Tag Archives: Medicaid

Why you should care about your governments long term liabilities for Medicare

24 Jan

Defense, foreign aid, a bloated bureaucracy don’t matter at all.

The reality is that while we hear lots of rhetoric about debt and deficits, what really matters is long term liabilities. If you don’t believe me consider what happened with General Motors and it’s liabilities to retirees mostly with regard to health benefits. The latest example is Kodak filing bankruptcy during which the promise of retiree health benefits is likely to disappear along with some pension promises for higher paid workers who are affected by income limits on pension funding. Losing a substantial portion of your pension after you have already retired sounds like more than ones fair share to me ( and we are not talking about CEOs).

If you want more examples of this liability thing causing trouble just look to the various states that have agreed to unrealistic pension and health benefit commitments to state workers. And then you look at the results of all this. In Wisconsin the unions have gotten 1,000,000 signatures to force a recall election of the governor who did the right, albeit painful, thing to correct the State’s problems.

What is the most significant problem affecting the U.S., it is the same as I have just described above; long term liabilities for health care first and pensions second. That means Medicare, Medicaid and Social Security, but mostly Medicare.

So now the question is what will you do for the politician who tells you the truth (assuming you can find one)? Chances are you won’t vote for him because it is far easier to ignore a long term problem than deal with it. It is more abstract to believe foreign aid is the culprit than something that affects you directly. It is less stressful to agree with a politician who claims to have a solution while leaving Medicare and Social Security untouched.

The difficult part is accepting the truth. The U.S. has made open ended, demographic based commitments that it can’t control and can’t pay for. Twenty to thirty years from now there will be hell to pay. The longer it takes to implement corrective action the worse it will be… and that’s the truth like it or not

 

2012 is the start of new fees and taxes on health care organizations…what are the possible consequences? First up, a new excise tax on pharmaceutical companies

18 Jan
English: Novamoxin Prescription Drug - Amoxici...

First target

One of the criticisms of the Affordable Care Act has been that few people actually know what is contained in the Act.  Having spent untold hours reading the Act along with various independent assessments of the Act, I can testify to its immense complexity.   

For example, in order to pay for the expansion of subsidized health insurance to millions of Americans, the Affordable Care Act adds numerous new fees and taxes on individuals’, employers and the health insurance industry.  In 2010, there was a new tax on indoor tanning facilities (ok, so that is not a big deal, anyone who uses one of those deserves to be taxed). In 2014 there are new fees on employers and insurance companies, all of which have the potential of being passed along to consumers.  In 2012 pharmaceutical companies that sell to the federal government are assessed what is called an annual fee (excise tax). 

The various fees and taxes contained in the Act are among the few elements that are reasonably quantifiable.  Other elements of the Act that are to reduce costs rely on assumptions of long-term success for well-meaning, but untried programs generally related to Medicare.  To be successful, hospitals, physicians, other health care providers and Medicare beneficiaries must all work in a coordinated effort under new paradigms for providing health care.

Taking billions of dollars each year in new taxes impacts these organizations which then must find ways to mitigate this loss.  It is tempting to simply dismiss such taxes as justified on highly profitable organizations.  However, we should never forget that everything we do is connected to something else and every action has its consequences (think housing crisis).  Generating revenue for some means a loss for others, a savings here means less revenue there and in some cases that may mean a loss of jobs, less invested in research or simply passing costs along to another party. When additional costs are imposed on employers, especially related to health benefits, it generally means greater cost sharing for employees and a shift in compensation from cash to employee benefit programs.  Good benefits are valuable, but they don’t buy groceries or pay college tuition.

The following is excerpted from the IRS regulations with regard to the new fees on drug manufacturers (a very small sample of the hundreds of thousands, ultimately millions, of pages of regulations implementing the Affordable Care Act). 

The aggregate fee amount each year for all covered entities (referred to as the applicable amount) is $2.5 billion for fee year 2011; $2.8 billion for fee years 2012 and 2013; $3 billion for fee years 2014 through 2016; $4 billion for fee year 2017; $4.1 billion for fee year 2018; and $2.8 billion for fee year 2019 and thereafter. The applicable amount for each year is allocated, using a specified formula, among covered entities with aggregate branded prescription drug sales of over $5 million to specified government programs or pursuant to coverage under such programs.

The specified government programs are the Medicare Part B program, the Medicare Part D program, the Medicaid program, any program under which branded prescription drugs are procured by the Department of Veterans Affairs, any program under which branded prescription drugs are procured by the Department of Defense, and the TRICARE retail pharmacy program (collectively, the Programs).

The annual fee for each covered entity is calculated by determining the ratio of (i) the covered entity’s branded prescription drug sales taken into account during the preceding calendar year to (ii) the aggregate branded prescription drug sales taken into account for all covered entities during the same year, and applying this ratio to the applicable amount. Sales taken into account means branded prescription drug sales after the application of the percentage adjustment table.

Bait and switch Congressional style

29 Oct

Now it is reported that Pelosi will send to the floor a bill with a public option that calls for negotiated rates rather than using Medicare rates for payment to health care providers.  Interesting start, but one can only imagine what will happen a few years after enactment when costs are still rising…does Medicare ring a bell?

However, you don’t even have to wait that long, to keep under the target cost projection the bill will also expand Medicaid,  this is what The Hill says about that:

“The negotiated rates plan is estimated to cost about $85 billion more than the Medicare-based reimbursements. To cut the number of uninsured without surpassing the $900 billion limit set by Obama, the bill will expand eligibility for the Medicaid health care program for the poor. The bill will also include an income surtax on the wealthy to pay much of the cost of the plan.”

I think they used to call that bait and switch.  They draw you in with a too good to believe sale and then sell you something else.  So, now the $85 billion is off the books for federal health care reform, but shifted to the states through expanded Medicaid.  Now you see it now you don’t.  And by the way, Medicaid costs money too.

As Margaret Thatcher said, the problem with socialism is that sooner or later you run out of other people’s money.

 

blogsurfer.us

Telling people the whole truth about health care reform would be refreshing

28 Oct

I am not an economist, in college I was so adept at statistics the professor saw to it that I took the course twice, but I do know that if something is free, somebody somewhere is paying for it.  I do know that if you buy something with borrowed money you have to repay it or suffer the consequences and I know that if you take from one place to give to another there is somebody who comes out on the short end of the stick.  Therefore, I apparently know a great deal more than members of the Congress of the United States. 

francis_telling_a_lie_with_fingers_crossed_md_clr

Trust me, you are going to save money and we are going to stick it to the insurance companies

A new multi-state study by Wellpoint (yes, I know they are an insurance company) demonstrates what many of us have been saying (using only common sense), and that is that for people who have health insurance now, the cost of that coverage will go up, in some cases significantly, under the planned health care reform.  That is because of mandates, new underwriting standards and age based premiums, etc.  Perhaps that is the price to pay for reform, but let’s tell people the truth. 

Also, buried within the reform legislation is an expansion of Medicaid, the state-run health insurance for low income Americans.  What you don’t hear is that much of the financial burden for expanding Medicaid falls on the states many of which are already struggling with budget deficits, but in any case more state obligations must mean higher taxes for citizens and or higher deficits or cuts in other programs. 

Hard choices are surely required in any reform effort, but at least tell people the full story.  The simple fact of course is that politicians don’t trust the public with the truth.  In private some staffers in Congress will tell you that.  I have to admit that listening to some individuals’ view of health care and health care costs, politicians may have a point.  None the less, this is a big, big deal and we need to let people know what they are in for, those with health insurance and those without.

blogsurfer.us

Follow

Get every new post delivered to your Inbox.

Join 371 other followers