They Made It Look Easy

Linda and I just returned from a five-day excursion to help pay for a certain wall—or not.  We enjoyed being among friendly and kind people, learning about a different history and culture, seeing amazing structures and artifacts of the past, walking about a vibrant and safe urban area and eating delicious cuisine.  When we are in new places my twenty years as a local elected official in the Tulsa area cause me to reflect upon and inquire about the provision of services such as water, sewage and refuse removal, streets and public transit, etc. and how they are paid for.  My evaluation of how Tulsa fares in the provision of such services has always been pretty high because we have reasonably priced and drinkable water, our trash and sewage wastes are easily disposed of, the streets are paved and without major ruts or obstacles, I travel about generally without fear, there are fire and ambulance services at the ready, and every child has a school to attend.   The only exception I note for Tulsa is the lack of adequate public transportation—Tulsa Transit does well with the resources provided, but for the 20% of our population for whom private automobiles are not an option due to disability or cost, they have very poor access to the street system they help pay for but can’t enjoy as the rest of us do.

These services don’t magically happen, they must be planned for, financed and implemented—something our current state legislature seems prone to ignore.  Reflecting on differences between Tulsa and the city we visited reminded me of what I said to my parents at the last wedding anniversary, their 60th in 2004, we celebrated with their children, grandchildren and great-grandchildren present.  I told them that they made it look easy, the “it” being raising my brother and me, making a living to provide safe and clean shelter, plentiful nutrition, medical care and many educational and recreational experiences, all while having active social lives with other families through church, neighborhood and family connections.  Growing up with my parents I just assumed making all that happen would be natural and easy.  As an adult in 2004, not a geezer yet, I knew better.  I remember when I thanked them for the loving childhood Clayton and I experienced, and for their special relationship with our children, and then said “You made it look easy”, my mother shook her head and said “No, it wasn’t.”

Making our lives on this planet we share safe, comfortable and enjoyable is not easy.  It takes planning, resources, work and not taking what works for granted.  We know from experience that some services are best provided collectively.  Early Tulsans in 1884 established the first school for their children because they recognized the importance of universal education in support of a prosperous community; this was done well before Tulsa was actually incorporated in 1898.  In the early 1920’s Tulsa’s city government successfully constructed the Spavinaw water line that assured the clean water supply needed for the city’s growth.  These public services and the others we can easily take for granted did not just happen and were not easy to get done.  And once done it falls to those who follow to continue to invest in the maintenance and improvement of these essential collective services. 

The city we visited was experiencing a severe water shortage.  Our friends, and other expats living there year-round or seasonally, do not drink the tap water, which lately is available only by filling roof-top tanks with privately purchased water.  The sewage disposal is prone to clogging so residents dispose of used toilet tissues through the trash system, not by flushing.  We ventured twice by taxi outside the central core where our hotel was located, once to a popular archeological site and the other time to a home-cooked dinner arranged by my college roommate with his in-laws.  During the first trip I experienced difficulty breathing and noticed several residents with face masks—air pollution is a problem.  The private home that was our destination for the second trip was on an unpaved City street.  It was only slightly challenging for our taxi, and the companionship and tamales were well worth the venture.  I did wonder about that street two days later during a heavy rainstorm.  Every major arterial, both taxi trips, had many and frequent speed bumps.  Our friends leave their car parked because it hits bottom and they fear the damage.   They believe the speed bumps are considered a cheaper substitute for adequate traffic signals and policing.

I try to imagine what it would have been like during my years as a Tulsa City Commissioner and City Councilor if I had to explain to citizens that they could no longer drink city water, that they could no longer flush their toilet paper, that some streets would no longer be paved, that to save tax dollars we would invest in speed bumps on our arterial streets instead of traffic lights and police, and that they should regularly wear face masks.  Yet not too many decades ago, and within the memory of many I have personally known, our city did have unpaved streets, houses without indoor plumbing, regular flooding, unsafe water and the regular stench of refinery emissions.  These quality of life improvements that we take for granted—that our visionary city-builders have made look easy to subsequent generations—can be easily lost.  All it takes is one generation of limited-thinkers in positions of power who believe that government is inherently wasteful, that cutting taxes cures all ills, and that private markets are the best way to provide for all services.  I fear we are on our way, onward to the past, in Oklahoma.

