Obamacare Targets Entitlements

Meeting with the Washington Post‘s editorial staff on January 16, President-elect Obama pledged to reform entitlements saying the process would begin straightaway by convening a “fiscal responsibility summit” before delivering his first budget to Congress.

“What we have done is kicked this can down the road. We are now at the end of the road and are not in a position to kick it any further,” he said. “We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else’s.”

Key, he said, is reigning in entitlement costs by making “very difficult choices and… sacrifice(s)… Social Security, we can solve. The big problem is Medicare (and, of course, Medicaid covering 60 million in 2005), which (are) unsustainable.”

In a major April 14 Georgetown University speech, he again highlighted the problem saying cutting health care costs and “restoring fiscal discipline” are two of the top “pillars” of his agenda.

“Let’s not kid ourselves and suggest that we can solve this problem by trimming a few earmarks,” he said. The “biggest cost drivers in our budget are entitlement programs like Medicare, Medicaid, and Social Security, all of which get more and more expensive every year, (so) if we want to get serious about fiscal discipline — and I do — we will have to get serious about entitlement reform,” implying a clear long-term goal of:

— shifting the burden from Washington, handing it to the states, and ultimately to taxpayers directly with no government aid or indirectly through taxes.

The US Debt Clock.org shows why. Besides the official $11.9 trillion exponentially growing national debt (some economists say $15 trillion or more), the big problem is unfunded liabilities:

— $13.9 trillion for Social Security;

— $18.4 trillion for prescription drugs; and

— $73.3 trillion for Medicare/Medicaid for a total of nearly $105.7 trillion.

Primarily through health care cost cuts, Obama pledged in his first year to begin controlling these unsustainable obligations.

The Congressional Budget Office (CBO) and Other Recent Reports Highlight the Problem

The CBO’s June 2009 “Long-Term Budget Outlook” projects future budget deficit and national debt estimates.

Both suggest future economic decline, eventual hyperinflation, and deep erosion of personal savings. Already the national debt is more than during the Great Depression, and it’s fast heading for surpassing WW II. According to the report, this burden will:

  • “reduce national saving;”
  • create the need for “more borrowing from abroad;”
  • reduce “domestic investment;
  • depress income growth in the United States;” and
  • “seriously harm the economy.”

In addition, “Lenders may become concerned about the financial solvency of the government (and) demand higher interest rates to compensate for the increasing riskiness of holding government debt.” Worrisome as well: “Both foreign and domestic lenders may not provide enough funds for the government to meet its obligations.”

Admitting its estimates may be grossly understated, the CBO said its projected budget shortfalls are unprecedented in US history, signaling a growing urgency to address them.

Further, the analysis omits how financial markets will react, but it anticipates “much more (disorder) as investors’ confidence in the nation’s fiscal solvency beg(ins) to erode… causing (dollar valuations to) plunge, interest rates to climb, and consumer prices to shoot up.”

The Federal Reserve’s second quarter “Flow of Funds Accounts” report highlights the problem by showing federal spending crowding out businesses and consumer households. In Q1 2009, the Treasury borrowed $1.443 trillion, and in Q 2 $1.896 trillion with projected continued high levels ahead.

In contrast, bank credit has dried up. Q1 2009 outstanding loans were liquidated at an $857.2 billion annual rate and $931.3 billion in Q2. In addition, net new mortgages aren’t being created. Instead, annualized liquidations hit $39.3 billion in Q1 and $239.5 billion in Q2. Cash availability through credit cards eroded by $95.3 billion in Q1 and $166 billion in Q2.

According to Professor Tim Congdon of International Monetary Research, “There has been nothing like this in the USA since the 1930s. The rapid destruction of money balances is madness,” suggesting serious trouble ahead.

The September 2009 US Treasury Bulletin adds more by showing America owes foreign investors nearly $7.9 trillion, and suggesting that these sources may begin drying up and eventually contract because dollar investments no longer are safe. Some, in fact, say the time for alternatives is now.

