American Hospital Association Writes Letter To President-Elect Trump

Lets Get Real About Repealing And Replacing Obamacare Shall We

By Melvin J. Howard

It is not clear President Trump, and Republican majorities in the House and Senate, whether full repeal is even possible and what replacement might look like. There are several reasons for this. First, Trump would face political and financial fall-out from a repeal. Second, even with Republican majorities now in the House and Senate, it would be hard to repeal the entire bill. It includes not only the establishment of the exchanges, in which people buy insurance, but also cost-saving and quality-improvement measures. Many health care professionals, systems, and tax payers welcomed these. In addition, repealing and replacing the Affordable Care Act with something entirely different without severely reducing access to care may be impossible. That’s because it’s the only system devised so far that uses the private market to increase coverage and that stops short of single payer government-run programs. The health reform framework that became the Affordable Care Act or Obamacare has a long history and many champions from all political philosophies. While the ACA will long be associated with President Obama and is most often called Obamacare, many other politicians and policy makers had been working on similar plans for years.

In the 1992 presidential election campaign, both incumbent George H. W. Bush and candidate Bill Clinton had health care reform plans. Both plans were structured similarly to the Affordable Care Act. They both created insurance purchasing pools (similar to the ACA marketplaces), eliminated pre-existing exclusion clauses, and had individual mandates and subsidies for low-income families. After the election, when it became apparent that the Clinton administration plan would be different from those plans, a group of Republican senators led by Sen. John Chafee (R-R.I.) developed a proposal that had all of these attributes.
       

Then-governor Mitt Romney of Massachusetts asked his staff to find ways to reduce the burden of the uninsured on the Commonwealth of Massachusetts. Searching for a market-based approach, they found their options narrow to a plan similar to Sen. Chafee’s. At the time the individual mandate penalty was described not as a tax, but as a measure of personal responsibility for paying for one’s own health care.

The Massachusetts plan became the model for the Affordable Care Act. The reason all of these proposals resemble each other and the Affordable Care Act is that there are limited options for creating a sustainable private insurance market that allows individuals access to affordable health insurance. Trump may be able to repeal the law and return to health care coverage as we knew it in 2010. Consequences, however, will be a sudden drop in access to care not just for those who lose coverage, but for many others who will lose access to care because their local hospital closes, or nearest doctor moves out of areas with high percentages of uninsured. Replacement requires something that looks like the ACA. The individual mandate of course is a little more complicated. At one point, it was seen along most of the political spectrum as a promising way to reduce the number of uninsured people in the United States; requiring healthy people to sign up for coverage was supposed to ensure that premiums were affordable. The idea was originally floated by the conservative think tank the Heritage Foundation and was first brought to Congress by Republicans in the 1990s. The mandate has since become one of the most despised aspects of the law.

But there isn’t a clear policy proposal with bipartisan support for how to get more healthy people into the insurance market in the absence of an individual mandate and insurance subsidies. Trump has proposed creating high-risk pool insurance programs, essentially plans that people with pre-existing conditions can buy into. These types of plans existed in many states before the passage of the ACA and by design are not self-sustaining because members use significantly more health care than they can afford. That means they require significant federal dollars ($25 billion in the case of a plan from Ryan), which is one of the many reasons high-risk pools are divisive among Republican lawmakers. I’ve written in the past that I was skeptical of whether it was feasible to just repeal the Affordable Care Act by  illustrating the forgotten man. So let’s just take a look at what would happen without some key important health care mandates from congress in the form of the forgotten man once again. When A takes from B to give to C, the world is well aware of the benevolence of A and of the plight of C; but B is the forgotten man.

The relevant point for us is not that B is being treated unfairly; the point is that B isn't going to stand still for this. He'll look for ways to prevent A from stealing from him. He may begin avoiding or evading taxes; he may earn less so that less will be taken from him; he may move out of A's jurisdiction; or he may start pretending to be C.

The end result is a society in which everyone wants to be C (or A), and no one wants to be B. But B was the person who originally financed A's generosity; and without him, there will be little to redistribute. In addition, if C doesn’t have to pay for his own needs, it's inevitable that his need will grow larger. Society develops that it has boundless needs and no one to pay for them. We can see how this happens if, we look at one sample of the A-B-C process in the health care reform debate. Health care advocates believe, for example, that people have a "right" to free medical care. Since no "rights" can be asserted against nature, the advocate must not be thinking of a right to live without disease. They are, in fact, thinking that no citizen should have to pay for medical treatment that it should be free.

But since nature doesn't provide medical care, it must come from other human beings. So one person's right to medical care is a claim upon some other person's time, energy, money, or knowledge. The man on whom this claim will be made is B, the forgotten man. Now the politician offers free medical care, but he never says, "You will have free medical care because we are going to force B to pay for it. The plan becomes unrealistic from the start in that it assumes that B will submissively pay the bill without looking for loopholes. It's unrealistic, also, to believe that the costs of the program won't change when the economics of it change.

The politician sees that people presently spend $100 billion per year on medical care. So he plans to collect $100 billion on new taxes or ( medical insurance "contributions"), and use the money to pay for doctors, nurses, medicine, X ray etc. He believes that this will make medical care free. But once the program is underway, the economics change drastically the 100 billion was what people had spent yearly when the money came from their own resources. Now that medical care is free their medical needs suddenly in­crease. Why forgo that operation, checkup, or treatment that might have some value.

Or if your lonely, why not go talk to your doctor? Or if you need a place to stay check into the hospital; they'll find something wrong with you many people will see that this is wasteful-for the nation. But for each individual, the consideration is always that it costs zero dollars to obtain something that might prove to be valuable so free medical care turns out to cost far more than $100 billion per year. And after a while B decides that he’s tired of paying for what he deems these loafers and he checks into the hospital, too from stress. Or at least he stops working so hard. His income is taxed to pay for free medical care and for all the other government programs. And so, leisure (unpaid and therefore untaxed) seems more attractive to him. He earns less; and he saves less, too, because he'd just have to pay tax on the interest his savings earn. And because he and all the other Bs are earning less taxable income, the politicians must raise tax rates even higher than they planned—to collect the money they need for free medical care.

