The country must move from the employer-paid healthcare
system and FICA tax system. Each employee is to have these revenues paid to them,
increasing their salaries. In the past, these revenues were tax-free, but when
paid to the employees they are now subject to income taxes. Personal and
business taxes will have to be increased evenly, across every tax level and the
top income tax rate that was cut be reinstated. All individuals will have an
increase in salary and a larger amount of disposable income. The nation overall
will have a lower health care burden, with the manufacturing industry
eliminating all its health care costs.
Healthcare Oligopoly
Monday, May 4, 2020
Saturday, May 2, 2020
Medicare/Medicaid Programs
The creation of this Oligopoly falls at the feet
of the federal government. In its production of the Medicare/Medicaid Programs,
it created a uniform billing system; then, by its effort to control medical
costs by creating Health Maintenance Organizations (HMOs), that helped
eliminate competition. The leading causes of the Oligopoly is the failure of
the law enforcement agencies, the Department of Justice’s (DOJ) Antitrust
group, failing to enforce the consumer protection laws; but Still greater, the
failure of the Internal Revenue Service (IRS) due to its lack of knowledge of
contract law and not enforcing Generally Accepted Accounting Principles (GAAP)
for accrual taxpayers and the collection of taxes mandated by the tax code.
Under the accrual method of accounting, revenues and deductions are recognized
by financial instruments like bills and checks, not by cash flow.
The Medicaid program created a pool of federal
money, divided into twelve regions, with each region getting a weighted amount,
with each region annually proportion determined by the increase in charges for
medical services. To increase a region's share of the pool of money, it
motivated a competition for increasing charges or matching the increases in
other regions. Through this writer's efforts, this competition was eliminated.
The government programs designed a breach of
accepted accounting principles for the first time in our history from the
accepted accrual accounting methodology, in that the amount listed on the
beneficiary's bill was not the actual debt owed to the provider, this is unlike
the amounts listed on the private-pay patients' bills. The government programs
created two accrual accounting systems. The new invoice was and still is a fake
invoice that only contains medical and billing information, but does not create
a debt or legal liability owed to the provider.
In 1973 Congress passed the HMO law, allowing
insurance companies to create provider networks, to select and direct their
insured members to the lower charging providers in a geographic area. The idea
was that the providers would compete with each other by lowering their charges
to get access to the insurance companies' members. The law was and is a
restraint of trade. HMOs did not take off until the late 1980s, but for a
different reason; the insurance companies began choosing higher charging
providers rather than lower charging providers but demanding that the provider
accept a smaller payment amount than the standard charges listed. The
difference not paid was nick-named a "secret discount"; the insurance
companies and providers called the "secret discounts" trade secrets,
removing medical billing transparency. The "secret discounts" went
from zero percent in 1983 to eighty-five percent today.
In 1983, to control the spiraling beneficiary
costs, Medicare went from the proportionate reimbursement of the expenses to
the Prospective Payment System, the government grouped related procedures based
on diagnostics, and set a fixed reimbursement amount for each group (DRGs). The
idea was that a provider could make a more significant profit by lowering its
costs. The idea was that they would get higher returns by reducing their costs.
It sounds like a great idea, but there was a flaw built in the reimbursement
methodology. The new law required an annual increase in the reimbursement
rates; the new amounts would be determined based on a bread basket full of
indexes, with each index having different weights. The heaviest weighted
indexes are under the control of the industry; they are the medical charges,
the physicians' pay, and the Consumer Price Increase (CPI); the CPI included
the fees listed on the patients' bills. Since 1983 medical charges index has
always been higher than the CPI, bringing the CPI higher. So, by increasing
medical charges and physicians' pay, the government pays out more money, and
each year the pot of gold in the federal budget gets more significant, and so
does our taxes. From this point in time, health care revenues begin to climb;
the major contributing factor is an increase in medical charges.
The largest financial group of medical patients is
the privately insured patients, at seventy percent. The insurance companies
pass through the increasing charges by increasing their premiums to their
customers, the nation's employers. But they were not willing to pay the higher
fees for the medical providers to get more money from the government.
Fraudulent accounting fixes the problem of increasing charges and maintaining
the same costs. In 1983 the healthcare industry introduced the "secret discount,"
which is not a discount but a kickback paid to the insurance company in the
form of a cancellation of debt. A legal discount is placed on the bill at the
time of issuance and deducted from the gross amount given you a new net amount.