Medicare Reform Through MedPAC: The Medicare Payment Advisory Commission

Established in 1997 as an independent congressional agency, it advises Congress about Medicare. Each year, it submits a “Report to the Congress: Medicare Payment Policy,” the latest on March 17, 2009 for FY 2008 with recommendations to the nation’s lawmakers:

“to help constrain costs both in the short and long run. (These) recommended actions are one part of a broader array of recommendations aimed at more fundamentally reforming Medicare’s delivery system,” including achieving greater overall “efficiency” to control the unsustainable out-year costs.

However, since recommendations aren’t policy, S. 1110: Medicare Payment Advisory Commission (MedPAC) Reform Act of 2009 (with one co-sponsor) was introduced in the Senate on May 20:

“to amend title XVIII of the (1935) Social Security Act, making the Commission an executive branch agency, and providing the Commission new resources and authority to implement Medicare payment policy.”

Then, on June 4, HR 2718: Medicare Payment Advisory Commission (MedPAC) Reform Act of 2009 was introduced in the House (with no co-sponsors) for precisely the same purpose.

In other words, both bills will let White House appointed bureaucrats dictate future policies, including payment rates and benefits, trial programs, and various other initiatives outside of congressional control for the first time ever. Thus far, they remain in committees, so it’s uncertain if Congress will relinquish its long held power. If it does, for Medicare and Medicaid combined, it will be step one toward eventually ending what over 100 million Americans rely on – a steadily rising total as the population ages and growing numbers of poor and lower income people have no other source of care.

House and Senate Health Care Reform Bills

The House bill is HR 3200: America’s Affordable Health Choices Act of 2009. The Senate’s version is America’s Healthy Future Act of 2009. After clearing the Finance Committee on October 13, further consideration now moves to both floors where significant hurdles remain.

In an earlier article, this writer explained that House and Senate bills will ration health care, enrich insurers, drug companies, and large hospital chains, and make a dysfunctional system worse. If Obamacare passes, hundreds of billions in Medicare cuts will harm seniors. Most others as well, especially the poor, chronically ill, all working Americans paying more and getting less, and millions more left uninsured. In addition, employers will be able to opt out of providing coverage, but since insurance will be mandated, those without it will have to buy it or face hundreds of dollars in penalties — still a debated figure ahead of House and Senate floor debate, votes in both chambers, and if passed, approving final legislation to be sent to the President for signing.

Four of the five House and Senate versions include a public option. Only the Baucus bill excludes it. Instead, it calls for expanding nonprofit health care cooperatives, similar to ones in many states that sell insurance, can pick and choose their members, are able to charge premiums comparable to private insurers, and in most areas provide little, if any, real competition.

If a public option becomes law, it will provide fig leaf cover for a weak and ineffective plan, not what many want but won’t get. Most, in fact, won’t qualify because it’ll be a limited to high-risk individuals, offloaded to the government for substandard care under an “adverse selection” process. Private insurers will get to skim off the cream, charge as much as they want, profit handsomely at low risk, and leave Washington stuck with ones the industry doesn’t want.

Yet they want more, are using hyperinflated cost estimates well above projected increases without “reform” legislation, and claim Medicare cuts will mean higher costs for the privately insured. They also say taxing higher-priced “Cadillac” plans and being prohibited from denying preexisting conditions will raise costs for everyone.

More still according to Wendell Potter, former PR executive for CIGNA insurance, now a whisleblower exposing shenanigans he saw on the inside, including the industry’s “Medical Loss Ratio” (MLR) profit margin. Until about two decades ago, it was five cents on the dollar. Now it’s a quarter or five times as much, and they’re still not satisfied, so they’re going for broke on Obamacare to skim hundreds more billions off the top in what will be greater than ever grand theft if they get it.