Because even the government's resources are limited (it can't tax what doesn't exist), it is forced eventually to do something to limit the costs of the program. Naturally it won't end the program that’s political Armageddon; it will declare that a crisis exists and impose rationing. So when the cost of free medical care has reached double or triple or quadruple the original estimate of $100 billion, the government announces that it will decide who gets to see the doctor first. You will have to go without—unless you have the right disease or fill out the right form or know the right people.

And most people will have no choice but to wait in line for free medical care. The billions spent on the program will have bid up the price of medical services; only the very wealthy (of whom there are fewer) will be able to afford to hire a doctor on their own. Just as promised, medical care is free; it just isn't available. We would be sobered by the medical situation in Canada and some European countries. Government medical and "Social Security" pro­grams are far advanced there, compared to the U.S. The shortage of medical care is chronic because doctors emigrate to the U.S. and other countries where there are greater op­portunities to earn more money. Waiting lists sometimes are years long and Mr. B. has long since disappeared.

I've used this as an example of the way the health crises develops. The crisis is always a conflict between the government's goals and the actions of individuals. Many in­dividuals will sympathize with the government's position, but none will sacrifice his personal interest.

It isn't a matter of selfishness vs. unselfishness. Every indi­vidual acts in his own self-interest; that's a principle of hu­man action. The conflict is between the individual who selfishly pursues what he believes is best for himself and the politician who selfishly wants the individual to act under his direction. Until the ACA is actually repealed, all its rules and benefits are still in place. There’s an open enrollment period right now. Despite several large insurers scaling back participation in the exchange market in 2017, many health care consultants believe major payers will return next year with recalibrated plans.

There is a feeling of stability within the individual market despite the turmoil of exchange exits by large insurers like Humana, Aetna, and UnitedHealth. Payers are already developing slimmed down, technologically advanced “next-generation plans” with price points that are more suitable for the individual market. Although many have focused on the impact of insurers exiting state exchanges and subsequent concerns over reduced competition, some payers have quietly found success within the ACA marketplace by deploying narrow or tiered networks. Centers for Medicare & Medicaid Services has said the evolving regulatory landscape offers insurers an opportunity for experimentation and innovation.


       

Trump Care Will It Work...

 A recent survey by Healthcare Finance magazine show the perils and anxiety of a new President tinkering with the health care system that the country was just starting to get a handle on albeit with flaws, comments range from. “Doing away with some of ACA provisions that will be a disaster for women's health, behavioral health, the disabled and those with pre-existing conditions," a senior clinical business analyst said”. "Healthcare quality will also decline if the federal standards are removed. It will be a total disaster."

Other respondents added that a Trump presidency would set the U.S. healthcare system back in time.

"Due to the lack of his understanding healthcare, he will push the system backward by at least 25 years," a retired healthcare administrator noted. "Patient care will suffer and provider fraud will increase because of poor documentation."

 Let’s look at his plan and see if it is all doom and gloom. First his plan has two major components. First, it would fully repeal the Affordable Care Act (“Obamacare”) and replace it with several new policies. Second, it would turn Medicaid into a “block grant” program. By the Committee for a Responsible Federal Budget estimates, President-elect Trump’s plan to repeal and replace Obamacare would cost roughly $330 billion over ten years including estimates of faster economic growth, and $550 billion under conventional scoring.

                 

The largest component of this estimate comes from the “repeal.” The campaign website proposes to “completely repeal Obamacare,” which they assume to mean repealing the Affordable Care Act’s regulations, subsidies, Medicaid expansion, Medicare savings, and tax increases. Although repealing the coverage provisions would save about $1.1 trillion, based on Congressional Budget Office (CBO) estimates (adjusted for recent legislation and changes in the budget window), repealing the legislation’s tax increases and Medicare cuts would cost a combined $1.6 trillion. In total, this means repeal would cost $480 billion – or $260 billion including the economic benefits of repeal.

President-elect Trump’s plan to replace Obamacare would entail further costs. Most significantly, President-elect Trump would create a tax deduction for individuals buying their own health insurance. This would equalize the tax treatment between individually-purchased and employer-provided health insurance, but at a cost of roughly $100 billion over ten years. The cost of these policies would partially be offset by savings from expanding prescription drug importation and re-importation and allowing people to purchase insurance across state lines. Policies to require price transparency and promote health savings accounts will likely have small effects in opposite directions, roughly canceling each other out.1 As a result, the replacement plan would cost $70 billion.

The total cost of President-elect Trump’s repeal and replace health care plan would be $330 billion over a decade under dynamic scoring and $550 billion under conventional scoring. Those numbers would be smaller (and the direction could differ) if he retained some of the Medicare cuts and/or tax increases from Obamacare. Note that this analysis does not include President-elect Trump’s call to negotiate aggressively for Medicare drugs, a policy that is not listed on his website. He has previously claimed that $300 billion a year could be saved through negotiation, a claim the Committee for a Responsible Federal Budget rated as false because Medicare will only spend an average of $111 billion each year on prescription drugs. Based on previous estimates by CBO, actual savings would likely be small or negligible.

The Coverage Impact of Repealing and Replacing Obamacare

According to (CBO) The Congressional Budget Office, about 27 million Americans will lack health insurance coverage in 2018. Repealing Obamacare would increase that number by 22 million, whereas President-elect Trump’s replacement plan would only increase coverage by 1.1 million. In other words, the plan would increase the number of uninsured individuals by about 21 million and only cover about 5 percent of individuals that would lose coverage from Obamacare repeal.

                 

The 1.1 million of gained coverage comes from the policies to allow insurance companies to sell across state lines, which would increase coverage by 400,000, and the deduction for individual health insurance, which would increase coverage by 700,000. (Estimates from CBO) Other elements of Mr. Trump’s replacement plan might reduce costs but would not significantly impact coverage.

Block Granting Medicaid

In addition to repealing and replacing Obamacare, Mr. Trump proposes to transform Medicaid into a block grant to the states. Effectively, this means replacing the current system where the federal government pays for a portion of state Medicaid costs (based on a matching rate) with a system where the federal government gives each state a fixed allotment of dollars each year.

Not surprisingly, the amount of money this proposal would save (or cost) depends entirely on the size of that allotment, and how much it grows each year. For example, block grants could be designed to maintain current projected spending levels, or they could be designed to save hundreds of billions of dollars (this year’s FY 2017 House budget resolution assumed over $1 trillion in Medicaid savings). However, President-elect Trump transition team has not provided any information on the size of their proposed block grants, making it impossible to score any savings.

