Money and Healthcare Reform

Congress handed the Congressional Budget Office (CBO) some assumptions, the computers came up with the mix of adjustments needed to give a magic number under $1 trillion in 10 years, and the “Affordable Care Act” (ACA) emerged.

The “affordable” trillion apparently means net additional federal government expenditures, with the Treasury envisioned as one big pot of liquid gold. All the revenue gets mixed in, and the financial engineers turn the valves to direct the outgo. Less will go into some channels (“savings”), and more into others.

Numbers are thrown about—but where’s a spreadsheet of the money flows? The President couldn’t exercise a line-item veto even if he had one because there aren’t any line items. For example, how can you budget for each of the new bureaucracies if you don’t even know exactly how many there are (159—more or less)? And are they counted in the $1 trillion cost?

Consider Medicare, the key to the whole calculus. The net trillion depends on about half a trillion in “savings” from Medicare, over 10 years starting in 2010. (If we start in 2014, it’s $800 billion in 10 years, and up to $3 trillion in 20 years.) Assume the savings happen, despite the influx of Baby Boomers. How do we distribute them?

Medicare revenue for Part A (hospitalization) comes from the Medicare payroll tax. That is by law a dedicated tax. Anything not immediately spent on benefits goes into the sacred Trust Fund. Will ACA loot the Trust Fund to pay for expanded Medicaid, or the new civilian medical corps, or improved care for “health disparity populations,” or community health centers? Wouldn’t that be illegal?

Congress could conceivably just legalize the looting—except that it is impossible anyway. There is nothing in the Medicare Trust Fund except IOUs. It has already been plundered for other government spending, and is part of the unacknowledged public debt.

The latest Medicare Trustees report showed a dramatic drop, of $6.2 trillion over a 75-year horizon, in Medicare’s unfunded liabilities—the amount by which anticipated expenditures exceed projected revenue. A statement by the White House said this shows “how the Affordable Care Act is helping to reduce costs and make Medicare stronger.”

Medicare’s Chief Actuary, however, noted that there is no “reasonable expectation” that this will occur, as it depends on cutting physician payment by 30% now and more later. But suppose that it does happen—that Congress wipes out a liability by reneging on its promises to seniors. One cannot use the same money both to cancel a liability and to fund a new entitlement.

And how will the savings be achieved? ACA has all kinds of mechanisms for control, which will apply with special rigor to seniors. Remember, “control” does not mean cost reduction, just payment reduction, translating to care reduction. The money not paid to doctors and hospitals or suppliers of oxygen may well be “saved,” if it is not funneled to the controllers. And the doctors and other providers who don’t get paid won’t be there for seniors, or anybody else—leading to more “savings.”

The non-Medicare sector is still more imponderable. Premiums for private insurance will have to cover far more generous benefits—now the mandated “minimum”—and are escalating rapidly. Insurers who lobbied for ACA may have expected swelling revenues from millions of reluctant new customers. Instead, politically powerful companies like McDonald’s are requesting and getting waivers. Politically weak small companies or individuals may go out of business or opt to pay the penalties for being uninsured.

It’s not clear where those “penalties” go, but they won’t be able to cover the subsidies of around $10,000 on premiums for persons making up to 400% of the federal poverty level (more than $80,000). Nor will they cover the cost of swelling Medicaid enrollment—perhaps 16 million newly eligible persons.

Will taxes on the “rich” cover all that? Let’s assume that all we need is the CBO’s (under)estimate of half a trillion not taken from Medicare: $500 billion, or $500 thousand million. To grab that in $10,000 chunks would mean a big tax bite out of 50 million Americans.

The controllers intend to direct spending of both government and  private funds. The mandates will get funded first: bureaucrats, smoking cessation counselors, multicultural health educators, translators for patients with limited English, weight monitors, hemoglobin A1C measurements, IRS agents, and quality assurance personnel who assure that you get an aspirin for your heart attack.

Not on the favored list are cancer treatment, stroke rehabilitation, trauma surgery, or coronary artery bypasses—the modern treatments for the Big Killers.

There’s no funding for death panels, but they won’t be needed.

ACA was sold with fiction-based accounting of phantom savings and revenue, and illusion-based benefits. Implementation means extracting real money from real people and productive enterprises, diverting it from the care of the sick into untraceable channels at the discretion of unaccountable bureaucrats, and pouring much of it into politically correct money sinks. Some would describe it differently, but even in the most favorable view, the numbers on the money flows just don’t add up.