Other likely final legislation features will include:

  • providing government subsidies of about $460 billion to lower income people over ten years to buy private insurance;
  • expanding cost-sharing with the states for an additional 14 million Medicaid recipients because of growing numbers of poor and lower income households needing it; in addition, raising the income threshold so more people qualify at a time the need is the greatest in decades;
  • exacting deep Medicare and other social service cuts to fund it – for starters, around $400 billion in federal programs for the elderly, poor, and disabled over 10 years; another $200 billion in lower payments to providers; and $113 billion in Medicare Advantage cuts affecting 10 million seniors getting benefits through private insurers;
  • taxing so-called “Cadillac” plans by levying them on insurers to be passed on to customers through higher premiums, larger deductibles, and/or less coverage, even though these plans mostly cover state employees, municipal union members, and other working Americans, not just the well-off;
  • exacting more Medicare cuts ahead, including from a White House appointed independent Medicare Commission to curb “excess cost growth” by rationing care through capping costs, denying expensive tests, procedures and drugs, and incrementally ending Medicare as we know it to deny future generations of seniors of what those covered now get – packaged as “health care reform” with deceptive promotion to disguise a scheme few will understand until they need expensive care and can’t get it.

As bad, millions will be left uninsured or underinsured as Washington cuts back on its obligation to provide universal quality care as a human right. Instead, final legislation will be class-based on the ability to pay with growing millions of poor and lower income people offered sub-standard care, millions left out entirely, and a time coming when only those who can afford it will be covered, no others. That’s Obamacare’s bottom line, but expect no public discourse to explain it.

Stephen Lendman wrote How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War. Contact him at: lendmanstephen@sbcglobal.net. Also visit his blog site and listen to The Global Research News Hour on RepublicBroadcasting.org Mondays from 11AM-1PM US Central time for cutting-edge discussions with distinguished guests. All programs are archived for easy listening. Read other articles by Stephen.

11 comments on this article so far ...

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  1. Tonyo said on October 22nd, 2009 at 11:19am #

    Here we go again. No thought of of ever prosecuting the wall street
    thieves and murderers. Yes, I said Murderers. People have become
    physically sick and are on their deathbed from the loss of their home.
    Job loss also causes tremendous stress in this globalization fucks its
    mother economy. But, Obamass will cater to the banks, wall street,
    and health insurance companies.

    Welfare for the privileged. Hunger, inadequate health care, and death
    for the proles. I hope I see anyone who voted for these inbredding
    piles of bile in trouble, I going to let them die. Anyone who respects
    them, same fate.

  2. lichen said on October 22nd, 2009 at 2:22pm #

    Obama’s quotes in this article make me sick. Obviously, if you’re looking to make cuts, cut the military budget; close the international bases, end the wars, shut down the cia, and let the government abolish the federal reserve and start printing it’s own currency. This is ridiculous; there is money, there are resources, and even if these are limited, we can overhaul the system and still make it so that everyone gets organic healthy food, clean water, clean air, guaranteed housing, single payer healthcare, free diverse good quality education k-phd… These are all easily within our grasp. And surely, SURELY if money is needed, the corporations and super-rich have plenty just waiting to be taken.

  3. Obstreperous said on October 24th, 2009 at 7:47am #

    Interesting article, but really, none of this is about health care. It is all about consolidating power and creating a Chicago-style politicrime government with just enough patronage to retain forever in power. If health care reform was on the plate, then we would have to address cost, access and quality issues at the same time. This should not be some ram-it-through 6 month process that ignores the views and needs of the totality being served. It is sad that we are willing to degrade what we have of a health care system at the altar of partisan worship. I suppose those in power would rather rule in hell than serve in heaven, because they seem to be bent on stoking up the fires for us all.

  4. Max Shields said on October 24th, 2009 at 7:51am #

    Again, the problem is the problem and how it’s understood and treated.

    Obama is limited. He sees all problems through the prism of US politics and that prism distorts the problem. The problem is vast in scope and depth and it crosses national boundaries.

    The problem begins with understanding who and what we can and want to be on this planet. It is question that the current policies, institutions and political system are incapable of grasping.

    So, when Obama says this and that are “unsustainable” he is talking in the meager narrow scope of what is within acceptable politico frameworks. (And yes lichen you are right about shifting resources from the pathology of war to human rights and needs).

    Power is concentrated away from solutions. It is a fundamental fact, an irrefutable truth. This will not be corrected through our actions, without utter collapse. Are we heading toward collapse? What has kept this menacing rogue nation afloat is the deep, and growing, interdependency that starves so many and works for so few. The dollar as the basis of world trade has a strangle hold on solutions.