On a happier note, we enjoyed sharing songs sung with our new friends, they sharing traditional birthday and romantic ballads, and we these lyrics from Woody Guthrie:

This land is your land This land is my land
From California to the New York island;
From the red wood forest to the Gulf Stream waters
This land was made for you and Me.

As I went walking I saw a sign there
And on the sign it said “No Trespassing.”
But on the other side it didn’t say nothing,
That side was made for you and me. 

As always, lunch on me for first to ID the location of the photo.



Not An Old Geezer Yet

It will be rare, I expect, that I will agree with our new HUD Secretary Dr. Ben Carson so I begin with a reprint of a paragraph I revised in my recent post A Spoonful of Sugar since some readers may have missed his exact words:

What is driving the financial struggles for Medicare is not that it is a government run program, which in fact is its strength, rather it is the reality of the rising expectations we collectively have for extending our individual lives, regardless of quality, at great costs.  As one who is likely, as my friend Lloyd Snow would say, playing in my final quarter, I can say that we do need to have an honest national discussion about the amount of scarce resources we are devoting to end of life treatments.  Call it “death panels” or say it like Dr. Ben Carson did recently to HUD employees when he honestly expressed his belief that his skills as a brain surgeon were more appropriately used to “operate 12, 18 or 20 hours on a young child and, if successful, you might be rewarded with 50, 60 or 80 years of life, whereas with an old geezer they die in five years or something else, I like to get a return on my investment.”  Regardless of the blunt language (though maybe 6 months instead of five years), if we want to control health care costs, it is a genuine way to do so, unlike so-called “market” and “private competition” proposals that will exacerbate the lack of access to care for our younger and economically marginalized citizens.

Linda and I are headed out for a few days to take more Thinker photos so before boarding the plane I wanted to leave you with a couple more thoughts about our nation’s health care challenges, including my rescue by fellow Econ Robert Samuelson (he’s a real economist, I’m just a wannabe) from being an “old geezer” yet.  A rational discussion about our national goals for health care needs to begin with whether or not we keep the Emergency Medical Treatment and Active Labor Act (EMTALA) which requires every hospital that receives Medicare or Medicaid payments from the federal government and that provides emergency room services, to treat anyone and everyone who shows up at the emergency room, regardless of ability to pay.  You see as long as we keep it, meaning we won’t allow emergency rooms to deny treatment to our fellow humans in this country based on their ability to pay for the treatment, we already have universal health care coverage.  It’s just that if EMTALA is the only game in town for millions who are uninsured then we will have more of our working age population who are sicker, more medical cost-shifting to those who do pay, more insurance premium death spirals, etc., because the uninsured are going to get treatment in a very cost-ineffective manner that simply exacerbates the problems with our crazy quilt system of medical care.

We could move to the South African alternative (per Trevor Noah’s story I retell in A Spoonful of Sugar) where the dying can be turned out onto the street if they can’t pay.  Or there’s the Oklahoma Council of Public Affairs alternative, the wonderful marketplace for emergency services, best summarized in this cartoon from this week’s New Yorker Magazine with the caption

“I’ll go shop around for a doctor.”

The cartoonist is among the many of us who “knew health care could be so complicated” and is demonstrating the folly of those, like the OCPA, who primarily advocate “market” and “competition” based solutions to our nation’s health care challenges.  As I pointed out in A Spoonful of Sugar there is too often a disconnect between the buyer (man unconscious on the sidewalk) and the seller (whatever medical provider eventually comes to his aid).  Unlike our common purchases of food, clothing, entertainment, etc. much of what we spend on health care is not always for a service for which we can effectively plan, much less shop among providers (like the OCPA’s silly example of discretionary cosmetic surgeries), to be sure we are making the best choice.  Even when we can prepare, often the pricing is obscured and far from fully knowable in advance.  A health care system reliant on third party payments, i.e. insurance, is just not like most markets.

