Our nation's debt is literally indenturing our children to our international debt holders, but most Americans don't care because they are more concerned about the latest saga involving Snooki on Jersey Shore rather than what really matters, our country’s future.

Wednesday, October 21, 2009

Open Letter to Congress To Stop Healthcare Reform

Below is the letter I sent to my Senators and Congressman. I urge you to let your represenatives know how you feel about the $900 billion being spent on healthcare reform.

Dear Senator/Congressman,

I urge you to please support real heath care reform and not the nonsense that is currently being discussed in the House and the Senate.

1. Allow private individuals to deduct 100% of any costs related to medical expenses.
2. Allow Doctors/Hospitals to deduct the full cost of services (using the applicable Medicare formula) that are preformed free of charge for all indigent patients or those who are unable to afford insurance.
3. Stop States from dictating what procedures and tests must be covered by an insurance plan and then preventing people from purchasing insurance for other states.
4. Eliminate federal regulations that discourage small businesses from providing coverage.
5. Give doctors the freedom to collectively negotiate with insurance companies and drive down the cost of medical care.
6. Make every American eligible for a Health Savings Account (HSA), and removing the requirement that individuals must obtain a high-deductible insurance policy before opening an HSA.
7. Enact real Tort Reform for medical malpractice.

Currently the legislation contemplated in the House and Senate is estimated to cost $900 Billion dollars. During good times this type of legislation would be fiscally irresponsible but in a recession it is completely unacceptable. In order to keep the cost for these new programs under $900 Billion the CBO has done some very creative math, which we usually only see on Wall Street right before we have a market crash or a company files for bankruptcy. Most of these new programs do not start until July 1, 2013. Why make the American people wait so long if this is so urgent it needs to be done before the end of this year? Because when CBO estimates how much a piece of legislation is going to cost, it only looks at the next 10 years. By waiting four years to start the expensive parts they make it look less expensive, without it being any less expensive. This preliminary analysis looks at 2010-2019. It doesn't take much more than third grade math to see why starting programs in 2013 (also everyone in Congress will have been reelected before this legislation goes into effect) artificially manipulates the cost estimate. A close observer will also note that one of the most consistent changes in the new draft of the Baucus summary is shifting many start dates from January 1, 2013 to July 1, 2013--cutting 6 extra months of costs out of the CBO estimate. A quick calculation says that if this bill costs $829 billion from mid-2013 through 2019, that's actually about $1.3 trillion over 10 years ($829/78 months = ~$10.6 billion/month x 120 months).

Reading further, there are several other red flags present in the CBO analysis. Enactment of the Baucus approach will add approximately $900 billion to the federal budget. That money will have to come from somewhere. Half of it will come from massive cuts in Medicare Advantage, while the other half will be generated by new taxes on high-end insurance, higher income taxes, and new levies on drugs and innovative medical devices. There are a variety of provisions in the bill designed to generate revenue, including $426 billion in Medicare and Medicare Advantage benefit cuts, $4 billion in new fines imposed on those who do not purchase insurance (fining people who can’t afford insurance makes absolutely no sense and if the person can afford the fine then let them live with the costs for not choosing to get heath insurance), $201 billion in new levies on health insurance companies with high-end health insurance plans, $180 billion in new taxes on medical devices and drugs (including breast milk pumps), $83 billion in new income taxes on individuals, and $25 billion in new taxes on employers.

There will also be significant reductions in Medicare reimbursements to hospitals, which will in turn generate more cost shifting from such facilities to the patients using them. Although Congress is likely to revisit this issue after passage of the Bill much as they are today trying to stop the 21% drop in Medicare payments to Doctors scheduled to occur in January, which were originally enacted to cut the cost of Medicare. Senate Democrats are proposing to upend that arrangement and instead freeze doctor payments at this year's level for the next decade. They seek to do so in a bill -- separate from the overhaul legislation -- that they said would shore up the government health program for the elderly. The cost to just freeze Medicare payments at current levels is -- $247 billion over 10 years. If inflation continues at 3% annual, as it generally does unless the recession turns into a depression, what type of Doctor is going to see Medicare patients in 2015 when all of his own living expenses; food, fuel, housing and his own medical insurance have risen but not his pay. Even Congress gets a pay raise (2.8% in 2009) even though unemployment is at a 25 year high and people are losing their homes daily to foreclosure but I digress.

The government programs that provide health care to the poor would expand to cover nearly one in five Americans under health insurance legislation pending in Congress, putting pressure on federal and state budgets. Medicaid, one of the fastest-growing government programs for two decades, and the State Children's Health Insurance Program would grow from about 50 million people today to more than 60 million in 2019, according to data from the Congressional Budget Office and Kaiser Family Foundation. That would be the biggest single expansion since Medicaid was created in 1965. The expansion is designed to cover the poorest adults among the nation's 46.3 million uninsured. It would change a program aimed mostly at children, people with disabilities and elderly nursing home residents into one that includes more low-income parents and, for the first time in 45 states, adults without children.

Medicaid grew in the 1990s as children ages 6 to 18 were added. Now adults would be covered up to 133% of the federal poverty line, or about $14,440 for individuals. The federal government paid $258 billion for Medicaid in 2009, about 57% of total costs, but would pay 90% of the expansion. States would pay about $33 billion, according to the Congressional Budget Office. Most of the 14 million adults who would be added over the next decade lack insurance and get health care at emergency rooms and community health centers. The federal government pays some of that cost, but hospital payments would be reduced. Most of the costs to cover the uninsured are absorbed by the facilities or passed on by insurers to employers and employees in the form of higher premiums. Because new Medicaid beneficiaries would use more health care services than they do now, government costs would increase.

• Can states afford it? Medicaid already consumes about 22% of state budgets, and 13 million people are eligible but not enrolled.
• Can states handle the expansion? Fourteen states, half of them in the South, only accept parents at less than 50% of the poverty level, so the expansion would be vast. Aging computer systems used to set eligibility may not be up to the task.
• Will there be enough doctors? Many parts of the country already face an acute shortage of general practitioners, 35% of whom did not accept new Medicaid patients last year. House legislation would require states to raise Medicaid payment rates to doctors, but Senate legislation would not.

New Jersey has a projected budget gap of nearly $8 Billion for 2011. We can no longer afford these types of social programs. I urge you to please reconsider your positions on health care reform. If you truly believe that the bills pending in Congress are the solution then please increase taxes to cover the full costs of these measures. We can no longer afford to borrow money. We must learn that things cost money and that the Federal Reserve is not a piggy bank. My children’s’ futures are in your hands.


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