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Why Not Avoid The Financial Problems?

Posted Feb 24 2013 9:04pm

 Stanley Feld M.D.,FACP,MACE

It is very clear to me that neither the Obama administration nor the senate wants to solve the root causes of the federal deficit problem.

The sequestration debates are not getting to the root causes of the deficit. Eighty five billion dollars will not make a dent in America’s 16 trillion dollar budget deficit.

President Obama is running around the country scaring everyone with the notion that vital services must be cut or else the country will be paralyzed.

Recently the congress and the President appropriated $60.2 billion dollars for aid to Sandy victims. This is almost as much as the sequestration is going to eliminate.

The Senate voted Monday to provide $50.5 billion in aid for victims of Superstorm Sandy . The vote means Congress has approved a total of $60.2 billion in aid for Sandy victims”.

America’s big deficit problem is created by out of control entitlement programs. Obamacare is adding to entitlement spending. It will only increase the deficit.  

Our politicians’ should be working hard to figure out a solution to increasing entitlement spending. Yet the Obama administration has refused to consider entitlement reform.

America’s two largest entitlements are Medicare and Social Security. Food stamps, and unemployment insurance, among others has some impact on the deficit.

Simple reforms and a decrease in waste could solve the problem.

The following two articles summarize the illusion of the existence of Social Security and Medicare Trust Funds .

In reality the money goes into these trust funds from payroll withholdings. The government then borrows the money to pay general expenses. It provides an IOU to the trust funds. In essence the trust funds are broke and the IOUs are an unfunded liability of the federal government..

“And since the federal government borrows the surplus from both funds (Social Security and Medicare) to pay other expenses, the only thing in those trust funds own special, non-negotiable, interest-bearing IOUs.”

In order to pay Social Security and Medicare obligations the government shifts revenue of current accounts into the trust fund accounts.

Citizens paying into Social Security and Medicare all those years thought they were paying for a retirement annuity. The assumption was the money would grow with wise government investments and those funds would be able to pay their promised liability to seniors.

Those payments were really a disguised tax. As baby boomers become eligible for Medicare and Social Security the obligation is increasing.

America is reaching the point where more people are receiving these entitlement benefits than the younger people who are funding them.

The logical result is the premium price for Medicare coverage is scheduled to double in 2014. The deductibles for services are scheduled to increase. The age requirement for eligibility is about to rise.  Access to care is decreasing as physicians refuse to take Medicare. Rationing of care is increasing as hospitals are being forced to assume risk. No one wants to assume the risk of taking care of sick people. Especially when they are not very good at evaluating the risk.

Everyone knows all of this. Nevertheless they turn away as the government either borrows more or prints more money.

Americans have been told by multiple administrations that citizens could not handle their own Social Security or Medicare annuity very well. Therefore the government must do it for them.

The government has done an awful job managing our retirement annuities.

Social Security and Medicare Trust Funds must become real trust funds that grow in value in the future or the government should hand control over to the people.

The Obama administration’s estimate is it costs 3 billion dollars a year. They are wrong. Ask any physician.

Why should physicians or hospital systems assume the risk of missing a diagnosis by not doing a test?

The emotional and financial consequences of a frivolous lawsuit can be devastating.

Simple and fair tort reform will save the healthcare system around 500 billion dollars a year.  The 500 billion dollars is more than 5 times the cost of the 85 billion dollar sequestration. The administration is wasting 500 million dollars to protect the business of malpractice trial lawyers.

The administration claims its overhead for Medicare is only 2 ½ %. This represents the cost to pick an insurance company to adjudicate insurance claims. The true cost is not clear. However, it is somewhere between 40-60% of every Medicare dollar spent.

The insurance company is permitted by the government to pack many expenses into the direct patient care column and avoid going over the 15% medical loss ratio allowed .

The ten hidden taxes written into Obamacare are now starting to be felt . The Obamacare taxes are going to increase the cost of medical care not decrease the cost as the affordable care act promises. 

Patients are directly responsible for many of their own medical outcomes .  If patients had skin in the game and financial incentives they would pay attention to their self -care and their physicians’ recommendations. 

There are no incentives in Obamacare for patients to manage their care effectively. Financial gain would get their attention.

These are just a few of the solutions to the real problems in healthcare. There is much more waste in federal spending than $85 billion dollars a year.

All you have to do is look at the list of extraordinary waste that Senator Tom Coburn has compiled .

Rand Paul did a clever thing. He sent $600,000 of his senate office budget back to the U.S. Treasury after carefully trying to save money. The 49 other senators and over 400 congressperson ought to do the same. It would set an example for all of the bureaucracy to do the same. In fact President Obama ought to demand it.

“The Kentucky Republican returned $600,000 in funds he saved from his Senate office budget in the last year, the  Louisville Courier-Journal reported .

“It’s the only budget I control,” Paul said at a news conference in Louisville. “It’s not enough, but it’s a start.”

If every congressperson saved 600,000 a year as Rand Paul did the deficit would be reduced by $321 million dollars more a year. If all the cabinet positions and their agencies tried to save money and were rewarded for saving money we would start to make some progress in decreasing the deficit.

The Simpson Bowles Report commissioned by President Obama would be helpful in eliminating unnecessary agencies and duplication. Their report has been ignored by the Obama administration.

Why has President Obama refused to listen to people who have exposed the many areas of government waste? It is incomprehensible.  

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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