The bad news: Providing certain health care services just became way more expensive for the counties. 

The Brown administration is ending a program that coordinated care for seniors and low-income families because it was no longer cost effective. As a result, the state will save $626 million this year, forcing counties to pick up the check. 

The Coordinated Care Initiative allows Californians who are eligible for both Medi-Cal and Medicare to “receive medical, behavioral health, long‑term services and supports, and home and community‑based services coordinated through a single health plan,” according to the budget document released Tuesday. 

But the law allows the Department of Finance to end CCI if it is deemed no longer cost effective. Federal regulations requiring in-home caregivers to receive overtime after 40 hours per week drove the cost of the program up with the minimum wage hike.

Last year, state analysts estimated the plan to gradually increase the minimum wage to $15 per hour would cost the state $4 billion by 2021. Cutting the CCI program will lower the state’s burden to $2.6 billion, according to a Department of Finance official. 

Cutting the program will shift the labor costs onto the counties, which is estimated to cost more than $4.4 billion over the next six years, according to the California State Association of Counties. 

 “This would be devastating to counties all over the state,” CSAC President and Alameda County Supervisor Keith Carson said in a statement. “We undoubtedly would have to make cuts in other vital social services to cover these costs.”

Critics of a California workers’ compensation system that is both among the

Gov. Jerry Brown recently signed Assembly Bill 1244, a bill introduced by Assembly members Adam Gray, D-Merced, and Tom Daly, D-Anaheim, and approved 79-0 by the Senate and 39-0 by the Assembly.

It would ban medical service providers from participating in the state-funded workers’ compensation program if they’d ever been convicted of a felony or of a misdemeanor involving fraud or abuse in the state program or in Medi-Cal or Medicare. It also bans those suspended from Medicare or Medicaid by federal authorities for fraud or abuse and those who have “lost or surrendered a license, certificate or approval to provide health care.”

Brown also signed Senate Bill 1160 by state Sen. Tony Mendoza, D-Artesia, which addresses a tactic used by health care providers to force payment from client companies if insurers reject claims they consider suspect or invalid: placing liens on their property. The measure requires physicians and others providing care to cite the specific legal authority that allows them to place liens, not just cite an unpaid debt. It also limits selling billing rights for uncollected claims to collection companies. Finally, it freezes collection of liens by providers facing charges of medical fraud.

Mendoza’s bill ran into Republican criticism in the Senate, where some saw it as too intrusive. But it passed 26-12 and was approved 80-0 in the Assembly.

New policy fights not as charged as before

Past fights about workers’ compensation fixes in Sacramento were far more contentious.

The most memorable and consequential came early in Arnold Schwarzenegger’s seven years as governor. His first major legislative victory after taking office in November 2003 came in May 2004 when he signed a package of legislation that allowed employers to limit which doctors were allowed to treat those who had or said they had workplace-related injuries. The new laws also made it more difficult to make claims of permanent disability; reduced payments for permanent disabilities; and put limits on how many times claimants could use employer-paid rehabilitation services such as physical therapy.

Businesses paid a record $21.4 billion in premiums in 2003, according to a Sacramento Bee report. That dropped by more than half in coming years as reforms paid off, but by 2015 had rebounded to $17.6 billion.

The 2003-04 fight was so pitched because some unions and Democrats believed Schwarzenegger was actually trying to knock holes in the safety net for injured workers, not just correct abuses.

More recent policy debates have focused on how medical care providers continue to keep pushing the envelope with their billing practices, some of which are obvious frauds and others of which are more nuanced.

Less sophisticated companies targeted

In a recent interview with Kaiser Health News, the director of the state Department of Industrial Relations, which oversees workers’ compensation, noted that scams are far more likely to be used with less sophisticated companies.

“I think both abuses and fraudulent activities prey on the most vulnerable populations and we’re hopeful that appropriate treatment will be provided to workers when needed,” Christine Baker said.

Such companies often have relatively small fiscal reserves. Kaiser’s story told how a family-run Los Angeles janitorial service that employed 350 had to close after it was hit with the types of liens that are now illegal.

But two developments raise questions about whether assumptions about a stable, content senior cohort are still true in California.

The latest came in a Field Poll released last week. Here’s part of KQED’s account:

Nearly half of low-income elderly Californians have opted out of a statewide managed care experiment because they feared losing their doctors and were reluctant to make any changes to their health care, according to survey data released Tuesday by the Field Poll.

 

California is in the middle of a three-year pilot project aimed at nearly 500,000 of the state’s most costly patients — so-called dual eligibles. The beneficiaries receive both Medicare, the health insurance program for seniors and the disabled, and Medicaid, called Medi-Cal in California, which provides coverage for the poor.

 

The state program, known as Cal MediConnect, has had a high rate of people opting out — about 47 percent, according to the state Department of Health Care Services. …

The account noted that many seniors have been automatically enrolled in the new program without being aware of the change. That produced sharp criticism from William Averill, a cardiologist in Torrance.

“The most vulnerable people were the ones who weren’t in a position to understand their choices,” he said. “I think the whole thing is going to collapse under its own weight.”

Many state seniors struggle to make ends meet

Given the details of a report released in September by UCLA, California seniors’ anxiety about changes in their medical care is understandable. As CalWatchdog reported, the study concluded that 1.11 million of the 4 million adults in California who are 65 or older struggle to make ends meet. That’s equal to a poverty rate of 28 percent, more than triple previous federal estimates for the Golden State.

