MINNESOTA
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The Minnesota Free Market Institute will host Lord Christopher Monckton Wednesday, October 14th at the Benson Great Hall on the campus of Bethel University. The evening starts at 7:00 pm with the national premiere of the Cascade Policy Institute documentary, “Climate Chains” (view the trailer here). Lord Monckton will give the keynote after the documentary.
The event is free and open to the public, view the flyer here.
In a editorial placed in today’s edition of Real Clear Politics, Oklahoma’s Junior Senator, Sen. Tom Coburn, called on the federal government to address the rampant fraud in Medicare and Medicaid before seeking to reform the entire health system. A licensed medical doctor for over 20 years, Senator Coburn knows the ins and outs of the health care industry well. This, his latest salvo against health care reform, drives right into the center of debate. If the government cannot prevent rampant waste within Medicare and Medicaid, how can Americans trust that a complete federal takeover of health care will not end up with similar results?
In his argument, Coburn sites a report by the Governmental Accountability Office claiming that a full 10 percent of Medicaid payments made in 2007 were improper. Medicare fraud estimates range as high as $80 billion, according Kim Brandt, one of Medicare’s anti-fraud specialists.
Coburn also serves on the Senate’s Permanent Subcommittee on Investigations, the same whistleblower committee that found individuals fraudulently using the ID numbers of dead doctors to file false claims, bilking taxpayers of over $90 million. Audits by the committee also found that in four of the nation’s largest states, California, Texas, New York, and Illinois, as much as 40% of home health care expenditures went toward fraudulent claims.
The editorial’s co-author, Harvard’s Dr. Malcolm Sparrow, author of “License to Steal” believes fraud could account for up to 35% of Medicare and Medicaid’s total claims, amounting to hundreds of billions of dollars.
According to the editorial, Medicaid internal inspectors agree that waste fraud and abuse run amok in the system. This sentiment is echoed by Medicare anti-fraud specialist, Kim Brandt saying, “The truth is, no one is sure. All they know is that the more they look the more they find.”
Back in May, Sen. Coburn introduced bi-partisan legislation that seeks to use privare sector entities to identify and prosecute fraudulent claims. Coburn says, “Members of Congress should look to the credit card industry as a model of fraud containment. It processes over $2 trillion in payments every year from 700 million credit cards being used at millions of vendors to buy countless products. Fraud in that industry is one-tenth of one percent while fraud in Medicare and Medicaid as at least 100 times higher.”
A Guest Post by Randy Ammon
As I’ve been listening to various talk radio programs I’ve heard the following new talking point proffered by national health care supporters at least four times in the past 48 hours: We have to pass a government option! Two-thirds of the bankruptcies in the US are caused by medical bills!
The basis for this argument is found in this recent study in the American Journal of Medicine. A snippet of the conclusion of the study is as follows: Using a conservative definition, 62.1 percent of all bankruptcies in 2007 were medical; 92 percent of these medical debtors had medical debts over $5000, or 10 percent of pretax family income.
At first look you’d have to say “Wow!” Can nearly two-thirds of bankruptcies be caused by the results of medical costs? The answer, after you look at the study and some other information is “No.”
Brett J. Skinner, director of bio-pharma, health, and insurance policy at the Fraser Institute, does a great job of deconstructing the noted study. His article, here, notes several items that left the study’s conclusions suspect.
First, Skinner makes the logical comparison with Canada. With the bankruptcy law very similar in the two countries, and Canada having a government provided health care system, if the studies conclusions are correct, we should expect to see significantly lower bankruptcy rates in Canada. We don’t. In both 2006 and 2007 Canada had a higher bankruptcy rate per population than we had in the US.
Secondly, Skinner looked at other studies done on the topic. One of those analyses, done by the Department of Justice, found that medical debts accounted for only 12 to 13 percent of the total debts among American bankruptcy filers who cited medical debt as one of their reasons for bankruptcy.
So here’s the question: “Is it possible to reconcile the study with the data Skinner found or is the study a fraud?” Thanks for asking. Yes, the two can be reconciled.
Going back to the original study we find that the mean negative net worth (the excess of debt over assets) of those who claimed to file bankruptcy due to medical reasons was $44,622 (Table 1). We also see on page 4, that the average total, out of pocket medical costs for those that filed bankruptcy for medically bankrupted families were $17,943. If we assume that the entire amount of out of pocket costs were left unpaid and counted in the negative net worth (it wouldn’t be but let’s use it for a moment), that would still leave a negative net worth of approximately $27,000 that resulted from other reasons.
A negative net worth of $27,000 would typically not be from a home mortgage as most borrowers are not be allowed to borrow more than the equity (the study was done in 2007 before the current melt down and reduction in home values). A negative net worth could be partially incurred from a vehicle as most new vehicles are upside down in equity for the first year or two of ownership. However, with the average mean income reported as only $30,000, one wouldn’t expect a whole lot of really expensive new vehicles included in the negative net worth of this sample. A negative net worth of $27,000 likely comes from one place — credit cards or other uncollateralized loans.
While the current study didn’t break it out this way, another study shows that the average person who claims they filed for bankruptcy because of medical reasons also had significant credit card debt. In a study done on 2003 Delaware bankruptcies, Ning Zhu from UC Davis found, that compared to a control group, those who filed bankruptcy had a slightly higher mortgage debt, nearly the same debt for vehicles but had a mean of over $25,0000 of credit card debt compared to less than $2,500 for the control group.
Regarding the possibility of an “adverse event” like medical costs causing bankruptcy, Zhu concludes: “Although adverse events surely trigger the filing of some personal bankruptcy cases, our evidence suggests that excessive consumption is a very important cause for personal bankruptcy that has not received due attention.”
