If Congress cannot raise the debt ceiling, Social Security and Medicare payments could be put at risk. Image from Wikimedia Commons.

Currently, the United States Congress and the president are locked in a battle over raising the debt ceiling for the government. It seems to be yet another partisan squabble, but the consequences could include Social Security and other payments could be defaulted on if the debt ceiling isn’t raised.

Congress to forgo Fourth of July recess to work on debt issue

One of the biggest political and economic issues to arise in the past year or so has been the national debt ceiling, essentially the credit limit of the United States government. The government is not allowed by law to exceed more than $14.3 trillion in debt, according to Reuters, which was reached in the middle of May. Yet the government has been making payments on it through last-minute measures.

Some members of Congress, mostly comprised of Congressional Republicans, have been refusing to raise the debt limit without substantial changes to fiscal policies. Senate Majoirty Leader Harry Reid Leader has announced that the Senate is going to forgo the traditional week-long recess after the Fourth of July holiday  in order to work on the debt ceiling, reports CBS. It has to be raised before August 4.

Warnings issued against default

Though there is nearly a month to forge an agreement to raise the debt ceiling, there are already warnings being issued against allowing the federal government to default on its debt. Besides a potentially catastrophic effect on global financial markets, credit rating agency Standard & Poor’s has warned that default on debt would result in currently maturing U.S. Treasury bonds being issued a “D” rating if those bonds are not paid out on August 4. The U.S. has $30 billion in interest payments due on short term loans acquired through sale of Treasury bonds. Chairman of the Federal Deposit Insurance Corporation Sheila Bair has warned Congress that they are getting into “a dangerous game,” according to NASDAQ, should they fail to successfully raise the debt limit.

Potential fallout in case of default

The American government is currently borrowing 40 cents of every dollar it spends, and in August of 2011 alone, the government is slated to spend $134 billion more than it will take in, according to USA Today. Up to 44 percent of government payments could be missed. Granted, this may seem a faraway issue to some people, but the largest and most urgent payments could hit the most vulnerable citizens where it hurts. Social Security payments to retirees, disability benefits, Medicare and Medicaid benefits and other forms of social aid such as welfare and food stamps may go unfunded. Federal employees may also be furloughed and contractors, including defense contractors, may go unpaid or have their contracts cancelled.

It is projected that there won’t be sufficient funds for the $23 billion payment to Social Security and Social Security Disability Insurance, or SSDI, recipients on August 3. Social Security represents 50 percent or more of all income for 53 percent of all couples aged 65 or older and 73 percent of all people over the age of 65.

Sources

Reuters

CBS

NASDAQ

USA Today

Social Security Administration facts at-a-glance

Ven-a-Care busts drug companies for Medicare fraud. CC by http://www.medicare.gov/Wikimedia Commons

It’s not every day a small pharmacy generates $168.7 million in annual revenue., but the Los Angeles Times reports that the specialty pharmacy Ven-A-Care of Florida Keys, Inc., is no mere small pharmacy. The company acts as a whistle-blower that reports the misdeeds of pharmaceutical companies that overbill Medicare and Medicaid. While the company has been called a “professional bounty-seeker” by critics, the truth is is that tens of millions of taxpayer dollars are at stake.

Purpose of Ven-A-Care

In its whistle-blower capacity, Ven-A-Care researches the price it pays for drugs versus those reported by big pharmaceuticals to the federal government for reimbursement purposes. Ven-A-Care is able to file a lawsuit for the U.S. government if there is a discrepancy.

For example, a 2005 case involved a 1-gram vial of vancomycin. Medi-Cal was charged $58.37 for it while pharmacies were charged $6.29 each. In another case, the medication atenolol charged Medi-Cal $70.30 while pharmacies only paid $3.05 for 50-milligram tablets. These examples are just the tip of the iceberg, says that Los Angeles Times. The State of California has recovered at least $95 million of late, thanks to Ven-A-Care’s efforts.

“I think Ven-A-Care has played a predominant role in alerting state and federal governments about … fraud,” said California Supervising Deputy Attorney General Nicholas Paul.

How the Ven-A-Care cases work

Since 2000, about 18 health insurance over-billing cases have been won by Ven-A-Care. While the small pharmacy has collected about $380 million in bounty funds, state and federal governments across the U.S. have pulled in about $2.2 billion.

“(Ven-A-Care is) cleaning up a huge cesspool,” said Nevada attorney and former Medicaid fraud investigator L. Timothy Terry. “Without their efforts, taxpayers would be gouged out of I don’t know how much money.”

Making sure payments have a cap

Insiders like former federal healthcare fraud investigator Michael Loucks believe that companies like Ven-A-Care are taking advantage of a near-limitless jackpot system. Now a defense attorney, Loucks told the Times that a $2 million cap should be instituted, large enough to still encourage whistle-blowers, but small enough to keep the government’s expense under control.

Jin Breen is the attorney for Ven-A-Care. He says that the cap won’t work. A big return has to be paid out because of the amount of legal costs that come when pursuing big pharmaceuticals.

Citations

Los Angeles Times

Medicare fraud hurts U.S. taxpayers

Capitol Hill is not going to have an easy time of implementing suggestions from Obama's debt panel. Image from Wikimedia Commons.

A national debt panel has just released findings concerning recommendations for reducing the national debt. The conclusions should be no surprise. The largest national expenditures are for Medicare, Medicaid, Social Security and defense. Those are the programs which are recommended for trimming. The United States won’t be the first nation to undergo austerity measures.