KPCC, the Pasadena-based NPR affiliate, took a closer look at the numbers in this report:

More than 770,000 seniors in California aren’t making enough to get by but aren’t considered poor by the federal government, according to a UCLA health policy study that is challenging the definition of poverty.

 

According to the study, about 340,000 Californians 65 years or older are considered poor based on the Federal Poverty Level, which makes them eligible for public assistance programs.

 

But in an analysis of 2009-2011 U.S. Census data, the researchers concluded that about 772,000 more seniors in the state could use the help but aren’t considered poor enough. She calls this group the “hidden poor.”

 

“They don’t have enough income to meet a minimally decent standard of living,” said study lead author Imelda Padilla-Frausto, a graduate student researcher at the Center for Health Policy Research.

The single state policy that most protects the finances of the elderly is arguably Proposition 13, the 1978 law preventing property taxes from going up more than 2 percent a year. This has insulated people who have owned their homes for decades from the effects of the massive increase in housing prices. Many homes in built-out communities with older stock sell for more than 10 times their original, mid-20th century purchase price.

Other states that have seen housing costs surge have adopted property tax relief for seniors on fixed incomes in recent years; this New Jersey program is typical.

The findings promised to sharpen the debate over immigration reform and its connection to America’s fiscal and economic health. “Researchers from Harvard Medical School, the Institute for Community Health and City University of New York’s School of Public Health at Hunter College found that in one year alone — 2011 — undocumented immigrants generated an average surplus of $316 apiece for Medicare,” California Healthline reported. “Other Americans generated an average deficit of $106 apiece. Undocumented immigrants contributed $3.5 billion more than they received in care in 2011, according to the study.”

The costs of expansion

Medicare eligibility has expanded dramatically under the Affordable Care Act. Many states have jumped at the chance to accept increased federal dollars to grow the program. Although Republicans are divided, some GOP governors in influential states, like Ohio and New Jersey, have approved the expansions as well. And with the Supreme Court declining to rule against the ACA, policymakers of every stripe have begun to consider its broader budgetary consequences.

According to the researchers’ report, “contributions from undocumented immigrants during the first decade of the century prolonged Medicare’s trust fund solvency by one year.” California Healthline added, “The trust fund is predicted to be insolvent in 15 years.”

Straining the system

California Democrats had pushed to expand Medi-Cal to roughly one million immigrants unlawfully present within the state. But over the course of exacting budget negotiations, Gov. Jerry Brown shrank down the ambitious plan to cover only those 18 years of age and under. The reduced population remained sizable, however. “An estimated 170,000 immigrants 18 and younger could qualify,” noted the Los Angeles Times. “The expansion of healthcare coverage to qualifying immigrant children would begin in May 2016, costing $40 million in the new budget and an estimated $132 million annually after that.”

The development has had a cascade effect in areas with relatively fewer unlawful immigrants. The County Medical Services Program recently authorized health coverage for the undocumented in 35 California counties. Although budgetary constraints have historically prevented such measures, “in recent years the expansion of Medi-Cal and the creation of the state’s health exchange under the Affordable Care Act have dramatically reduced the population it serves, leaving it with about $225 million in reserves,” according to the Sacramento Bee.

For their part, California Republicans have warned that the pace of expansion has already added stresses the health care system can’t handle. During the legislative debate on Democrats’ original plan to cover the state’s unlawful immigrants, “Republican lawmakers opposed the additional assistance, saying there aren’t enough doctors available to cover those people,” as Bloomberg recalled.

“‘There are 12.4 million Californians who depend on Medi-Cal right now that have difficulty accessing doctors and services because our reimbursement rates are too low,’ Senate Republican leader Bob Huff said during a budget debate on June 19.”

According to the state Department of Health Care Services, Bloomberg added, fully one third of Californians are currently enrolled in Medi-Cal.

A unified agenda

Although Medicare and Medicaid differ in how their budgetary burdens are distributed between states and the federal government, California officials have suggested that the case for expanding the one strengthens the case for expanding the other. “While these are two different programs with different funding sources, I think there’s no question that this study lends support to the efforts to extend Medi-Cal coverage to undocumented immigrants,” said California Insurance Commissioner Dave Jones. “I think many of the same points in this research — that undocumented immigrants contribute tax money to support government programs — applies to Medicaid and California’s Medicaid program, Medi-Cal.”

Dramatic cuts

Covered California officials portrayed a slate of new budget cuts as evidence that the exchange was prepared to thrive in the absence of federal funding. But as the Los Angeles Times reported, Covered California has fallen some 300,000 enrollments short of its second-year goal. With the exchange charging $13.95 per individual enrolled, the lower figure translates into over $4 million in lost revenue.

According to the Times, officials have settled on a plan that cuts 15 percent from last fiscal year’s budget. Although the budget for marketing, outreach and sales will drop by a full third, it will remain the largest single expenditure, at over $121 million. “The state also would draw on $100 million in federal money in reserves,” noted the Times — “the last of the start-up grant. No further federal funding is expected.”

The exchange also announced an additional enticement for would-be enrollees: a first-of-its-kind cap on payments for so-called specialty drugs. According to the new regime, taking effect in 2016, the typical customer “will pay a maximum of $250 per month for high-end specialty drugs that cost as much as $1,000 a pill on the retail market,” the Sacramento Business Journal reported.

Critics quickly took note of a counterintuitive detail, however. “A group with silver-level plans will pay $150, but those with bronze plans will pay as much as $500 per month until they hit their maximum annual out-of-pocket of $6,500,” according to the Business Journal.

