The Money Has to Come from Somewhere

Federal entitlement programs dominate the public debate. Social security, Medicare, Medicaid, and the social welfare programs of food stamps, disability and unemployment insurance are the most widely discussed. As a share of the federal budget, entitlement spending accounts for over 60% (up from 25% in 1960). They can be divided into the programs that are targeted for those who are unable to provide for their own needs (Medicaid, disability, etc.) and those that are funded by past contributions (Social Security and Medicare), regardless of financial need. With almost half of this country’s population receiving some form of government subsidy, many are predicting that the United States is becoming a ‘welfare state.’ The results of the last Presidential election within many inner city voting districts, where entitlement income rivals earned income, would tend to substantiate that claim.

With future generations left to clean up a growing national debt that threatens to reduce this country to a third world status, the focus in Washington has turned to ‘fixing’ the entitlement programs as a major part of the solution. Although the Social Security program is an integral part of this fix, it is the ‘tinkering with’ the Medicare and Medicaid programs, under the new Accountable Care Act (Obamacare), that specifically impacts the medical profession. In a thinly veiled attempt to hide the increased tax burden from the electorate, the initial proponents of this legislation, proposed moving $716 billion out of the Medicare program (the elderly) and into an expanded Medicaid program (mostly the younger uninsured which comprise 25% of this group) over the next ten years. It is a shell game of potential catastrophic proportions.

The arguments that make this new legislation more affordable are through several methods: First is rooting out fraud and streamlining health care delivery (specifically in the Medicare and Medicaid population). Next is turning over much of the frontline care to non-physician practitioners. (See my blog, Turf Battles, but on Whose Turf?, April, 2011 @ Finally, it is by raising taxes on the ‘rich.’

The arguments concerning streamlining (reduced treatment options for the ‘senior’ population) are addressed in my blog, Obamacare Has ‘Thrown Our Seniors Under the Bus, October, 2012. Addressing the issue of increased taxes on the ‘rich’ (restoring the taxes for the wealthy to the Clinton administration levels) seems to be the main hurdle between the President and beleaguered Republican leadership in the House of Representatives. Even now that the President has gotten his way, the revenue that the President’s win will add to the Federal coffers comes nowhere near the added costs of the expanding entitlement programs. Both political parties agree, besides seeking ways to cut government spending, more revenue needs to come into the system from somewhere.

Each year health care providers are facing decreasing reimbursements from their Medicare patients. Each year more providers stop taking new Medicare patients or drop the program altogether. This country is reaching a ‘tipping point’ where the care for our seniors is going to be, not just inconvenienced, but compromised.

With the advances in the science of medicine and a growing population, this country should strive for better care for everyone, not cost shifting from one population to another. Rooting out fraud, decreasing inefficiencies and standardizing certain approaches to care though practice parameters, electronic medical records and telemedicine are definite steps in that direction.  All sides agree on these approaches. Assigning care to alternative providers that are not under physician supervision, just to reduce costs, must be undertaken in such a way as to not jeopardize patient care. It reminds me of the axiom, we may know what we know, but we don’t know what we don’t know.

Where our elected leadership disagrees is how to bring more funding into the system. What is being proposed by the ACA (Obamacare) is increasing taxes on a litany of things such as medical equipment and restoring the taxing structure to the pre-Bush years for the ‘rich.’

Since neither proposal is enough to address the increased financial obligations of the new ACA legislation, another way to bring in monies that are currently sitting in the pockets of the ‘wealthy’ is through a proportional decrease of their Social Security benefits and by making them spend more for their medical costs under Medicare. This is not a new concept. There is already a sliding scale (means testing), based on income, for Medicare taxes.

Adding to the tax burden of the wealthy potentially means that they will horde more, spend less and hire less. More spending equates to more jobs and more commerce. Whereas more taxes often equates to more regulations and more entitlements.

With Social Security, the concepts for savings that are being discussed are raising the age limits for eligibility and tying the cost of living adjustments (COLA) to price fluctuations, rather than changes to the national average wage.

No one program will solve these problems. Health care savings accounts (HSAs) have been very successful and should be made available to a larger part of the population. Their distinct advantages are that they allow the patients some determination (control) of their first dollar coverage and HSAs bring new money into the system. Issuing vouchers, like food stamps, is another proposal. They do allow for some determination of spending by the disadvantaged population, but they don’t bring new monies into the already financially-strapped funding system.

For the Medicare program specifically, new influx of funds could come from balanced billing.  The providers of health care services would be allowed to bill those who could afford the added expenses not covered by the current Medicare allowable charges. This higher fee scale should not exceed the private industry standards and eligibility determined by the means testing methods that is already in place for adjustments in Medicare insurance costs. This idea has been proposed by the medical sector before, but has fallen on deaf ears in the nation’s capitol.

A change that would have an immediate effect would be ‘balance billing’ for those who could afford to pay.  The patients would be responsible for a portion of the costs of their medical care.  The amount for which they are responsible would be determined by their ability to pay.

If patients could not afford to fund a predetermined portion of their costs, the system for them would work as is does now.  For a system such as this to work, a means test would be required— It would make for a more normal patient/doctor relationship by partially removing the government payer as an intermediary.

Congress would benefit by transferring some of the costs to those who use the system, at the same time introducing a cost-containment measure on the utilization of available services.  Patients would think more carefully about seeking care if they were going to pay part of their own costs.

The system must be set up in such a way that these patients would be protected from catastrophic problems that could deplete their resources.

For any healthcare system to be financially viable, there must be a method to limit utilization.  What better way than to put it in the hands of those that both use and can afford to pay for it.

R. Tenery,  American Medical News. April 22/29, 1991

Balanced billing brings more revenue into the delivery system, but maybe even more important, the influx of increased reimbursements encourages more providers to care for more patients who are covered under Medicare. It guarantees many Medicare participants greater access to health care services. It encourages spending instead of hoarding. Finally, by putting the responsibility for first dollar coverage back where it belongs, the patients assume some of the responsibility and control for their own care.

Since the feds are still grappling for solutions, maybe its time this idea is looked at again. It seems the majority in Congress have little trouble supporting raising taxes on the ‘so-called’ wealthy to bring in more money to the federal coffers. But when it comes to bringing in more money to those who actually perform the services (health care providers, hospitals, drug companies, etc), they seem reluctant.

Maybe it’s because they would have to give up some of their control!

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