Archive | April, 2010

Why your prescription plan is important, time to tell CEOs and CFOs how important

30 Apr


Recently I received the following note from a retired person who currently has prescription drug coverage through his previous employer.  He like thousands of other people is worried about the impact  PPACA may have on his coverage and rightly so.  Companies are looking at this law an an opportunity to lower costs and move liabilities someplace else, specifically to the federal government and taxpayers.

If you are in the position of possibly losing your retiree prescription coverage, now is the time to write to your former employer’s CEO and CFO and tell them how important this coverage is to you and remind them that these benefits are not a gift to be taken away, but that you earned these benefits as part of your total compensation throughout the years you worked for the company.

The prescription coverage has me most concerned. I am not too worried about the routine blood pressure and heart medications but the oral chemo pills are the real concern. Right now, the pills are free and have been since November 2005 because I was part of the clinical trials. This freebie could end at any time and the monthly cost for the medication is $8,000. In addition, there is every likelihood that I could stop responding to this medication and will need another oral medication which runs the same price and which I would not get for free because I was not part of that trial. Right now, my company plan would charge $50 a month but who knows what Medicare Part D or any new employer coverage would cost or if they would think it would be beneficial to keep me alive (on paper, I do not look too good! When I first met my new primary care doctor  last year he said to me that after reading my history he was surprised to see me sitting up!).

I am very lucky because all of these new drugs came along after I was diagnosed with kidney cancer. When I first met with the oncologist in August 2005, he wasn’t sure I would survive to the end of the year! I owe my life to these pills and I thank God I wasn’t diagnosed earlier when there was no treatment available.

Grandfathering under PPACA, what you think you have may not be what you think (you have)

29 Apr


The health care reform legislation (PPACA) makes a number of changes to health plans and health insurance. Many people have expectations of immediate changes that in some cases will add benefits to their coverage.  This is not necessarily the case.  Several provisions will not apply to certain grandfathered plans, generally health plans that were in effect on the date of enactment, March 23, 2010. 

Here is a summary of those provisions that are subject to all plans and those that do not apply to grandfathered plans.

These changes apply to all plans; there is no grandfather plan exclusion:

  • No overall lifetime benefit maximum and no lifetime dollar limit on specific essential benefits
  • Restricted annual benefit maximum for essential benefits (pre-2014)
  • Dependent coverage to age 26 (for dependents without employer sponsored coverage pre-2014)
  • No rescission except in case of fraud
  • No preexisting condition exclusions for children under age 19
  • Prohibits waiting periods longer than 90 days (2014)
  • Uniform explanation of coverage 

My plan is grandfathered I tell you, grandfathered!

In addition, there is a question of how and when the above provisions apply to a collectively bargained plan.  The legislative language is confusing and contradictory.  Nevertheless, the consensus is that the intent is for these provisions not to apply until the existing CBA expires. 

These provisions do not apply to grandfathered plans: 

  • Rules on deductible maximums and out-of-pocket maximums ($2,000 and $4,000)
  • Required coverage of preventive services with no cost-sharing
  • Internal and external appeal process rules-
  • No prior authorization for ob-gyn visits
  • Emergency care must have same payment in and out of network, and no prior authorization
  • Nondiscrimination for insured plans under the tax Code (105 h dealing with coverage for highly paid)

So, for example, the requirement for a plan to have both a revised internal and a new external claims review procedure does not apply to plans that were already in effect on March 23, 2010.

Now the question becomes, can a plan that is grandfathered lose that grandfathering by taking certain actions like making changes to the current provisions of that plan?  The law does not say what will cause a plan to lose its grandfathering. However, some thinking that changing a plan (say, raising a deductible) could cause that to happen.  Only future regulations will clarify the situation.  Until that happens, plan sponsors should make changes with caution.