But as Medicare and Medi-Cal participation has expanded separately under Obamacare, the cost of new prescription drugs has become a systemwide burden. “Programs such as Medi-Care and Medi-Cal have struggled with burgeoning health costs in recent years from drugs such as Harvoni, a potential cure for many patients with hepatitis C,” as the Sacramento Bee observed. “The drug has a shelf price of $1,125 a pill, with a typical treatment cost that approaches $95,000.”

Enrollment rates fall

In anticipation of a heavy budgetary lift during the first year of Obamacare, the Affordable Care Act provided generous subsidies to states setting up their own exchanges. Even though an end to the cash was foreseen since the beginning, California and other states have had to scramble to make up the difference.

One bellwether came in the form of decreasing signups during the latest round of availability. The federal exchange set up under Obamacare has seen the same kind of dropoff as the state exchanges, CNBC reported:

“HealthCare.gov signed up 147,000 people in 36 states during a special tax season enrollment period, officials revealed Tuesday. That relatively light level of sign-ups was similar to what was seen in 11 other states and the District of Columbia during their own grace periods. […] The federal exchange’s special enrollment period was open to people who learned they were subject to a tax penalty for failing to have health insurance coverage last year when they were preparing their tax returns.”

Hard choices

Covered California has wound up in perhaps the best position to weather the tough transition to self-sufficiency. Other states haven’t been so lucky. In Hawaii, the state Health Connector exchange has collapsed, unable to attract enough signups by the January 1 deadline this year. A proposed infusion of cash from the state’s general fund couldn’t measure up to projected costs. Yet staying out of compliance risked “about $1 billion in Medicaid funds to serve 330,000 Hawaii residents,” KTIV Channel 4 reported.

As Health Connector Executive Director Jeff Kissel explained, the choices states face in Hawaii’s position can be daunting. “If we use the federal technology, the federal government requires everyone to sign up again,” he told KTIV. “We are scheduled to meet as a board again next Wednesday to consider how we’re going to move forward and face the challenges and overcome[.]”

Part One of a series

May 3, 2013

By Katy Grimes

One of the original pioneers of the Obamacare patient networks, HealthCare Partners, has been operating in California without the required state license. But according to health care experts and a new lawsuit, the California Department of Managed Care has known this, and allowed it for 10 years, saving HealthCare Partners millions of dollars.

HCP has flown under the radar of the California Department of Managed Health Care regulatory authority by claiming it’s a medical group, while in fact operating as an unlicensed Health Maintenance Organization. It has done so by taking standard HMO global risk for the patient — hospital care, medication and physician services.

The Affordable Care Act, also known as Obamacare, works through a network of Accountable Care Organizations providing managed health care services to all people throughout the country.  Health care experts have said all along there is not enough money in the system to do what the ACA purports it can do.

The acronyms are confusing. What’s the difference between an HMO and an ACO? “ACOs amount to little more than the old HMOs of the 1990s — which Americans detested — and will yield lower-quality, centralized care that ends up costing patients more,” Sally Pipes wrote in Forbes magazine; she is president, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute, CalWatchog.com’s parent think tank, and the author of the book, “The Truth About Obamacare.”

House of cards

HealthCare Partners, one of the original pioneer ACOs, appears to have been built on a house of cards. Charges of illegal operations, providing unlawful hospital networks, and repeated denials of care at the patient level are just some of the issues.

HealthCare Partners, hand picked by the Obama Administration, allegedly has been operating in California for one decade without the required state license, according to charges filed last September in a class action lawsuit by lead plaintiff Juan Carlos Jandres (lawsuit pdf here).

Charges include shoddy, substandard care to more than 675,000 patients in Southern California, including a disproportionate number of Latinos in East and South East Los Angeles.

The lawsuit was filed by the Johnny Cochrane law firm on behalf of Juan Carlos Jandres, a hospital worker in Orange County, and a class of other patients allegedly harmed.  Jandress was denied access to a quality hospital and oncologist by HCP for nearly three years.  Finally, his Human Resources department changed his medical group from HealthCare Partners to Monarch, and Jandres was allowed to go to UCLA, where doctors found a malignant tumor in his mouth.

Class action charges include that HealthCare Partners had illegally taken payments from the HMO for hospital care, and created its own substandard network of community hospitals, and then forced patients to go use its network.

Reserves

HCP also has been charged with not putting aside the millions of dollars in reserves required, according to a Feb. 11, 2013 statement delivered by Our SALUD Community Advocates Nestor Valencia and Elba Romo, as delivered to the Financial Solvency Standards Board. (See Document 1, reprinted below.) Our SALUD is a health activist group whose official name is: Somos Aliados Latinos Unidos por la Dignidad (Latino Allies United for Dignity).

Advocates for Our SALUD announced Tuesday they are calling on the Department of Managed Health Care to deny an application from Los Angeles-based HealthCare Partners medical group for a Knox-Keene Act license.

Our SALUD learned only last weekend that HCP filed an application for a Knox-Keene Act license on Thursday, April 25, with the DMHC. Our SALUD has raised allegations during the past year that HCP has illegally operated as a health plan, without a Knox-Keene Act license, for more than a decade.

“The DMHC should deny HCP’s application and should immediately ban the medical group from accepting institutional risk in the future,” said Our SALUD Community Advocate Nestor Valencia. “If the DMHC approves this license, and hands down no penalty action for operating without one, then it’s a slap in the face to the nearly one million HCP patients in Southeast and East Los Angeles. HCP has put profits over patients for far too long.”

