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  • Morning Bell: Why Government Can Never Lower Health Care Costs

    If current trends continue, Social Security and Medicare spending will jump from 7.5% of GDP today to 13% by 2030. Entitlement spending at those levels will cripple the U.S. economy. The liberal/progressive answer to this problem is to push for government-run health care that will control the meteoric rise in health care costs. The problem is that the federal government has a terrible track record at reducing costs, especially when it cones to health care. Medicare is a great case in point.

    The federal government spends billions of dollars every year buying medical equipment like oxygen tanks, wheelchairs and walkers for Medicare recipients. Being the government, the Department of Health and Human Services (HHS) does not buy these goods on the free market, and instead relies on fixed prices and fee schedules. With billions in profits at stake, it should be a surprise to only liberals that medical supply companies spend thousands of dollars on lobbying fees every year trying to protect the profits they “earn” by selling the government medical equipment at inflated prices.

    According to the Washington Post, the American Association for Homecare alone has contributed $138,490 to members of Congress since 2002. And what do AAH members get for their generosity? The right to charge U.S. taxpayers $1,825 for a hospital bed anyone else can buy online for $754. In 2003, conservatives in Congress tried to put a stop to this madness by passing a law that required the HHS to phase out its fee schedules in favor of competitive bidding. Now that those fee schedules are about to end, Congress is moving to preserving them.

    Senate Finance Chairman Max Baucus (D-Mont.), who received $4,000 from the AAH last year, added a provision to his Medicare legislation yesterday that would delay new HHS regulations creating a competitive bidding system for medical equipment. The new system was scheduled to begin in just 10 metropolitan areas but would have begun saving American taxpayers about $125 million a year. If the competitive bidding plan was taken national, it would save $1 billion annually. Defending Baucus’ legislation, Chesapeake Rehab Equipment President Gary Gilbreti said, “Large numbers of small business in our industry will begin losing money and will be forced to reduce staff or ultimately close.”

    And that is why government will never be able to reduce health care costs. Politicians are incapable of turning off the federal spending spigot when their constituents could be harmed. The better solution for controlling health care costs is consumer-driven health care and the only solution for containing Medicare spending is to change the program from an “entitlement” into insurance.

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    Posted in Ongoing Priorities [slideshow_deploy]

    6 Responses to Morning Bell: Why Government Can Never Lower Health Care Costs

    1. Michael Reinemer, VP says:

      Since you're attacking the organization I work for, I'll weigh in. This is a difficult topic to understand unless you spend a few minutes on it. Because Medicare rates have been set by an annual fee schedule, home medical equipment companies have historically competed on the basis of service and speed setting up seniors discharged from hospitals, for instance, getting them out of more expensive institutional care into the home setting where they might need oxygen therapy, a hospital bed, etc. The bidding program, promoted for years by both Democrats and Republicans, was supposed to bring market pricing. But has been poorly implemented in a way that actually reduces competition. In fact, both conservative Republicans and Democrats are calling for delay in the program to fix the problems. See http://www.aahomecare.org to get the full picture. This issue is not partisan and it can't be twisted into a tired, knee-jerk liberal vs. conservative cartoon. More broadly, using the Internet as the basis for pricing Medicare equipment or services delivered to a frail senior at home is absurd but that's what critics would have you believe you should be used to set reimbursement for your grandmother's oxygen therapy or power wheelchair. Home medical or durable medical equipment is the smallest, slowest-growing, and most cost-effective sector of Medicare.

    2. Pingback: Morning Bell: Why Government Can Never Lower Health Care Costs

    3. Shelly Dewail, Kentu says:

      The governments competitive bidding program is a more than a disaster…it's a catastrophic event. Even though competitive bidding will put thousands of DME providers out of business and many employees on unemployment, the major effect will be to the Medicare receipients. These receipients will be called on July 1st and be told by their trusted DME provider that the "government" has prohibited them from receiving their services and they will have 10 days to find a new provider. Now if your mother or grandmother was on oxygen-which is required to substain life, would you not be upset that the "government" could possibly cause major harm or even death to her? Although Medicare services tells non winning DME providers they must help Medicare recipients find a winning DME provider, do you think a company and their employees will be interested in helping your mom or grandmother find a new provider when that non winning provider will more than likely be shut down and their employees are out of a job? Probably not!

      Come on law makers…get a grip on reality.

    4. Cheryl Handy, Illino says:

      Kudos. Great article. Government intervention is not the answer to the increased medical costs. (Don't even get me started on the AARP's "United We Fail" campaign.)

      I have been the primary care-giver for a "frail senior." And, in that capacity, I have grown tired/discouraged of monthly examinations of the Medicare statement. Nearly every month I see Medicare fraud on the part of DME supplier (Apria) who bill Medicare for months of oxygen and equipment that my dad never had.

      Per Medicare fraud mandates, I request the DME company's records for my dad. And I actually see forged doctors' signatures!

      The only thing that Medicare does is sent a statement to my dad that indicates Medicare has requested repayment from Apria. That's all. Medicare should stop contracting with companies that have a history of fraud (or really bad record keeping if we think these are honest errors.)

      What if the "frail senior" does not have an advocate (i.e. daughter) reviewing Medicare statements to check on the billing? I shutter to think of the fraudulent payments to DME suppliers (like Apria) that Medicare just pays without question . . . and that no one ever challenges.

      There is such a push and incredible pressure for my dad to accept home healthcare after he leaves from hospitalizations (dad is a cancer patient). The hospital staff is always shocked that I (the college – graduate level – educated and loving daughter would chose to care for my dad 24/7 at home.) The hospital doctors say "get the home health" "Medicare pays for it" "you have a life too."

      Well, part of having a sick family member is for the family to pull together. My caring for dad at home reduces the home health care costs and ensures loving care for my dad. Home health agencies in the area are irritated because my refusing their "help" is the equivalent of a blank check to Medicare being taken out of their pockets!

      Caring for my dad has educated me on this issue and changed the direction of my professional interests. (www.advocateyourself.blogspot.com)

    5. Rita, Dallas says:

      Generic medications are a great way to keep your prescription drug costs down. I’ve seen ads on TV for Caduet. It has two ingredients. One is Amlodipine and the other is Atorvastatin. With my RxDrugCard I can get 30 tablets of Amlodipine for $9 and 30 tablets of Simvastatin for $9. I’ll bet they are charging more than $18 for this new drug! The unthinking public is going to pressure their doctors into giving them something just because it’s new, when something old or generic would do the job for cheaper.

    6. Pingback: Obama's Right: We Are Out of Money, And Here's Why - Columns - American Issues Project

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