Sunday, January 13, 2013

Fraud, Greed & Profits Drives Healthcare Costs

This is what the Republicans know, but they aren't saying...

In the U.S., those at the very top in the heath care industry are opportunists, charging "whatever the market can bear".

No matter what debilitating disease you might have, no matter how sick you are, no matter how much pain you're in, health care in this country is just like buying an automobile --- you get what you pay for.

The rich don't need ObamaCare - they've been installing full-fledged emergency rooms right inside their homes, each complete with an array of medical gear that mirrors what the White House has available for the President. They even have them installed on their yachts and private jets!

Some hospitals are specifically competing for wealthy clients by offering them perks like butlers, fancy beds, beautiful views, and fine food. 

But if you're poor with a tooth ache, you'll need a pair of pliers and a shot of whiskey.

In the United States a neurosurgeon must complete four years of college, four years of medical school, a one year internship, and at least five years of a neuro-surgery residency. According to the U.S. Bureau of Labor Statistics, the top neurosurgeons made an annual salary of $225,390 in 2010. (From Forbes.Com - See what other hospital employees earn)

The CEO of a hospital only needs a business degree. Among the highest-paid "public employees" in California was at the Palomar Pomerado Hospital. Chief Executive Michael Covert's pay totaled $1.04 million in 2009. The hospital's chief executive, Nancy Farber, was the second-highest-paid official and was paid about $874,000.

The healthcare publication Payers & Providers reported that the average compensation for "private hospital" chief executives averaged $732,000 a year, and far surpassed the annual salary of $225,390 that a top neurosurgeon might earn.

A neurosurgeon, the most educated and highest skilled person in the health care industry, with an adjusted gross income of $225,390 a year, will pay 33% in federal income taxes for 2013 --- and they will also pay Social Security taxes on their first $113,700 of income -- with the maximum of $7,049.40 in Social Security taxes.

By contrast, a corporate raider like Mitt Romney could have $100 million invested in a pharmaceutical company, earn $20 million a year in carried interest, and only pay a 20% capital gains tax (before deductions) and pay NO Social Security taxes at all. (See the 2013 tax rates). And the first $10 million Mitt and his wife leave their 5 sons will be totally exempt from any inheritance taxes (which was meant to protect the company assets of small family-owned businesses, not the heirs of the Hilton Dynasty.)

But even the "average" of $732,000 a year for a hospital's CEO is paltry when compared to what many others earn in the health care industry. Some earn far more than Mitt Romney; and few (if any) earn less than a neurosurgeon.

Our health care system, from the top down, seems more driven by "profits" and "pay" than about "health care", health being the by-product of patented medicines, medical devices made in China, CEO's compensation packages and Medicare fraud.

Our deficit problems and high Medicare costs (paid for with Medicare taxes, mostly by the bottom 98% of wage earners because "investment income" hasn't been taxed for Medicare), isn't because old people were unnecessarily getting dual-hip replacements....two or three times.

And our senior citizens weren't busted in FBI sting operations for bribing doctors for extra pain medications --- to use or sell on the black market to supplement their meager Social Security incomes. Medicare costs are high because of the corporations and CEOs that the Republicans hold in higher esteem than God.

Heath care costs are more driven by greed (and many times fraud), plain and simple.

Richard Scrushy was once the superstar CEO of HealthSouth, a huge provider of outpatient rehab services until federal prosecutors accused him of masterminding a $2.7 billion fraud.

A Few Examples of Health Care Fraud (too numerous to list here)

In the U.S. about $70 billion is lost to heath care fraud every year. And these people who cheated Medicare, most likely also cheated on their income tax return too -- and tax evasion costs us another $337 billion every year (Do you hear me Mitt?)

  • CEO Earnest Gibson III of Riverside General Hospital, along with his son and five others, were arrested by the FBI as part a national Medicare fraud sweep involving $430 million in bogus billings and 91 health care providers in seven states.
  • Kent Thiry, who's paid $15 million a year as CEO of DaVita Inc., defrauded the government by over-billing Medicare and Medicaid "hundreds of millions, easily!"
  • Marcus Jenkins, the owner of several Detroit-area businesses that housed severely mentally-disabled Medicare recipients pleaded guilty for his role in a $13.2 million fraud scheme.
  • Texas psychiatrist, Anthony Francis Valdez, wrongly billed over $42 million in medical procedures.
  • Abshir Ahmed, operator of a home health care agency in northeast Minneapolis is charged with filing bogus Medicaid billings totaling more than $400,000.