In avoiding the Knox-Keene license, HCP has also been allowed to avoid paying hefty annual fees to the DMHC, or provide regular audits to the agency, as required under state law. The Knox-Keene Act of 1975  protects health-plan members.

Questions arise about how this could have happened under the regulatory overview of the Department of Managed Health Care, the state agency charged with the oversight and regulation of health groups. The department also is in charge of the health care exchanges set up by the state to comply with Obamacare.

And this raises some serious issues at the state level surrounding Health Maintenance Organizations,  Accountable Care Organizations (similar to HMOs) and other health care providers.

“I believe that HCP had always intended to get the needed Knox-Keene license to operate as an ACO and held off as long as possible [more than 10 years] to save millions of dollars,” one health care expert told me. “Those resources were used to acquired additional medical groups, allowing them to grow so big and so fast, they could merge with DaVita — a $4.4 billion merger.” DaVita is a dialysis specialist.

The merger occurred last year. Reported the Los Angeles Times, “HealthCare Partners, a privately held company led by founding physician and Chief Executive Robert Margolis, is becoming the latest big medical group swept up in a consolidation wave triggered by federal government efforts to tame rising healthcare costs.”

Health care and politics

Margolis has moved the company into the position of being the biggest ACO participating in the Affordable Care Act / Obamacare. Margolis is a well-known, politically connected campaign contributor in Democratic circles.

Obamacare was sold as a way to reduce costs through the creation of  ACOs: groups of doctors, hospitals and other health care providers, “who come together voluntarily to give coordinated high quality care to their Medicare patients,” according to the federal government.

Focused on Obamacare implementation in California, HealthCare Partners has become a darling of Obamacare officials and Democratic politicians.

“The challenge ahead will be to join with other like-minded physicians and healthcare organizations to lead the transformation of the country’s health care delivery system to assure quality, access, and affordable care for all,” HealthCare Partners’ 2010 annual report said.

But four of my sources inside the health care system warn that HealthCare Partners is not what it seems. They charge that HCP worked a deal with the DMHC when the agency was first established in 2000, by which the state willfully neglected to license HealthCare Partners for more than 10 years. The DMHC is just now scrambling to get the giant health care company licensed before it becomes the largest Obamacare provider in the state.

Given that HealthCare Partners just made a formal application for licensure from the Department of Managed Health Care a week ago Thursday, some are asking why this is necessary since HCP claimed it didn’t need a state license for 10 years.

So what’s the problem?

A Feb. 28 letter (See Document 2, reproduced below) from Senate Minority Leader Bob Huff, R-Brea, to Brent Barnhart, director of the California Department of Managed Health Care, addressed some of these issues. “I am particularly interested in the Department’s intended approach to regulation of Accountable Care Organizations, and other new risk-bearing entities that will be created as a result of the Affordable Care Act,” Huff said.

“Even the slightest appearance of impropriety, whether deserved or not, can damage a regulator’s reputation and seriously hinder its effectiveness.”

Huff reiterated Our SALUD’s concern with the department’s lack of enforcement of HealthCare Partners, which has “operated for some time as an unlicensed health plan.”

Huff also stated Our SALUD’s charge either “HCP hid this from the Department, or the Department is complicit in HCP’s activities.”

There is ongoing litigation involving HCP, but Huff was more interested in how a health plan in California could possibly go unregulated for more than 10 years.

“In order for the Department to move forward and focus on the critical task of ACA implementation, it is critical that you provide a prompt, complete and detailed response to the allegations leveled by Our SALUD,” Huff said.

On April 9, DMHC responded to Huff (see Document 3, reproduced below):

“Since the enactment of the ACA on March 23, 2013, the DMHC has undertaken numerous activities to ensure that health plans are complying with the provisions of both California law and the ACA.”

Our SALUD involvement

“Our SALUD initially became involved in what now appears to be the Enron of health care when they learned of the plight of Juan Carlos Jandres, a victim of HCP’s illegal hospital network scheme,” according to Valencia of Our SALUD. Valencia also was the whistleblower in the scandal involving the city of Bell.

“HealthCare Partners, a darling in Democratic fundraising circles and one of the pioneer Accountable Care Organizations that the Affordable Care Act is predicated on, has played a shell game with its financials,” Valencia explained in Feb. 8 statement made with Elba Romo.

“The medical group bullied state officials to avoid oversight and regulation, denied care to patients, built their company through acquisitions to the point they could orchestrate a $4.4 billion merger with DaVita, an out of state corporation, thereby creating the largest health care company in the country. Put simply, DaVita bought a shell company with no business or employees,” Valencia and Romo said.

These charges and more have been confirmed by a high-level Department of Managed Health Care employee, who asked to remain anonymous out of fear of retribution.

A response from the DMHC was due April 25 about what the DMHC was going to do about HCP’s licensing. But sources inside the Capitol report Huff did not receive a response.

Serious allegations

The allegations are serious. According to Our SALUD and the anonymous DMHC employee, HCP and DaVita concealed the actual revenue streams allowing DaVita to purchase a shell company for $4.4 billion, of which 75 percent was debt. Then HCP’s largest shareholders cashed out.

HCP did not return calls about this.

Our SALUD tried to get Attorney General Kamala Harris to investigate, but never heard back from her.