Why the Patient Protection Affordable Care Act (PPACA) will not produce the stated savings..and why you should care

29 Apr


A new study puts some reality into the cost of health care as a result of the “reform” legislation.   As many of us have been saying, the CBO focuses only on the government’s budget, expenses and tax revenue and then only in the context of the exact words in the legislation.  This results in “savings” for the government, but are they real, is the deficit really reduced?

The PPACA does little if anything to control health care costs but adds new mandated benefits and removes underwriting considerations plus by adding to the insured roles, especially Medicaid, it increases demand including among those who have little or no out of pocket costs. Combined, this is a prescription for ever growing health care costs possibly even beyond that which would have occurred absent the legislation. That is not going to make employers, unions, state and local governments or many individuals very happy. Blaming insurance company premiums is not the solution, but that will continue to be the thrust of political rhetoric.

The problem goes beyond what the PPACA does or does not do, even the assumptions contained within the legislation are questionable at best and likely will not deliver the promised savings or positive impact on the federal deficit.

A new report from the Chief Actuary for CMS   provides some objective clarification on what is happening.  Here is a sample of the findings:

Because of the transition effects and the fact that most of the coverage provisions would be in effect for only 6 of the 10 years of the budget period, the cost estimates shown in this memorandum do not represent a full 10-year cost for the new legislation, CMS says.

The CMS report cautions that “it is important to note that the estimated savings shown in this memorandum for one category of Medicare provisions may be unrealistic.” The reason is that if the proposed cuts to payments to hospitals, nursing facilities, and home health agencies go into effect, “roughly 15 percent of Part A providers would become unprofitable within the 10-year projection period…”  The only way to resolve this problem would be to prevent the cuts, which in turn would eat up some of the projected savings from the legislation.

While in theory Medicare Part A cuts would extend solvency of the program by 12 years, the actuary writes, “In practice the improved (Medicare hospital insurance) financing cannot be simultaneously used to finance other Federal outlays (such as the coverage expansions) and to extend the trust fund, despite the appearance of this result from the respective accounting conventions.”

One of the most under-reported aspects of the new health care legislation was that it creates a smaller new entitlement within the massive entitlement – a program pushed by Ted Kennedy that would allow individuals to purchase long-term care insurance through the government (The Class aCT).  But the program begins collecting premiums before paying out benefits, making it produce surpluses in the early years that Democrats claimed as deficit savings. However, CMS notes that, “After 2015, as benefits are paid, the net savings from this program will decline; in 2025 and later, projected benefits exceed premium revenues, resulting in a net Federal costs in the longer term.”

CFOs see an opportunity, the end of employer based health benefits

28 Apr


“Ezekiel Emanuel, the White House health care advisor, said that health systems are already preparing for it (implementation of PPACA) and changing their practices. He said he expects the Cadillac tax to have an effect well before it comes into play in 2018.

 ’I think CFOs at companies will go to their insurance brokers and say you have to refashion our plan so we’re under the cap,’ said Emanuel, 52. ‘That is going to be very anti- inflationary.’”

Well, he is right about that. Many CFOs welcome an opportunity to cut benefits, but they don’t have to go to a broker, they just tell their benefits department to cut and call it in the best interest of the company. Not only will deductibles and co-payments be raised, but some coverage will be eliminated such as retiree prescription coverage.

Very anti-inflationary? We will see, cutting costs once by cutting benefits does not change health care trends unless you believe that raising a deductible lowers the demand for health care.

If the objective of reform is to raise individual out of pocket costs and make more people dependent on government programs—mission accomplished!

Make no mistake about it, the PPACA is the beginning of the end of employer based health coverage and on the way down that road, workers are going to lose benefits and see their costs rise.

Lessons learned, lessons ignored

27 Apr

“April 27 (Bloomberg) — Stocks tumbled, with Europe’s benchmark index sliding the most since November, and the dollar and Treasuries rallied as credit-rating downgrades of Greek and Portugal spurred concern that indebted European nations are moving closer to default.”