If we are truly serious about making health care affordable and available to all, then we cannot rely on simply providing mandated access to emergency room treatment (EMTALA) and greatly subsidized care (Medicare) for the old who, however deserving, are our least productive, i.e. geezers.  Samuelson’s recent Tulsa World column Making Medicaid Great offers an important perspective on the role of Medicaid, i.e. federal/state financed health care for the destitute, in our health care system.  Most mention of Medicaid in the current national discussion is about how Obamacare expanded Medicaid coverage (in the 31 states that agreed to participate; 19 including Oklahoma did not) to provide insurance to millions more Americans.  In fact three quarters, per Samuelson, of Medicaid recipients are working age poor adults and children, a population some seem willing to cast aside or marginalize as unworthy of assistance.  The other quarter are the disabled elderly, think nursing homes, and younger disabled determined unable to support themselves.  In other words, this part of Medicaid is our nation’s go-to answer when our elderly parents run out of money, think $70,000 per year in nursing home costs, to pay for their own full time care, AND we choose to let the government pick up the tab instead of taking care of them ourselves.

In my law practice I counseled many clients about these choices—especially the reality that the survivor of Mom or Dad couldn’t qualify for nursing home Medicaid until the family house was sold for his/her care.  Many adult children curiously viewed this as the government taking the house.  Still today, to qualify for Medicaid assistance, a person’s assets can total no more than $2000.  Most elderly receive their health insurance through Medicare, but it does not pay for long term nursing home care—that comes either out of the family pocket, rolling the dice with long term care insurance, or Medicaid (sell the home first).  That part of Medicaid, including care for the younger disabled, is two-thirds of the total expenditures, per Samuelson.

Now here’s how Samuelson saves me from being an old geezer, and his proposal—a good one I think.  The huge costs of Medicaid for the elderly are predominantly for those age 85 and over–a population set to explode due to medical advancements and aging baby boomers (I’m on the leading edge, born in 1947).  This is likely the same population Dr. Carson had in mind.  So I’ll make no more claims to being an “old” geezer for now (next 15 years), but do proudly consider myself a “geezer”.  Samuelson’s proposal is to replace the current federal/state sharing, approximately 60/40, for all Medicaid expenditures with a system where the federal government will assume the costs of providing for the elderly in nursing homes, and the younger disabled, while the states take care of health insurance for low income adults and children.  This shifts the riskiest and fastest growing part of Medicaid costs entirely to the federal budget and would leave states better able to invest in improving health care for the working poor and children.  Something to think about.

As always lunch is on me for the first to ID the photo location.

Dennis Not The Menace

Here’s what happened to this Dennis:

He was at work at a bank branch in Martinsville in 2014 when other staffers noticed he was not feeling well. A co-worker drove him to an urgent care facility, but the staff there called an ambulance to take him to a hospital.  Dennis was having chest pains that recalled an earlier heart attack, and nitroglycerin did not seem to relieve his pain, according to a summary by Henry County Circuit Judge David V.

Williams. Dennis’ wife said he was “crying … upset … [and] agitated,” the judge wrote.  Dennis arrived at Memorial Hospital of Martinsville & Henry County “in acute emotional and physical distress,” Williams said.

While lying in a hospital bed awaiting treatment, a hospital staffer had him sign a “Financial Responsibility Agreement.” The agreement provided that the patient was obligated to promptly pay the hospital in accordance with charges listed in the hospital’s “charge description master” or CDM.  Dennis was in the hospital two days and underwent surgery to place five stents in his arteries, his lawyers said. 

Dennis and his insurance company paid $27,000 which was the approximate amount the hospital would have accepted from other insurers, including Medicare, with which it had an agreement in advance, but the hospital billed at its “charge description master” (CDM) rate $111,000 because it had no agreement with Dennis’ insurer, meaning he had “chosen” an out-of-network hospital.  Memorial Hospital sued Dennis for the $84,000 balance based on the contract he had signed.  I found these case descriptions by Googling “contract of adhesion hospital bill”, Dennis 1 and Dennis 2.

In my law school Contracts course we learned that for a contract to be enforceable both parties must have the legal capacity to contract and willingly enter into the agreement with knowledge of its terms.  By contrast a contract of adhesion “is a contract between two parties, where the terms and conditions of the contract are set by one of the parties, and the other party has little or no ability to negotiate more favorable terms and is thus placed in a “take it or leave it” position.”  Such a contract is not enforceable and was the basis of the judge’s decision for Dennis that he owed only $500 more and that was enough.