The designers of the Prospective Payment System
relied upon the enforcement of other laws. Under the Consumer Protection Law,
also known as the Antitrust Law, the prices are the same for all private-pay
patients. The Department of Justice (DOJ) is responsible for the enforcement of
these laws, especially price discrimination, and price-fixing. It is easy to
look at the providers' bills and decide all patients have the same amounts
listed, especially since there are no discounts listed on any patient's bill.
The DOJ failed to recognize is that different amounts collected are what
determine price discrimination, not the charges listed on the patient's
bill. When the provider collects more
from the un-insured patient than from the insured patient, the provider is
violating the price discrimination laws, which makes them subject to criminal
and civil lawsuits.
When it comes to billing the beneficiaries of the
government programs, the bill does not create the legal obligation. Congress
determines reimbursement amounts. The providers charge the government patients
the same price as the private-pay patients but do not collect the full amount.
The difference between the amount billed and the amount collected is a partial
cancellation of debt. Canceled debt given to the government goes unreported to
the Internal Revenue Service due to the fact the government does not pay itself
taxes. In 1965, for financial reporting, to distinguish between the canceled
debt given to the private insurance companies and given to the government, the
Financial Accounting Standards Board (FASB) created the contract adjustment
account for government canceled debt deductions. In 1983 the industry began
using the account for both government and private business canceled debts.
In the healthcare industry, a kickback paid to
someone for referring a patient is illegal; it has criminal and financial
penalties for the giver and receiver. The tax code states that no deduction
from gross income is allowed for kickbacks. The tax code does not recognize
contract adjustments as a legitimate deduction. The tax code only has two legal
reductions from gross income, bad debts and canceled debts.
It is easy to argue that even though the insurance
companies overcharge for their services and the costs for the medical services
are lowered by the canceled debt; their profits would increase and be taxed.
For the kickbacks given to the insurance companies, the insurance companies
reciprocate by steering their insured members to the providers. When an insured
member goes to an out-of-network provider, the insurance company charges the
patient a higher variable co-payment, a percentage based on the billed charges
rather than a lower fixed amount required by the HMO law, for additional
administrative purposes. This practice is economic duress, and its requirement
is in the contract between the in-network providers and the insurance company;
its sole purpose is for the insured members to boycott the out of network
providers. This practice is a restraint of trade.
The proper implication of the anti-trust laws and
some other tax laws for the effectiveness of the oligopoly system that the
Government of USA properly enforced it. The anti-trust laws, consumer
protection laws and the tax laws have protections for the citizens included in
them. The secret contracts between the providers and the insurance companies
violate these laws. The anti-trust laws make it illegal for any person or third-party
payer, to solicit and receive a lower price for services that other patients
have to pay. All private-pay patients have to pay the same prices. It is
illegal for the insurance company to seek a lower price for medical services or
for provider to give a lower price to an insurance company. The health care
providers say they charge everyone the same price for comparable services and
goods but collect different amounts. The
law is very clear under the anti-trust and consumer protection laws of the
definition of price; it is the actual amount collected. The tax law is
perfectly clear, under the accrual method of accounting, price is the net
amount listed on the bill.
The provider may have somewhere between four and
fifty insurance companies it forms contracts with. Each of these companies has
many insurance products they sell, varying the amounts they pay for covering
medical services. Each insurance company negotiates with the provider their own
approved payment rate for the different services. The provider has no set
discount rates for the insurance companies, all rates are negotiated. In the
secret contracts the discount rates are not fixed the same for all services but
are negotiated, therefore through careful auditing and calculations the insurance
companies can get the best financial payout rates to match their insured
member’s probable medical needs. The overall hospitals costs are shifted to
different medical diagnostics. This is also cost shifting. It causes one group
of patients to carry a heavier burden of costs.
In the contract between the provider and the
insurance company there is included a clause that states the insurance company
must charge a second co-payment if the insured member goes to an off-network
provider. This is a penalty, it is financial duress, to make the insured
members boycott the off-network providers. It is a restraint of trade. It is
illegal. It is price fixing. The original intent of a co-payment was to
encourage the patient to select the lowest cost medical provider, there was
never any need for a second co-payment.
