The Government Shuts Down But the Sun Still Rises

Except for the military, law enforcement, and State Department personnel, the United States Government is shut down.  Yet the sun still rose this morning and here in the New York City metropolitan area, the sky is a beautiful autumn blue (rather like that morning on Sept. 11, 2001 without the catastrophe).

 

Well, it’s a catastrophe to the Democrats and their Progressive minions.  You won’t be able to see Bridal Veil Falls out there in Yosemite National Park nor will you be able to sit in peace and quiet at Shepherd’s Pond in Ringwood.  But are we ever saving money.  Reportedly, some 800,000 federal employees are on unpaid furlough.

 

All those unnecessary functionaries that are bloating are government like too many Twinkies in the belly of the Federal beast must stay home today, just like those of us who are out of work because our companies couldn’t afford to pay their salaries.

 

Obamacare is still in force.  The exchanges officially opened today.  You have until the end of December to sign up – or else.  What’s holding up the government shutdown?  Well, the Republican House wants the Democrat Senate to compromise.  Defer Obamacare for a year and require Congress and all its federal employees to sign up for Obamacare.

 

Sen. Majority Leader Harry Reid has crossed his arms and is holding his breath until he turns blue.  ‘We won’t negotiate.’  They figure there’s no good reason for them to do so.  The Media has blown the government shutdown so much out of proportion that they’ve got the public whipped up into an hysteria about the shutdown.

 

Progressive Republicans are trying to soothe the American public by claiming that Obamacare will die of its own weight and unpopularity.  Did Social Security die?  It did die, but it’s on artificial life-support.  Welfare was reformed, but only after a similar shutdown of the government.  Obamacare will not die from its own weight any more than Social Security did.  Enough people will find themselves clinging to it that we’ll be “shamed” into supporting it.

 

Already, Reid has been on the air and the cable claiming that many poor people are in need of it.  People who currently use their Medicaid funds to buy everything from aspirin to contraceptives.  Hospitals are already required to treat the poor.  That’s one of the reasons the federal government wants us to support Obamacare.

 

According to Ralph Weber and Dave Racer in their book “Medicrats:   Medical Bureaucrats that Rules Your Health Care,”  FDR was the first president to try to pass universal health care.  He failed.  But he was able to implement Social Security, which was only supposed to be a supplemental income for retirees.  Physicians worried that Social Security would lead to compulsory health insurance.  Heavily regulated, they feared it would affect patient choice and their relationship with patients.

 

In 1939, the American Hospital Association urged physicians and surgeons to form their own prepaid plans under the name of Blue Shield to insure that doctors and surgeons were paid for their medical services.  Other services were still paid out of pocket by the patient.  Blue Cross was soon formed to protect the hospitals from non-payment.

 

During World War II, Congress imposed a wage freeze on employers (and employees).  “As a result,” Weber and Racer tell us, “employers began offering health insurance as an employment benefit in lieu of higher wages.  By imposing its will on private employers, Congress upset the common employment incentives provided by salaries, wages, working conditions, and industry.”

 

“In 1954, when Congress decided to allow employers to deduct health insurance from their taxes as an expense, it changed how people purchased health care.  Employers soon realized they could provide a great benefit for employees and save money at the same time – for both parties.”

 

“The law allows the employer to deduct 100 percent of the $1,000 from company income.  The employer pays no income or payroll taxes on the $1,000.  The $1,000 costs the employer $1,000.  If the employer paid the $1,000 in salary, I might cost the employer as much as $1,250 in payroll taxes, workers’ compensation, unemployment insurance, and other payroll-related tax.

 

“The employee pays no income or Social Security tax on the $1,000.  After 1965, the employee also paid no Medicare tax on the $1,000.  The $1,000 buys the employee a $1,000 benefit.”  If the employee received the $1,000 in straight compensation (wages), the employee would pay “Social Security, Medicare, and income tax on it.  Depending on the employee’s income tax bracket, the $1,000 in compensation might result in as little as $600 in the employee’s pocket.”

 

“After the 1954 tax code change, employers shifted annual increases in compensation away from salary, and toward tax-effective benefits.  Health care plans became richer, while pay increases became smaller.  This increase in health care spending caused health insurance companies to develop more costly plans, which in turn drove up healthcare utilization and inflation, while moderate pay increases kept general inflation lower.”