This outcome just last year in a Virginia court was definitely an exception.  By some estimates over half of bankruptcies in the United States are in part due to unpaid medical bills.  (bankruptcy 1 and bankruptcy 2)  While that level may be overstated (FactCheck) there is no dispute that medical bills are a very substantial contributor to bankruptcies in our country.  This fact simply underscores the reality of the medical services “marketplace” and demonstrates how most consumers are at the mercy of their insurance companies at best, or large hospital chains with inscrutable charge description masters at worst.  Those engaged in the current national debate over the future of how we pay for medical services in this country who advocate more reliance on “markets” and “competition” need to explain how consumers are to make rational, and competitive, decisions (assuming they’re even conscious at the time), like they do when shopping at the mall or online, when they aren’t even allowed to know the prices of the services being provided.

Lest you think Dennis is an exception, here is my true story about a friend who sought my help after she suffered from a suicidal episode about 15 years ago.  Fortunately, at the time she had health insurance through her employment and she knew about COPES, the local mobile psychiatric service that responded to her call for help.  COPES, though, took her to the psychiatric ward of a Tulsa hospital that was, like Dennis’, out-of-network.  Gratefully the intervention was successful and my friend was discharged after two weeks of treatment.

Then the billing came, which was not supportive of my friend’s road to recovery.  Knowing what I did about hospital charging practices I was able to negotiate a 50% reduction which brought it somewhere nearer to what the in-network cost would have been.  With assistance my friend’s bill was paid and she has had no other hospitalizations or significant illnesses since, which is typical of those who are not old geezers like I am.   That experience was when I first reflected on the possibility that many hospital patient contracts are contracts of adhesion—especially when the patient arrives in no condition to make a contractual commitment of any kind.

My friend eventually lost her job with that employer and since has been employed by a series of employers that did not offer health insurance.  She was locked out of the private insurance market because that one hospitalization constituted a “pre-existing condition” that made her uninsurable.  After her COBRA coverage ran out from the ex-employer she then maintained coverage first, at a very high cost, through the State of Oklahoma’s High Risk Pool, which once kicked her out for not remembering to use 4.3 instead of 4 when converting a weekly income to monthly, and more reasonably through Insure Oklahoma, before finally having the actual right to purchase an individual plan through the Affordable Care Act (Obamacare).  Now we wait in fear to see what happens next.

Who knew health care could be so complicated?  I did; Mr. Dennis did; my friend did; and you do too.  The “market” by itself won’t get it done.  We can provide reasonable care for all Americans and it is simplest and most cost effective if we do it collectively and together.  We’ve figured out how to take care of us old geezers through the single payer Medicare system, which no politician is trying to eliminate, so why can’t we do the same for our working population.  They are the source of our nation’s wealth and future productivity; just as we need to invest in our physical infrastructure we need to invest in our workforce by assuring every person of working age has the health care they need to remain productive—and paying for my Social Security retirement income.

Again, you’ve got to read Bitter Pill How Medical Bills Are Killing Us; I close with an excerpt:

Unless you are protected by Medicare, the health care market is not a market at all. It’s a crapshoot. People fare differently according to circumstances they can neither control nor predict. They may have no insurance. They may have insurance, but their employer chooses their insurance plan and it may have a payout limit or not cover a drug or treatment they need. They may or may not be old enough to be on Medicare or, given the different standards of the 50 states, be poor enough to be on Medicaid. If they’re not protected by Medicare or they’re protected only partly by private insurance with high co-pays, they have little visibility into pricing, let alone control of it. They have little choice of hospitals or the services they are billed for, even if they somehow know the prices before they get billed for the services. They have no idea what their bills mean, and those who maintain the chargemasters couldn’t explain them if they wanted to. How much of the bills they end up paying may depend on the generosity of the hospital or on whether they happen to get the help of a billing advocate. They have no choice of the drugs that they have to buy or the lab tests or CT scans that they have to get, and they would not know what to do if they did have a choice. They are powerless buyers in a seller’s market where the only sure thing is the profit of the sellers.   

Indeed, the only player in the system that seems to have to balance countervailing interests the way market players in a real market usually do is Medicare. It has to answer to Congress and the taxpayers for wasting money, and it has to answer to portions of the same groups for trying to hold on to money it shouldn’t. Hospitals, drug companies and other suppliers, even the insurance companies, don’t have those worries.   