Thousands of medical professionals have steadily billed Medicare for more complex and costly health care over the past decade - adding $11 billion or more to their fees - despite little evidence that elderly patients required more treatment.

While Mitt Romney was a director of the Damon Corporation, the company was defrauding Medicare out of millions, and yet Romney’s and Paul Ryan's plan would have ended Medicare for the elderly as we know it. (Romney also helped the Marriott Hotel dodge millions in taxes, taxes that could have helped fund Medicare for All.)

Mister Rick Scott ran a company that paid a record fine for committing Medicare fraud; but then as Republican Governor Rick Scott, he cut millions from health care benefits for Florida's poor.

Now Florida's chief economist has warned the staff of Governor Rick Scott that his Medicaid cost estimates are all wrong, but Rick Scott keeps using them anyway.

Other CEOs in Health Care

The average pay of a CEO in the S&P 500 was $12.94 million. (Source: AFL-CIO Corporate Watch - December 2012). Here are some examples of excessive ANNUAL CEO salaries in the healthcare industry, and another reason why the cost of healthcare might be so high:

  • John Hammergren of McKesson Pharmaceuticals - $131.2 million 
  • George Paz at Express Scripts Healthcare - $51.5 million
  • Stephen Hemsley at UnitedHealth Group - $48.8 million
  • John C. Martin of Gilead Sciences (Biotech) - $42.7 million
  • David Pyott at Allergan Pharmaceuticals - $33.8 million
  • Gregory Lucier of Life Technologies (Biotech) - $33.8 million
  • Louis Camilleri of Philip Morris (Tobacco) made $32.7 million (I just threw this one in for good measure.) Source: Forbes.Com

Health Care, the Deficit and Government Spending

The deficit has grown mostly because of the Great Recession. Repeat: The deficit has ballooned, not because of specific spending measures, but because of the recession. The deficit more than doubled between 2008 and 2009 as the economy was in free fall. Does anybody else remember that?

That was when 8.5 million laid-off American workers paid less in taxes and needed more benefits, such as unemployment benefits and food stamps. That was when millions lost their homes, life's savings and cars -- and some their spouses (and sometimes their lives to suicide). That was the "shared sacrifice" the middle-class and poor had made during the Great Recession.

But even still, the actual deficit actually shrank in 2010 and 2011.

The 2008 stimulus bill cost much less than Bush's wars and tax cuts. Republicans frequently have blamed the $787 billion stimulus package for the deficit. But, when all government spending is taken into account, the stimulus wasn't that big. In contrast, the U.S. will have spent nearly $4 trillion on wars in the Middle East by the time our conflict in Afghanistan comes to an end -- that, according to a recent report by Brown University. The Bush tax cuts alone have cost nearly $1.3 trillion over the last 10 years.

As everybody knows, the deficit grew under George W. Bush (we didn't have a Tea Party telling us the sky was falling back then). When George W. Bush took office, the federal government was running a surplus of $86 billion. When he left, that had turned into a $642 billion annual deficit, with over $10 trillion in national debt. Under Obama, the national debt grew from $10 trillion to $16 trillion because of the Great Recession (Obama has 4 more years to run up another $4 trillion in debt to TIE George W. Bush).

Last year's federal budget deficit was 12 percent lower than in 2009, according to the Office of Management and Budget. The deficit is projected to shrink even more over the next several years.

Investors are paying us to borrow money! The interest rate on 10-year Treasury bonds is negative, according to the Treasury Department. Investors are even paying us for 30-year Treasury bonds, when adjusted for inflation. Investors are not running away as the GOP like to claim. Conservative commentators have been warning for years that investors will run away from Treasury bonds because of the national debt. So far that's not happening. Interest rates on Treasury bonds continue to hover at historic lows.

Health care reform actually reduces the deficit. Republicans have blasted the Affordable Care Act (ObamaCare®) as "budget-busting." But health care reform actually reduces the deficit, according to the Congressional Budget Office.

