How to cut the cost of Medicare and save tax dollars

Medicare is a major financial driver for healthcare in Ohio; the government insurance program for the elderly and disabled younger people paid for 41 percent of all medical services at Ohio hospitals last year, according to the Ohio Hospital Association.

via Hospitals’ Medicare funding cut over readmissions | www.daytondailynews.com.

There is no arguing that America pays more for health care than any other nation, and gets less. In the same breath, you can also hear that independent physicians are going as far as leaving medicine, despite shortages of physicians, because they claim that they can’t make money accepting the reimbursements from both Medicare and private insurers.

Republicans talk about spending cuts all the time. Paul Ryan is under attack for wanting to transform Medicare by turning it over to private insurers (which is exactly what we’ve done in Ohio and specifically with a major business that’s been propping up Dayton- CareSource).

CareSource has been in hyper-growth mode as a manager of Medicare/Medicaid dollars, getting more government money for every citizen that enrolls in their managed care program. They then sit between the government and the health care providers and try to ration and manage tax dollars to provide the “highest quality care” for their clients.

But here’s the rub. All of these private companies that count on government tax dollars for large parts of their income, 41% for hospitals, and 100% for companies like CareSource aren’t subject to any effective cost controls. How do we know this? The CEO of Premier Health Partners, makes $4 million a year, and most of his top staff makes a seven-figure salary. The CEO of CareSource makes $3 million a year. Her salary is set by, get this, a board made up of her customers- the hospitals.

Congressmen often make fun of the proverbial $650 toilet seat or the $700 hammer, but, with Medicare/Medicaid paying 41% of hospitals’ revenue, and 100% of CareSource, why don’t we have wage controls on these government contractors? The same can be said of defense contractors, although the main difference is that no defense contractor is pretending to be a non-profit.

In NY there is currently legislation being discussed to cap non-profit executive pay at $199,999 and it’s already in place in NJ. I remember outrage over 20 years ago when the CEO of the Red Cross was toppled for a salary over $1.5M but can’t find the reference right now. Adjusted for today’s dollars it would dwarf the salary being paid to our local chiefs.

Government contractors over a certain size are even told how much they have to pay each worker in a specific position. A secretary is proscribed to be paid $21.08 an hour in one package I looked at. How come we don’t have maximums required as well? Part of the reason politicians refuse to address this, is that without being able to make over a million a year for running a “non-profit” health-care  operation, many of these emperors without clothes wouldn’t be able to make huge contributions to their campaign funds. According to open secrets, health-care professionals were the 5th largest donors to political campaigns in the 2008 election.

Of course if we eliminated private money from political campaigns we might get the politicians we need instead of the best money can buy.

Access to affordable health care in this country is a farce. Any major illness almost always comes with bankruptcy as a side-effect. Small businesses struggle with insurance costs that climb between 20% and 40% annually, without offering better coverage. It’s a small step, but ending the exorbitant salaries of semi-public employees (those who make 40% of their income from our tax dollars is a good starting point.

Chutzpah alert: as a small business owner, who is also a community activist, I’m publishing this piece at the same time as I’ve requested a meeting with Premier Health Partners President and CEO James Pancoast to discuss the benefits of a real bike-share program in Dayton and the environmental, economic and health benefits to the community. A first class system could be bought and paid for with 75% of his annual income, leaving him a cool million to still keep food on his table and gas in his tank.

I’m betting that he won’t be willing to meet with me, blaming my criticism of the system that makes him a very rich man, with our tax dollars. This is the America we have. Unfortunately, because our leaders apparently don’t read history, they are ignoring what inevitably happens with all republics that allow the gap between the haves and the have nots to get too wide.