Moreover, the only players in the private sector who seem to operate efficiently are the private contractors working — dare I say it? — under the government’s supervision. They’re the Medicare claims processors that handle claims like Alan A.’s for 84¢ each. With these and all other Medicare costs added together, Medicare’s total management, administrative and processing expenses are about $3.8 billion for processing more than a billion claims a year worth $550 billion. That’s an overall administrative and management cost of about two-thirds of 1% of the amount of the claims, or less than $3.80 per claim. According to its latest SEC filing, Aetna spent $6.9 billion on operating expenses (including claims processing, accounting, sales and executive management) in 2012. That’s about $30 for each of the 229 million claims Aetna processed, and it amounts to about 29% of the $23.7 billion Aetna pays out in claims. 

As always lunch is on me for the first to ID the photo.

A Spoonful of Sugar

State Capitol of Iowa, ID’d by Sue Haskins

We’re going to need lots of sugar to take what this Congress is likely to shove down our national throats as they repeal and replace the Affordable Care Act—Obamacare.  I likely will devote future, and better researched, posts to this topic but for now am going to share some insights and stories accumulated over an adult lifetime of thinking about medical costs and health insurance—well not my entire adult life, just since the late 70’s when I was immersed in teaching both Personal Finance and introductory Economics at Tulsa Junior College.  Before that, through three employers, one wife, and two children, I didn’t give it much thought.  I can tell you what we paid for rent in Philadelphia, for a pound of chicken livers (least expensive protein), for a gallon of gas, for a motel room, for our first mortgage, for our first car, and much more, but health insurance costs don’t register in my memory.  I was a classroom teacher with Tulsa Public Schools when our second child was born and I don’t remember the cost of family coverage being significant back then.  Today that cost is $1,734 per month with only $571.04 of that being paid by the employer in most school districts.  If now was then I would remember that level of impact on our family’s budget.  So getting national health care/insurance right is a big, big deal to American families.

As a famous American said recently “Nobody knew health care could be so complicated”.  Well, after a little study back then, I did, and so did many others as rising health care costs, rising numbers of uninsured families, and rising numbers of deaths due to lack of insurance, have made health insurance and medical costs inflation major topics of national discussion for decades.  In my 1970’s and 1980’s Personal Finance classes we learned that having good major medical insurance at all times is an essential risk management strategy for everyone since very few, such as billionaires, can rationally assume the entire risk of having a catastrophic loss of health with the attendant hospital costs and loss of earned income.  We also learned that modern medicine, safe drinking water and sewage waste disposal have mostly eliminated what were prevalent causes of death for my parents’ and grandparents’ generations, like typhoid, diphtheria, measles, chicken pox, etc.  Vaccines and sanitation have eliminated most causes of early death from contagious diseases and greatly increased life expectancies.  We also learned that our leading causes of death now often result from our behaviors of choice, like eating too much, not exercising, smoking, shooting each other, and driving too fast or while impaired or distracted.

In introductory Economics we learned what economists had to say about the rising cost of medical services, namely that characteristics of American health care markets did not fit the model of competitive markets for other products and services, like restaurants, house construction, automobiles, lawn mowers, etc. In those markets prices are kept in check and quality improves due to many sellers trying to gain profits and market share while selling to many consumers who have lots of choices.  By contrast in health care markets the greatest expenditures often occur when the “consumer” has a serious health condition and relies on, or is at the mercy of, health care professionals to recommend the medical care needed to improve health or even save life.  In these “markets” consumer “choice” is a fantasy.  Additionally, due both to the prevalence of health insurance and physician and hospital ethics, a “consumer”, the patient, is going to receive the treatment without the same regard for cost as would be the case if he or she were purchasing a television, a movie ticket or lawn service.   In other words, most health care expenditures are made with the consumer relying on professionals to determine what will be purchased and relying on somebody else, i.e. their insurance company, to pay for it.  Think what would happen to the price of automobiles if we all purchased based on a car dealer’s recommendation for the make, model and optional equipment, AND we had a trust fund, restricted for automobile purchases only, to pay for it. 

Economists have long recognized that where health care services are involved we cannot rely on market competition alone to contain costs and improve outcomes; there is simply too much of a disconnect between the “consumers” and the “deciders”.  Unfortunately, many engaged in the discussion are so wedded to the belief that competition cures all they lose touch with reality.  For an example of this see what Mark J. Perry, one of the limited-thinkers at the Oklahoma Council of Public Affairs, posted June 1, 2015 “Competitive Health Care Markets Spur Price Deflation”.   Apparently he believes the circumstances and choices faced by consumers (no quotation marks) of liposuction, breast augmentation, tummy tuck and Botox injection services, are similar enough to “consumers” facing diagnoses of advanced breast cancer, heart disease, renal failure, and other life-threatening health conditions, that there are important lessons to be learned.  I’m sorry that his introductory Economics course didn’t include discussion of why markets are not always perfectly competitive and why some market outcomes require corrections for the betterment of society—or maybe he was nodding off after having discretionary brain surgery.  More competition alone is not going to improve the health of the many Americans whose access to quality health care is limited today.