    Poverty is the obverse of wealth. One creates material wealth by creating poverty in its wake. That poverty exists here and throughout the globe. It shifts all balance to the centers of power. This is a fundamental principle which must be understood without leaning on ideological crutches that distort the problem, even if some ideologies concede an acknowledgement of some of the problem.There is no “plug and play” ideological solution; and it is a horrible waste of our resources to focus so completely on past ideologies to answer what the problem has become.

  5. Obstreperous said on October 24th, 2009 at 8:06am #

    I agree that fragmented and competing national interests stands in the way of the type of progress as envivioned ideally; however, I do not believe in the ‘ideal’ and recognize the inherenent goodness coupled with inherent imperfections in all people.
    I do not agree with the fixed pie mentality that says wealth creates poverty. If that were true wealth could not exist since poverty is primal human condition. Wealth is created by individual and group effort. (Consider it the thermodynamics of economics…entropy is poverty and work is required to decrease entropy.) Ideally group efforts are negotiated. The world is not ideal and you protest the inequalities. I get it and agree that social and economic justice is the goal. Idealists believe it is a point we can achieve. I believe it is a direction we must always be heading.
    Perhaps one of you points may come to pass. The dollar as the basis of world trade may be going the way of the dinosaur. Be careful what you wish for.

  6. Don Hawkins said on October 24th, 2009 at 9:04am #

    A new way of thinking on being a human. It’s on the way oh yes it is.

  7. Max Shields said on October 24th, 2009 at 9:27am #

    I don’t see the dollar disappearing unless there is a complete and utter collapse.

    But of course wealth creates poverty. The specific kind of wealth I mean is material. Material wealth requires privatization of the world’s resources to the exclusion of the vast majority of humans. The only way that such wealth can be expanded is their the kinds of schemes Wall Street has devised which are purely speculative in nature.

    There is, to be sure, an expansive, perhaps infinite, wealth which is transferable while never given away. Perhaps it shouldn’t be referred to as wealth since we’ve become fixated on material wealth as the be all end all. But it is based on human needs. What are those needs?

    I would say they are finite, but satisfaction is infinite. These include:
    identity and

    These needs are universal and they are very dynamic, interacting with one another and are reinforced either positively or negatively. When a need is satiated it can bleed into other needs, curtailing their satisfaction. These needs change over a life-time.

    The only need that must first be fulfilled is subsistance in order to move to all the others. All other needs are equal in their importance to a healthy existence. An example of a negative fulfillment is, say, protection and the response of an annual expenditure of a trillion dollar military industrial war machine and 800 bases world-wide. Such an negative reinforcement works in reverse creating less protection, AND depriving other needs from being fulfilled. Our material excesses work much the same way.

    If we thought of poverty in these terms it would create a much more livable sustainable world for most if not all of the world’s population. But a system based on GNP, GDP and Consumer indexes is totally alien to this way of meeting human needs; and thus deprives many from fulfilling lives – Americans do poorly in the 9 areas mentioned.

  8. Max Shields said on October 24th, 2009 at 11:05am #

    Work Does Not = Wealth.

  9. dan e said on October 24th, 2009 at 12:21pm #

    The Pharmaceutical Industrial Complex: A Deadly Fairy Tale

    By Dr. Doug Henderson and Dr. Gary Null

    URL of this article: http://www.globalresearch.ca/index.php?context=va&aid=15758

    Global Research, October 21, 2009
    Progressive Radio Network – 2009-10-20

    It has been a particularly bad month for the pharmaceutical industrial complex in its ongoing litigations in American courts. Among the main pharmaceutical headlines, Merck’s Gardasil vaccine for HPV, now being widely administered to pre-teens, was found to be linked to amyltrophic lateral sclerosis, commonly known as Lou Gehrig’s disease; following a $1.4 billion fine in promoting one of its blockbuster drugs Zyprexa off-label, deceptive correspondence was uncovered by Eli Lilly gaming the system again by promoting another one of its drugs, Cymbalta, off-label for fibromyalgia; AstraZeneca was fined $160 million for scamming the Medicaid system in Kentucky after being fined $215 million for ripping off Alabama; Glaxo lost a Pennsylvania trial for failing to warn doctors and pregnant women of the dangers of its antidepressant drug Paxil related to birth defects; and Pfizer scored a record-breaking fine of $2.3 billion for illegally marketing several drugs over the years: Bextra, Zyvox, Geodon and Lyrica. These kinds of charges, among the many others, have become a habit for drug makers for the past dozen years.