National debts and basic economics

Part of basic economics pertaining to governments is that there are limited ways to deal with debts and deficits. Revenue can be increased, or in other words, taxes have to be raised. Expenditures can be cut, or in other words, programs have to have budgets cut or be canceled outright. There is the middle road, where governments use a combination of those. Most, if not all, Americans, are always dead set against raising taxes, and in fact a tax revolt was part of the reasoning for the American Revolution. The danger, of course, comes when taxes are cut but expenditures are not. In order for tax cuts to be truly effective, the government has to spend less on services.

National deficit panel recommendations are hard

The debt commission convened by President Obama came out with some very unpopular proposals. First, benefits from Medicare, Medicaid and Social Security are recommended for reduction, according to the New York Times. The retirement age is recommended to be raised. Also, according to Reuters, defense spending, like the F-35 program, would be cut as well. Farm subsidies and discretionary spending allotments would also be cut. The panel also is recommending an incremental 15-cents-per-gallon increase in the gas tax. Tax breaks for individuals and on businesses would be done away with, but the overall rate would be reduced.

Payments have to come from somewhere

In order for deficits and the national debt to be paid down, the money cannot be borrowed. Austerity measures aren’t popular, but the tug of war in government is always between revenue and services. Americans don’t like paying taxes, but many want to continue or expand the services rendered. Something has to give somewhere.

Sources

New York Times

Reuters

Being re-admitted to a hospital could be bad for your overall health. CC by mateoutah/Flickr

Health care in America is exceedingly expensive, which means  any new programs that stem from health care reform have work cut out for them. Efficient practice of preventative medicine is important, yet it’s a category where America fails miserably. A 2009 study by the New England Journal of Medicine shows that 20 percent of Medicare patients are back in the hospital a mere 30 days after release. After 90 days, that percentage climbs to 34 percent. After a year, a frightening 67 percent are back – or dead.

Re-admission is taxing U.S. healthcare

According to the Huffington Post, the cost of Medicare was $17.4 billion in 2004. That gigantic figure forced Medicare to start monitoring hospitals in order to track the high re-admission rate problem. Top offenders were penalized financially. A new industry was born amidst the turmoil; private companies would extend their efficiency expert services to afflicted hospitals. Considering that several studies show that three-quarters of all re-admissions are preventable, it seems likely that the efficiency experts have plenty of business.

Hospitals and nursing homes won’t take ownership

Lack of proper communication seems to be the common ingredient when it comes to hospitals and skilled nursing facilities providing sub-par care that leads to re-admission. Not sharing the right info on patients and medication are among the communication issues at hand. The problem grows significantly for those Medicaid patients who are older and are shuttled between general and intensive care facilities.

Medicare and insurers sometimes lack foresight

The American Geriatric Society found in a recent study that Medicare and insurance companies prefer to recommend skilled nursing facilities over inpatient rehab for stroke victims, reports the Post. This is done due to lower costs up front, but the rebound rate at skilled nursing facilities in this scenario is seven times higher. The foresight to see beyond the lower price tag is a skill Medicare and private insurers must develop.

Make your doctor give you the details

Medical care facilities will usher patients out as quickly as possible unless patients and their loved ones force them to slow down and answer questions. Ask about the risks and be sure that future care instructions are quite clear. For more info on specific questions, see the Huffington Post article listed below.

Further reading:

Huffington Post:

The American Spectator also supposedly found the Loch Ness Monster. Image from Wikimedia Commons.

The American Spectator, a conservative political journal, has been taken to task in the media over a story it ran about the health care reform bill. The American Spectator reported a Health and Human Services report indicated the health care reform bill would be economically harmful, and the HHS report was quashed by the staff of Kathleen Sebelius. The journal seemed to indicate the White House willfully disregarded the idea the bill would run up huge tax debt to pay for health care.  The American Spectator report was taken to task for being completely unfounded.

American Spectator blasted for spurious source

The article in question ran Monday, April 26, on the American Spectator website. It asserted that an anonymous source revealed that the Department of Health and Human Services had a report that was stifled before the vote on the health care reform bill in March. The claim is that Sebelius’ staff refused to review it and intentionally neglected to do so.

Putting words in anonymous mouths

The anonymous HHS source said “The reason we were given was that they did not want to influence the vote” and that publishing the report before the vote was “actually the point of having a review like this, you would think.” The source wasn’t named, but the American Spectator mentioned the report was conducted by the actuary of the Medicare and Medicaid office.

Medicare and Medicaid Chief Actuary sounds off

According to ABC News, the chief actuary for Medicare and Medicaid indeed had something to say.  Richard Foster, Chief Actuary for the Center for Medicare and Medicaid Services, blasted the report by the American Spectator as being completely bogus.  “I don’t know how that rumor got started,” he said, “but it’s completely unfounded.”

Richard Foster and the real report

The Spectator failed to mention that Richard Foster received the bill three days before it was voted on, nowhere near enough time to study it, or for the alleged report to have been compiled. Foster did submit a report that indicated the bill would be unsustainable due to costs. However, the report wasn’t published until the April 22, a month after the Office of the Chief Actuary actually received the bill for analysis.

Shock and awful reporting

There was enough inflammatory rhetoric about the health care reform bill without making anything up.  (The death panels thing was a real gem.) What is certainly troubling is that the government would pass such legislation before an economic analysis could be completed before voting on it.  It is also troubling that the bill would mandate purchasing insurance, which would be delivered by private insurers being paid with subsidized funds.  Wait a minute – wasn’t the insurance industry supposed to lose money?