I actually experimented a few years ago with this market competition approach to health care when my physician and wife, a colon cancer survivor, shamed me into getting my first colonoscopy.  The first time I tried my insurance would pay part of the cost, but not all, so being a good econ, a rational decision-maker, or as my Italian daughter-in-law describes me, a pidocchioso (Italian slang for “stingy or cheapskate”), I wanted to know what the price/cost would be.  I met with the referral doctor who, after he got my information and explained the procedure, asked me if I had any questions.  I said yes and asked what the procedure would cost.  He said he didn’t know, that I should ask his billing staff out front.  While in private law practice this was a question I was always prepared for and always answered as definitively as I could, when asked by a client.  “Out front” I was told to ask my insurance company and the facility/hospital where the procedure would take place.  I called the facility/hospital which deferred to the other two and fared no better when I contacted my insurer.  I happily used this pricing obfuscation to do what any good consumer should do—I declined to have the procedure.

Then a couple of years later, either due to my advanced age or change in preventive care coverages (may have been implementation of the Affordable Care Act), the procedure became “free”, at least to me as the consumer.  So I dutifully went back to the same doctor, the same facility/hospital, and the same insurer, and, along the way, including the early morning of the procedure (my wife smiling all the time), asked each one to confirm that the procedure would be “free”, at no out of pocket cost to me, which they each did.  So with no remaining excuse or reason to defer, I was wheeled into the staging area, where a nurse anesthetist introduced himself and asked me to count backwards, 10, 9, 8, 7, 6,…. then I’m waking up, told all looked good, and driven home none the worse for wear.  Until several days later when I got a billing from the nurse anesthetist for charges not covered by my insurance because he was “out of network”.  Oh what a stupid consumer I was and entirely my bad that while on the gurney in my backless white gown I didn’t, in my final minute of consciousness, ask if the needle-holder was “in network”.  Where were Mr. Perry and the OCPA when I needed them.

My first substantive exposure to health care pricing in this country was in 1986 when, as the newly elected Commissioner of Finance and Revenue for the City of Tulsa, I became a member of the Emergency Medical Services Authority which then and now provided emergency ambulance services to Tulsans.  Prior to serving on that authority I assumed that medical services pricing, like prices for barbers, exterminators, plumbers, dentists and other service providers, would be based mostly on the cost, i.e. the value of the labor of the service provider involved, adding in amounts for equipment and other costs involved.  Indeed, such calculations were the starting point, including the wages of the emergency medical technicians, amortizing the cost of the ambulances, fuel and medical supplies costs, etc.  There also were calculations about how to most efficiently schedule and position the ambulance crews so that they stayed fairly busy (more on Saturday nights for example) and, therefore, productive.  All of that led to a dollar calculation of what the actual cost was for an ambulance run, much like the calculations that an auto wrecker service must make to determine its per-run pricing, and essentially total expenditures divided by the total number of runs.  Let’s say it was $150 in 1986.  In contrast to the wrecker service where that might be the beginning and the end of establishing a price of a run, for EMSA we were just getting started. 

Unlike the wrecker service, a plumber or a dentist, EMSA is required by city ordinance to provide emergency services to anyone and everyone who is in need; it can’t ask about ability to pay.  Whereas the wrecker service, plumber and dentist will each have a “bad debt” write-off as part of their calculation, it is nothing like the algebraic gymnastics for EMSA at that time.  A sizeable portion of the runs were covered by Medicare, Medicaid or other health insurance, however Medicare and Medicaid for sure, and much of the employer and individually purchased insurance, negotiated a reduction from what EMSA charged for a run at the “retail” level, i.e. a cash-paying, non-insured person who was transported.  Of course many of EMSA’s retail customers ended up being bad debts.  When all these factors were fed into the algebraic gymnastics the result was a retail charge much greater than the actual cost, something like $275.  So the reality was that a person able to pay, but without the benefit of any insurance related “discount”, was billed and expected to pay far more than the actual cost.  I don’t remember the actual ratios and dollar amounts, but it was eye-popping and patently unfair, but also perfectly legal and what had become an expected part of our crazy-quilt way of pricing medical services.

