Unofficial Portions are Copyright © 2017 & Confidential, Fair Use Exception for excerpts © reserved Published sources - Page 1 of 211 Medicare’s Business Model – Hundreds of Health issues swirling around Medicare’s cost consistently grows 60% faster than inflation.1 Medicare’s2 net outlays are about one fifth of the Federal budget,3 on its way to one fourth. As these are 55% of the total, Medicare’s budget4 of $751 billion plus the $200 billion for Medicaid 5SCHIP, is twice the spending of the Department of Defense.6 In similar terms, the recent appropriation of $790 Billion for the financial sector to steady the worse stock crisis in 79 years is a $100 billion less than Medicare’s every year, making Medicare a comparable financial event every eleven months. Medicare processes one point two billion claims a year, or a hundred million claims a month, or two thousand three hundred fifteen claims a minute, 24 / 7 / 365. The 75 year unfunded liability is $34 trillion.7 Medicare is the health payment program for people age 65 and older (about 39 million), or those on permanent disability under Social Security (about 11 million) plus End Stage Renal Disease (300,000). Medicaid’s enrollment is about 50 million.8 80 million Americans are under this health care coverage.9The total participants’ proposals to ameliorate this collision course between the airplane of promises with the mountain of revenue spending are many.10 But in reviewing those proposals, there is additional information which is not mentioned, or may have been considered, but isn’t on the published lists. There are 750,000 physicians in the U.S. as compared to 2 million attorneys. A fourth of the physicians are trained outside the country, and half of those are from Pakistan and India. There are 6 times the number of law schools now, as when the Association of American Law Schools was organized circa 1900. There are about the same number of medical schools (if not fewer) now as a century ago. There have not been enough medical schools to reach equilibrium to replace physicians dieing, retiring or disabled, much less sustain the growth of population needing health care for most of the twentieth century. The Medicare business model of 1966, had many checks and balances which were only partially or never implemented. The following table discusses the Business model as designed, and the actual events, as reported. Medicare was never tried or implemented in accordance with the 1965 statute. We don’t know if Medicare would work, as it has never been tried. Abstract This article tabulates the cost of healthcare, specifically the problem of administrative system unable to control waste or fraud due to overutilization by patients, and overprescription by physicians or hospitals or device manufacturers. When Medicare was adopted, the government had two decades of experience with health insurance coming out of the employer sponsored plans created during World War Two. The experience showed that the co-pay and deductible were reasonable requirements. The 20% co-pay meant if the patient thought the care was important, the patient would contribute one dollar for every four from the Government, and the patient would watch their own bills to make sure the charges were accurate, reasonable and necessary. If an overbilling occurred, the patient insured would complain, and not pay the co-pay. Likewise, the patient would not seek unnecessary services even if their portion was relatively reduced. Very few patients would want to waste their own money. Co-pay was adopted in Medicare, but almost immediately work arounds, circumvention, ignoring, waiving, or exempting co-pays became an industry wide practice inviting fraud, waste, and abuse. The article is a tabulation of hundreds of news reports dealing with Medicare co-pay and other cost issues. Business Model, or Reality Check as to what has happened to the business model and been Proposals – many what Congress may have reported since . and varied assumed when implementing Medicare11 Unofficial Portions are Copyright © 2017 & Confidential, Fair Use Exception for excerpts © reserved Published sources - Page 2 of 211 These are not in order of priority, or expense to the budget. The order is alphabetical for the first column Aged and poor had a Study Shows Increase Twice national average In Minnesotans On Put a catastrophic cap on business model for help. Medicaid. annual health costs, and Now some become poor to The Minneapolis Star Tribune (6/14/2012, Wolfe) reports on a study issued people will not attempt to qualify for help. Medicaid this week by the National Governors Association and the National qualify for poverty to get covers the co-pay. Association of State Budget Officers, which found that "the number of Medicaid. Minnesotans on Medicaid shot up at nearly twice the national rate over the past two years, while