Wednesday, April 14, 2021

Stupid Budget Tricks - Government Healthcare Edition

If you think the federal budget situation in the United States is bad, and it is, you needn’t look any further than the remarkably inefficient and miserably managed systems of Medicare and Medicaid in order to get an idea of just how bad.  As of today, our national debt is over $28 Trillion or $225,000 per taxpayer.  But of course, that doesn’t take into account America’s unfunded liabilities.  You know, how big that debt is when you factor in what we owe and have not set aside for Medicare, Medicaid and Social Security.  After factoring that in, the real U.S. debt is $162 Trillion and each citizen owes $492,000.   


This trick has actually been going on since the 1990s.  Yup ... the 90s.     


What is the problem?  One-third of all government healthcare payments are wasted on fraud and abuse.  


See CATO: In 2005, the New York Times reported that New York’s Medicaid program “has become so huge, so complex and so lightly policed that it is easily exploited,” and that “a chief state investigator of Medicaid fraud and abuse in New York City said he and his colleagues believed that at least 10 percent of state Medicaid dollars were spent on fraudulent claims, while 20 or 30 percent more were siphoned off by what they termed abuse, meaning unnecessary spending that might not be criminal.“


Nevertheless, Medicare pays less than half of what employer-based plans pay in the U.S.  So, increasingly providers decline to take new Medicare patients.  More providers decline to take Medicaid (for low income folks) which pays, on average, 28% less than Medicare.  


Medicare is now set to run out of money by 2023 or 2024. 


See Kaiser Health News: "The Committee for a Responsible Federal Budget, a nonpartisan group of budget experts focused on fiscal policy, estimates that the pandemic will cause the Part A Trust Fund to be unable to pay all of its bills starting in late 2023 or early 2024. “But we’re still very close,” said Marc Goldwein, the group’s senior vice president." 


Even more problematic, healthcare expenditures continue to grow at 6% annually.  Federal legislators look at this quandary and don't know what to do.  Obviously the fraud can't be removed or it would have been over the last 30+ years.  Yet, House and Senate members must still "bring home the bacon" to cement reelection.  So how do they pass new legislation, particularly as it relates to healthcare, without totally blowing up the Congressional Budget Office's (CBO's) financial projections?  Two tricks:  

  1. They write a provision into their favorite federal spending laws, like Obamacare, that provide that part of the way they will "fund" the new entitlements will be to cut the Medicare reimbursements to doctors by 2% per year.  That way the "law" is in the books and the CBO must score the law assuming the cuts will happen.  

  2. Then, as those cuts come due, congress delays or suspends them.  Every.  Single. Time.  Below is the latest story on this topic.  

To reiterate the whole-scale financial negligence of the situation: one-third of U.S. government healthcare is waste, fraud and abuse.  That same system compensates doctors less than half of what private plans do.  But when congress is faced with how to make it more efficient or to save money, its answer is to bluntly cut the reimbursement to doctors even further because they know that the federal bureaucracies simply cannot get a handle on waste, fraud and abuse.  


Of course when Medicare is paying less than half of what employer-based plans pay and Medicaid pays 28% less than Medicare, nobody who wants to be re-elected will actually further reduce those reimbursements.  Doing so would be political suicide.  


This is from The HIll:  

The House on Tuesday approved a bill that would put off automatic cuts to Medicare provider payments until the end of the year.

The bill passed with a strong bipartisan majority of 384-38. 

Technically, the House vote comes nearly two weeks after the cuts were set to take effect, but the delay came with knowledge that action could be postponed until Congress returned from recess and passed the legislation.

The automatic cuts were originally put into place by the 2011 Budget Control Act, which set up an annual 2 percent reduction in Medicare payments as one of its mechanisms for reducing the debt. Congress has never allowed the cuts to take place, however, voting to overturn them regularly over the past decade.

When Congress passed the CARES Act, its $2.2 trillion emergency COVID-19 bill, last March, it pushed the cuts off until April 1 as a way of countering some of the bill's costs, at least on paper. ...