Another issue was bubbling to the surface almost simultaneously with HealthCare Partners. Our SALUD had been trying to get to the bottom of the licensing issue with HCP after learning about Juan Carlos Jandres, who allegedly was prevented by HCP from receiving a proper cancer diagnosis, and the subsequent critical medical treatment. What should have been an early diagnosis of cancer ended up taking half of Jandres’ face.

HCP doctors continually referred Jandres to community clinics for treatment, instead of sending him to specialists. (Video of Jandres.)

During Our SALUD’s investigation, they discovered that Dr. Keith Wilson, regional medical director for HealthCare Partners, was also on the Board of Directors of the Financial Standards Board of the Department of Managed Health Care. “This disgrace is more evident in that Dr. Wilson has a hand in making recommendations to the Director on what licensure should be required of Accountable Care Organizations,” Our SALUD found.

When Our SALUD brought conflict of interest up with Barnhart, the director of the Department of Managed Health Care, it appeared the DMHC just got sneakier about its meetings.

“Your agency through FSSB sent out an announcement of next week’s FSSB meeting, without notifying Our SALUD,” the watchdog wrote in a Feb. 8, 2013 letter to Barnhart. They noted the Managed Health Care agency actually put the subject of Wilson’s conflict of interest on the agenda, but buried it in the middle, and neglected to notify the interested parties.

And the agency incorrectly identified Wilson as being affiliated with a different medical group — deliberately, charged Our SALUD, to minimize the conflict.

The question remains: How could a gigantic HMO have been allowed by the DMHC to operate in the state without a license?

Managed Care agency speaks

In the April 10 return letter to Huff, the DMHC acknowledged that HealthCare Partners Medical Group had been operating without a license, and tried to shrug it off as a legitimate technicality of the Knox-Keene Act.

“Some existing licensees have created products they have labeled ‘ACO,’” the DMHC wrote. “These products typically utilize narrow provider networks designed to control costs, improve quality, and keep premiums low while complying with the Knox-Keene Act. In practical terms, this is consistent with the intended purpose of ACO’s.”

The DMHC said that, because of this “practical” intended purpose, “there is no need for them to be separately licensed, although the products must be approved by the DHMC.”

The ‘Enron’ deal

According to a story in Business Wire, “HealthCare Partners acts like an HMO by creating a contracted network of hospitals, but is not licensed by the Department of Managed Health Care to provide medical and hospital services in California. HCP then forces patients to their substandard network of community hospitals to avoid the costs associated with other quality hospitals in the patients’ health plan network.”

HealthCare Partners has grown exponentially for years with little state regulation. According to Our SALUD and health care experts, this only serves to put HCP patients at a huge disadvantage. Hospitals cannot enter into contracts with HCP because it is unlicensed. HCP then directs patients to tiny HCP medical clinics and other facilities.

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Document 1: Our SALUD Letter of Feb. 11, 2013:

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Document 2, Feb. 28, 2013 Letter from Sen. Bob Huff:

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Document 3, April 9, 2013 Response letter from the Department of Managed Health Care:

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By John Seiler

Many people, including yours truly, have warned that Obamacare would lead to higher costs and worse medical care. That’s now happening like a heart attack.

A new estimate by the Society of Actuaries pegs increases in California medical claims costs by 2017 at 62 percent. This is for “individual health insurance markets, where people purchase coverage directly from insurers rather than get coverage from employers.”

Meanwhile, reported the Orange County Register, “Anaheim General Hospital, which made a rare turnaround two years ago after a near-fatal loss of federal funds, will go out of business in May.

“The closure will result in the loss of 142 hospital beds at a time when Orange County hospitals are preparing to serve more patients because of the federal Affordable Care Act.”

The hospital did have some problems meeting federal health requirements. The real cause of the closed hospital is the immense paperwork from Medicare, Medi-Cal — and now Obamacare.

Like Medicare itself, Obamacare is not designed to help the poor get health care. The poor were well taken care of by charity before 1965, as Ron Paul, himself a medical doctor, has pointed out. Instead, these programs have been created to increase federal control over our lives, and to pad the pockets of Big Pharma, Big Hospital, Big Health Insurance, the HMOs and rich doctors.

American medical care now has the worst of both worlds: the incompetency and high mortality of socialist medicine, and the high expense of capitalist medicine.

Katy Grimes: I couldn’t decide if Vice Presidential incumbent Joe Biden was manic during the VP debate last evening, or just being condescending and rude to intimidate challenger Rep. Paul Ryan, R-Wis.

Rude, condescending, and just weird, Biden interrupted Ryan 82 times, while Ryan remained respectful and polite; it was a stark contrast. Joe’s OPD came shining through. Obnoxious Personality Disorder is not an official personality disorder, but it should be, especially after last night’s debate.

Biden’s smirks, laughs, eye rolls, huffing and puffing, only made him look like a petulant child, instead of the “statesman” he prefers to be called. Even veteran FOX journalist Chris Wallace said after the debate that in his years of watching debates, since the first Kennedy-Nixon debate, he had never seen anyone behave so disrespectfully or contemptuously as Biden.

After the bounce that the GOP got from the Romney-Obama Presidential debate, the expectations placed on Biden were high; he had to bring home a win for Obama-Biden.

But that did not happen. Even the CNN and Associated Press polls called the debate for Ryan last evening.

While moderator Martha Raddatz offered solid questions, she did not maintain control of Biden. She even interrupted Ryan many times, often just as he was making a point.

Ryan handled pointed questions on foreign policy, surprising many, and handed Biden his tush on taxes and the economy with numbers and facts.

