Published in The Journal Record
January 29, 2020
Last month we learned that President Lyndon Johnson needed help with social conservatives to pass Medicare. Enter United States Representative from Arkansas, Wilbur Mills.
Mills chaired the House Ways and Means Committee which made him a very influential legislator. He foresaw the likely possibility that if Medicare were passed it would be but a short time before members of his party would demand something similar for the rest of the country. He devised companion legislation that was dubbed Medicaid to forestall this anticipated desire to expand Medicare to the entire population.
Mills did several things that were particularly pragmatic and far-reaching. He suggested that Medicaid should cover certain categories of the poor, particularly those with the greatest public enthusiasm such as pregnant women, children, and the poor elderly. In addition, he was particularly clever in making Medicaid a joint federal/state program with the states paying roughly half the cost, but also maintaining control over who and what was covered and what providers would be paid.
As would be expected, any government program such as Medicare was likely to be opposed by a conservative coalition of conservative Democrats from the south and northern Republicans. Anticipating this Mills knew that conservatives love programs where the state had considerable autonomy. Thus, he was able to pull off a hat trick by aligning Medicare and Medicaid together but allowing the states to have considerable control over Medicaid and significant leverage in how the program would be managed within their state.
So, in July 1965 Lyndon Johnson signed both the Medicare and Medicaid programs into law – Medicare, an individual tax supported insurance program for the elderly; and Medicaid, a social welfare program funded by the federal and state governments designed to help certain categories of the poor.
Today Medicaid covers 59% of low-income children. States pay, in general, 17% of their general fund into the program. It covers 60% of nursing home residents and 37% of child births. Mills, therefore, eliminated until this very point in our history the call to expand Medicare to the entire population. His artful maneuvering of the political system eliminated the desire for a “Medicare for All” program until today, with the Democratic party clearly moving in that direction.
We must admit that Wilbur Mills was spectacularly successful in avoiding a single payer system for two generations.
Published in The Journal Record
November 20, 2019
In a recent article in the Daily Oklahoman there was a story about a charlatan who had taken advantage of several desperate rural hospitals in Oklahoma, Missouri, and Kansas. As it turns out rural hospitals can charge more for routine lab tests than their larger neighbors. This individual would convince rural hospital boards he could save their hospital. The scheme was to solicit lab tests to perform on patients (not citizens of their community) and reap additional payments. Conceptually, payments flowed into the hospital coffers, but mostly into this individual’s pocket. This Ponzi scheme was eventually detected and once again many rural hospitals were left at a financial death’s door.
The problem is clear that the good citizens of these communities were desperate to save their local hospitals. This made them easy targets for disreputable and dishonest schemers. What is it about rural hospitals that makes them so vulnerable in today’s economic environment?
First, they’re heavily dependent on Medicare and Medicaid with very little private insurance in their revenue base. Private insurance is one of a few opportunities hospitals have to make a margin. As a result, these hospitals often exist for years simply on cash flow with no profit and thus no reserves. Consequently, they have little ability to update their physical plant or to purchase today’s sophisticated technology. As a result, they become increasingly unattractive to newly trained physicians who expect sophisticated technology to practice today’s medicine. As a result, they often are in a death spiral.
The second problem is that all too often their leadership at the board and community levels refuses to recognize their clear economic eventuality. Hometown pride makes it almost impossible for them to reach out for obvious forms of help. For instance, several rural communities could combine and collaborate on building one hospital centrally located between them. The additional volume would substantially improve the financial outcomes of the combined institution. However, local pride often influenced by competitive football teams makes such cooperation almost impossible. Some communities, however, are smart enough to reach out to major health care systems in nearby metropolitan areas to insure their survival. However, local pride often doesn’t allow them to see a solution before they have become so desperate that they are an unattractive acquisition.
Rural hospitals in America are at a crossroads. The current financial scenario almost insures difficulties and makes them particularly vulnerable to any carpetbagger with a sack full of tricks that are marginally ethical and financially unstable.