The original intent for the HMO law was for the insurance
company to select the lowest charging medical provider. Today this system has
completely broken down; the insurance company does not care what the medical
provider charges, because they just pass the charges on through higher
premiums, but selects the provider that gives it the greatest kickback. This is
a restraint of trade.
Healthcare and Income Tax System
There are certain taxes on income that everyone
has to pay, and FICA taxes are at the top of the list. And employers must
withhold these taxes from employee paychecks and pay them to the Internal
Revenue Service (IRS).
FICA taxes are the Social Security and Medicare
taxes paid by individuals and employers. FICA taxes are called payroll taxes
because they are based on the amounts paid to employees.
FICA taxes have two elements. Withheld from
employee paychecks and paid by employees and employers for (1) Social Security
(OASDI) and (2) Medicare. This article
gives you information about how to calculate FICA taxes, how to report and pay
these taxes, what earnings are not part of FICA taxes, and more.
The term "FICA" is short for the Federal
Insurance Contributions Act. The Act was introduced in the 1930s to pay for
Social Security.
Lowering corporate taxes is a benefit to existing
businesses, giving them a short-term profit. But, lowering taxes does not lower
the cost of manufacturing because it only affects the revenues above the cost
break even line. The Congressional Budget Office has just revised the forecast
downward for the creation of new jobs because of the latest tax refund
legislation and increased the increase to the national debt from $11.5 billion
to $13.5 billion for the next ten years.
When these recommendations for a single payer
system and revised tax system are implemented there will be many changes taking
place, some good and some bad. On the good side, everyone will be covered for health
care, people with pre-existing conditions will be covered and people will have
their choice of healthcare provider. Employees with existing illnesses or
disabling skills will be able to get jobs and hold on to them with their skills
to produce. The money allocated to the employees for health care will be paid
to them in the form of higher wages, about $10 thousand per employee, plus FICA
taxes. The salary increase will be the biggest recorded in our nation’s history
while creating a huge consumer group flush with money. The 1.7 million
bankruptcies personal bankruptcies due to health care costs will be eliminated.
The 25 percent of administrative health care expenditures for billing and
collecting will be eliminated. The national health care expenditure will be cut
in half or lower. The trade deficit will be eliminated. The National Debt will
be lowered. With universal healthcare all employees will have a greater freedom
of choice of where they work and not have to worry about changing jobs with a
loss of medical coverage. The state’s Medicaid expenditures will be eliminated
and should immediately be moved to offset the cost of free higher education,
like every other industrial country.
On the downside the bad news is: based on a
comparison with the insurance companies’ employees per capita of Canada 250,000
sales jobs will be lost, there is no need for sales people; these sales jobs
should easily be moved to the manufacturing industry. Taxes paid for The
Federal Insurance Contributions Act (FICA) will be increased and a flat tax
added to the corporate and personal income rates. The total FICA tax is 15.3%.
That percentage is applied to the employee's gross pay. The employer and employee
each pay 7.65%. Here is the breakdown of these taxes:
- Within that 7.65%, the OASDI (Old Age, Survivors, and Disability
program, AKA, Social Security) portion is 6.2%, up to the annual maximum
wages subject to Social Security.
- The Medicare portion is 1.45% for each employee, on all employee
earnings.
The new amount of the flat tax will have to be
determined by the General Accounting Office and should be added on all earned
income tax levels, which will insure all people pay their fair amount of taxes.
The medical portion should only rise 3% to 4% raising each contribution to
10.65% to 11.65%. Included will be the government’s obligation to our military
veterans. The rise in the amount collected for the new taxes will be far lower
than each person’s increase of income.
Our progressive personal income tax system is
fair. We realize certain individuals will always make more than others, allowed
to keep most of it which is a strong motivator for success. We also realize
that when more is given to an individual under our capitalistic system, a
strong financial system is required for maintaining our freedom, therefore in
the short run more has to be given to the government for the maintenance of the
country, maintenance of our capitalistic system and the benefit of its citizens
who make it possible. In the future we will pass legislation for the
maintenance of a balanced budget. When
the transition is finished, we must allow market forces to stabilize all
industries and keep government interference to a minimum.
