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The Age of Wisdom and the Age of Foolishness: A Tale of Two Healthcare Visions

The Age Of Wisdom And The Age Of Foolishness: A Tale Of Two Healthcare Visions

We were witness to the starkest of contrasts recently when financier Warren Buffet delivered a strong admonition about the perils of healthcare costs just days after a blatant political deal was cut between the Centers for Medicare and Medicaid Services (CMS) and the state of Florida. It was hard not to think of Dickens’ famous opening: “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness…”

On the inspired side, the brilliant chairman of Berkshire Hathaway rapped his fellow CEOs for pushing for lower corporate tax rates. Buffet remarked at his shareholders’ conference that corporate taxes are not the root of the increasing lack of competitiveness of American business worldwide. He said healthcare costs are.

It is hard to blame CEOs for jumping on the lower tax bandwagon. With an administration and House that care little about coherent health policy, they will take what they can get.

In truth, while changes need to be made, the actual corporate tax load is not demonstrably different than most developed nations. Yes, the corporate tax rate is extremely high. But it doesn’t tell the full story. Big business has lobbied over the years for so many credits, allowances, and other loopholes that they pay very little – sometimes nothing. It is the medium- and small-sized businesses, which should be the driver of economic growth, that are paying the huge tax bill comparatively as they have no strong special interests to buy off politicians. This is where the fix is needed.

Where Buffet was going, however, was a place we often go to in our blogs: healthcare costs eat up nearly 20% of the gross domestic product, compared with 10% to 12% on average for most developed nations. More importantly, the dysfunctional system we have built here, with lack of access and gaps in care for tens of millions of Americans, means that the employer-sponsored system bears a massive cost shift. Because providers are under-reimbursed or not reimbursed (in the case of the uninsured), employer-sponsored coverage pays a disproportionate share of the healthcare bill. Indeed, as Buffett noted, the actual corporate tax burden has fallen over decades while healthcare costs have increased exponentially.

Now, Buffett has more radical views than this blog does about how to solve the crisis. Fundamentally, though, we agree that it is rooted in providing access to affordable care to everyone to move people from high-cost crisis services (such as hospitals and ERs) to low-cost preventive services and chronic disease management. Only in this way, can we begin to deal with untempered healthcare costs and inflation and improve quality.

Contrast this with the more sinister story: CMS recently agreed to a special Medicaid deal with the State of Florida, whereby it will increase federal dollars for the state’s hospital funding pool. Florida is one of 19 states that have not expanded Medicaid. Texas and Florida are the two biggest holdouts and thus have millions of uninsured. The previous Obama administration lowered or held hostage such hospital monies in most states as it tried to promote expansion of Medicaid through the Affordable Care Act (ACA). Obama’s CMS had cut the Florida “low-income pool” to about $600 million annually. Instead of returning it to the $1 billion it was prior to the reduction, Trump’s CMS is now offering to raise the annual amount to $1.5 billion a year.

In the past, we have been critical of the Obama administration’s inflexibility in working with states to expand Medicaid at lower income levels than dictated by the ACA (e.g., 100 percent of the federal poverty level as opposed to 133 percent). But this move by Trump is truly nonsensical. While some funding for uncompensated and under-reimbursed care will always be warranted, the message is clear: instead of expanding access to upfront healthcare to hundreds of thousands of people, Florida and the Trump administration are content to continue to seed a slush fund and feather the nests of inefficient and wasteful hospitals — all in the name of “healthcare reform.”

All of this was done because the new administration does not want to see any new Medicaid expansions. It is a political payoff. If the shadow repeal of Medicaid expansion in the House’s American Health Care Act (AHCA) did not define things well enough, this grotesque Florida deal makes clear the fundamentally flawed and political thinking of the administration on healthcare.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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