Indebted nations, ummmm sound like anyone you know? Can we learn what overspending and overpromising enitlements means in the long run?


The realities of health care reform are becoming apparent sooner rather than later

26 Apr

I predict politicians will continue to be politicians

Somewhere in these pages, you will find predictions to the effect that the Obama version of health care reform will not control costs, but rather increase them.  You will find reports that the CBO says much the same for most people.  You will also find predictions that to control costs there will have to be some form of health care rationing (not all bad mind you).  There are warnings of tinkering by Congress shortly after enactment of the legislation (although even I thought it would take more than a month), and there are references to the unworkable Massachusetts model. I talk about the risk of subsidies and tax credits tied to uncontrolled cost of health care resulting in higher and higher costs for these subsidies and credits.  More recently, I mention the dangers of demonizing insurance companies and seducing people into believing that the problems with health care costs are high premiums caused by CEO pay, insurance company profits and the lack of “competition.” 

I explain that the money being “saved” was simply the federal government moving money around and shifting costs like a Ponzi scheme.  There are also predictions somewhere in the pages that because costs will not be controlled and premiums will continue to rise at well more than inflation (driven by basic trends in health care services), politicians will have to again blame insurance companies for these results.

Finally, I point out that many of the assumptions used in the legislation are not only unrealistic, but also outright skulduggery. 

Have you read the papers lately?

Hold onto your wallet and put money aside to give you more flexibility in receiving health care, you may need it. I guess forty-eight years managing health benefits, lobbying Congress and working with insurers and health care organizations wasn’t a waste after all.

Join the FACEBOOK group, “What the heck are they doing with my employee benefits?”

Employers seek new strategies to cope with PPACA changes in retiree prescription coverage-shift to Medicare Part D likely

23 Apr


With the enactment of Medicare Part D, employers were provided an incentive rebate to retain coverage for their retirees with the goal of saving the federal government money.

The Patient Protection Affordable Care Act changes the rules so that the rebate provided (now suddenly described as a tax loophole) to employers is no longer tax deductible thereby adding substantial bottom line costs for the employer.  This is causing employers to evaluate alternatives to providing this benefit to millions of retirees.  One alternative is to simply eliminate the coverage  thereby requiring the retiree to fend for himself in finding and paying for prescription coverage, but there are alternatives.  Another option is to set up an employer sponsored Medicare prescription plan open only to the retirees of an employer group.  This allows the employer sponsored plan to collect Medicare subsidies, but gets the employer out of the process and tax implications of receiving the retirees drug rebate that is part of the original Part D program.

Employers are actively looking at their options although with the changes caused by the PPACA not effective until January 2013, there is time to act.  However, because of accounting rules, employers will likely announce any changes in 2010 to reverse the tax impact of changes in the law. 

In any case, retirees are likely to see significant changes in their coverage including less involvement by their former employer, increased out of pocket costs and less flexibility in terms of which drugs are available for thier use. 


Medicare Part D and the Plan Sponsor: What You Don’t Know Can Hurt You and Your Bottom Line  Excerpts

 By Erin Costell, Managing Partner, Global Pharmaceutical Solutions HR Management Article: Medicare Part D and the Plan Sponsor: What You Don’t Know  