 

The 1954 legislation triggered a never-ending increase in inflationary healthcare spending.  In those days, however, insurance was limited to hospitalization and major medical.  Earlier, the Supreme Court has overturned Congress’ regulation of health insurance, ruling that it did not qualify as an object of commerce.  So Congress tried to maneuver around the Court.

 

In 1944, the Court (now packed with FDR appointees) finally gave Congress the authority to regulate insurance under the Commerce Clause.  As a result, Congress passed the McKarran-Ferguson Act in 1945.  This left the regulation of medical and hospital insurance in the hands of state regulators.

 

“State regulation, eventually called ‘health insurance,’ did not change until Congress gave the Federal Secretary of Health and Human Services overarching control over it when it passed the Affordable Care Act in 2010.”  Giving the state’s control was no blessing, but rather, it was just another step towards bureaucratic control.  Governors in certain states, like New Jersey, became the ad hoc presidents of the health insurers.  No health insurance company could do business in such a state unless they agreed to this arrangement.

 

No insurance company could afford the weight of all the endless, bureaucratic regulations and stopped doing business in states like New Jersey.  The cost of hospital stays skyrocketed out of the reach of ordinary citizens meanwhile.  They had to depend upon their employer-sponsored insurance.  But the companies couldn’t afford the insurance premiums any longer, either.  Between the health insurance and onerous business taxes, business fled states like New Jersey and California by the thousands, leaving employees without jobs and without insurance.

 

Struggling families could hardly afford individual insurance premiums and also relied on their employers rather than purchasing individual policies.  In a bad economy, an individual policy would be the better choice if only the premiums weren’t so high.

 

Worried workers fell for Obama’s snake oil salesmanship.  You can still keep your employer health plan.  Except that employers can no longer afford the burden.  You can still keep your doctor.  That is, if you can still find him.  Doctors are leaving the profession in droves.  One of the little-known conditions of Obamacare is that doctors must accept the same pay as nurses.  Income equity, the Progressives call it.

 

No self-respecting doctor, who has been through college, pre-med, medical school, and an eight-year, 24/7 internship is going to suffer the government to tell him (or her) what he can charge for his services.  That’s just one of the many conditions that make Obamacare insufferable.

 

Weber and Racer tell us that the noted economist Milton Friedman described the American Medical Association as the “strongest trade union in the United States.”  Only 20 percent of doctors are members.  The AMA vigorously restricts competition, using its Council on Medical Education and Hospitals to control the supply of medical care providers.  It uses its power to restrict the number of medical schools and approves how many applicants these schools may accept.  In this way, the AMA limits the supply of physicians.

 

“Because the AMA directly affects the reimbursement rates physicians receive, in essence, the AMA is directly negotiating physicians’ wages.”  Like a trade union, it guarantees that low-quality doctors will be paid the same rate as the best.  What’s more, their wages are subject to regulation by the Centers for Medicare and Medicaid Services (CMS) and the AMA.

 

CMS sets the Medicare reimbursement rate paid to doctors, hospitals and other medical providers. It uses 13 different reimbursement systems to determine what and how it will be paid, according to Weber and Racer.

 

Medicare employs a complex coding system to reimburse providers.  For medical and surgical procedures, for instance, CMS uses Current Procedural Terminology (CPT) codes.   The ranges of the CPT codes goes from 00100 through 99499 and include approximately 7,800 CPT codes.  In some cases, two-digit modifiers may be appended when appropriate.

 

The AMA produces and manages the CPT codes, earning nearly $72 million in royalties for their use.  CPT codes result in price-fixing of reimbursements for all physicians and hospitals that accept Medicare – and private insurance.  The private insurance companies use the CPT codes to set their own rates.

“Physicians consistently report,” Weber and Racer write, “that Medicare and Medicaid reimbursements at best only meet the raw cost of providing services – usually even less.  To earn enough money off this CMS/AMA-regulated system, clinics must reduce quality, and one of the most common methods is limiting physician time with patients – to five minutes or less per office call.  Clinics extend time by using Physician Assistants (PAs) or Nurse Practitioners (NPs) to provide the medical care that should require the physician’s attention.

 

“The clinic can allot more time with a PA or NP because they cost the clinic less.  The more codes that can be entered into the bill and the more bills that can be sent, the more revenue the clinic can generate, but at less cost per transaction.  In some ways, older, more experience physicians cost the clinic more since they spend more time with the patient, whereas young, new doctors spend less time, and order more tests, making them more ‘profitable.’”

