Thursday, February 2, 2012

Six Months Later, the CBO Confirms a TDS Calculation on Government Health Care Costs

Sometimes it really makes me wonder why there are so many obvious truths and trends in our economy and society that I, a mere lonely blogger literally sitting on the couch in my basement, am able to see that the politicos, mainstream media and our so-called business "leaders" are unable to see. I guess it's because I have deliberately positioned myself as a outsider, and thus really could not give a shit less how things turn out for the various charlatans, frauds and hucksters who completely dominate those segments of our society these days.

This basic point hit home again this week when I read a Reuters article about a recent Congressional Budget Office (CBO) report on the expected rise in government health care program costs over the next decade:
Government spending for Medicare, Medicaid and other healthcare programs will more than double over the next decade to $1.8 trillion, or 7.3 percent of the country's total economic output, congressional researchers said on Tuesday.

In its annual budget and economic outlook, the non-partisan Congressional Budget Office said that even under its most conservative projections, healthcare spending would rise by 8 percent a year from 2012 to 2022, mainly as a result of an aging U.S. population and rising treatment costs. It will continue to be a key driver of the U.S. budget deficit.
So why did I find that particular statistic that I highlighted in bold, bad as it is, so interesting? Maybe because back on August 3rd of last year in my post, "Spending on Medicare and Medicaid is Absolutely Out of Control," I wrote the following:
As you can see, going back to the first quarter of 2008, the quarter that marked the “official” beginning of the Great Recession, Medicare and Medicaid spending has in fact exploded by 21%, advancing a staggering $208 billion on an annualized basis during that time. Extrapolating that growth rate forward would cause such spending to double to nearly $2 trillion per year by 2021, the final year of the ten year time frame used in the just completed deficit reduction battle.
Not to pat myself on the back or anything, but that was a pretty damn good calculation on my part. And you know what I used to come up with it? The friggin' calculator on my computer. Needless to say, I don't have a whole staff of budget analysts working for me like the CBO does who do nothing but analyze this kind of data on a full time basis.

Even more maddening, here was the CBO's bland conclusion to its report:
"The resulting deficits will increase federal debt to unsupportable levels," the CBO report said.
And here was my conclusion from back in August:
Even scarier, that total is not far below the amount of revenue (around $2.1 trillion) the federal government took in from taxes last year.

Obviously, unless real, organic economic growth not tied to federal deficit spending resumes, these two programs are in big trouble. And that doesn’t even take into account that the Baby Boomer generation is just now reaching the point where its oldest members are becoming eligible for Medicare benefits.

Though the debt limit accord passed this week was hazy on real specifics, I think we can safely assume that whatever cuts are planned for Medicare and Medicaid will hardly curb this explosion in costs. Since we have reached a point thanks to peak oil and resource depletion where continued real economic growth is impossible, a genuine crisis in these programs (as opposed to the fake political crisis we just witnessed) is quite obviously not far away.
To the good folks at the CBO: if you ever want to trim that bloated staff of yours, I am available for consulting work. I'll even put on a tie and everything.

Bonus: Pretty soon this is the only doctor any of us will be able to afford:


  1. I'm not startled by this at all. Ralph Nader has a good piece out today about the "Health Care Racket". He gives many comparisons on cost for procedures in the US versus countries with universal coverage and lack of HIC (Health Industrial Complex). It's astounding and well known that we pay so much for poor results.

    Our Medicare system is a minefield for reimbursement, however. I'm sure there's a lot of fraud and the cost of the "no-negotiate for bulk discounts" prescription coverage has blown out the budget as well. A boon to the pharmagoons, but the rest of us, not so much!

    But I'm also on the end of it that sees some of the Byzantine awfulness of trying to get reimbursed for care given. Did you know that if a hospital incorrectly calls you "inpatient" status as opposed to "observation" they can lose all reimbursement for the stay, after the discharge you can't fix the problem and bill for observation in an effective manner. Essentially a write off.

    RAC Audits look for incorrect status- I have had to respond to some of those. In one case they refused payment because a patient didn't meet what they considered to be inpatient status. They said it could have been done outpatient. One problem: the person had been dosed with radiation and by our state law is to be sequestered in a room until they are well..."less hot". How the fuck do you do that outpatient? Those who deny these claims get a portion of the saved money so there is great incentive to look for any reason not to pay for care given.

    I think it would be difficult to envision a more horrible system. It's hard to get reimbursed for honest care given, but a pharma company can charge extortion for a new cancer drug and that's probably okay.

    And here's some semantic lunacy for you. A doctor can write "admit to observation". Medicare says that the word admit implies inpatient care so they will ignore the part that says "to observation". Once again, this can keep you from getting reimbursed.

    And the hospitals are so desperate to stay one step ahead of the crazy-rule-of the day that consulting charlatans find a nice niche.

    Sorry for the rant.

    1. "I think it would be difficult to envision a more horrible system."

      Sadly, that is the absolute truth of the matter.

  2. Sorry Bill - I don't see how calling a rise in costs ahead of time qualifies you for consultation on cost-cutting.

    1. I was being factitious. Probably the LAST place I'd ever want to work is the CBO.

  3. The US health care system is perhaps the hardest thing about the US for a European to understand. Wikipedia says you guys spend 7,960 (us dollars) per person per year on healthcare, while France spends only 3,978 (us dollars). The French have one of the best health care systems on earth and it is available to every resident of France, for half the price of your system. Your system delivers first world care to those who can afford it and third world care to those who can't. Very odd indeed.

    1. Sadly, this is what you get when the profit motive trumps everything else, especially in an area in which humanitarian concerns ought to be the first consideration.

  4. There are some other issues other than fairness and access to insurance and profits, among them, the fact that a huge percentage of the average person's lifetime health care costs comes in the last 2 weeks or so of life (I'm sorry but that's just stupid) and also, we spend so much on treating illnesses that derive from our polluted environment, rather than changing industrial processes and our prevailing tendency to use the air and water as open sewers.

    1. Gail, these are factors but don't these factors also apply in France, in themselves they cannot explain the incredible cost of the US health care.

  5. TDS as mentioned below shall be applicable.