One such alternative is the establishment by the plan sponsor of its own Medicare Prescription Drug Plan (PDP), known as a direct-contract Employer Group Waiver Plan (EGWP). With a direct-contract EGWP, the employer enters into a contract with CMS to provide plan benefits and receives payment directly from the government. Plan sponsors with large Medicare-eligible populations may find this to be financially superior to the RDS approach. Under the direct-contract EGWP approach, the pre-tax federal subsidy is set at the national average monthly bid amount less the Part D base beneficiary premium, with the national bid being $80.43 and beneficiary premium being $27.35 in 2007. Unlike the RDS option, the direct subsidy available through the direct-contract EGWP plan includes subsidization for administrative costs and profit margins based on the national average of commercial plans. The direct subsidy payments are also adjusted based on the health risk status of the beneficiary. Direct subsidy payments alone are almost equivalent to the average subsidies provided under the RDS program. In addition to direct subsidy payments, direct-contract EGWPs also receive low-income subsidy payments, as well as “catastrophic” reinsurance payments that provide reimbursement for 80% of eligible drug costs that exceed a beneficiary’s maximum out of pocket limit, with the out of pocket limit being $3,850 in 2007. The total value of the direct contract EGWP subsidies can exceed that of the RDS by as much as $400 to $500 (pre-tax) per year for each covered Medicare beneficiary. The subsidy is estimated to be 35% or more of the plan sponsor drug spend for Medicare beneficiaries, far exceeding the estimated 20% average subsidy yielded under RDS. For large plan sponsors, this additional savings can amount to millions of dollars per year.


Another alternative option for plan sponsors is the purchase of an Employer Group Waiver Plan from a third party Part D Sponsor, known as an “800 Series” EGWP. Under this arrangement, the employer or union does not contract directly with CMS. Instead, a third party Part D Sponsor contracts with CMS to offer this benefit to the employer or union plan sponsor on CMS’s behalf. This arrangement alleviates much of the employer’s or union’s administrative burden because they have no direct obligations to CMS. Under an “800 Series” plan the third party Part D Sponsor receives the direct subsidies, low income subsidies and reinsurance payments for the employer’s or union’s approved beneficiaries, like the payments available under the direct contract EGWP. The employer or union realizes these savings  through either reduced premiums or a pass-through of CMS payments from the third party Part D sponsor back to the employer or union sponsor. However, since the administrative and regulatory burdens fall on the third party Part D sponsor under this arrangement, third party sponsors typically charge additional fees to cover these expenses.


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“If you like the plan you have you can keep it.”  Who was it that said that over and over, seems like it was someone who should have known.

Make sure to join the Facebook Group

Employers figure ways to mitigate impact of PPACA (are you surprised?) – unintended consequences, what a concept!

23 Apr


Well, maybe not.

One of the requirements under the PPACA is for health plans to allow enrollment by children of an employee or retiree who are under age 27.  For many plans this means additional expense, especially when the employee may already be enrolled in family coverage that includes the employee and any number of dependents.   What to do, what to do?  Well some employers will change their plan so that the employee’s payroll deduction is based on the number of dependents actually enrolled. That means if you have a spouse and two children currently enrolled and you now add a twenty-five year old on your coverage, you pay more.  It also means that all employees and retirees will pay based on the number of children they have enrolled. 

Consultants are out en mass selling ideas to employers that will mitigate the impact of PPACA on plan costs.  Unintended consequences is big business!

What the CBO Director says about the impact of health care reform on the deficit

22 Apr


By all accounts the Congressional Budget Office (CBO) is a credible organization with many skilled professionals trying to do an impossible task of estimating the cost of government in an environment of uncertainty and instability (to put it mildly).  The struggle between this effort and the shenanigans in Congress is a good example of how difficult it can be.  Does health care reform reduce the deficit or increase it?  That depends on which set of assumptions you use and whether those assumptions pan out.  In the case of health care reform it is a good bet many of the assumptions will not be fulfilled simply becasue they are unrealistic or for political reasons dictated by Congress.  Take a look for yourself what the Director of the CBO says.  NOTE: I have added the bold to certain statements.

Just git er done!

From the Congressional Budget Office Director’s Blog, April 20, 2010.

Some observers have asserted that CBO and JCT have misestimated the effects of the changes in law. Concerns have been expressed in different directions—for example, some believe that subsidies will be more expensive than we project, while others maintain that Medicare reforms will save more money than we project.

o Our estimates reflect the middle of the distribution of possible outcomes based on our careful analysis and professional judgment, drawing upon relevant research by other experts. Nevertheless, estimates of the effects of comprehensive reforms are clearly very uncertain, and the actual outcomes will surely differ from our estimates in one direction or another.

