-- Published: Wednesday, 22 April 2015 | Print | Disqus
My Two Cents
By Andy Sutton
Don’t be misled by the title of this essay. This is not about the housing market or about whatever rates National Van Lines or PODS or any of the other moving-related services happen to be offering. Instead, this essay seeks to give the reader an understanding of the scope of the hole Medicare is in by breaking out just one small niche area and examining it rather than looking at the whole mess.
This essay is, instead, about the cost associated simply with moving people. Forget about surgery, the cost of MRIs, laboratory work, doctor’s visits, medical devices, and the like. This is just about moving an ever-aging population simply from point A to point B. I will say up front that this examination is in no way meant to demean the baby boomers, or anyone for that matter, other than perhaps policymakers who were made aware of Medicare’s problems decades ago, yet opted to push the problem forward to let the next generation deal with it. The taxpayers of the United States have had Social Security and Medicare deductions taken out of their paychecks, for the most part since birth. This piece should NOT be interpreted as any type of justification for higher taxation – at any level. The American people are taxed more than enough as it is. Beyond comprehension, as a matter of fact. As another disclaimer, none of the information provided in this essay is patient specific, but is merely representative of my own personal experience. The data itself, however, is not fabricated. It is real.
The following is a list of the types of transportation that might commonly be provided to a patient: These include, but are not limited to, emergent ambulance transport, transport by helicopter, and a variety of non-emergent transports such as inter-facility transports, transports for various medical procedures like wound care and dialysis among many others, and non-medical van-style transportation.
Mind-Boggling Costs – One Example
Most people are probably familiar with the garden-variety emergency. These incredibly disrupting situations often require a bevy of transportation. For example, let’s use the example of a car crash. One or more ambulances will respond to the scene and let’s say the patient needs a trauma center. The paramedics and EMTs on the ambulance may decide to fly the patient from the scene or perhaps transfer the patient to the nearest ER before flying to a trauma center. Let’s say the crew transports to the nearest ER. That bill will run anywhere between $550 and $750 depending on the distance involved. A helicopter ride then costs between $14,000 and $20,000. Chances are decent that when the patient finally comes home, it will be by ambulance. This transport is likely to be more expensive due to the distance component. Let’s use $1,000 as a baseline as it will be a fairly representative number. Using the upper numbers, just the transportation alone for this type of situation can run in the area of $22,000. Again, understand that this is a representative average. The actual costs can be a lot more.
The above situation, however, is not representative of the costs that plague Medicare even though there are thousands of such circumstances daily in the United States. It must be noted that many other types of medical situations require rapid transport to a specialty facility. Strokes, certain heart conditions, serious illnesses, and other situations where the benefits of rapid transport and care outweigh the costs. Add to that the number of people who suffer from chronic conditions such as kidney failure and require multiple trips per week to a dialysis center. Many times these people are transported either by family members, nursing homes, or medical vans. However, there are just as many cases where a component of the patient’s condition requires transport by ambulance. Let’s take the case of a patient on dialysis to help mitigate the effects of kidney failure. Let’s say the dialysis center is 10 miles away from the patient’s residence, be it home or a nursing home type facility. Let’s also say this patient goes three times per week, which is fairly representative. Don’t forget that the patient isn’t transported simply to the center, but back home as well. These constitute separate trips. The average billable amount for the round trip is around a thousand dollars or roughly $500 each way. Three times per week. That’s $3,000/week. There are 52 weeks in a year. This person might be on dialysis for an extended period of time. $156,000 per year just to move this particular patient back and forth from the dialysis center. Not even considered is the cost of the dialysis itself.
Before anyone gets any misconceptions about ambulance companies or the EMTs and Paramedics working for them, most are non-profit or run by municipalities. The non-profits generally struggle, and the municipal services usually require infusions of taxpayer dollars since they are rarely self-sustaining.
So consider our dialysis patient from the above example. $156,000 just for transportation costs. Medicare won’t pay the full bill of course, and costs vary by jurisdiction, but you’ll see later just how quickly this adds up. Now go grab a copy of your last pay stub and look at the Medicare deduction. Then multiply it by whatever you need to in order to arrive at your contribution to Medicare for a year. See the problem when you hear on the news or in another publication about how there are 1.25 workers for every person receiving benefits? Also keep in mind that I’m ONLY talking about moving costs. Add to that the various doctor appointments required by someone who has kidney failure, all the medications, lab work, etc. The problem just keeps getting bigger. These people are worth every bit of the care they are receiving. They paid in. They worked hard with the expectation that this system would be there to take care of them in their older age. The problem with Medicare is not their fault. Some publications have been so absurd and disgusting in recent years that they’ve unabashedly published articles entitled ‘The Case for Killing Granny’. Disgusting. The Baltimore Sun found the article ‘interesting’. I encourage everyone who hasn’t already done so to look this article up and read it. It is the perfect trial balloon. Sure, it is disguised as making the case for end of life compassion, but let’s call it what it really is – the establishment considers the elderly to be little more than useless eaters. Go look that one up too.
