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The Government’s Rising Stake In Healthcare Costs

The federal government may be stalled on health care reform legislation, but the executive branch has been expanding its stake in paying for care.

Yesterday, QD reported that federal and state governments will pay for more than half of the health care purchased in the U.S. by 2012, and likely even sooner. Today, Medicare’s actuaries announced that growth in national health expenditures (NHE) outpaced growth in the Gross Domestic Product (GDP) last year. The recession, H1N1 programs and federal subsidies for COBRA benefits all contributed to the largest one-year increase in history, from 16.2% of GDP in 2008 to 17.3% of GDP last year.

In 2010, NHE growth will decelerate to 3.9% while GDP is anticipated to rebound to 4% growth. But, and this is a big caveat, much of the projected slowdown in NHE growth is attributed to the 21.3% slashing of Medicare physician payment rates called for under current law’s Sustainable Growth Rate provisions.

We here at QD love a good chart to explain all this, and there’s plenty to peruse.

Also released today is a report that, one year after expanding Children’s Health Insurance Programs, 2.6 million more children gained Medicaid or CHIP coverage. As a result of the extra federal spending, all but two states cover children in families earning at least 200% of the federal poverty level, ($48,100 for a family of four in 2009.)

Health care reform
Speaking to a friendly audience, President Barack Obama broadly outlined his goals for moving forward on health care reform. He called for a “methodical, open process” and a public airing of ideas from partisan legislators and non-partisan experts. Vice President Joe Biden backed up those statements, but U.S. House leaders dodged the topic following a meeting with the President. (New York Times, The Hill, Politico)

*This blog post was originally published at ACP Internist*

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One Response to “The Government’s Rising Stake In Healthcare Costs”

  1. Art says:

    How much of the government Healthcare Cost increases are in the form of Waste, Fraud and Abuse? Could it be 25%?

    Our “government experts” AG Holder and HHS Secretary Sibelius say these cause $60 billion in valueless costs each year; while candidate Obama said they amounted to “tens of billons” until last June 15th when President Obama told the AMA “And we can save about one billion more by rooting out waste, abuse, and fraud throughout our health care system so that no one is charging more for a service than it’s worth or charging a dime for a service they did not provide”. Perhaps he was limiting this amount as these worthless claims done just by physicians! Then he cut a deal with PhRMA that lowers the effective Medicaid Drug Rebates from what the CBO reported was 31% to 23% and made it look like an increase in rebates. Meanwhile Medicare recipients who are also poor and qualify for Medicaid too, continue to overuse of Medicare Advantage Plans to the tune of $14 billion while their drug usage which use to be the higest in Medicaid now doesn’t produce some $3 billion a year in Medicaid Drug Rebates that it use to!

    Holder and Sibelius stepped up the HEAT program, which if given any oversight will show doesn’t even recover its costs, is not focused on recovering much and depends on “estimated reductions, restitutions never paid and an average 4 years incarcerations for a few hundred fraudsters caught”! Meanwhile “kingpins” just start other “companies” or move to locations outside of Miami, Los Angeles, Detroit and Houston where all the “FBI and HHS troops are” whiuch are left uncovered and unwatched and not subject to any anti-fraud measurers. New York’s Medicaid costs are twice as much as any other state, but there is no HEAT there? The few 2009 announcements of HEAT financial recoveries are not from Medicare, but rather from a single Medicaid false claims Pfizer action of $2 billion [$1 billion of which was a fine].

    “Civilian” experts Malcolm Sparrow and Thompson Reuters place waste, fraud and abuse amounts at about ten times the government estimates and Thompson Reuters even breaks down their amounts by category. Will these factors even be discussed at the WH conference or will the subject be limited to the passed but not enacted Healthcare bill that takes the approach of cutting Medicare $50 billion/YR, while increasing Medicaid an additional 15 million recipients effectively raising Medicaid cost by more than $50 billion?

    Who is working on Medicaid waste, fraud and abuse? State Medicaid Fraud Control Units which operate like their Federal counterparts, going after “small fry” reported providers such as physicians, nursing homes, pharmacists and others who are often found to have either made “human errors” or plead to get rid of the problem, which are most frequently waste and abuse problems. A few “Federal cases” arise from state MFCU’s pursuing False Claim Act cases; and these cases like the Pfizer and a few similar cases are the sole successes these “Fraud Fighters” use to justify their work and existence!

    $2 billion of the government claimed $60 billion equals a recovery rate of 3.3%, leaving 96.7% of Waste, Fraud and Abuse unchallenged and the remaining $58 billion in net fraud is 7.25% of combined Medicare and Medicaid costs of $800 billion/YR. If The amounts of fraud that seem consistent between Sparrow and Thompson Reuters are $200 billion a year, that matches what Sparrow found after the Clinton Healthcare failed and would match what he found in 1993 of 24% being fraud. Then President Clinton and then acting AG Holder claimed to have cut this amount in half, but nobody says what the cause of the remaining 12% was and is!

    These areas are public knowledge and show huge non–beneficial amounts that can be quickly recovered and removed simply by aggressively pursuing thousands of existing False Claim Act cases that are left uninvestigated for the past 10 years while government agencies chase “ghosts” and “street dealers” and unfortunate providers who make mistakes!

    Surely AG Holder would find this of interest as he could use it to pursue another area of concern in his pursuits of President Bush’s administration crimes and failures; unless he is more concerned of his “standing” with large corporation clients he advised and defended during the Bush Years against “white collar crime” in general and the False Claims Act in particular as a partner in a large firm that prides itself in their expertise in this legal area!

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