Libya

The debate opened with Raddatz asking Biden if the terrorist attack on Libya and the murder of U.S. Ambassador Chris Stevens was a huge blunder. “It was a pre-planned assault by heavily armed men. Wasn’t this a massive intelligence failure Vice President Biden?” Raddatz asked about the Sept. 11 attack on the U.S. Consulate in Benghazi, where Stevens was brutally murdered.

Biden dodged the question and launched into his own speech about how great the President is.

But Ryan answered the question and said that  Stevens had been denied sufficient security by Obama administration officials. “It took the President two weeks to acknowledge that this was a terrorist attack,” Ryan said.

“With all due respect, that’s a bunch of malarkey. Not a single thing he said is accurate,” Biden snarled.

Raddatz told Biden to “be specific.”

Biden retorted that Ryan cut the embassy security budget, and then launched again into how great Obama has been on security.

Economy

Biden said that the economic recovery America is enjoying would proceed if Republicans “get out of the way.” Ryan deftly pointed out that the Democrats had complete control of Congress and the White House when Obama and Biden took over in 2009-10. “He had his chances. He made his choices,” Ryan said, and “this is where we are at.”

Obamacare

The debate moved to Obamacare allowing to Ryan bring up the unelected panel which would make important health decisions and ultimately what the future of health care would look like. Biden laughed again, and said that Sarah Palin had already argued the death panels with him in the last debate.

Foot-in-mouth-syndrome

Out of the blue, Biden brought up Romney’s campaign comment when he said that 47 percent of Americans pay no federal income tax, see themselves as victims, and take no responsibility for their own lives.

“It’s about time they take responsibility” instead of signing pledges to avoid raising taxes, Biden said about Romney, Ryan and the Republicans. And somewhere during the debate, Biden brought up Grover Norquist and his “no-tax” pledge.

“This is a man who gave 30 percent of his income to charity, more than the two of us combined,” Ryan retorted. “Mitt Romney’s a good man. He cares about 100 percent of Americans in this country. And with respect to that quote, I think the vice president very well knows that sometimes the words don’t come out of your mouth the right way.”

Ryan finally succeeded in wiping the smirk off Biden’s face, but only temporarily.

Medicare

Ryan said Obama’s health care plan will take $716 billion from Medicare, as well as create a new board that could have the power to deny care to the elderly patients who need it.

Democrats “haven’t put a credible solution on the table,” Ryan said. “They’ll tell you about vouchers. They’ll say all these things to try to scare people.”

In a throw-granny-off-the-cliff moment, Biden retorted that Ryan had authored two proposals in which seniors would be given government payments that might not cover all of their care. And he said that the Romney-Ryan plan would never achieve the savings they claimed.

It was clear that without a strong record to run on, both Obama and Biden are on the  attack, and Ryan let them know that he knows their plan. Quoting Barack Obama from 2008 when he was on the campaign trail, Ryan said that their strategy is obvious: “If you don’t have a good record to run on, you paint your opponent as someone to run from.”

It’s exactly what Obama and Biden are doing, and why they steer clear from their four years in charge, and spend much more of their time on-the-attack. This debate was more evidence of the strategy. Thankfully, it’s over.

Politico has the debate transcript.

by WAYNE LUSVARDI

Rationing health care under Obamacare will end up politicizing and bankrupting the medical financing system, just as Medicare does.  And there will be middle-class resistance to Obamacare when it is realized that this will end the American Dream of leaving your wealth and home to your heirs.

Last week President Barack Obama signed HR 3630 to postpone nearly 30 percent cuts to Medicare physician reimbursements.  This bill, delaying budget cuts in Medicare was part of a larger package of measures that included an extension of the payroll tax cut and continued unemployment benefits.

The part of the legislation delaying cuts to fees doctors can charge under Medi-Cal is called a “doc fix.” This is because it “fixes” the problem by delaying cuts in doctors fees for another 10 months.

It should have been called a “patient fix,” because if doctors’ fees were cut about 30 percent, they might have dumped their patients covered by Medi-Cal. This would result in an even larger overload of patients that depend on hospital emergency care.

A two-tiered medical service system would result in low income persons assigned to county hospitals and the middle class and wealthy able to access private physicians. What politician in his right mind would want that coming home to roost in an election year?  It is bad enough Obama made the Catholics mad.

The legislation postpones a 27.4 percent reduction in fees originally set to begin on March 1, 2012.  The cost of the “doc fix” will be $18 billion nationally. This is just to extend the current rate of reimbursement for doctors for 10 more months.  This is to be funded by various cuts in other health-related cuts spread out over a decade:

The measure will fund:

* $18 billion in Medicare costs through 2012.

The measure will cut:

* $5 billion from the prevention and public health fund created by the federal health reform law;

* About $4.1 billion in Medicaid payments to hospitals with a disproportionate number of uninsured patients;

* Payment rates for clinical laboratory services, by 2 percent in 2013, to save an estimated $2.7 billion over a decade;

* $6.9 billion in “bad debt” payments to hospitals when Medicare beneficiaries do not pay for services; and

* $2.5 billion in Medicaid funding to Louisiana, which received increased funding from the overhaul.

Doctors will face about a 32 percent reduction in Medicare payments when the “doc fix” expires. This assumes it is more politically expedient to stick it to them then and not kick the can further down the road.

Obamacare Sees ‘Markets’ as the Problem

Many health care policy experts see the ability of private-sector model of health care and Big Pharma — large drug companies — as the primary cause of why the federal budget is running uncontrollable deficits. A long-term solution would cost $300 billion.