However, I write this article not to spur a debate about end of life issues, but merely to point out the frivolity of the arguments emanating from the various stuffed shirt politicrats who claim they’ve found a way to ‘fix’ Medicare. It cannot be fixed. The above illustration, which is VERY common in today’s medical landscape, illustrates the ludicrous nature of such assertions. This is just one example. There are hundreds of thousands of others, and the baby boomers, who are being blamed (if that is the right word) for the problems with Medicare and Social Security really aren’t aged all that much yet. The leading edge just turned 70 last year. The youngest are in their mid 50s. They haven’t even begun to really utilize the healthcare system yet. By and large they are on a couple of medications. Some have had some procedures, but the knee and hip replacements, dialysis, advanced and intensive cardiac and pulmonary care days are still ahead for the vast majority of them.
A whole other issue arises when considering the plight of the various medical assistance and Medicaid programs. The area in which I currently reside is among the top 5 in terms of consumption of medical and social assistance services in Pennsylvania and we’re talking about three counties that make up less than 1% of the state’s overall population. Many other states feature similar issues. This is no longer an exclusively urban problem. The demographics and economics of medical assistance are even worse than those facing Medicare because the programs are grossly underfunded because those paying in are generally lower and minimum wage workers, the disabled, and those who work the system as their full-time vocation, who of course, contribute nothing, but are still able to draw benefits.
The Next Big Thing in Healthcare
From a boots on the ground view, the next big boom in healthcare appears to be Behavioral Health. Even a cursory examination of drug trends shows that what I call ‘brain dope’ type drugs are being prescribed at ever-increasing rates. These are the Serotonin, Norepinephrine, and Dopamine reuptake inhibitors. There are links to these classes of drugs as outlined in Wikipedia in case anyone is curious about the names of these drugs. Then there is the use of Schedule II Controlled Substances such as Valium and Klonopin among many others. I’m not even going to get into the situation with narcotics and the rampant abuse there.
For some of these people, the world has just gotten to be too much to handle and their psychological reserves for dealing with life have been used up. This results in both intentional and accidental overdose, abuse, hospitalization for the above, and eventually long-term residence in various psychological hospitals. For yet many others, the Behavioral Health system has become a means for them to tap into previously unfound government benefits. Behavioral Health workers in this area have told me on many occasions that they can almost predict the day when they will see a good portion of their population because those people need to make contact with the system in order to maintain their ‘benefits’. Making contact with the system usually comes in the form of a short stay at the local hospital’s Behavioral Health unit. Most of these commissions are voluntary and last around a week. Many of the commissions require some type of medical transportation so we can refer to the aforementioned sampling of those costs to get an idea of the scope of this issue as well.
So massive is this ‘problem’ that the Department of Health and Human Services has devoted an entire division to Behavioral Health and Substance Abuse. I put problem in quotes because quite honestly I think that a government which has sought to embrace the tenets of Marxist socialism would be quite happy with a population who is shackled by chemicals and institutionalized either physically or by the very drugs that are supposed to be helping them.
While this brief essay is not meant to be a research paper and is only intended to open a channel of awareness of just one of the many issues facing Medicare and the rest of the social-support structure of this country, I’ll close with a few snippets which illustrate the forces slamming Medicare. You can decide for yourself from this presentation of largely anecdotal evidence if Medicare’s problems can be ‘fixed’ or not.
According to the Dartmouth Atlas of Healthcare, the average reimbursement per Medicare Enrollee in 2012 was a minimum of $6,724 (by state, see below chart). Note that many areas represent much higher rates of reimbursement. Given that the number of enrollees in 2012 was well over 50 million people, Medicare paid a MINIMUM of $336 Billion in reimbursements just in 2012.
Data obtained by the Wall Street Journal under the Freedom of Information Act showed that Medicare reimbursements actually totaled over $600 billion in 2012 alone.
Given that the workforce was estimated at 143 million by the Bureau of Labor Statistics in 2012, each one of us who works is responsible for around $4,200 to the Medicare system if cash inflows were to match reimbursements.
Given the median household income in 2012 of just over $51,000 as compiled by the Census Bureau (see below graphic), the $4,200 burden represents about 8.2% of pre-tax income. The actual tax deducted for Medicare in 2012 was 1.45%. Again, this is in no way meant to advocate for further taxation, but merely presented to show the gaping hole between inflows and outflows.
Looking at the graphic above, it is easy to see why the government reports median and not mean income. We could dig into labor statistics (even cooked ones) and come up with the simple notion that Medicare is unequivocally, universally, and unconditionally up the river without a paddle. Most people grasp that as a general concept. Laurence Kotlikoff has done an outstanding job over the past decade of providing us with a reasonable picture of the plight of this broken system. It is my hope that this scattergun approach to a couple of areas allows you the reader to grasp the scope of this problem as well as its magnitude.
Andrew W. Sutton, MBA
Chief Market Strategist
Sutton & Associates, LLC
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