Money & Healthcare Reform: Sources, Sinks, & the Bottom Line

By : Jane M. Orient, M.D.

Congress handed the Congressional Budget Office (CBO) some assumptions, the computers came up with the mix of adjustments needed to give a magic number under $1 trillion in 10 years, and the “Affordable Care Act” (ACA) emerged.

The “affordable” trillion apparently means net additional federal government expenditures, with the Treasury envisioned as one big pot of liquid gold. All the revenue gets mixed in, and the financial engineers turn the valves to direct the outgo. Less will go into some channels (“savings”), and more into others.

Numbers are thrown about—but where’s a spreadsheet of the money flows? The President couldn’t exercise a line-item veto even if he had one because there aren’t any line items. For example, how can you budget for each of the new bureaucracies if you don’t even know exactly how many there are (159—more or less)? And are they counted in the $1 trillion cost?

Consider Medicare, the key to the whole calculus. The net trillion depends on about half a trillion in “savings” from Medicare, over 10 years starting in 2010. (If we start in 2014, it’s $800 billion in 10 years, and up to $3 trillion in 20 years.) Assume the savings happen, despite the influx of Baby Boomers. How do we distribute them?

Medicare revenue for Part A (hospitalization) comes from the Medicare payroll tax. That is by law a dedicated tax. Anything not immediately spent on benefits goes into the sacred Trust Fund. Will ACA loot the Trust Fund to pay for expanded Medicaid, or the new civilian medical corps, or improved care for “health disparity populations,” or community health centers? Wouldn’t that be illegal?

Congress could conceivably just legalize the looting—except that it is impossible anyway. There is nothing in the Medicare Trust Fund except IOUs. It has already been plundered for other government spending, and is part of the unacknowledged public debt.

The latest Medicare Trustees report showed a dramatic drop, of $6.2 trillion over a 75-year horizon, in Medicare’s unfunded liabilities—the amount by which anticipated expenditures exceed projected revenue. A statement by the White House said this shows “how the Affordable Care Act is helping to reduce costs and make Medicare stronger.”

Medicare’s Chief Actuary, however, noted that there is no “reasonable expectation” that this will occur, as it depends on cutting physician payment by 30% now and more later. But suppose that it does happen—that Congress wipes out a liability by reneging on its promises to seniors. One cannot use the same money both to cancel a liability and to fund a new entitlement.

And how will the savings be achieved? ACA has all kinds of mechanisms for control, which will apply with special rigor to seniors. Remember, “control” does not mean cost reduction, just payment reduction, translating to care reduction. The money not paid to doctors and hospitals or suppliers of oxygen may well be “saved,” if it is not funneled to the controllers. And the doctors and other providers who don’t get paid won’t be there for seniors, or anybody else—leading to more “savings.”

The non-Medicare sector is still more imponderable. Premiums for private insurance will have to cover far more generous benefits—now the mandated “minimum”—and are escalating rapidly. Insurers who lobbied for ACA may have expected swelling revenues from millions of reluctant new customers. Instead, politically powerful companies like McDonald’s are requesting and getting waivers. Politically weak small companies or individuals may go out of business or opt to pay the penalties for being uninsured.

It’s not clear where those “penalties” go, but they won’t be able to cover the subsidies of around $10,000 on premiums for persons making up to 400% of the federal poverty level (more than $80,000). Nor will they cover the cost of swelling Medicaid enrollment—perhaps 16 million newly eligible persons.

Will taxes on the “rich” cover all that? Let’s assume that all we need is the CBO’s (under)estimate of half a trillion not taken from Medicare: $500 billion, or $500 thousand million. To grab that in $10,000 chunks would mean a big tax bite out of 50 million Americans.

The controllers intend to direct spending of both government and  private funds. The mandates will get funded first: bureaucrats, smoking cessation counselors, multicultural health educators, translators for patients with limited English, weight monitors, hemoglobin A1C measurements, IRS agents, and quality assurance personnel who assure that you get an aspirin for your heart attack.

Not on the favored list are cancer treatment, stroke rehabilitation, trauma surgery, or coronary artery bypasses—the modern treatments for the Big Killers.

There’s no funding for death panels, but they won’t be needed.

ACA was sold with fiction-based accounting of phantom savings and revenue, and illusion-based benefits. Implementation means extracting real money from real people and productive enterprises, diverting it from the care of the sick into untraceable channels at the discretion of unaccountable bureaucrats, and pouring much of it into politically correct money sinks. Some would describe it differently, but even in the most favorable view, the numbers on the money flows just don’t add up.

We need to end ACA—or it will end the life of American medicine.


 

Jane M. Orient, M.D., On Air contributor speaking on Healthcare Reform.  Dr. Orient has appeared on NBC, MSNBC, ABC and many major broadcast venues throughout the US, as well and her Op-eds have been printed in hundreds of local and international newspapers, magazines and followed on major blogs.

She is the Executive Director of the Association of American Physicians and Surgeons, has been in solo practice of general internal medicine since 1981 and is a clinical lecturer in medicine at the University of Arizona College of Medicine. She received her undergraduate degrees in chemistry and mathematics from the University of Arizona, and her M.D. from Columbia University College of Physicians and Surgeons. She is the author of Sapira’s Art and Science of Bedside Diagnosis; the fourth edition has just been published by Lippincott, Williams & Wilkins. She also authored YOUR Doctor Is Not In: Healthy Skepticism about National Health Care, published by Crown. She is the executive director of the Association of American Physicians and Surgeons, a voice for patients’ and physicians’ independence since 1943. Complete curriculum vitae posted at www.drjaneorient.com. Additional information on health-related issues: www.aapsonline.org and www.takebackmedicine.com.