If President-elect Trump intends to generate aggressive savings from block granting Medicaid, it could more than pay for the cost of repealing and replacing Obamacare – though perhaps at the cost of a further reduction in coverage.

President-elect Trump’s plan to repeal and replace Obamacare – based on the details available – would both add to the deficit and significantly reduce coverage. Meanwhile, his plan to block grant Medicaid could generate significant savings; however, insufficient details are available to estimate if there are any and how much. What is clear is the uncertainty and that is no good for the industry, insurers or patient care.

Healthcare and the Impact on the Federal Budget

By Melvin J. Howard

There appears to be at least as many permutations and combinations available for presenting the US Federal Budget and Government Spending data as there are years that it would take you to count to $2 Trillion dollars, which is about 60,000. Note that in the US the number One Trillion is One Million times by One Million, or 10 to the power of 12. For the mathematically inclined, the correct mathematical definition of One Trillion is One Million to the power of 3, and the correct mathematical definition of One Billion is One Million to the power of 2. But in America numbers work differently, so it came to be that One Billion got redefined as One Million to the power of 1.5, and One Trillion is redefined as One Million to the power of 2. The effect and advantage of being the Imperial Superpower is that everybody else in the world now had to adopt this number conversion.

Rome is Burning

The U.S. Federal Budget has been in the news a lot lately both Republicans and Democrats both showcasing their version of the numbers. How you present the Federal Budget depends entirely on the bias you start with and the point you are trying to make. Therefore I decided to admit the bias up-front and then you can better decide what to do with the data. My bias in looking at U.S. federal spending was the thought that maybe we might be on fire just like the Roman Empire was over 1,000 +-years ago. To be sure, the Roman Empire had many similarities with the modern U.S. Empire - both being Empires built on a combination of clever legal systems, hard-work, confidence, much brutality in military conquest and extensive use of slave labor, coupled with a system of desirable, tempting, and free entertainment to warm the masses to the Empire (think Roman Idol), as well as erratic spouts of helpful assistance to the poor. Certainly also, a widespread Roman currency and trade system, and an extensive taxation and government spending program were just as critical to the success of the Roman Empire, as they are now in today's American Society.

The comparisons of Budgets started with finding a Roman budget at a time around when their leaders stopped being elected and instead were "appointed" and when ancestral lines of Emperors became very popular. So I started with the early Empire days of the 1st - 2nd Centuries AD. The approach I have taken is based on historical data from those days, to calculating the Roman budget in this period. The total Roman budget was about $1 billion sesterces, a common Roman currency that started in the BC years as about 1/4 of the Moneta denarius. These are estimates for the Roman budget in 150 AD broken down into the following expenditure categories. Roman Empire Budget Distribution Source of Roman Data Expense Item Percent Outgo:

Military 70%

Civil Service - Judiciary, Police, Government Departments 10%

Social Spending 5%

Economic Infrastructure 5%

Other - Mostly Foreign Affairs 10%

Now compared to U.S. Actual Government Spending in earlier years subtracting both Social Security and Medicare, which have been fully self-funded by separate taxes (the FICA taxes) since the early 1980s. Then you subtract interest on public debt for comparison purposes since the Roman Empire did not have a consistent, well-developed system of Sovereign debt issuance like America does today.

Some other adjustments to be made to U.S. Spending were to include Veterans Benefits, Military Retiree benefits and Military Assistance to the Provinces (Countries) of Judaea and Egypt (Israel and Egypt) with Military Spending. The inclusion of benefits to ex-military employees is consistent with the way the Roman data was derived, and the inclusion of military aid to Israel and Egypt was done because these were the two most expensive outer-Provinces to maintain under both Regimes. The following distribution of expenses on a comparable basis can be derived from the full current Budget of the U.S. Government. We are focusing on the demands on the Budget coming from the aging of the population and society's increasing medical expenses. America’s Budget Distribution Expense Item Percent Outgo breaks down to something like this:

Military 40%

Civil Service Admin, Justice, Treasury, Fed Civil Retirees 10%

Social Spending - Medicaid, Food, TANF, Unemployment, Housing, SI 30%

Physical and Economic Infrastructure 10%

Other - Education/Training, Research, Foreign Affairs 10%

Clearly the data indicates that social spending in the Roman Empire was generally at a very low level. However social spending tended to happen erratically in much larger amounts, depending on the Emperor of the day, and the need to win over public opinion. What is clear from looking at the two budgets is that the current U.S. budget has more regular proportions of social spending, especially in comparison to military spending. However, it should be noted that the U.S. budget looked much more Romanesque in earlier decades of the last century, notably during the 40s for WW2 and during the 50s in gearing up for the Cold War, where military expenditures were close to, and sometimes even exceeded, the Roman proportion.

The move from a Romanesque budget of the 1950s to current U.S. spending distribution has a lot to do with increased healthcare expenditures such as Medicaid, and the introduction of things like the Earned Income Tax Credit, and changes to Unemployment, Housing and Food Assistance Programs. Note that most of these social spending items included in the 30% fall under the grouping of "Means Tested Entitlements" which means that they make up the social safety net for people whose income and assets fall below a certain threshold.

The other primary social spending benefits or social safety net items are Social Security and Medicare, which apply to Retired and Disabled Persons and are not means tested. As noted earlier these benefits have been self-funded through separate employer and employee contributions (known as the "FICA taxes") for the past two decades and half. In general, rising medical costs affect both Medicare and the means tested healthcare entitlements such as Medicaid. In fact, one of the Historical Data Tables in the Budget shows total government spending on all health programs to have increased from about 2% of the Budget in 1962 to just over 10% by 1980, to almost 25% or one quarter of the Budget by the year 2001.

