path we’re on let me point something out.  In 1980 the Federal Government spent $55.3 billion on health care.  That’s 33 years of time to FY2013 and an acceleration of cost to the Federal Government by a compounded annual rate of about 9% for every single year since 1980.

If you ignore the FY2012 and 2013 numbers and go off FY2010 it’s a bit worse — 30 years to get the same advancement works out to about 9.5%.

This is the point I made at Southerland and Miller’s Town Hall earlier this year: There is a more than 30 years history that says that this roughly 10% increase in cost is about what everyone is getting hit with and it is going to destroy the Federal Government unless we stop it right now.

Not 30 years from now, not 20 years from now, now.

That 50 year old person is not going to get his Medicare as promised. The government can’t provide it.

Why not?

Because when you’re half way to the maximum amount you can pay for something you have one doubling time left before you’re dead and at a 10% growth rate that’s 7 years.  We’re spending much more than half of what we can afford on health care at a federal level — we’re probably spending 75-90% of the maximum we can afford right here, right now, today. 

If we’re at 75% of what we can afford we have just three years before our government blows up.

And this, my friends, assumes that there are no external shocks such as, oh, Europe blowing up first.

Which it will.

We have to stop the insanity now.  Not in five years, not in ten, not 20 years down the road.  We cannot “bend the curve” on medical costs over a decade or more.

The mathematics control what can happen and what will happen if we do not act today — here and now.

Some day people will demand that commentary have some sort of intelligent basis behind it.

Yet, the current system is falling apart. Medicaid, which funds almost half of all paid long-term care, is under immense financial pressure. Few Americans have saved for their long- term-care needs in old age — half of retirees have less than $55,000 in financial assets, barely enough to pay for nine months in a nursing home, or two years of limited daily help from a home health aide. And hardly anyone buys private long- term-care insurance — only 7 million Americans own policies.

Despite the death of CLASS, the challenge of long-term care financing is not going away. So, how can we fix a badly broken system?

The best way is probably through universal long-term care insurance. Every major developed country on the planet — except for the U.S. and the U.K. — has already gone this route. Here, insurance could be offered by the government, or by private carriers in a regulated national marketplace (much like the Medicare Part D drug benefit or Medicare Advantage managed-care plans).

Utter nonsense.  Here we are with another “plan” to simply play ponzi for a few more years.

Health care has expanded in cost at an average of 7.9% from 1990 through 2010 for individual “coverage.”  Family coverage has expanded at 8.2%.

This is what you’re trying to “provide”, assuming the “young person” buys at age 25 and continues through age 65, a period of 40 years.  We will assume that the care today costs $4,000/month, which is well under the average actual cost, or $48,000/year.  In short I’m being “polite” about the numbers, giving you the maximum benefit of the doubt.

To Bloomberg: Would you please stop publishing utter and complete crap under the rubric of “opinion”, when said “opinion” is an argument for that which is mathematically impossible?

Alternatively you can explain how we’re going to pay (through any mechanism) $931,274 annually for each insured person 40 years hence to cover this “long-term care.”

The claims of “solutions” that are in fact the incessant selling of Ponzi Schemes must end right now.

Further, any government or private party setting up, maintaining or promoting such a scheme must face immediate prosecution as Ponzi schemes are illegal under existing law.

Adding complexity offers a facsimile of “reform” that actually serves the Prime Directive of fiefdoms and cartels: self-preservation.

The most obvious features of recent political and financial “solutions” are their staggering complexity and their failure to fix what’s broken. The first leads to the second. Consider the healthcare “reform,” thousands of pages of mind-numbing complexity which slathers on thick layers of  bureaucratic control on a system which already costs twice as much per capita as competing developed-world systems.

Sadly, the “reform” simply solidifies the Status Quo fiefdoms and cartels that control the U.S. sickcare system.

The healthcare reform fixes nothing, while further burdening the nation with useless complexity and cost. The same can be said of the Dodd-Frank “reforms” of the embezzlement-based U.S. financial system. The original Glass–Steagall Act separating investment banking from depository banking was a few pages in length; by one count, Dodd-Frank  requires that regulators  create 243 rules, conduct 67 studies, and issue 22 periodic reports.

Meanwhile, back in reality, the Financial Elites of Wall Street and the  “too big to fail” banks still have the nation (and Europe) by the throat.

Complexity is itself a tax; the maintenance cost of complexity is high, and can only be justified when the added complexity solves a critical problem of the society as a whole.

Adding ineffectual complexity leads to diminishing returns, as the complexity itself crushes the system supposedly being “improved” or “reformed.”

Here is the “problem” which complexity “solves”: it protects Savior State fiefdoms and private-sector cartels from losses. State fiefdoms and cartels have one goal: self-preservation. Once sufficient power and wealth (or control of wealth) is concentrated in a fiefdom or cartel (generally the two are partnered, as each supports the other), then the power can be devoted to limiting losses or encroachment.

That becomes the raison d’etre of the agency or enterprise.

Complexity works beautifully as self-preservation, because it actually expands the bureaucratic power of fiefdoms and widens the moat protecting cartels. Once the fiefdom expands to manage all those new rules, only a handful of corporations can possibly afford the regulatory reporting burdens. They are thus free to exploit the populace as an informal cartel.

I addressed some of these issues inThe Cycle of Dependency and the Atrophy of Self-Reliance (July 2, 2011).

Put another way: in the competition with the private sector for scarce capital, the State and corruption always win. That’s why kleptocracies and banana republics are characterized by bloated, unaccountable State bureaucracies and systemic corruption: sweetheart deals, no-bid contracts, shadow banking, shadow governance by Elites, inefficient workforces that cannot be fired or held accountable, and so on.

Real solutions require radically simplifying ossified, top-heavy, costly systems.Complexity serves to protect the existing constituencies and cartels; it allows those with the most to lose the cover of “reform.” But the reform is only a simulacrum; it claims reform along with its expanded powers, but the result is system that is so complex that it loses all accountability. Complexity is the perfect moat.

This is the idea, of course: banana republics and other kleptocracies always manage to support vast State bureaucracies which enable and support private cartel stripmining of the national wealth.

Note that the Status Quo always supports complex “reforms” and dismisses radical simplification as “impractical.”  What “impractical” means is that various fiefdoms and cartels would lose swag and power, and that would be painful; thus it is verboten.

The single goal is preserving the revenue and reach of concentrated power centers:State fiefdoms with large constituencies and headcounts, and cartels with no competition and stupendous profits. The two are hand in glove.

But complexity does have an eventual cost: collapse. Keep adding decks to the ship and eventually it capsizes and sinks. One the ship is sufficiently top-heavy, all it takes is a small wave.

Of Two Minds