Based on Zhu’s analysis and the large negative net worth that was not attributable to medical costs, medical costs were simply the “straw that broke the camel’s back.” The straw could have been any of a number of other things i.e. a major car repair, a major home repair or any number of other unexpected items.
Rather than any one specific issue, like most other bankruptcies, the folks that this study samples had a series of issues with the last one in line, for them, medical expenses, being more than they could handle. In each case, medical costs were just one of the issues that led them to bankruptcy. To say medical expenses were the reason that these folks filed for bankruptcy is about as accurate as saying that the Titanic sank because it was holding too much water.
Randy Ammon is a self-employed business consultant. He was campaign manager for Dave Thompson in his run for Chair of the Republican Party of Minnesota.
Our friends over at the Cascade Policy Institute tipped us off to a new short climate change documentary coming out mid-september. The documentary, Climate Chains, specifically targets cap and trade legislation and its possible effects on the economy. The movie is particularly relevant with the Senate moving to debate the Waxman-Markey legislation sometime this fall. Check out the trailer below.
This commentary was first published in the Minnesota Free Market Institute Weekly Update. For your free subscription, click here.
Neal McCluskey of the Cato Institute (”Feds in the Classroom“) alerts us to a truly disturbing consequence of the federal government’s intervention in education. The U.S. Constitution provides no grant of authority for federal involvement in education. As the founders recognized, a government that has no moral authority to mandate how people worship has no moral authority to indoctrinate people as to how or what to think. The commonality of freedom of religion and freedom of education, blurred by the No Child Left Behind Act, is about to be obliterated by President Obama’s September 8 address to the nation’s school children.
The president’s speech is not simply an extended public service announcement encouraging students to work hard and stay in school, a message most of us would agree is worthwhile for any president to deliver and every student to hear. The president’s speech is the point of the spear in a concentrated campaign that exposes the dangers of a monopoly system of government-run education.
Irrespective of who controls the White House, an education system manipulated by the president and the Department of Education is not in keeping with the principles of a free society.
As a prelude to the President’s speech, the taxpayer-funded U.S. Department of Education (remember when Americans took seriously the idea that Department of Education should be abolished?) has sent detailed lesson plans for grades pre-K-6 and 7-12 to schools nationwide. The lesson plans, “developed by and for teachers,” outline ways to capitalize on the message of the president’s speech – how to support the president and his goals – not the educational opportunity to teach critical thinking and analysis.
In a letter anticipating the president’s address, Secretary of Education Arne Duncan flatters teachers by noting that their work is “critical to…our social progress.” As McCluskey notes, Duncan’s statement strongly suggests – “as many educators have held and continue to hold” – that it is the job of public schools to impose values, often collectivist, on students. The lesson plans sent out by Duncan do little to dispel that idea.
Pre-K-6 kids are encouraged to make posters setting out “community and country” goals. The lessons encourage schools to teach that it is important to listen to “the President and other elected officials.” Even more than just listen is guidance that is explicitly designed to glorify the office of the presidency and Barack Obama specifically. Teachers are encouraged to ask students how President Obama will “inspire” them in his speech before he gives it, and how they were inspired after he has spoken.
Again, let me be clear: This idea of a “cult of the presidency” is being exploited in the extreme by the Obama administration, but it is a bipartisan malady. As I wrote during the presidential campaign, both Obama and Sen. John McCain campaigned for a presidency that is nowhere to be found in the Constitution – as is constitutional authority absent for a federal role in education.
The thrust of McCluskey’s work in general points out the inherent dangers of government controlling education (again irrespective of who controls the White House). Power corrupts, and ultimately politicians will use power over education to indoctrinate children, something completely antithetical to a free society. And this is just the starkest manifestation of the inherent problem with government control of education. Every day, writes McCluskey, free people are pitted against one another in defense of their freedom and basic values because they all have to support a single system of government schools.
“Evolution vs. creationism. Prayer in school. Books with offensive material in schools libraries. Decisions over whose history will be taught, and whose won’t. The curtailment of freedom goes on and on when government takes everyone’s money and provides schools with it,” writes McCluskey. “Which is why the only system of learning compatible with a truly free society is a system of school choice – public education, not schooling - in which the public assures that all people can access education, but parents are free to choose their children’s schools, and educators are free to educate how they wish.
Andrew Coulson, also of the Cato Institute, notes the irony of the president saying nice things about kids staying in school and graduating while his own actions and policies are having the opposite effect. Although there is copious scientific research showing that private schools have higher graduation rates than public schools, and that their graduates are more likely to go on to college and complete college, and the president’s own Department of Education found that the DC voucher program is producing significantly better academic results than DC public schools (and at a quarter of the cost), the President Obama has chosen to kill the DC voucher program rather than grow it, and he opposes private school choice programs at the state level that would bring these better educational outcomes within reach of all children.
“So kids, here’s your lesson for next Tuesday,” he writes. “The guy talking at you from the television set may say a lot of nice sounding things, but he is not doing what is best for you. He is letting some combination of ideology and political self-interest trump what is best for you. That’s politics. And that’s one reason why we need limited government and educational freedom.
Amen.
The Tax Day Tea Party organizers are planning another rally at the state capitol on Constitution Day, September 17th. The rally features many prominent speakers from around the state. Bring your friends and family and let your voice be heard.
The event will take place from 5pm to 8pm in front of the state capitol in St. Paul. Those interested in more information can view the flyer here.
The Tea Party organizers’ website can be found at http://www.teapartymn.com