The USS Ark of Healthcare Reform

As anyone with a health insurance policy will tell you, healthcare costs under private sector coverage continues to rise. Overall, an increasing amount of America's total Gross Domestic Product (GDP - a measure of the total economy) is spent on healthcare. To keep score of the size of an economy and the size of national income people often talk about GDP . This measure of national income is also equivalent to Annual Consumption Expenditure plus Government Spending plus Investment - which are the only three places your money can go. That is, any income you get either goes to taxes, you spend it or you invest it. U.S. GDP is about $14.6 Trillion US dollars. Consumption Expenditure makes a Trillion dollars a year. Today healthcare expenditure makes up about 16.5% of U.S. GDP. About 30% of this is picked up in Government Spending; the rest is in private spending. At the current rate of growth, healthcare costs are predicted to nearly double to $4.5 trillion in the year 2019. At that point, those costs will account for 19.3 percent-almost a fifth-of our GDP. America spends more on healthcare as a percent of its GDP than any other developed nation, but has less public coverage for this cost and a large uninsured population. So, the high spending on healthcare in the U.S. must be explained by something other than a general concern that everyone has adequate care.

To a very large extent the high level of American healthcare spending is a result of America becoming victim of its own technological success, its sedentary lifestyle and a culture obsessed with longevity, overcoming natural cycles and the desire to "stay young". The latter appears to be common to inhabitants of Great Empires of the past. This cultural obsession, fed by medical technologies far superior to those of any other country, may suck up so much of the US economy that it won’t be able to sustain its global super power status. Indeed it is perhaps the very fear of this that is really driving the attempt to reform and redefine Healthcare, Social Security, Medicare and Medicaid.

Now moving on to some of these other expense items, it should be noted that "Other Spending" includes Foreign Affairs expenditure other than the expenses of maintaining the outer provinces of Israel and Egypt, which are included in the Military item. Under both Empires so-called "foreign aid" is or was an important part of keeping peace with peripheral provinces or countries. Unlike Rome, the U.S. also successfully uses loans through various multi-lateral institutions such as the IMF, World Bank and Inter-American Development Bank to maintain optimal relations with peripheral sovereigns.

This use of loans gets to one of the fundamental differences between Rome and America - the role and leverage of the financial system. The U.S. success is largely due to the success and complete faith in its monetary system. In contrast, the Roman Empire's monetary system was almost entirely metal based and while there was easy access to credit for the ruling classes this was not true for other classes. There appears to be much debate among historians about what stopped the Roman Empire from having an industrial revolution. But whatever one's opinion, surely a pre-requisite is a highly leveraged, monetary system with sophisticated, widespread access to credit. But Rome never got to such sophistication with its financial system.

This provides us with another reason why its success was always more driven by military conquest than anything else. In contrast, for the modern American superpower, financial influence is on a par with military power, and both feed off each other. The financial success of the American Empire has also made its tax collection process far more efficient than any previous Empire before. In Roman time the tax collector had to go door to door to collect heavy coins, cattle, feed etc. But still just like then the biggest problem being with collecting from the rich. Remember the biblical character of Noah and the Ark warned of an impending storm like no other storm in history. Well our storm has arrived in the form of healthcare spending. And if we don’t take swift action the USS Ark of Healthcare Reform will close its doors and sail off leaving the bulk of its people medically stranded and unprotected. And just like Noah’s Ark the USS Ark of Healthcare Reform will not have any place to dock instead it will continually drift in a sea of red ink! 

  

International Countertrade With A Social Purpose

                                        http://www.boeing.com/boeing/history/narrative/n080mdc.page

Global trader with a social cause in the making

By Melvin J. Howard

Circumstance has away of preparing you for life without you knowing it. For example when I was in College I got a job that was arranged by my alumni department head. It was working for a major defense contractor in their countertrade division. Little did I know at the time it would play a major roll in my life now? Countertrade is a term used for parallel business transactions, linking sellers and buyers in reciprocal commitments, which usually lie outside the realm of typical monetary trade. Some of the common forms of countertrade transactions include barter, counterpurchase, compensation, buyback, clearing arrangements, offset and switch trading. More than 10% of world trade today involves some form of countertrade.The World Trade Organization estimates that 15% or $8.43 billion  of the $5.62 trillion in international trade is conducted on a non-cash basis.

My mentor was a great teacher he was a Vice President of the defence firm I was working for. I was learning first hand how to do world trade not in the classroom but on the front lines. He took me under his wings and taught me the most basic and the most complicated forms of Trade.  Offsets–an umbrella term for a broad range of industrial and commercial compensation practices required of foreign suppliers under primarily government agency of state-owned enterprise acquisitions–were made a common requirement for the procurement of either military (e.g., fighter aircraft) or high-cost civilian hardware (e.g., commercial aircraft). Both defense and non-military offsets may entail overseas co-production of the procured item, as well as other economically beneficial transfers to the importing country that are not related to the original export. To assist their exporters some industrialized country governments also promoted countertrade under government agreements. For example, the French Ministry of Agriculture signed in 1989 an agreement with the USSR Council of Ministers which provided for exchanges of Soviet commodities for French agricultural and food processing equipment and technologies. Other Western governments, such as those of the United States, Canada, Belgium, Holland, the United Kingdom, and Italy, established special countertrade service units within public agencies to provide countertrade-related advisory assistance to their exporters. The French Government has supported instead the formation of a separate countertrade assistance entity in the private sector. The Swedish Government was until 1990 a major stockholder, through interests by the Swedish Investment Bank, in a private sector company involved in countertrade. Now with trade agreements like NAFTA in 1994, which integrate regional trade, based on free market principles some countertrade has abated somewhat.

International countertrade practices are now increasingly associated with bidding on major defense and non-military government procurement contracts and with project financing–a contract-based, off-balance-sheet finance technique whereby revenues generated from the output of the financed project are directly allocated to service outstanding debt and principal. A variation of the countertrade buy-back contract which links foreign contractors’ repayments to the output products of the production capacity they supplied, project financing relies instead mainly on contractual recourse to the project’s revenue streams. (According to the World Bank, developing countries are now spending around $200 billion a year on new infrastructure investment, one-fifth of their total investment.) High procurement costs and tighter budgets have prompted many emerging country governments in the 1990s to issue new civilian offset regulations (e.g., United Arab Emirates, Kuwait). Civil offset requirements, therefore, are increasingly acquiring a financing rationale in these markets. In a global environment of budgetary constraints, the ability of suppliers to meet offset requirements and/or to provide their clients with financial packages that can best those of competing bidders is a major competitive edge.

