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The Real Truth Behind the Health Care Battle

I was in Washington DC for meetings last week.

Washington is not America!

Nowhere in America could a restaurant catering to the business traveler charge $23.00 for a first course Caesar salad and stay in business.

But in central Washington that’s the common price at every day restaurants – not white table cloths, tuxedoed waiters and elegant French cuisine — but the type of place a business traveler goes for a quick bite and a glass of wine at the end of a long day.

And those restaurants are packed – not by the tourist families who crowd the Capital Mall — but by government workers and lobbyists.

The average government worker in Washington earns $112,000 a year before benefits.

Contrast the national median income for a family of four — $55,775 — against the average bureaucrat or congressional or presidential staffer, who earns twice what the average American family does (members of Congress earn 3.2 times their average constituent), and the picture becomes clear.

They can’t possibly understand the daily life of the average American.

In this context, the GOP proposal to “repeal and replace Obamacare” makes perfect sense. From their cushy perch — $16000 a year for health insurance is not such a big number.

This difference in earnings and benefits, also, explains why they see Medicaid spending as just numbers on the ledger rather than the human lives protected. Debit the rate of Medicaid spending and credit income tax rate reduction by the same amount and federal budget deficit remains the same.

Medicaid is Largest Health Care Insurer in America

In the roaring US economy of the 1960s, Medicaid was an afterthought – an amendment to the original Medicare hospital insurance (Part A) proposal – a few dollars to protect “poor women and children”.

Today, Medicaid is the largest health insurance program in the United States – 40 percent larger than Medicare.

Medicaid enrollment grew from 4 million (of 196 million) in 1966 to 73.5 million (of 326 million) in 2017 as a series of economic shocks took a toll on the American middle class.

  1. The wide-spread loss of employer based pensions and cuts to union sponsored pension programs beginning in the 1980s.
  2. The erosion of semi-skilled mining and assembly-line manufacturing jobs through automation and outsourcing to lower wage countries
  3. A reduction in family savings
  4. Reduced capital investment in innovation and technology by both private investors and the government.

Over the last quarter century quality jobs have declined — resulting not just in fewer jobs but lower wages, shorter hours, and fewer employee benefits. Fully 25 percent of US jobs, today, are in the retail sector.

The Kaiser Foundation reports in 30 of the 50 states the median income for a family of four has fallen below the national average of $55,000.

The twenty states at or above the national average tend to be the large coastal states where concentrated pockets of wealth mask the overall condition of their populations (California, New York and Virginia – buoyed by technology, global banking and an overpaid federal work force).

Lower wages, fewer employee benefits, less job security and lower savings add up to more families who need government help paying for necessary health care.

Medicaid is the primary health insurance for forty (40) percent of US children. These are the children of the shrinking middle class plus the “birthright citizen” children born in the United States to undocumented/illegal aliens.

For too many Americans whose jobs and job prospects deteriorated or vanished in mid-life (along with guaranteed pensions, good wages and employee based health insurance), Medicaid has become the necessary bridge to Medicare.

Medicaid is Just a Symptom of the Real Problem

Since the 1990s, Congress, and both Republican and Democratic administrations, papered over the drip, drip, drip of declining job prospects for millions of Americans with “temporary help” government programs – tax cuts, college loan programs, 60 separate federal job retraining programs, extended unemployment insurance and – most recently – subsidized health care – leading to an explosion of the national debt.

The solution to the mushrooming Medicaid program cost is not to punish the vulnerable dependent upon it. Medicaid pays 2/3 of all old age and dementia patient nursing home bills.

The challenge to Congress is to reform Medicaid — bend the cost curve without cutting access or benefits to the growing number of Americans who need the help.

Three Potential Reform Ideas:

1) Ban All Political Contributions: Shift Congress’s focus from the stake holders to the shareholders and customers by banning all political contributions from health care providers, drug and device manufacturers and other profit centers in the health care eco-system.

Once freed from deference – their first question to their former donors should be “why does health care cost so much”? Why does health insurance, health care devices, drugs, surgery, laboratory tests, even a visit to a primary care physician cost Americans 50% more than any other developed nation’s citizens?

The next question should be – what are you going to do about it?

2) Federalize the Program: Allow states to design delivery systems that are specific to their environment and patient population.

The states are laboratories of innovation. States have stronger incentives to use Medicaid dollars efficiently. They pay as much as forty (40) percent of their Medicaid costs and must balance their budgets.

Plus, if the program were federalized, the number of Center for Medicare and Medicaid Services bureaucrat rule writers in Washington would decline – saving $112,000 plus benefits times several hundred individuals.

3) Hold the Bureaucrats Accountable: Medicaid fraud rises every year. In 2016 it amounted to $33 billion. Congress must hold federal and state bureaucrats collectively and individually accountable to reduce the rate of Medicaid fraud to zero over the next 10 years.

Eliminating Medicaid fraud over the next 10 years would save at least $333 billion — more than the $319 billion savings the Congressional Budget Office projected from the first Senate healthcare reform.

Added together these simple reforms would save as much as half a trillion dollars over the next decade without cutting one penny from beneficiaries.

After all, aren’t the beneficiaries the purpose of Medicaid?


Thanks to for the graphics

2021-02-01T14:29:52+00:00July 8th, 2017|Comments Off on The Real Truth Behind the Health Care Battle

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