That same year Congress passed the Emergency Medical Treatment and Active Labor Act (EMTALA) which requires every hospital that receives Medicare or Medicaid payments from the federal government and that provides emergency room services, to treat anyone and everyone who shows up at the emergency room, regardless of ability to pay.  Translated we effectively have universal health care coverage and I doubt even the most limited-thinker at the OCPA would be mean-spirited enough to advocate repealing EMTALA—but they might surprise me.  I just finished reading Trevor Noah’s autobiography of growing up in South Africa “Born a Crime” (black mother, white father, during apartheid).  Spoiler alert for the rest of this paragraph now because it was a great read and I highly recommend it.  When he was just a couple of years out of high school, his stepfather shot his mother in the back of the head and she was taken to the emergency room, dying.  The staff informed Trevor when he arrived that she could not be treated there because she was uninsured (a devout Christian she believed Jesus was her insurance), meaning South Africa had no equivalent of EMTALA.  Only because he provided a credit card and agreed to be financially responsible for what could have been an astronomical cost did the hospital give her the emergency treatment she needed.  Miraculously the bullet that had exited cleanly through her nose missed all vital parts of her cranial cavity and she was treated and released within days.  When Trevor later chided her saying her faith in Jesus didn’t give her health insurance when she needed it, she replied “But Jesus gave me you”.

After my EMSA experience I always thought hospitals were following a similar calculation process, just more complicated by all the hundreds, maybe thousands, of different procedures they perform.  Apparently that is not the case.  While collectively the charges grossly exceed the actual cost to account for the insurance negotiated discounts and the no-pay patients, the individual procedure charges are mostly unrelated to any rational measure of actual costs—at least that’s what author Steven Brill reported in his 2013 article “Bitter Pill–Why Medical Bills Are Killing Us“.  It is a must read for anyone who thinks “Nobody knew health care could be so complicated.”  It demonstrates the absolute folly of thinking analyses like that reported above by the OCPA are relevant, while showing how effective the market power of a single payer system, namely Medicare, can be in reducing costs, both medical and administrative services, compared to pricing through the private sector. 

What is driving the financial struggles for Medicare is not that it is a government run program, which in fact is its strength, rather it is the reality of the rising expectations we collectively have for extending our individual lives, regardless of quality, at great costs.  As one who is likely, as my friend Lloyd Snow would say, playing in my final quarter, I can say that we do need to have an honest national discussion about the amount of scarce resources we are devoting to end of life treatments.  Call it “death panels” or say it like Dr. Ben Carson did recently to HUD employees when he honestly expressed his belief that his skills as a brain surgeon were more appropriately used to “operate 12, 18 or 20 hours on a young child and, if successful, you might be rewarded with 50, 60 or 80 years of life, whereas with an old geezer they die in five years or something else, I like to get a return on my investment.”  Regardless of the blunt language (though maybe 6 months instead of five years), if we want to control health care costs, it is a genuine way to do so, unlike so-called “market” and “private competition” proposals that will exacerbate the lack of access to care for our younger and economically marginalized citizens.

One other thought, as important as dealing with end of life health care costs, is the role of having universal coverage in containing costs.  Not only is it a great benefit for all of us and a societal advancement we can afford, it is also a smart play.  Insurance works best when large numbers participate and no one is able to game the system.  That is what happens when we don’t strive for universal coverage, but still honor EMTALA, namely the young and/or healthy can roll the dice, contributing nothing to the pot, knowing that they can always join later and have the emergency room guarantee in the meantime.  For most it works, but for those it doesn’t we and they pay dearly.  The resulting dynamic is the “death spiral” of more expensive insurance premiums driving more to roll the dice, which in turn raises the premiums further.  You need look no further than the discrepancy in premiums for teachers’ health insurance, $571 per month where the premiums are paid for by their Flexible Benefit Allowance, and the $674 charged for spouses, all of which is entirely out-of-pocket.   That higher cost for spouses drives more to find other options, like rolling the dice before the individual mandate of the Affordable Care Act, leaving an older and sicker group captive to a plan for which costs must inevitably rise.  Whew!!!  That’s way too much information—maybe you’d like for me to post the photo of my colon instead.