International trade in medical services will become increasingly more important. For ensuring quality, well-known medical facilities are likely to invest (commercial presence) in countries. Likely to be the destination of “consumption abroad” mode. Likely to be the supplier of patients mainly due to “poor quality” of medical care rather than the cost of care. International migration of foreign medical graduates will likely to be associated with commercial presence rather than traditional migration. New migration pattern will further encourage adoption of consumption abroad approach for reducing overall healthcare cost in both developed and low-income developing countries. Further expansion of consumption abroad will discourage purchase of expensive health insurance plans. In high medical care cost countries; international trade in health services will encourage purchase of catastrophic insurance plans. Health expenditure in the world in 2005 was about $4.8 trillion ($60 trillion was the global income) $4.0 trillion in OECD countries,  $800 billion in the remaining 160 countries of the world. Globalization has increased trading in health care services. Cost of international communication, travel has declined. Time lag has declined significantly and for electronic transfer of information, it has become almost zero (origin to destination). Cost of obtaining services of similar quality varies significantly among developing countries as well as between developing and developed countries of the world. There are types of medical care services that are extremely time sensitive. Waiting will rapidly reduce the benefit of treatment.

 The benefit function declines rapidly. If the time lag between the onset of the condition and reservation benefit level is shorter than the time needed to travel to a country, the service will be demanded locally. Worldwide, 1.3 billion people do not have access to effective and affordable health care. Low- and middle-income countries bear 93% of the world's disease burden, yet account for only 18% of world income and 11% of global health spending. What governance structures are necessary to encourage the right mix of public and private health care provision? What regulatory framework is needed to induce businesses to provide insurance, provision and finance for health in poor countries? How can the fruits of medical knowledge and technologies be shared among rich and poor countries without destroying incentives to generate more knowledge? What forms of international cooperation are conducive to the finance of health systems in developing countries? What international institutions are required to make health care for the poor an attractive opportunity for business? One thing is clear groups or individuals who think health care is static or promote the status-quo are sticking their heads in the sand. Recent economic conditions highlight the need for new sources of capital to be brought to bear on social problems.

At the heart of the social enterprise movement is the ongoing challenge of accessing investment capital for socially responsible purposes.  Acquiring start-up capital is a common issue for many nonprofits. It's exacerbated by federal tax laws that restrict nonprofits from accessing traditional forms of equity, such as venture capital and, sometimes, commercial debt. For the most part, nonprofits must rely on private foundation grants, government support, and, for some, earned income such as fees for services. To subsidize their earned income, some nonprofits have set up separate social enterprise business sidelines. The for-profit sector faces its own challenges in funding charitable activities because federal tax laws generally restrict private business entities from accessing foundation grants and government assistance. In addition, for-profit investors expect market-rate returns and maximized profits. Their expectations don't align well with social mission-focused entities, which need "patient capital" and typically have slower, more modest growth.

There is a growing body of thought that new business models and possibly new tax incentives or structures are needed to effectively bridge the "sector" gap. These new models would eliminate the need for social entrepreneurs to either choose between the for-profit and nonprofit business models or create and manage both. One such model, could be a form of business that blends attributes of nonprofit and for-profit organizations in order to promote investment in socially responsible objectives. “It’s time we utilize innovative ways to stimulate the economy and create jobs we need to spur the growth of socially responsible business by simplifying partnerships between nonprofit foundations and for-profit investors. Hybrid financial tools can generate a vast pool of investment funds needed to develop companies dedicated to the public good.

There are major lessons learned from the global greed era we are leaving behind to a new era which creates an opportunity for the investment of private capital to further social purposes.

MELVIN J. HOWARD FOUNDATION INC.

The Washington Award Program has chosen Melvin J Howard Foundation, Inc for the 2013 Washington Awards in the Non-Profit Organizations classification.

Regent Hills Health Center Financial Analysis

Regent Hills Private Hospital budget

Structured Finance Meeting Regent Hills Health Center (Canada)

Regent Hills Health Centre_Meeting Agenda_31604 by 5Hleaders

Mental Health Of Success On The Couch

Paying That Price For Success

By Melvin J. Howard

The first rule of paying the price is a very important rule, and, indeed, possibly covers most of the subject matter. Before you make any formal resolutions whatsoever, make certain that you genuinely desire to carry it out. Let there be no doubt that the end you have in view is so desirable or advantageous that it will outweigh all desires and advantages or all other ends that are likely to have to be foregone or abandoned in order to attain it. In short, be sure you are willing to pay the price. This rule is the corner-stone this is of great importance. There is a price for everything for doing and not doing. Paying the price is characteristic and a passionate desire to succeed, a desire so strong and overbearing that it amounts to a demand, and that, in the strictly economic sense to which I means willingness to pay the price. 

The price is first of all singleness of purpose and concentration of effort. Nearly all of us, at school, have thought that we should someday like to be President of the United States. But not all of us have made it a point to study the lives of past presidents to see how they did it. Not all of us have taken a law course with that special insight like constitutional law. Not all of us have refused tempting commercial opportunities for certain poverty and struggle for a time to gain an end in which the mathematical chances were ridiculously and overwhelmingly against us. Not all of us have kept desperately fanning the embers of dissatisfaction, fanning them into a constant white-hot flame. With most of us the early fire dies; the embers fade and grow cool. We reach as high a level as we ever seriously hope to reach. We have spasms of dissatisfaction with our position in the world, but not sufficient dissatisfaction to make us work our way out of the rut to a higher position. We have moments of longing for the mountain tops, but not enough longing to make us willing to give up something for them. Strolling in the valleys is so much more pleasant than climbing.

And singleness of purpose demands more sacrifices than mere industry. It involves giving up all pleasures that interfere with it. They may be quite innocent pleasures, their sole offense being that they occupy time. It involves making oneself narrow; one cannot be a success in any one line if one dissipates one’s energies in a number of activities—unless, of course, one be a versatile genius whose energies overflow, like Benjamin Franklin, Leonardo da Vinci, or Goethe—and such instances are so rare that they may be ignored. Let there be no mistake. I do not mean to discourage efforts to become a Success. I mean merely to indicate that the goal has a price. I want you merely to ask yourself whether you are willing to pay that price; to ask yourself candidly how far you want to go and how much you are willing to pay; for if you do not ask yourself now, before you make your Success resolutions, you are likely to ask yourself later on. 

As you see obstacles and disappointments pile up, you are apt to begin wondering whether the game is worth the pain. And if you decide to give up then, you will have broken your early resolution, with all the undermining of self-confidence and faith in your will which that involves. 