Some observers have asserted that budget conventions hide or misrepresent certain effects of the law, such as its impact on future discretionary spending, its effect on the government’s ability to pay Medicare benefits, and its effects on the economy.

o The estimates I discussed above focus on direct spending and revenues because those are the figures that are relevant for the pay-as-you-go rules and those effects will occur without any additional legislative action. As CBO’s estimate noted, the legislation will lead to some increases in discretionary spending (that is, spending subject to future appropriation action) that are not included in the deficit figures cited above.

o The legislation will improve the cash flow in the Hospital Insurance trust fund (that is, Part A of Medicare) by more than $400 billion over 10 years. Higher balances in the fund will give the government legal authority to pay Medicare benefits longer, but most of the money will pay for new programs rather than reduce future budget deficits and therefore will not enhance the government’s economic ability to pay Medicare benefits.

o Following standard procedures for the Congressional budget process, the estimates do not include any effects of the legislation on overall economic output, although CBO wrote last summer about possible effects of health reform proposals on output.

Some observers have asserted that the law will be changed in the future in ways that will make deficits worse.

o CBO estimates the effects of proposals as written and does not forecast future policy changes. As is the case for many pieces of legislation, the budgetary impact of the health reform legislation could indeed be quite different if key provisions are ultimately changed.

o In fact, CBO’s cost estimate noted that the legislation maintains and puts into effect a number of policies that might be difficult to sustain over a long period of time. For example, the legislation reduces the growth rate of Medicare spending (per beneficiary, adjusting for overall inflation) from about 4 percent per year for the past two decades to about 2 percent per year for the next two decades. It is unclear whether such a reduction can be achieved, and, if so, whether it would be through greater efficiencies in the delivery of health care or through reductions in access to care or the quality of care. The legislation also indexes exchange subsidies at a lower rate after 2018, and it establishes a tax on insurance plans with relatively high premiums in 2018 and (beginning in 2020) indexes the tax thresholds to general inflation.

The above is not exactly what you hear at the political podium is it?

New move in Congress to regulate health insurance premiums-surprise, surprise!

22 Apr


When I was lobbying in Congress regarding portions of the health reform legislation, several congressional aids confided that as soon as the legislation was passed they would start working on more legislation and changes. They were telling the truth.

Legislation has been introduced to further regulate insurance premiums at the federal level. “Regulate them like utilities.”  has been thrown about. I wonder if these politicians realize that profits for the health insurance industry are about the same level allowed for many regulated utilities. Utilities are given protected territory for good reason and regulated because of that monopoly, hardly the same as the competitive situation for health insurance (especially given the government’s goal to increase competition).

This new attack is the logical result of months of rhetoric about insurance companies as the devil in the health care system. Or, here is a thought, the politicians are setting the stage for high premium increases between now and 2014 as the impact of PPACA changes start to kick in and the ongoing impact of doing nothing to control health care costs becomes apparent (to the people who don’t already know it).

From the New York Times:  WASHINGTON — Fearing that health insurance premiums may shoot up in the next few years, Senate Democrats laid a foundation on Tuesday for federal regulation of rates, four weeks after President Obama signed a law intended to rein in soaring health costs.

Karen M. Ignagni, president of America’s Health Insurance Plans, a trade group for insurers, said Congress should let the new law work before piling on additional requirements. Congress, she said, has largely ignored the cause of rising premiums: the explosive growth of medical costs and the power of hospitals and other health care providers to dictate prices.

Ms. Ignagni said the law imposed new requirements, taxes and fees on health plans, which could further drive up costs.

Fasten your seat belt the ride has just begun.

Reining in Wall Street and Goldman Sachs

21 Apr


First it was stopping the abuses and discrimination by health insurance companies, now it is:

“President Obama means business.