state costs soared by 40 percent to surpass $4 billion for the first time." The piece notes, "While the weakened economy explains most of the rising Medicaid rolls in other states, much of Minnesota's increase came when Gov. Mark Dayton expanded the program by 80,000 people last year under an option in the federal Affordable Care Act Aviation industry safety Ten Percent Of Medicare Budget Lost To Fraud. Stop medigap regulation model is not to ABC World News (3/1/2012, story 6, 2:50, Sawyer) reported, "This week, the insurance, and have tens or hundreds of FBI has been cracking down on Medicare fraud. It is estimated that 10% of the require collection of thousands of government Medicare budget, billions and billions of taxpayer dollars, are lost to cheats and co-insurance. inspectors monitoring safety, scammers." but to rely on the millions of As these programs are 20 percent of the federal budget of 4 trillion However, co-pays eyes of non government dollars, that would mean 2% of the 4 trillion is lost to fraud every year, or 20% have disappeared into pilots, airmen, customers, in 10 years, or $800 Billion. medigap insurance, passengers, and shippers. Medicaid, or just This was a safety issue, and never collected. The fraudulent repairs or Result is fraud, in fraudulent training have unknown quantities. deadly consequences. The Estimates are one business model of medicare was to rely on co-pays and dollar in ten, but the co-insurance, for the millions government just of eyes. That co-pays were doesn’t and can’t ignored, meant it didn’t know for sure. happen. Bribery and fraud. Blue GlaxoSmithKline To Pay $3 Billion To Settle Bribery, Fraud Allegations Cross and Shield during Cross and Shield during With US. WWII to act as governor WWII to act as governor The announcement by the Justice Department of a settlement with drugmaker against unnecessary against unnecessary GlaxoSmithKline of bribery allegations generated heavy media coverage last expenses, fraud, and over Unofficial Portions are Copyright © 2017 & Confidential, Fair Use Exception for excerpts © reserved Published sources - Page 3 of 211 expenses, fraud, and over night and this morning, including more than seven minutes of coverage on use. Co-pays were use. Co-pays were adopted network newscasts. adopted by Medicare for by Medicare for similar The CBS Evening News (7/2/2012) story 6, 2:50, Pelley) reported, "The similar purposes. But purposes. But providers and US government is calling it the biggest case of healthcare fraud in American providers and suppliers suppliers stopped collecting history. The British drug maker GlaxoSmithKline is accused of withholding stopped collecting long long ago. Off label use for important safety information about the diabetes drug Avandia [rosiglitazone] ago. Even auditing is drugs was legal if a and illegally promoting two other drugs for unapproved uses. GSK agreed to unsuccessful, as this case Physician prescribed it. This pay $3 billion in fines." was apparently brought eliminated any incentive for NBC Nightly News (7/2/2012) story 4, 2:00, Williams) reported, "At the under the whistleblower the drug company to get the launch of asthma drug Advair prosecutors say global drug giant act, to wit, an employee drug approved for new uses. GlaxoSmithKline pushed the sales force to push hard even for uses not or insider who ratted out Federally approved. Today the company admitted its sales force bribed doctors the drug company. to prescribe its drugs by offering such incentives as Hawaiian vacations and tickets to Madonna concerts." ABC World News (7/2/2012) story 4, 2:15, Muir) reported, "The goal to rev up sales as part of what prosecutors say was a culture of greed where patient safety took a back seat to profit. The government claims GSK engaged in an illegal marketing campaign where drugs were promoted for disorders where there was no medical evidence they would help. Allegations of promoting the drug Paxil for treating depression in patients under age 18 even though the FDA's has never approved it for kids." The AP (7/3/2012) Holland) reports, "GlaxoSmithKline LLC will pay $3 billion and plead guilty to promoting two popular drugs for unapproved uses and to failing to disclose important safety information on a third in the largest health care fraud settlement in US history, the Justice Department said Monday. Accompanying the criminal case was a civil settlement in which the government said the company's improper marketing included providing doctors with expensive resort vacations, European hunting trips, high-paid speaking tours and even tickets to a Madonna concert." The Los Angeles Times (7/3/2012) Hsu) reports, "The agreement is the largest healthcare fraud settlement in history, spanning nearly every state, according to the Justice Department. It's also the largest payment ever by a drug company.