As always lunch on me for the first to ID the photo location.     

The Ugly Step-Thinker

As this Tulsa World article, “Question of revenue for teacher raises looms over lawmakers”, shows our legislature seems to have every good intention of funding a teacher pay raise this session—except they haven’t a clue how to pay for it.  It’s got to come as a shock to most of them that when you spend years drinking the Kool Aid dogma, and perversion of true supply-side economics, that every tax cut will generate more revenue, our state will eventually run out of revenue to fund even its most basic services.  So where is a good think tank when you need them; surely the Oklahoma Council of Public Affairs is ready with the answer.

Painful as it is I checked their site and found a February 1 post, “Non-Teaching Staff Surge Prevented Oklahoma Teacher Pay Raises”, from Benjamin Scafidi who, for this post, is the Ugly Step-Thinker.  I’ve never met Mr. Scafidi, have no idea where his appearance would fit on some immature 1 to 10 scale, and besides, as you can see from my legs in the photo above, I’m firmly opposed to judging a person based on his physical appearance.  My use of “Ugly” goes back to my November 19, 2016 post The Glib, The Bad and The Ugly, where I showed that each of the OCPA’s recent suggestions for funding a teacher pay raise in Oklahoma are bereft of substance.  The “Glib” was the assertion by OCPA “thinker” Dave Bond that recent legislation doing something with teacher health insurance had freed up $100 million for raises; he just made it up.  The “Bad” was the assertion by OCPA “thinker” Steve Anderson that school districts could simply spend all their available cash for raises; he just demonstrated his ignorance of school district financial accounting and cash flow.

I refer to Mr. Scafidi as a “step-thinker” because he is not with the OCPA, but rather one of their outside contributors.  I guess the OCPA thinkers just can’t do the state finance math to see how their fiscal policy recommendations over the last decade have succeeded in almost bankrupting our state government so they have to call in outside help.  I refer to him as “Ugly” because his proposal for funding a teacher pay raise is to offset the cost by laying off non-teaching staff, and that would not be pretty.  Even though his most recent post drops the silly implication that the relative surge in non-teacher employees over the last several decades is mostly an increase in administrators, his numbers still don’t fully jive with the data I’ve found so methinks he is still playing loose with the statistics. 

I don’t dismiss his work entirely.  We may quibble about the stats around the edges but his central point that non-teacher staffing has grown faster than teacher staffing is probably accurate.   School administrators, and even lawmakers, certainly should look at their school districts’ data and analyze whether the staffing patterns are necessary and appropriate; most already do.  It might benefit Mr. Scafidi to talk to them.  Regardless, I doubt this step-thinker proposal will get legs this session because it is pretty ugly.  He projects $255 million is potentially available for a teacher pay raise, but he doesn’t spell out that means laying off over 6,000 non-teacher school employees statewide.

He also throws out a new (from him) option of giving $7,000 vouchers to 36,000 students.  He says this will lower class sizes but doesn’t say how and is not clear if this is somehow related to giving teachers a pay raise.  Any discussion about vouchers has got to begin with how the state is going to pay for the inevitable increase in student enrollment (counting both voucher and traditionally enrolled together) that will result.  In my July 5, 2016 post This Is Too Much Fun I show why I think the number of Oklahoma students in private and home schools is approximately 44,000 to 45,000, or about 6.5% of the total school aged population.  That number and percentage represent a pipeline of students who are educated outside the public school system and the state budget for education.  Maybe not all the first year, but eventually any voucher system is going to capture a sizable share of that pipeline and every payment will be an additional expense to the state.

That is not to say the students and their families aren’t entitled to an education at public expense—they most certainly are and it is already available to them.  But to suggest that implementing a voucher system of any kind is somehow going to save the state money so that we can lower class size or increase teacher pay, is folly and defies the reality of a 40,000 student pipeline that will certainly take advantage, as they should, of the opportunity.  A voucher proposal that does not include more revenue to pay for these additional students, coming in from the private/home school system, in the near future, is fiscally irresponsible.

As always lunch is on me for the first to ID the photo location, but I recommend you try one of my earlier posts instead—this one is of an obscure Lake Michigan lighthouse and selected only because it shows my ugly legs.