Saturday, November 8, 2008
Playing Hopscotch With Medicare
On Again, Off Again: California's low income seniors are being used as pawns in a game of table tennis between Medicare, Medi-Cal and private health insurance carriers. It's a direct result of the state's budget deficit. First to be axed was the state's annual rental subsidy check of $320 to the single poor. The amount wasn't much but to seniors living solely on Social Security benefits it was a welcome stimulus. The latest round of cuts eliminates Medi-Cal from paying the $96.40 monthly premium for health care provided by Medicare. The net effect is nearly $100 in income lost from one's Social Security benefit which averages about $1,192 while at the same time re-qualifying the individual to receive no co-pay health coverage from Medi-Cal. If Medi-Cal pays the Medicare premium, except for the lowest income seniors the state pays for catastrophic coverage after medical expenses exceed $520/mo. This forces the individual to obtain health coverage from private carriers and only HMO's offer it. If that's not perplexing, it gets worse. A directive from Sacramento tells caseworkers at the county-level Department of Public Social Services that funding by the state for Medicare premiums will be stopped and started in two-month increments as long as the state budget crises lasts. For the thousands of seniors who fall under this umbrella, health care costs are paid by their private carriers for two months and the next two months are free under the Medi-Cal no copay system. We kid you not. What we have here is a bureaucratic nightmare. Seniors who play the system are coerced to stack all their medical needs short of hospitalization in two-month windows of opportunity. The private carriers should be happy to oblige. It is estimated it costs an average of $167 for the insurance carriers to process each claim, no matter what dollar amount of the claim may be. The track record of most carriers is to stick Medicaid with medical claims at every opportunity. Is California really saving money in this on-again, off-again venture of passing the Medicare premium payments on to the consumer? What they save in premium costs is drowned by a flood of anticipated increases in full-coverage claims every two months. Do the math. This is crazy. It's insane. It's our government at work.
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Jerry:
I concur with much of what you said; however, I've found out that "running the numbers" and submersing ourselves in the details is a way we all tend to banter about "things" and seldom arrive at the root cause for problems. These are my priorities: Money first, attorneys second, then legislators - all attorneys. And as you know, all attorneys do is chase money and create dissension!
I've spoken with a few doctors about Medicare and general costs, and they all say pretty much the same thing. Their single largest problem is attorneys, but I don't want to argue details. All our problems started with Medicare in 1965 under Pres. Johnson. Hospital beds went from $15 per day to $115 per day - overnight. Why? Because the government was going to foot the bills - unquestioned payments.
Think about it. Hospitals no longer had to spend time calculating their costs. If they were making a profit at $15/day, then $115/day only added to their profits, thus it became a waste of time to count the beans anymore, just charge whatever they thought they could get. On top of this came their compliance (again regulated) to be "not for profit" organizations. That give administration a huge dollar variation between actual costs and "over" invoiced prices. The two aren't the same, and that's how they get to play the money game. That variation is a place to hide one heck of a lot of "accounting sins." We both know that.
But back to the attorneys. Most of them are about as left wing as you can get. They think everything ought to be the way they think it should be, not "what is." As an example, when in aerospace, I was negotiating a large contract but we had some issues with 4 paragraphs. Even the attorney who drafted the language couldn't remember his own intent. But when he came out of his coma, he recalled the reasoning - not the language. What had been put on paper was his way of shifting the blame to someone else in the event of loss of life due to an air accident. I explained we already had laws in place to cover accidental deaths, and that he was "out-of-line" attempting to place responsibility long before any accident. I walked out of the meeting and turned down a $13 million contract, and by the time we settled the argument, their airplane was behind schedule by 5 months. I won the contract after they bitched for three weeks, so I deliberately slowed down the process - just to piss them off! The attorneys always got up and left the room every time I showed up, because they knew I was going to screw with their money, by blaming them for the contract pitfalls.
So in 1965 we experienced very high cost increases because some dumb ass attorney (or group of) wrote the rules for Medicare. Since that time Invoices have risen much faster than costs.
We also learned to scale things up along the way. Accountants starting using percentages rather than actual's, and that drove pricing higher. The big "monkey wrench" happened in 1971. Tricky Dick came up with the "wage and salary freeze," and that drove corporate profits up 20% to 30% year after year, corporate raiders came along (mostly attorneys) to scavenge (like bottom feeders) for good companies hard of cash. Those were eaten alive by cash rich organizations, and merged into the heap - after down sizing the smaller company. "Joe the plumber" types have been screwed ever since.
But what really happened in the seventies was a huge influx of attorneys graduating from every major and minor school around. Remember, they all chase money, so with Naders Raiders they attacked the automobile industry. Trial lawyers attacked general aviation and destroyed the small aircraft market. Trial lawyers attacked health care, but the only place to get the cash was to attack the insurance industry - that's when doctors needed malpractice insurance. Up go your health care costs, and I mean significantly. Look at John Edwards...he made millions suing malpractice carriers, and many on class action suits.
In a nut shell, get rid of all regulations (these cost an inordinate amount of money to administrate), get rid of the trial lawyers who litigate for unjustified reasons, and Medicare will take care of itself. Get rid of administrative costs, and watch your insurance rates drop. Like the Eagles said in one of their songs - "Get rid of the attorneys..." Heck even Shakespeare didn't like them a few hundred years ago.
Questions?
John T. Cothern
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