They believe that many treatments and drugs are ineffective, such as:

* stents for blocked arteries that can be prevented by forcing everyone to shift to a plant-based diet;

* “palliative” chemotherapy that only relieves symptoms of incurable cancers;

* removal of cataracts from eyes in the elderly;

* health care rendered in the last two years of life.

The problem to these experts is “capitalism”: too many entrepreneurial doctors making lucrative compensation with exotic treatments that often don’t work, causing Medicare to go broke. The only solution they see is punishing doctors and rationing health care services.

A problem with the Obamcare solutino is that the health care system will end up politicized and broke, just as Medicare is now. The adult children of elderly medical patients will vote for whatever politician or political party promises to provide medical services “on demand” to their elderly parents.

This would continue to protect the inheritances of the children of the elderly. To leave your children your wealth is considered to be part of the American Dream. So any health care rationing system would just end up in the same place, as Medicare is today — running huge unsustainable deficits.

Back to the Pre-WWII Future?

Says Charles B. Warren, an economic policy analyst in Pleasant Hill, California:

“I guess the important question is, ‘What are the last couple years of life worth to you?’ Anything spent 10 years or more before your probable pull date is probably worthy of consideration. But, in the present system, tons of money has been spent on the last couple years of sometimes very aged people’s lives. Death panels are one answer.”

Warren believes individual responsibility for a major cut of care, particularly end-of-life care, is another solution.  His proposed solution entails:

* medical insurance deductible by all or none. This would be something like “assigned risk” car insurance for high-risk individuals;

* major co-pays (with optional but, if insurance is deductible, tax deductible medical savings accounts to cover them);

* openly published prices and outcome rates, which implies…

* immunity from liability for the disclosure of negative outcomes.

According to Warren, we need to establish a market in medical services not dissimilar to what existed before World War II. He says employer-paid health care was an end-run around WWII wage-price controls. “Its IRS deductibility shows that everybody knew and knows that health insurance is just another wage expense,” he said.

“It is no surprise that Medicare has just made everything more costly,” he added.   He believes we lost that battle when former Republican Barry Goldwater lost the 1964 presidential race to President Lyndon Johnson. In 1965, Johnson I imposed his “Great Society” welfare systems, including Medicare and Medicaid.

California is in the process of postponing inevitable cuts to the public-funded health care system. It is not the cuts, however, that are the main issue, but how to make the cuts. Those who want Obamacare see a totalitarian rationing system as the only solution. But such a system will end up just as politicized and broke just as Medicare.

This is because the middle class will eventually catch on that Obamacare will end the “American Dream” and the “California Dream” of leaving their wealth and their homes to their children.  As Machiavelli wrote: “Men more quickly forget the death of their father than the loss of their patrimony.”

By JOHN SEILER

The U.S. House of Representatives, now controlled by Republicans,  voted to repeal the Patient Protection and Affordable Care Act of 2010, commonly called Obamacare. The U.S Senate, still controlled by Democrats, will not follow suit. And President Obama would veto any attempt to pull the plug on what he considers a major achievement of his administration.

Which for now throws the controversy and implementation of Obamacare back to the states. The number of states challenging the constitutionality of Obamacare has risen to 27.

Meanwhile, California, after the wipeout of even moderate Republicans in the November election, is leading the way toward the implementation of Obamacare. Reported Politico:

California’s Health and Human Services secretary, Diana Dooley, had dinner last week with Joel Ario, the Obama administration’s lead on health exchanges, and discussed the state’s progress on implementing the new law.

Ario complimented Dooley, telling her that the Obama administration saw California as a “pace car” on health reform. Dooley offered a slightly different perspective.

“I told him we don’t want to be a pace car state,” Dooley told POLITICO in an interview after just one week in office. “We want to be the lead car.”

Dooley’s confidence is a good indication of California’s attitude toward health reform these days. First out of the gate on setting up a health benefits exchange, the Golden State is eager to blaze a trail after its numerous state attempts at health reform have failed.

The enthusiasm is a little overblown. The California actions “are not going to affect Obamacare very much at all,” John R. Graham told me; he’s director of health care studies at the Pacific Research Institute, CalWatchDog.com’s parent institute, and author of The U.S. Index of Health Ownership. “It’s just approving a board.” He distinguished between two major parts of Obamacare:

1) Health insurance exchanges, in which those not insured could obtain health insurance. The bureaucracy of that is what California is setting up. “There will be some operating costs that the state will bear,” Graham said, but almost all of the costs — expected to be $500 billion nationally between 2014 and 2019 — will be borne by the federal government.

2) An expansion of Medicaid, health care for those who can’t afford insurance, which in California is called Medi-Cal. It would put about 32 million more Americans on Medicaid.

At least that’s the plan.

Early costs

Michael Tanner told me that Obamacare’s mandates “already have added 9 to 12 percent to the costs of insurance policies” in America, including California; he’s a senior fellow with the Cato Institute and coauthor of Healthy Competition: What’s Holding Back Health Care and How to Free It. So the mandates are another drag on the national and state economies as the country tries to pull itself up from the Great Recession.

The added costs to insurance policies also are retarding job growth because new hires for most jobs get medical insurance. In December 2010, the U.S. unemployment rate rose to 9.8 percent. The California rate rose to 12.5 percent in December, second only to Nevada’s 14.5 percent; California’s rate was above 12 percent all year.