    When we speak of the pharmaceutical industry complex, it does not refer solely to private drug manufacturers. The complex, like a Matrix that holds captive the health of the nation in medical slavery by its own design and manipulation, is a consortium, a spiders’ web woven with financial attachments throughout the medical profession. In addition to the pharmaceutical and medical device firms, this complex includes every government health agency—the Food and Drug Administration (FDA), the Centers for Disease Control (CDC), the National Institutes of Health (NIH), and or course the Department of Health and Human Services (HHS)—as well as drug lobbying firms now employing a large number of former Congresspersons, insurance and HMO companies, all of the leading professional medical associations such as the American Medical Association (AMA) and the American Psychiatric Association (APA), the majority of medical schools and their research departments who are heavily funded by drug money, many of the most prestigious medical journals, and ultimately all of this filtering downward to the physicians who diagnose our illnesses and prescribe our medications and treatments.
    SNIP — long article follows, see the URL

  10. Max Shields said on October 24th, 2009 at 12:46pm #

    Obstreperous, Universal human needs are not, by the way, ideals. These are met or not. They are dynamic and so always in flux as our community needs change from childhood to adults; but they are embedded in our being.

    dan e, concerning Pharma, it strikes me as interesting that many indigenous people never die of degenerative illnesses such as cancers, diabeties, heart disease, MS, etc. These are all Western/US illnesses and Pharma and the great non-profit fundraisers are claiming to be working on “cures” for these tragic illnesses and killers of our time.

    Afterall where do most of these pharmaceutically concocted drugs come from but nature, the patents/privatization of what is available (or could/should be) to all?

    What holds us hostige is not Big Pharma, but our inability to think outside this box that even makes Pharma relevant.

  11. Obstreperous said on October 24th, 2009 at 4:08pm #

    Ah, Pharma…the most misunderstood aspect of medical care.
    1) Pharma is dying…began in the early 1990s. We will regret it.
    2) “indigenous people never die of…” Yes they die of infectious disease as did the rest of the world just a century ago. Your mom or grandmother may remember siblings and relatives dying in infancy at a regular rate. Mine does. The combination of public health measures and pharma has increased the lifespan so that industrialized nations deal more with age (osteoporosis) and lifestyle diseases (e.g., cancer from smoking, obesity related diabetes and cardiovascular problems). Cancer (lifestyle, carcinogen exposure, sunlight)…live long enough & yep, you’ll probably have to deal with a cancer.
    3) 25% of current drugs have a natural product origin. ~75% or those had a known ethnobnotanical use. That does not mean that those plants are the safest drug. There was a lot of digitalis toxicity until the dose could be standardized…those evil phara folks. Even if you drug is a plant…don’t take it if you don’t need it. (Paracelsus paraphrased: All things are poison and nothing is without poison; only the dose makes the difference.). Interesting that some will be in awe of shamans of yesteryear that they never knew yet disprespect the shamans of today that are dedicating their lives to improving the human condition. Just curious how folks think.
    4) People take too many drugs…not beacuse of Pharma. People do not take sufficient responsibility for their own health; hence, the large perncetage of lifestyle derived disease. People also visit doctors too much for their own unhappiness and their ability to deal with their children. Yes there is a need for psychiatric drugs, but the statistics of the number of people taking them indicates usage in unnecessary circumstances.
    5) Getting back to point 1…what’s so great about Pharma? Properly applied chemotherapeutics can prevent the need for more serious medical care and improve quality of life in may circumstances. With no ability for Pharma to pay for the government mandated costs of drug testing there will be no new therapies. New conditions, new infections, no therapies. We go back to heath care of almost a century ago.