 

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7 Responses

  1. Dave Poliquin August 22, 2012 / 2:07 pm
    Marsha Evans, as I recall made about $650K in 2003 as head of the Red Cross.
  2. Bryan August 22, 2012 / 7:44 pm
    Until we have a system, any system, that drives health care consumers to be cost conscience, nothing will ever change.  The ‘something for nothing’ attitude doesn’t hep either.  As an example for a very simplistic approach, if we even went to a 90/10 split with medicare recipients where medicare paid 90% and the patients had to pay 10% you might to start see some change in behaviors and cheaper costs.
  3. David Esrati August 22, 2012 / 8:47 pm

    Welcome Bryan- I’m not sure I agree with you on the split. I think the key is taking out the middle men, with a single payer- and rewarding doctors for positive outcomes and healthier patients.
    Sure, we need tort reform- but, we also need accountability for costs- we’re seeing a boom in building facilities- that there may not be any real need for. At some point, we have to realize that preventative medicine is the best and most cost effective form of health care.

  4. Hall August 22, 2012 / 9:49 pm
    Never even occurred to me that Medicare recipients had no co-pay. Then again, I shouldn’t be surprised… I think that is definitely something that should be implemented, on the other hand, unless you have to pay up-front (gee, with private health insurance, I do, even at the emergency room !), people can just ignore the bill when it shows up later. Another thing that should change is the requirement that hospitals HAVE to treat anyone who walks into an emergency room. I’ve seen starting charges of $250 for basically being taken to a room in ER. When people go to the ER for a sore throat and cough vs a family doctor (or even an urgent care), it’s too bad the ER can’t say “sorry, you don’t have an emergency”. 

    And for the record, that ER visit was with our (at the time) 18-month old who was “ill” a few months after spending (3) days at CMC for RSV. 

  5. David Esrati August 22, 2012 / 10:03 pm

    Hall- how about posted prices? Or a quote before they charge you $80 for an asprin?
    If we had real national health care, ERs wouldn’t be first place people without health care go.

     

  6. joe_momma August 23, 2012 / 3:24 pm
    “There is no arguing that America pays more for health care than any other nation, and gets less.” DE
     
    Actually…No.  There is a lot of arguing, and that is a very debatable statement.  Don’t take this as an endorsement of the current system.
     
    As for having the government arbitrarily limiting the salaries of CEO’s that receive government funding… Well, that is just more of the same.  It’s crony capitalism.   It encourages  special interests to try to get “their guy” elected to arbitrarily change the rules in their favor.
    Pragmatically speaking, in 2011 healthcare spending made up 17.9% of GDP.  That’s roughly $2.7 Trillion.  Capping the salaries of a few hundred or even a few thousand individuals doesn’t even move the dial.
     
    “I think the key is taking out the middle men, with a single payer- and rewarding doctors for positive outcomes and healthier patients.” – DE
    Patient +  Government + Doctor.  In a Single Payer environment, Government is the middle man.  Having third party pay your bills or do your shopping for you doesn’t work well.   
     
     
    At some point, we have to realize that preventative medicine is the best and most cost effective form of health care.-DE
     
    This is certainly not definitive.
  7. Bryan August 23, 2012 / 8:54 pm
    Posting a sign or having a hand out with all prices for all procedures would be great.  There isn’t any reason why you know exactly how much your oil change and tire rotation are going to cost before you do it, but don’t know how much you doctor visit or procedure will be.  But with that said, posting prices does absolutely nothing unless people  have an incentive to shop around.  It’s crazy the looks I get when I even ask for a receipt, let alone for how much something costs up front.
    Now think about this.  If I said I thought you needed a car and was willing to buy any car you wanted, for you, at no cost, which car would you pick?  I bet it wouldn’t be a base model, but would be an expensive luxury or sports car.  If someone proposed that offer so me, it would be a corvette or maybe a Ford GT.  Now throw in some cost sharing into the equation.  If I offered to pay 90% of the cost of that car, but you had to pay 10% out of your own money, what car would you pick?  The choice would be tempered, however mildly, due to the fact that you have ‘skin in the game.’  Posting prices, and taking out or reducing the role of the middleman is a good idea, but is only going to get you so far.  People need incentive to care how much their healthcare costs.

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