We need to end ACA—or it will end the life of American medicine.

Jane M. Orient, M.D., is an On Air contributor speaking on Healthcare Reform. Dr. Orient has been in solo practice of general internal medicine since 1981 and is a clinical lecturer in medicine at the University of Arizona College of Medicine. She is the author of Sapira’s Art and Science of Bedside Diagnosis and YOUR Doctor Is Not In: Healthy Skepticism about National Health Care. She is the executive director of the Association of American Physicians and Surgeons.

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24 replies »

  1. Some policy reforms do not yield votes nor the politicians put in evidence in society.
    Most countries, especially the poor, must to promote political reform seeking improvements in the health sector.
    We all know that large amounts of money are needed to make a good political reform.

    Silvio Sandro Cornélio – Rio de Janeiro / BRAZIL

  2. Congress needs to focus more on reducing the cost of care then trying to balance a healthcare budget. I recently wrote a research paper in college about health care reform. This is something that is possible but we pay too much per unit of care. Ezra Klein from the Washington post interviewed the CEO of Kaiser and he outline this very well. We do not have enough government regulation to keep the cost of health care low. Cuba insures every one of their citizens for $300 per year and has almost the same mortality that we have in America.

  3. Every time I such big figures it remind me so much of the problems most Americans and even visitors facing right now when it comes to health care. Actually, with the bills alone I feel like the patient is going to have a heart attack so it is better to keep it a secret. There is so much to do yet and good luck.

  4. Concierge medicine is the wave of the future. Doctors ought delist from the insurance carriers who are making obscene profits, using doctors as window washers.
    Doctors should all charge a service fee for their time in filling out forms and answering inane computer produced questions about therapy from the PBMs and insurers.
    Every year, the carrier has another preferred statin and a form needs to be filled out justifying current therapy.
    Doctors have been disenfranchised by the AMA.
    AAPS is the only doctor organization in the country that cares about the doctors. AAPS sued the Hillarycare task force for access to its deliberations.
    Go AAPS!!

  5. There is some good points made in the article but plenty of reach points too. I do find it ironic though how the author basically runs a concierge practice where she charges $200/hr for medical services (including travel time) without any medical supplies included.
    Concierge medicine of the “FFS on steroids” variety is hardy an answer to solve America’s spiraling healthcare costs.

  6. “climate legislation is a threat to human health. ”
    Actually SusanQuack this is a known fact. Warming of the earth increases arable land which allows more people to be feed. Additionally warmer tempatures reduces the number of people that die from cold weather and the illnesses common with winter. Humans thrive in warmer weather. Don’t let facts get in the way of your tirade though.
    “Surprisingly, the BBC stood out as one media agent that took enough care to balance its coverage. Underthe Web site headline “Global Warming ‘May Cut Deaths,” it reported 20,000 deaths are linked to the cold each year in the U.K. and that those deaths fell 3% ayearfrom 1971 through 2003, a period in which summers warmed but heat-related deaths did not change.”
    ” Across Europe, there are six times more cold-related deaths than heat-related deaths. We know this from the world’s biggest cross-national, peer-reviewed studies under the aegis of Professor William Keatinge of the University of London.”
    Any more mocking you care to share?

  7. Dr. Melch,
    I respectfully disagree that policy debate should be limited to “experts”, or self described “experts”. Voting certainly isn’t, at least not yet… By your definition above practically all elected officials should be excluded from the conversation. Enticing perhaps, but not very practical.
    Dr. Z,
    Facts, it seems, are mainly in the eye of the beholder when it comes to health care reform. The “facts” have been tortured in every direction by both sides, and they are all in any case pro-forma at best.
    It all boils down to whether you think health care should be equitably extended to all or not.
    Red checks today, blue checks tomorrow, more red checks after that… and on and on. It’s not a loss. It’s how it should be.

  8. Well presented Dr. Orient. Thank you. There is reasoned hope.
    Ms. Gur-Arie suggest you stick to your strenght in health IT and leave the general health care reform debate to clinicians and knowledgeable public policy practitioners (not academics).