Once you have made your decision, having coldly decided that is what you want and that you are willing to pay the price, your decision is forever beyond dispute. You should never ask yourself again whether the other course is possible; whether it is really worth while staying home to study for a specified number of evenings each week; whether a man who has resolved to stop drinking can really do so suddenly without blowing to pieces; whether a man in a moderate position, without so many responsibilities and burdens on his shoulders, doesn’t really get just as much enjoyment out of life as the Success. Can I do it a person that comes from Hoboken anywhere can actually accomplish what he sets out to do. Those questions are forever closed; you have asked them before and have decided them. You will know that thoughts determine action, and to control your actions you will begin by controlling your thoughts. You will vivify all the advantages that will come from carrying out your resolution. You will paint them in glowing colors.

You will dwell on them constantly. The disadvantages you will ignore. They are disadvantages only to fools; a wise man does not think them so. Concentrate on the positive side; avoid the negative at all costs friends, family anyone that would dampen your spirit. Picture yourself already a success. I have come across many people in my life that want the easy life the glamorous life the rich life. But they are never willing to pay the price. Each successful person knows what I am talking about they have paid the price. What looks to the outside world of easy success is an illusion the price these individuals paid could be number of things that we will never know about. 

Medical Debt And Your Credit Score

Medical Credit Score

Til Debt Do Us Part #3

By Melvin J. Howard

Do ever wonder why you have a low credit score or why you never seem to qualify for the lowest interest rates on home, car, or other loans, the problem may be medical debt. This is true even if you paid an overdue medical bill. The Federal Reserve has shown that more than half of all collection accounts that negatively impact credit reports are medical debt. This is a result of the fact that health care costs are on the rise and tens of millions are uninsured. But it is also because medical debt is treated differently from other kinds of debt. Private health insurance reimbursement is incredibly cumbersome. Different benefits are often covered by different companies and at different rates, leading to a lengthy, circuitous billing process that often leaves patients holding the bag. If you have ever received a medical bill that you didn’t understand or that you thought your insurance was supposed to cover, you have been caught up in this system. If you have ever received a letter from a health care provider stamped with the notice “This Is Not A Bill,” or if you have signed a form at a doctor’s office promising to pay anything your insurance fails to cover, you have been an unwitting victim in the tangled web of medical billing, an industry that thrives on patient and health care provider confusion.

One study found that nearly one-third of respondents let a medical bill go to a collection agency because they did not understand the bill or explanation of benefits statement. Another study estimated 14 million American adults said that a medical bill was sent to a collection agency because of a billing mistake.

Confusion keeps the medical collections industry turning. It’s hard not to think that billing “mistakes” may not be mistakes at all but part of an intentional strategy to keep patients in the dark and in the red. In addition to patient confusion, medical debt is more likely to end up in collection because hospitals routinely sell medical debt to debt collectors after 60-90 days of nonpayment, far less than the customary 180 days for other kinds of debt. Health care providers rarely report paid medical bills to the credit reporting agencies. So, even if you are billed in error, your health care provider may send your bill to a collection agency before you can dispute the charge. Once in default, a medical debt stays on a credit report for up to 7 years, even if you pay the bill. Research by the Commonwealth Fund shows that, in 2010, 9.2 million people wound up in default on a medical bill because of a billing mistake.

These mistakes have serious consequences. A single paid medical bill can lower a consumer credit score by as many as 80 points. That means you will pay a higher interest rate for almost anything else you want to buy on credit, including a home or a car. The fact that a relatively small medical bill can end up costing thousands in interest charges down the line demonstrates the obscene power of the credit rating agencies. No other companies have more power over the American consumer than the top three credit reporting agencies, Equifax, TransUnion, and Experian.

If patients are powerless, so are many health care providers. It’s important to note that your doctor may be just as confused as you are. Talk to any health care worker around the country, and they tell you that they are as frustrated as patients when it comes to medical billing. Why do insurance companies and ratings agencies have so much power over our lives? Why do we live in such perpetual confusion?

The Medical Debt Relief Act attempts to prohibit credit reporting agencies from listing medical debts on credit scores. Yet, even this minor reform has little chance of passing because the credit rating agencies and insurance companies are a powerful lobby in Washington. And even if the MDRA were to make it through the Senate, it only applies to paid medical bills. Indeed, the evidence actually indicates that if we don't act things will get worse for patients and debtors before they get better. FICO has begun developing a special ratings system to rank potential patients on how likely they are to pay their medical bills. Like having a barcode tattooed on your forehead, we could be looking at a brave new world in which your credit rating determines not only whether you can obtain a credit card but whether you receive medical care when you get sick.

Nonprofits are losing out to Privatizers that has got to stop forthwith

After years of welfare reform there is evidence that privatization has been successful, not for the people who were supposed to be moved out of poverty, but for corporate profiteers.

By Melvin J. Howard

An unintended consequence of welfare “reform” has been the transformation of the nonprofit sector particularly the better-funded national organizations from community assets to market-based competitors. The traditional distinction between nonprofits investing in people and communities, and for-profit entities that make money for their owners, is becoming blurred. In some areas, for-profits and nonprofits are now in direct competition; in others, they are creating partnerships to secure government contracts. In the Harvard Business Review, William P. Ryan, a Cambridge, Massachusetts-based consultant to foundations and nonprofit organizations, looks at the changing landscape for nonprofits forged by government willingness to contract with for-profit corporations to administer government services. Ryan points out: “By playing in the new marketplace, nonprofits will be forced to reconfigure their operations and organizations in ways that could compromise their missions. The danger,” writes Ryan, “is that in their struggle to become more viable competitors in the short term, nonprofit organizations will be forced to compromise the very assets that made them so vital to society in the first place.”

One of the most insidious consequences of the San Francisco County’s welfare-to-work program is that local nonprofits and private businesses are able to “steal jobs from low-wage workers, for whom these jobs no longer exist.” This short sighted pitting of low-wage workers against welfare workers threatens to create a new group of unemployed workers, who may find themselves applying for welfare benefits.

To compete in the marketplace, nonprofits are adapting to its new realities in a myriad of ways, “from subcontracting to partnership to outright conversion to for-profit status,” writes Ryan. He points to the YWCA of Greater Milwaukee, which although “large and sophisticated by any nonprofit standard…could not go it alone.” In order to deal with the “demand of a comprehensive, $40 million welfare-to-work contract, it created a for-profit limited liability corporation [called YW Works], with two for-profit partners.”