 

The clinics and hospitals must operate in this way, or they’d go out of business.  According to Weber and Racer, “If a service provider is paid $10 for a service which costs $15 to provide, they must make a choice between reducing quality or adding billable options to the service.”

 

“The CMS/AMA’s price-fixing scheme is a fundamental problem in our health care payment system.  It serves to distort the prices an individual should actually pay to receive care.  The CPT coded pricing system scheme, as it too often grossly underpays actual physicians’ costs, forces doctors to inflate their billing prices to the private insurance companies.

 

“The insurance companies, in turn, ‘discount’ the billed prices and pay only a portion of them.  Ironically, the individuals that pay the most for health care under this system are the people without health insurance who must cash for services.  The current CMS/AMA price-fixing scheme creates cost-shifting from the public to private individuals, leaving perceived prices high.”

 

When the AMA endorsed the ACA’s individual mandate, they created a situation similar to unions using the power of government to require “prevailing wage” laws that force government units to pay top dollar for construction contracts.  Every payer must play in the same employment pool, under the same rules, with little ability to negotiate.

 

The ACA, Weber and Racer tell us, also requires the formation of Accountable Care Organizations (ACOs).  “These act like Health Maintenance Organizations (HMOs) on steroids.  HMOs are notorious for their perverse incentives to physicians that less care is good because it saves money.  Congress believes it will be easier to control cost by herding physicians, surgeons, and other medical providers into ACOs – large organizations – and then use the leverage of those ACOS to deliver services more ‘efficiently.’

 

“Local physicians and surgeons fear they will be unable to work unless they sign up under an ACO.  This is similar to another union tactic.  Unions hate “right to work” laws that force their members to compete with non-union employees for jobs and contracts.   ACOs, like unions, do not want to have to compete with hundreds of smaller medical providers.

 

“The AMA, like unions, prefers government enforcement of  ‘membership’ through its endorsement of the individual mandate, price fixing by its CPT codes, its cozy relationship with CMS, and by organizing physicians into ACOs.”

 

Racer and Weber provide an example of how this code system “helps” the consumer:

 

“In Minnesota, the Medicare reimbursement set by the CMS/AMA price-fixing scheme sets the reimbursement rate for an MRI at $542.  The Medicaid price for the same MRI is $367 ($175 less for the same service).  The insurance company for an individual with a health plan would reimburse the clinic at about $695.  Yet, if an individual called and asked for the cash price, the clerk would quote them about $1,250, or might discount it 25 percent to $935.  So, for this one service, we see a price swing of as much as $883 – from $367 to $1,250.  The MRI clinic might actually lose money providing services to Medicare and Medicaid patients, and then attempts to make it up by charging more to people with insurance or who pay cash.”

 

“Price fixing is an artificial way to set the cost of health services.  As it pays Medicare providers too little, it forces the price higher for individuals who receive health care from non-government sources.  As a result, the clinics, hospitals, physicians, surgeons, pharmacists, medical device suppliers, and the entire army of service providers must inflate their bills for private-pay patients.”

 

In an open and competitive free market health care system, prices would likely drop to meet actual cost with an appropriate margin for profit to the medical care provider.  Better physicians would charge more but patients would receive better care.  Without the AMA’s interference, more qualified physicians would be able to enter the field, winnowing out the less qualified.  More physicians would mean more competition and the result would be lower prices.

 

Instead, qualified doctors (like mine) will flee the field.  There will be more doctors willing to take the lower pay, but they will be less qualified.  Younger people going to the doctor for a sore throat won’t care.  However for the bulk of older patients suffering from serious diseases like cancer, heart disease, or diabetes, Affordable Care is a medical catastrophe, if the government will even allow them to be treated.  We already know that patients 75 and over are out of luck.

 

With the implementation of Obamacare (officially beginning in January), an Iron Curtain is being drawn around Americans.  The young, as always, are unable to see the future as it really is.  The curtain around the bed is painted with smiley faces and rainbows to reassure them that the government knows best.  They listen to the Media describe the government shutdown as some sort of catastrophe that will plunge America into an eternal abyss.  Consequently, the young cast blame on the House Republicans, sympathize with the Senate Democrats, sneer at the Conservatives, and imprecate the Tea Party.

 

Welcome to Day One of the Communist future.

 

 

 

 

 

 

 

 

 

 

 

 

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Published in: on October 1, 2013 at 11:56 am  Leave a Comment  

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