  9. FYI
    From http://www.SourceWatch.org
    The Association of American Physicians and Surgeons (AAPS) is a group of conservative activist doctors who oppose the 2010 health care reform law, the “Patient Protection and Affordable Care Act.”
    Members of the group also believe that President Obama may have hypnotized voters and that climate legislation is a threat to human health.
    Some of the group’s former leaders were members of the John Birch Society. Mother Jones wrote of the group, “Yet despite the lab coats and the official-sounding name, the docs of the AAPS are hardly part of mainstream medical society. Think Glenn Beck with an MD.”

  10. Typical Margalit… high on emotion short on facts. Check the Red ‘Margie’, check the Red. Sucks to lose.

  11. I agree Margalit. I thought you were a big proponent of ACA’s, guess I was wrong. Good to know.

  12. “Will ACA loot the Trust Fund to pay for expanded Medicaid, or the new civilian medical corps, or improved care for “health disparity populations,” or community health centers? ”
    Yes, Armageddon indeed. Every time you spend money on those “disparity” folks with their English translators and multicultural educators, the end of America gets nearer. Spending money exclusively on those rich enough not to need any money, is making America stronger, because we are as strong as the strongest link.
    Oh yeah, never hurts to mention “death panels” at least once in every rant, whether it belongs there or not. Gives it more oomph…

  13. amen to above comment from Dr Z. And all this pontification about numbers and programs just gets old and distracting in the end!

  14. @anon. Maggie will not have anything to say until she’s sent her talking points from Cambridge.

  15. “The busy bee republicans want to cut spending.Well, I know that the wallets of the doctors will honey to them. Live free or die!”
    Democrats pass a bill cutting doctor fees 30% and you find a way to blame republicans? To spin that tale takes talent. The one group of people proposing cuts in taxes, spending, and regualtion and you project the liberal faults on them.

  16. The busy bee republicans want to cut spending. Well, I know that the wallets of the doctors will honey to them. Live free or die!

  17. “but what we need now is more comparative effectiveness research, funding of innovative pilots of delivery models, and support of EMR.” Is it worth the expense? Who is profitting from this? Certainly not the patients.
    For starters, GIGO and often QIGO rules at the EMRs. No one one knows what EMR to buy. Comparative effectiveness is needed for the EMRs and CPOEs, and then, for the care that comes out of them.
    To the crux: Clinical decision support is worrisome. Assume I am the smartest doctor out there, why would I want some programmer to advise and control my creative management of patients?
    And why would I want to continue to take good care of patients when an administrator equates the title with intelligence and sanctions me under the quise of peer review, for not following the recipe?
    We know that the governing officials believe that with CDS, they could get chimpanzees to follow the recipes of care in order to reduce the cost of care for the ACA. We know it is the government controlled recipes of care that our leaders believe will get the costs of the ACA covered. Th9is is why there is not any spread sheet of money flows.

  18. Healthcare is a big problem always for every country, every people.
    Healthcare Reform also. I know it’s complex, but must!

  19. Propensity makes an excellent point. HITECH and ACA are peas in a pod. Both are intrusive and serve to allow the government to dominate and control its people. It allows the wealthiest to increase their dominance over the down trodden. It allows further disintegration of the middle class. The dangers of computerizing all aspects of medical care include dehumanizing, domination and control, and elimination of privacy as we know it, not to mention the medical risks of requiring the use of medical devices without any surveillance.

  20. …”cancer, stroke, and coronary bypass??…During the late 1960’s I was a physician working in NIH for the Division of Regional Medical Programs which was at the time an exciting new federal effort to improve the delivery of the best care in Heart Disease, Cancer, and Stroke. Apparently it didn’t work because we are still trying to implement the best care possible across the nation.Maybe one of DRMP’s weaknesses was its “categorical approach” to disease treatment. A lot of ICU’s were planned and built with its funds, and that was good, but what we need now is more comparative effectiveness research, funding of innovative pilots of delivery models, and support of EMR. ACA is not ALL about more bureaucrats, though some people only see that aspect.

  21. Well said, Dr. Orient. Medicare has become the piggy bank for the US Government, and the doctors’ and patients’ pockets are being picked to fill it.
    I am a little surprised that you neglected to write of the $ billions going to pay for HIT. Said HIT does meaningfully little in its current poorly usable iterations to improve patient care, but does lots to enable the US Government to gather data to execute its UACA (Un Affordable Care Act) while scrutinizing the elements of a physical exam, enabling patient privacy violations, paradoxically endangering patients, disrupting the work flow and cognitive processes of doctors, while bankrupting them with slower care and obscene implementation and maintenance costs.