In addition to unleashing predatory corporate forces, and the ongoing transformation of nonprofit organizations into high stakes competitors for government contracts, the Personal Responsibility and Work Reconciliation Act of 1996 contains the first enactment of a concept known as “charitable choice.” Far from expanding anyone’s choices, “charitable choice” mandates that state and local governments include religious organizations in their pool of bidders for service-delivery contracts.

On the face of it, this is nothing new. As Cathlin Siobhan Baker, Co-Director of the Employment Project, explains, for years religious organizations have received government funding for emergency food programs, child care, youth programs, and the like. However, they were expressly prohibited from religious proselytizing. Now, Baker writes: “Gone are the prohibitions regarding government funding of pervasively sectarian organizations. Churches and other religious congregations that provide welfare services on behalf of the government can display religious symbols, use religious language, and use religious criteria in hiring and firing employees.”

President George W. Bush has been a big-time supporter of charitable choice and faith-based initiatives. If his faith-based initiative, announced to great fanfare in late January, ever gets back on track, it will allow for a bunch of social services to come under the control of faith-based organizations. During the presidential campaign, Bush repeatedly called for “armies of compassion” fielded by “faith-based organizations, charities and community groups” to help aid America’s poor and needy. In a USA Today opinion piece he laid out his plan for taking “the next bold step in welfare reform,” proposing $80 billion over 10 years in tax incentives to “help our nation’s most heroic armies of compassion.” He also proposed a federal initiative to “support community and faith-based groups that fortify marriage and champion the role of fathers.”

Welfare is no longer a question of poverty or the economic inequities in our society. Charitable choice frames the debate within such time-honored moral hodgepodge as the proverbial “epidemic of out-of-wedlock births,” or the “lack of personal responsibility”—behaviors that conservatives claim, contribute to the general moral breakdown of our society.

Since 1996, responsibility for welfare services has shifted from the federal government to the states and the states have contracted many services out to for-profit corporations and non-profit organizations. Under President Bush’s faith-based initiative, religious organizations have become a major player in the service provider mix. However, in addition to the bevy of objections raised by liberals and conservatives that have stalled the implementation of Bush’s faith-based plan, many people of faith do not believe that they can shoulder such a burden.

In Religion-Sponsored Social Service Providers: The Not-So-Independent Sector, independent researchers Jim Castelli and John McCarthy of Pennsylvania State University, conclude that it is mistaken to believe that faith communities can take on the burden of expanding their provision of social services as a substitute for government efforts. “Not only is there no infrastructure at the national, state, or local levels to administer programs and large amounts of funding, but such expansion would require faith communities to wholly change their funding priorities in order to build their capacity.”

Privatization as the engine powering welfare reform was supposed to replace federal and state bureaucracies with streamlined, cost-effective corporate service providers. Privatizers believed that private companies would administer welfare regulations more stringently and accurately, deliver services more efficiently, and focus on only those who really deserved benefits. Saving the taxpayers money was another appealing promise. Companies competing for contracts assured states that they would dramatically reduce the welfare rolls.

Has the privatization of welfare delivered on its promises? Have private companies and enterprising nonprofits transformed the old welfare system with the outcome of long-term employment with decent pay for former welfare recipients? Max Sawicky, economist at the Washington, DC-based Economic Policy Institute, is troubled by the fact that the so-called “success [of welfare privatization] was announced before the results are in.”

In a 1997 speech, Lawrence W. Reed, President of the conservative Midland, Michigan-based Mackinac Center for Public Policy, touted privatization as the wave of the future: “The superiority of [privatization]…is now approaching the status of undisputed, conventional wisdom: the private sector exacts a toll from the inefficient for their poor performance, compels the service provider or asset owner to concern himself with the wishes of customers, and spurs a dynamic, never-ending pursuit of excellence - all without any of the political baggage that haunts the public sector as elements of its very nature.”

·         While welfare privatization has delivered drastic reductions in caseloads and welfare rolls, it has not moved recipients from the “underclass” to the working class. Privatization is not efficiently delivering job training and support services to those who need them.

·         The financial bonuses privatizers receive for reducing caseloads create an incentive to terminate clients’ benefits, not to assist them in climbing out of poverty.

·         As in the case of Curtis and Associates, staff working for private companies often have neither the credentials nor the training to handle their caseloads. Consequently, clients do not receive services they need, and to which they are entitled, such as childcare, transportation subsidies and medical care.

·         As Wisconsin, New York, and Texas have learned to their chagrin, companies like Maximus and Lockheed Martin blithely spend public money from other jurisdictions to wine, dine, and pay off decision-makers in the pursuit of new contracts.

·         The states and local governments that contract with corporations for welfare services have not instituted any form of systematic oversight. Because information about large private contractors is not centralized, it is not unusual for a company in hot water one place to pick up new contracts at the same time in another state—or in another county in the same state. Ultimately, for-profit corporations are accountable to their shareholders, not to the communities they are hired to serve.

Spurred by revelations of Maximus’s questionable activities, Milwaukee-area Democratic Congress- people Jerry Kleczka and Tom Barrett, are hoping the federal General Accounting Office will fully investigate the practices of private companies hired to manage welfare services. As we move closer to welfare reauthorization, the GAO needs to vigorously take on the Congresspeople’s request. In the meantime, corporations will continue prospecting for gold among the poor.                                      

MAXIMUS INC CONTRACT UNDER THE MICROSCOPE

Medicaid and Medicare Poverty and Wealth the money train

There is money to be made off the poor:
Til debt do us part #2
By Melvin J. Howard