The country must make the changes advocated or we
will be facing financial ruin. Manufacturing creates wealth. Without a strong
manufacturing industry, we will become a third world country, with our main
industry becoming agriculture. The cost of our produce will keep rising because
other rich nations will be buying our produce and will inflate our costs.
A massive stimulus program will take place to give
more money to employees directly and the first steps to rebuild the United
States manufacturing industry. On August 14th, 2020 the employers are to cancel
all health insurance contracts for employees; the employers are to pay each
employee the amount allotted for health care benefits, which is to be included
in employee’s salaries. Medicare is going to cover all medical expenses, at the
rates already determined. Every patient will give the health care provider
their Social Security Number or their guardians SS #. All assets of health
insurance companies will be frozen by Internal Revenue Service while audits are
in process.
High Healthcare Costs Has Also Caused Huge Damages To The Manufacturing Industry. Here Are The Details Of How It Works
The United States cannot compete with other industrial
countries because our manufacturing costs of goods are higher than their
selling prices of similar good. Our manufacturing costs have increase year
after year during the past three decades because our national health care
expenditures have increased during this same period, while the international
competitors have maintained the low health care expenditures. The reason is
they are on a single-payer health care system while we are not. Our country’s
national healthcare expenditures are eighteen percent of the GDP on health
care, while other industrial countries average about seven percent of gross
domestic product. Our manufactures incur the costs of healthcare into the price
of manufactured goods, while our international competitors do not.
In the United States the majority of health care
costs are paid by employers. Employer health care costs come in two categories,
direct costs, the costs paid for the employees’ benefits, and indirect costs,
the health care costs included in products or services they purchase from
others, and Social Security costs. All goods or services that are utilized have
built into its price direct costs of health care for its employees and indirect
costs.
All manufacturers must sell their products at a
price above their cost break-even line. Any cost incurred by a manufacturer are
marked up a reasonable amount to set the selling price, cover taxes, cover
product over-runs, and make a profit.
For this discussion I am going to use a forty percent markup.
Our country spends eighteen percent of the GDP on
health care, while other industrial countries only spend six percent. Our
nation used to spend the same percentage as other nations but that was prior to
the industry giving secret kickbacks to the insurance companies for referring
their insured members to the providers. When you mark up the eighteen percent
by an additional forty percent, the total cost of direct and indirect cost goes
to about twenty-five percent of total manufacturing costs.
Since 1982 the health care industry increased its
share of the GDP from seven percent to today’s eighteen percent.
Correspondently manufacturing industry decreased it share of the GDP from
thirty-four percent to twenty-three percent. The healthcare industry adapted
restraint of trade practices, eliminating competition between parties. The
actual competition was which provider was going to give the insurance companies
the largest kickback in order for the providers to have access to the insured
members.
As the
manufacturing marginal costs became greater than the competitive prices of
similar goods due to increased health care costs increases the companies closed
and filed for bankruptcy. The Federal Trade Commission and the Department of
Justice were negligent in not recognizing the harm one industry was doing to
another industry. Our antitrust laws are not only meant to protect us from one
company becoming dominant in one industry but also to protect another industry
from being damaged by a rival industry. The DOJ did not even recognize the
price discrimination between private-pay patients, the actual difference
collected from uninsured patients and the insured patients. The uninsured
patients pay six times more to the providers than the insurance companies pay
for the same services, BUT the insured pay more because the insurance premiums
are based on the patients billed amount, the charges listed on the insured
member’s bill.
The legislative branch of our government got into
the health care business in 1965 but failed to control the costs spent on
health care. There is an axiom that states: when the government goes into
business it never fails but passes on its losses to the people by increasing
taxes. This is what happened with Medicare and Medicaid. There was an early
warning sign in 2006. The amounts listed on the beneficiaries’ bills were
causing problems. The General Accounting Office was charged with determining
the costs for Medicare Part B hospital out-patient services. In their report to
Congress it noted that if it would be allowed to recompute the Medicare Part A hospital
in-patient services, Medicare could save seventy-two percent for this program.
This fact was never acted on and completely ignored. Today, they could save a
figure that would be closer to eighty-five percent.
Major Examples Of Health Insurance Frauds That Happened In Clinical Settings
- Fraud Insurance Claims – There are numerous pieces of evidence found that in cases
medical services providers claim compensations for services and procedures
that were never performed or provided.