We spend too much on health care, especially when compared to all other modern and industrialized nations. Health insurance, including Medicare and Medicaid, constituted 21 percent of federal spending last year. In contrast, education constituted only 2 percent of federal spending. 

And the U.S. government is borrowing much less from foreign countries (such as China) than before the recession, according to government data cited by Paul Krugman. That is because the U.S. private sector is financing our bigger deficits.

We spend far too much on Defense. Defense spending constituted $718 billion of federal spending last year, according to the Center on Budget and Policy Priorities. This adds up to 41 percent of the world's defense spending, according to Bloomberg TV anchor Adam Johnson. (* See my post about defense spending)

And believe it or not, many Republicans may actually WANT larger deficits...for now. The federal budget deficit ballooned under Ronald Reagan, and that may be just the way Republicans like it. Some Republican thinkers have proposed "starving the beast": that is, cutting taxes in order to use larger deficits to justify spending cuts later. Since Republicans ultimately want lower taxes and a smaller government, what better way is there to cut spending than to make it look urgent and necessary?

Taxing to Fund Health Care

The top 1% doesn’t want to help fund our healthcare and Social Security; and most Americans don’t want to help subsidize their big oil companies (making record profits), their bloated defense contractors (who outsource our jobs), their unnecessary wars (WMDs?), their big pharmas (who over charge us) and their corporate agribusinesses (such as big dairy, big tobacco and Michele Bachmann's farm) who all get taxpayer subsidies.

50% of all American workers net less than $27,000 a year and the average "HOUSEHOLD" income is $50,000 a year -- and 80% of all "HOUSEHOLDS" have (and need) two wage earners. Most can't afford to pay the high cost of the CEO's salaries in the health care industry.

Capital gains and dividends (CEO salaries called "investment income") should be taxed at the regular marginal income tax rate (the top rate being 39.6%, not 20% like the billionaires will now have to pay (it was only 15% from 2003 to 2013). As it is now, at 20% Warren Buffett's secretary will still pay a higher tax rate than her boss.

All “investment income” (capital gains made from real estate, stocks, dividends, carried interest and fine art etc.) should also be taxed for Social Security and Medicare...which is currently exempted. (I think ObamaCare® might start imposing a tax on this income). The $113,700 cap on Social Security taxes should also be eliminated, because almost everyone else (especially the poorest) has to pay this tax on 100% of their earnings.

Bankers, oil barons, the CEOs of Apple and Hostess, hedge fund managers, Mitt Romney and other corporate raiders will pay a 20% capital gains tax (before deductions) on their stocks, stock-options and deferred interest --- Aha! But working Americans who have their pensions, IRAs and 401k plans invested in stocks are taxed at the regular marginal tax rate, depending on their annual adjusted gross income. Why aren't the ultra-wealthy taxed the same way as everybody else?

Loopholes should be eliminated and deductions capped (like Mitt Romney’s show horse as a medical expense) when 16 percent of the U.S. population (48.6 million people) had no health insurance last year. Source: NPR (December 2012)

Six years ago Warren Buffett said: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war --- and we’re winning.” And because of a lack of affordable health care for the "47%", that is another reason why the rich are living longer than everyone else.

Read this post to see what else our ultra-wealthy "captains of industry" have been up to, and then ask yourself, "Why don't the Republicans want to tax the top 1% for our heath care, schools, and infrastructure?"

The Republicans know all these things, but they don't talk about it very much when they get their faces on TV. It's much easier for the Republicans to go after "soft targets" --- the low hanging fruit --- like the frail, the poor, the disabled, and the elderly (because they don't have lobbyists). These are the people that the Republicans are saying "should put more skin in the game". These are the people (the 47%) that Mitt Romney calls "free riders". But for some odd reason, many of these people will still foolishly vote against their own best interests and vote Republican. (Go figure.)

See the links below --- this is what the Republicans know, but aren't saying.

Starve the Beast - The GOP 30 Year Strategy 

Corporate Profits Hit Record High --- Worker Wages Hit Record Low

The Corporate Tax Rate Is Lowest in Decades

CEO's in the S&P 500 Average $13 Million a Year, Year after Year

Capital Gains Taxes on the Wealthiest at Historical Lows

Every Year $1 Trillion Not Taxed on the Rich for Social Security or Medicare

$385 Billion A Year Lost to Tax Evasion

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