In 2007, MAXIMUS agreed to pay $30.5 million to resolve an investigation by the U.S. Department of Justice (DOJ) into False Claims Act allegations.  In a deferred-prosecution agreement, the company admitted responsibility for causing the District of Columbia to request Medicaid reimbursement as if the city‘s foster care agency provided reimbursable services to every single foster child when, as Maximus then well knew, that was not true. The DOJ described the settlement as demonstrating strong commitment to vigorously pursuing those companies that defraud the Medicaid program. However, both before and during the course of the litigation, MAXIMUS was almost inextricably linked to federal and state government agencies through contracts to provide services in Medicaid, Medicare, and other aid programs. Thus, the available sanction of exclusion from continued participation in federal aid programs was explicitly avoided as part of the settlement. Within two months of the settlement regarding allegedly fraudulent Medicaid claims, MAXIMUS won a five-year contract with the state of New York to provide Medicaid fraud-consulting services talk about the fox watching over the hen house. Within three months, the District of Columbia extended the same Medicaid revenue maximization contract with MAXIMUS that resulted in the alleged false claims. From the time of the settlement through the end of 2008, MAXIMUS entered into or extended contracts related to Medicaid or Medicare worth more than $240 million, including millions of dollars in contracts directly with the Centers for Medicare and Medicaid Services (CMS) the federal agency to which the allegedly fraudulent claims had been submitted. Then, one year after the DOJ settled its possible claims against MAXIMUS, the company won a contract to insert its services within the DOJ itself, to provide investigative and analytical support, consulting, technical services, financial management, and case-related professional support during the investigation and prosecution of criminal cases.

In addition to tax and debt instruments for raising revenue, intergovernmental grants are a primary tool for different levels of government to carry out their respective roles, and thus are a key application of fiscal federalism theory. In the United States, intergovernmental grants typically take the form of federal grant-in-aid programs, such aid programs has been to devolve more discretion and control to the states and local governments. The grant programs generally fall into three categories: matching programs such as Medicaid and Title IV-E Foster Care where state spending is required at a certain percentage match to receive additional federal funds; block grants like the current welfare cash assistance program (Temporary Aid to Needy Families, or TANF), which require states to maintain a certain level of state spending to receive the full federal block grant; and programs that are fully funded by the federal government but administered by the states, such as the Food Stamps Program.

Total federal spending on two of the largest matching grant programs, Medicaid and Title IV-E Foster Care, is projected to reach almost $320 billion in 2014. The programs are frequently targeted for contractor operational and consulting services and have been the subject of increased federal scrutiny into revenue maximization strategies. The programs provide an excellent example of intended fiscal federalism structure and the transformative effects that occur as the poverty industry‘s relationships with both the state and federal governments continue to grow. Numerous private companies have not only recognized the money to be made from poverty programs, but have concentrated on that niche as the core of their business offerings. With a mission of helping Government Serve the People, MAXIMUS provides operational and consulting services for almost all aspects of government health and human services programs. The poverty industry thrives on bad times. While many companies‘stocks were diving, MAXIMUS announced increased cash dividends to its shareholders. MAXIMUS also noted in its 2008 fourth quarter earnings call that there are more unemployed people and they look for job opportunities, and that plays right into the sweet spot for our welfare to work programs.

The depth and scope of the poverty industry‘s role in federal grant-in-aid programs and funds is striking, spurred in part by lobbying efforts, campaign contributions, and a revolving door of personnel between private industry and government leadership. The poverty–industrial complex has grown to the point where seemingly any task regardless of possible conflicts or limitations regarding inherently governmental functions can be contracted out.

 Pay-to-Play

A few years before former Illinois Governor Rod Blagojevich faced impeachment for allegedly trying to sell a U.S. Senate seat, he faced media scrutiny for his dealings with MAXIMUS. In 2005, The Chicago Sun Times reported on possible links between the company‘s receipt of state contracts and campaign contributions to Governor Blagojevich made by MAXIMUS and the company‘s lobbyists. According to the paper, MAXIMUS initially contracted with the state to develop a new plan to maximize federal aid dollars, and the company was then ―handed a waiver from state contracting rules by Blagojevich‘s administration so it [could] bid on the lucrative contract proposal it helped the state develop. The company had apparently given Blagojevich‘s political fund $25,500, and the company‘s lobbying firm—which employed the governor‘s former congressional chief of staff—donated another $80,300 to the governor.

Such scrutiny then reached to the west coast. According to the Los Angeles Times, when MAXIMUS faced the risk of losing a $32 million welfare-to-work contract with Los Angeles County, the company reacted by outspending its competitor on lobbying efforts by eight to one. The county‘s Department of Public Social Services concluded another company‘s bid was better, and a review panel and the auditor–controller upheld the decision on appeal. But after MAXIMUS spent $200,000 in lobbying fees and thousands more in campaign contributions, the paper explains, Los Angeles‘s five county supervisors voted to ignore the year-long review process and re-bid the contract to give MAXIMUS another chance.

Revolving Door

In addition to the influence of money and lobbying, there is a continuous flow of leadership between the ranks of government agencies and private contractors involved in federal grant-in-aid programs. While Governor of Wisconsin, Tommy Thompson was on the national forefront of the charge to privatize welfare and other poverty programs and he took his championship of privatization to the national stage as Secretary of the U.S. Department of Health and Human Services. When he left his federal post, Thompson was rewarded with multiple positions in the private sector. Simultaneously, Thompson joined Deloitte Consulting, leading the firm‘s Center for Health Solutions; became a partner with Akin Gump Strauss Hauer & Feld LLP, where he focused on developing solutions for clients in the health care industry, as well as for companies doing business in the public sector; joined former U.S. House Majority Leader Richard Gephardt as a member of the board of directors for Centene Corporation, a company that provides Medicaid managed care services in several states; became the board chairman of Logistics Health Incorporated and joined the boards of directors of several private companies in the healthcare field.

As states increasingly view federal grant-in-aid funds as a source of general revenue rather than a means to enhance program services. Once the bipartisan pick for Commerce Secretary in the Obama Administration, U.S. Senator Judd Gregg has since become a critic of the Administration‘s increased spending on federal aid programs to address the economic downturn and budget difficulties faced by states. However, when Senator Gregg was governor of New Hampshire and faced a growing state budget deficit, he initiated a process of claiming additional federal Medicaid matching funds, but with no additional net outlay of state funds. Then, rather than using the additional funds for Medicaid-related services, Gregg created a new general revenue line item in his state budget called ―Medicaid Enhancement Revenue. Gregg converted additional federal Medicaid payments into general use rather than using the federal dollars for Medicaid programs and services. The strategy led to such an increase in federal funds that the new general revenue line item accounted for 28% of New Hampshire‘s total general fund revenue in 1994.Gregg balanced the state‘s budget—indeed, to the point of a surplus by converting federal funds intended to aid the poor into general state revenue.