He’s committed his administration to reining in Wall Street and creating the strongest consumer protections in history.”

So now we will rein in Wall Street or at least get average Americans to demand it because these days we love to hate Wall Street (not that we need them for our credit cards, mortgages, IRAs, pensions, and 401(k) plans).  I heard Sen Dodd say at his hearing on financial reform that millions of Americans saw their retirement savings wiped out, in some cases in minutes as a result of the financial crisis.  Imagine that, in minutes.  In addition to financial reform it seems to me we need to do more on investment education, promoting diversification and planning for retirement.

The news headlines about Goldman Sachs would make you think they were ripping off grandma instead of making a non public sale to equally sophisticated investors (or they thought they were). In addition, Goldman was aware of this investigation over two years ago and yet the announcement by the SEC was a surprise to everyone…and apparently well timed.  Go figure.

We hate everyone these days including the “wealthy.”  We seem to forget that these are the people who built America, greed, scandals, union busting, worker abuse and all the rest.

Working people may do the labor but those robber barons, industrialists, bankers, thinkers and assorted strange people…and yes Wall Streeters are the ones who made things happen. They are the ones who establish foundations and universities, start new businesses, stimulate innovation, give to charities, build libraries, museums and art venues. It would be nice if it were all done in the most ethical way, but we are human and we don’t always act that way.  This is not an excuse for bad behavior or justification that the results always justify the means, but reality is that all Americans have benefited from the actions of the movers and shakers and the wealthy.  For the average person to do well, we need Wall Street to do well.  If you don’t believe that you are either greatly uninformed or a fool (or perhaps a politician).

Hate them if you will, rein them in, but we better be sure the good we all receive is not destroyed in the process.

Generous Americans know no bounds with their giving

21 Apr


There are a number of generous Americans even beyond the wealthy.

These  folks help people by cars under cash for clunkers, they help other people buy a new home or upgrade, they are giving $250 to many seniors, they gave me $1500 to put in central air conditioning. It appears their generosity knows no bounds.

Now Congress is working on a new program, six billion dollars for cash for caulkers. This program will pay up to half the project costs for new windows, insulation, upgrade a furnace, and similar things. The House Energy Committee has cleared the bill, now it’s on its way to the senate.

My share of this bill is what?


Of course, the same old rationale is used, stimulate the economy and make us green. So, if there is a good cause, you can automatically afford it?  On one hand we are going to stimulate the economy and on the other we are going to raise taxes to the extent we dull the economy and quell the American spirit; too dramatic…let’s hope.

I fear green may be the color of the next generation when the bill comes due and the United States is a second tier country on the world scene. Make no mistake about it, this generosity is a big mistake and the symptom of an ever bigger concern.

Oh, you want to know what that concern is? Well, the more you become dependent on someone the more control he has over you. I’m making you an offer you can’t refuse. Make sure you vote for me and I will keep the goodies coming. No questions asked.

Yeah, no questions asked.

What the heck are they doing with my employee benefits?

20 Apr


Now on Facebook, a new group to join and ask your friends to join. 

“What they heck are they doing with my employee benefits?” is a question and answer discussion about all aspects of employee benefit programs.  This group is designed to help people better understand, utilize and appreciate their benefit programs.  The information discussed is not company specific, but applicable in all situations.

Take a look at:


Back to the future, what happened to HMOs? Look in Massachusetts

20 Apr


Once again in its quest to rein in health care costs Massachusetts is taking the lead backward. Rushing headlong into reform for the sake of expanding coverage, the State is now grasping for solutions to deal with costs.  That’s good of course, just that they, like the U.S., got it backwards. To date they have tried capping premium increases, talked about imposing capitation payments for physician services, and now its dawned on someone perhaps they should look at the profits of hospitals. 