However, Tanner had the same take as Graham on the new state bureaucracy. Tanner said that California’s “going it alone” in implementing Obamacare “probably won’t reduce competitiveness” with other states that aren’t so enthusiastic about the program because the California actions are  “paper shuffling.” In objecting to Obamacare, he said, “the other states are sending a message, which California is not.” The messages aren’t policy; at least not yet.

In the meanwhile, three years is a lot of time. In 2012, Republicans could end up winning back the Senate and the White House, while keeping the House, giving them the power to repeal Obamacare outright, or at least to modify it greatly. But Democrats might retain control in the Senate even though they must defend a larger number of seats than Republicans and Obama himself might be re-elected.

Long-term costs

Both Graham and Tanner pointed to a new Cato Institute study out this month, “Estimating ObamaCare’s Effect on State Medicaid Expenditure Growth: A Study of Five Most Populous U.S. States,” by Jagadeesh Gokhale, a senior fellow at the institute. Before Obamacare is instituted, he found:

The results suggest that Medicaid costs would increase considerably even on a pre-ObamaCare basis in California, Florida, and Texas — states with rising populations across many Medicaid eligibility and enrollment groups by age and gender.

However, for after Obamacare’s implementation, he found a difference among these states concerning “old eligibles,” people already eligible for Medicaid:

On a post-ObamaCare basis, the projected cost increase is small for California — just 4.5 percentage points in cumulative costs during 2014-23 compared to the pre-ObamaCare ten-year total cost projection. That’s because enrollment rates among “old-eligibles” are already high in California on a pre-ObamaCare basis, implying little scope for additional enrollment increases from the introduction of ObamaCare.

Put another way, California’s Medicaid system — Medi-Cal — already is so generous that the Obamacare mandates won’t increase costs much. The expected increase in “old eligibles” in 2020 from Obamacare is just 1.9 percent in California, compared to 21.2 percent in Illinois and 16.8 percent in New York. For 2030, the increase in “old eligibles” is expected to be 2.7 percent in California, 23.3 percent in Illinois and 23.5 percent in New York.

Worse for those two Rust Belt states, the U.S. Census projects low population growth, meaning the base for supporting the new Medicaid recipients will not increase. By contrast, California’s continued population growth of about 10 percent a decade — currently the national average — will help it manage the new costs.

Budget factors

California, of course, has the worst state budget deficit in the country, at $25 billion. Until the 2014 full implementation of Obamacare, as we’ve seen, the budget won’t be much affected. But given that Gov. Jerry Brown has asked for a five-year tax increase to cover future budget problems, it’s worth looking ahead. How will the state’s budget be affected by Obamacare?

The Cato study projects that, by 2030, general revenue Medicaid costs will increase 4.5 percent in California.  But compare that to our Sun Belt competitors, where costs will rise 23.1 percent in Florida and 20.9 percent in Texas. And it’s even worse for the Rust Belt states: New York’s general revenue costs will rise 35.6 percent and Illinois’, 36.9.

According to the Cato study, “This result arises because the potential under Obamacare for additional enrollments — relative to enrollments projected by excluding Obamacare — are exhausted by the mid-2020s for California, Florida, and Texas.”

California also has a relatively young population and higher birth rate. Young folks, obviously, are healthier on average than others, and so require less care. Part of the controversy over Obamacare is that it forces everyone into getting health insurance, even young people who currently skip insurance, figuring they’re unlikely to get sick. When the young are forced into the system, they effectively will be forced to pay for the care of those older than them.

Projections and paperwork

It’s worth remembering that past government projections for medical costs have not been very accurate. The original Medicare program, after being set up in 1965, saw federal expenditures double every four years between 1965 and 1980.

According to this summary, in 1965 the House Ways and Means Committee estimated that, by 1990, Medicare would cost only $9 billion. The real cost in 1990: $67 billion, or 7.4 times as much. Moreover:

In 1987, Congress projected that Medicaid – the joint federal-state health care program for the poor – would make special relief payments to hospitals of less than $1 billion in 1992. Actual cost: $17 billion.

Then there’s the paperwork. “The bill itself is 2,409 pages, to which 153 pages were added to iron out kinks in the Senate bill,” writes Sally Pipes in The Truth About Obamacare; she is PRI’s president and CEO, and Taube Fellow in Health Care Studies. “These 2,562 pages are almost exactly double the length of Vintage Classics’ 1,296-page edition of War and Peace. At least Tolstoy offered his readers a plot.”

Graham added that, in less than a year since passage, federal bureaucracies implementing Obamacare “already have added more than 6,000 pages” of new regulations. “It just gets worse and worse.”

So, nobody really knows how much Obamacare really will cost businesses and citizens in direct costs, or the costs of meeting the demands of the paperwork of a large, sclerotic bureaucracy. If the history of federal welfare programs is any guide, the costs will be multiples of any current estimates.

Business uncertainty

The real problem with Obamacare in California is that it multiplies uncertainty businesses. Already, businesses don’t know what their tax levels will be. Gov. Brown is seeking to put a five-year tax increase on a special June election. Nobody knows how voters will respond — if the tax increase even makes it to a vote of the people. President Obama just signed a two-year extension of the Bush tax cuts. But what will tax rates be after that?

And nobody knows to what extent AB32 actually will be implemented by the California Air Resources Board, in particular its new cap-and-trade program.

Although Apple, Google, Facebook and other surging California high-tech companies hardly will be affected by such certainty, the little guys — the small businesses that create most jobs — will be most affected by the multiplying business uncertainties.

John Seiler is a reporter and analyst for CalWatchDog.com. His email: writejohnseiler@gmail.com.