- Claims for non-covered medical treatments – Government and private insurance companies authorize a
certain set of services to their subscribers. In some cases, healthcare
providers tried to trick the system by claiming compensations for
procedures that were not authorized.
- Tempered dates and locations – In this type of health care insurance fraud, providers tried
to temper the data containing the information about the location and date
of the services provided.
- Inaccurate ICD and CPT coding – To support payment claims health care services providers
would add extra ICD and CPT codes and try to overcharge for services
provided to patients.
- Prescription drug fraud – Prescription drug fraud is one of the major types, costing
billions to US healthcare. Forged prescriptions and issuance of medication
which was not required is a type of prescription fraud.
Health insurance frauds are not only affecting
insurance companies, financial institutions, and government-run programs; these
fraudulent activities are also affecting common people who are law-abiding
citizens and, pay their insurance premiums in time and have purchased insurance
coverage. However, due to fraud, they pay for the medical services which they
never availed.
The following chart shows the Manufacturing Industries decline of GDP as the kickbacks increased in the Healthcare Industry
This chart shows the U.S. Trade Deficit grew as the Manufacturing Industry declined.
Statistics That You Must Know About The USA Health Care Industry In 2020
Some of the statistics that must know about the
USA Health Care Industry in 2020:
- The global health industry was worth $8.45 trillion in 2018.
- Global healthcare spending could reach over $10 trillion by 2022.
- The US has the greatest healthcare spending, sitting at $10,224
per capita.
- The US spends twice what other countries do on healthcare.
- There are 784,626 companies in the US healthcare sector.
- McKesson is the biggest US healthcare company with annual revenue
of $208.3 billion.
- The internet of things (IoT) can lower the costs of operational
and clinical inefficiencies by $100 billion per year.
- 64% of physicians believe the IoT can help reduce the burden on
nurses and doctors.
- The reason for the loss of manufacturing and the loss of wealth
because the overall United States trade deficit shrank last year for the
first time in six years as the American economy cooled, domestic oil
production soared and President Trump waged an aggressive global trade war
to rewrite America’s trading terms.
- Both imports and exports fell as American factory activity slowed
and businesses and consumers felt the impact of tariffs imposed on China,
the European Union, Canada, Mexico, and other nations. Total American
exports dropped $1.5 billion to roughly $2.5 trillion, while imports fell from
$12.5 billion to $3.1 trillion.
- Soaring domestic oil production was a major factor in the
shrinking trade deficit, cutting into imports of foreign crude oil by
$30.3 billion last year. Exports of civilian aircraft also fell $12.6
billion last year, reflecting the fallout from the deadly crashes of
Boeing’s 737 Max airplanes.
- Manufacturing productivity in the U.S. is rated very high, but it
is a false indication of the manufacturing industry. The increase in
productivity has been attributed to the use of new automated manufacturing
methods, but in reality, it may be caused by the removal of marginal
profitable manufacturing goods, being produced in other countries, from
the equation. The country has moved into producing larger costly products
like planes, trains, trucks, cars, etc., but the majority of consumer
goods come from other countries.
Key Factors Highlighted In The Report
- The U.S. spends more on health care as a share of the economy —
nearly twice as much as the average OECD country — yet has the lowest life
expectancy and highest suicide rates among the 11 nations.
- Of the Thirty-five OECD member countries, the U.S. Healthcare
System is ranked thirty-fourth in quality of care.
- The U.S. has the highest chronic disease burden and an obesity
rate that is two times higher than the OECD average.
- Americans had fewer physician visits than peers in most countries,
which may be related to a low supply of physicians in the U.S.
- Americans use some expensive technologies, such as MRIs, and
specialized procedures, such as hip replacements, more often than our
peers.
- The U.S. outperforms its peers in terms of preventive measures —
it has one of the highest rates of breast cancer screening among women
ages 50 to 69 and the second-highest rate (after the U.K.) of flu
vaccinations among people age 65 and older.
- Compared to peer nations, the U.S. has among the highest number of
hospitalizations from preventable causes and the highest rate of avoidable
deaths.
- Twenty-nine percent of employees are involved in administrative
and bill collecting activities.
- Healthcare Insurance Companies have about 250,000 sales and
administrated people.
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