But the best idea of all is the Accountable Care Organization, a coordinated way of providing health care with a group of physicians.  If that sounds familiar, the concept used to be called an HMO.  Back in the late 1970s some of us embraced that system only to see it gradually fall by the wayside; both profit and non profit HMOs.   What killed the HMO?  We did, that is, patients were convinced they were scrimping on care to save money, and they were telling doctors what to do and generally rationing care.  Doctors, many of whom embraced the idea reluctantly and out of necessity quickly found that operating an HMO with business as usually didn’t work.  Employers were were told they skimmed the healthy people from their groups and then when it was learned these generous benefit packages were not offset by managing care and costs, the idea was generally abandoned. 

Good luck Massachusetts!

By Steve Adams
Posted Apr 17, 2010 @ 07:59 AM

Senate President Therese Murray’s prescription to shrink small businesses’ health care costs might soothe some issues but isn’t a miracle cure, according to health care and industry figures.  The Plymouth Democrat this week called for caps on health insurance companies’ administrative costs and asked for a $100-million donation from health care providers.

The bill is the latest of a flurry of fervent efforts, at the state and national level, to corral health care costs. Yet most every attempt has failed, with medical expenditures tripling in the past 18 years to $2.3 trillion.

Murray acknowledged the challenges in a speech to the Greater Boston Chamber of Commerce Wednesday, noting some cost increases are beyond the control of insurance companies. But she said insurers need to be held more accountable.  Murray’s plan would force insurers to prove they are using at least 90 percent of premiums for medical services, rather than administrative costs. Those that don’t would have limits placed on their premium hikes.

“Obviously the insurers set the premiums, but they reflect the medical cost trends,” said Eileen McAnneny, senior vice president of government affairs for Associated Industries of Massachusetts. “Unfortunately, the Senate president’s bill only addressed the insurance piece.”

Murray said her long-term goal is to convert Massachusetts to “global payments” within five years. With global payment, providers would be paid in advance each year for each patient – not separately, for each drug or service rendered – based on a person’s age and health status. That system would encourage the creation of so-called “accountable care organizations,” a new breed of provider networks that coordinate patients’ care among member primary physicians, hospitals and specialists.

Keep an eye on the Bay State, it’s a looking glass into our future frustrations.

Health care cost control in the Bay State


We all love entitlements and we all complain about taxes and the debt, how dumb are we?

18 Apr


A recent survey showed that the vast majority of Tea Party participants while decrying the size of the federal government and high taxes have no special problem with Social Security and Medicare which begs the question why are they opposed to the PPACA which is just another entitlement like Social Security and like Medicare and Medicaid. 

Entitlements are interesting things, we love to hate them, but love to love them.  This is true the longer they are in effect and the more we come to depend on them.  So, all the rhetoric about government interference and individual responsibility contains no more substance than a cup of tea.

The fact is that mandatory spending makes up 59.5% of Federal spending and 70% of that is for Social Security, Medicare and Medicaid…and will grow as all the subsidies, credits and other spending kick in under the PPACA.  Social Security alone is 20.3% of federal spending while the military is slightly less than that.  As I have said before, it won’t be long before the PPACA is just another line item under the mandatory spending category. 

So, while we yell and scream about spending, the deficit and taxes, the fact is we are quite content to spend what we don’t have on what we want anyway, not unlike the average American family.  If any politician had the guts to say the COLA under Social Security needs to change, the early retirement age needs to change and the Medicare deductible needs to go up to at least $500, we would probably tar and feather him.  However, we have no trouble railing against foreign aid which along with all international affairs makes up 1.6% of the federal budget.

In the end, we are no different than any other socialist leaning country, we do want the government (and the following generations) to take care of us and no, we do not want and do not accept personal responsibility for much of anything.  The Chinese view is that America is in decline and thus becoming less reliable in its influence and its wealth.  They are probably right.  We are more content to play the scapegoat game, the kick the can down the road game and the “put it on the back burner game,” than to make hard decisions at all levels.  We are soft and complacent and we are more interested in someone sharing his wealth than creating our own, we are entitled after all.

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