Republican Budget Would Cut $5.4 Trillion from Social Security, Medicare and Medicaid Over the Next Decade

The classic Republican scheme in the modern era — cut taxes on the richest people in the country (those who are already the big beneficiaries of the massive upwards redistribution of income over the last four decades) and then cut the safety net programs vital to the majority of the population. If policies like this one continue to be enacted, America is simply going to be further ruined for the vast majority.

With the nation’s attention rightly fixated on President Donald Trump’s horrific treatment of immigrant children, House Republicans on Tuesday quietly unveiled their 2019 budget proposal that calls for $537 billion in cuts to Medicare, $1.5 trillion in cuts to Medicaid, and four billion in cuts to Social Security over the next decade in an effort to pay for their deficit-exploding tax cuts for the wealthy.

“It’s morally bankrupt, patently absurd, and grossly un-American,” the advocacy group Patriotic Millionaires said of the GOP’s budget proposal, which calls for $5.4 trillion in spending cuts from major domestic programs.

[…]

Progressives have been warning for months about the GOP’s plan to axe crucial safety net programs following the passage of its deeply unpopular $1.5 trillion tax bill, which has sparked a boom of corporate stock buybacks while doing little to nothing for most American workers.

“Each GOP budget is more fraudulent than the last,” Seth Hanlon, senior fellow at the Center for American Progress, wrote on Tuesday. “We know what they stand for: tax cuts paid for with healthcare cuts.”

In addition to proposing devastating safety net cuts, the House GOP budget also calls for partial privatization of Medicare and the repeal of the Affordable Care Act, a move that would throw tens of millions off their health insurance.

New Bill to Lessen the Pain of the Dysfunctional U.S. Healthcare System is a Reminder of Its Critical Flaws

Massachusetts Senator Elizabeth Warren has introduced a bill that attempts to “curb pain” emanating from the corrupted for-profit healthcare system of the United States. Among other things, the bill’s provisions would implement helpful but admittedly inadequate measures, such as making it illegal for insurance companies to revoke a patient’s plan during their course of treatment. There could of course be many reminders about the more critical flaws of U.S. healthcare made in relation to this.

For one, the U.S. spends about twice as much on healthcare compared to other wealthy countries such as Canada, Britain, and Germany. If that spending — which is annually $3.4 trillion ( about 18 percent of annual U.S. GDP) — was reduced by around half, it would be an enormous savings that (all else unchanged) would actually have the U.S. running substantial budget surpluses.

That isn’t to say that budget surpluses are necessarily good (budget deficits can be helpful and natural), but it’s to point out that subtracting the almost $700 billion ($5550 per U.S. household) in budget deficit totals that the U.S. ran in fiscal year 2017 from a $1.7 trillion in healthcare savings would still be about a trillion dollars of budget surplus. It’s strange how rarely this simple point enters the mainstream press, what with the irrational and even harmful attention corporate media such as the Washington Post has given to budget deficits. More importantly though, it’s over a trillion dollars that could be spent productively elsewhere in the economy instead of harmfully allowing health insurance corporations receive it.

Interestingly enough, Berkshire Hathaway, Amazon, and JP Morgan Chase announced plans earlier this year to jointly form a healthcare company for their employees that’s “intended to be free from profit-making incentives.” This is another revealing insight into why a for-profit healthcare system is too flawed to function well — building a healthcare system around corporate profits simply raises the costs too much. The executives at those three corporations aren’t the only parts of the business community to understand this as they seek to reduce their own expenses.

Businessman Warren Buffett has even admitted that single-payer is “probably the best” healthcare system for the U.S. He has made a comparison between U.S. healthcare in 1960 and in 2017 — in 1960, U.S. healthcare spending was only five percent of annual GDP, and almost 60 years later there’s been almost a four fold GDP-based increase in healthcare spending. This reveals again that the amount of resources being devoted to the overall mediocre U.S. healthcare system is excessive.

The for-profit element of the system has other consequences outside of direct economic costs though. One of them is unnecessarily lost lives, with strong evidence finding that over 20,000 people die a year in the U.S. due to being unable to afford health insurance. It is simply a major moral disgrace that world history’s wealthiest country suffers from such a problem.

Also disgraceful is the staggering number of medical bankruptcies per year in the United States. The amount of those per year has been estimated at hundreds of thousands in the U.S. alone (far more than other wealthy countries) and medical bills have been a leading cause of Americans filing for bankruptcy for years. All other OECD countries besides Mexico have universal healthcare and have a much more efficient healthcare system to prevent many of those problems to begin with.

For a practical example, Medicare (a predominantly single-payer healthcare service run by the government) has administrative overhead costs of about 1 to 2 percent, which is usefully contrasted to the 12 to 20 percent overhead costs typically run by the for-profit health insurance industry. This is because inefficiently having thousands of different healthcare payer plans necessitates higher bureaucratic costs with too much paperwork.

And another notable part of the high U.S. health costs is due to the ridiculous prices of prescription drugs there. In 2017, the U.S. spent $450 billion (2.4 percent of GDP) on prescription drugs, an amount that could almost certainly be reduced by about $370 billion ($2930 per U.S. household) by having prescription drugs sold without patent monopolies and other unjust protectionist measures. In a time when at least nearly one in five Americans are unable to afford their medications adequately, this proposal for savings should be considered much more.

It should also be noted what happens an extreme amount of undeserved resources are diverted to harmful corporations such as the pharmaceutical ones. Pharmaceutical companies — such as Purdue Pharma — have used their excess profits to manufacture an opioid crisis (to seek even more profits) through flooding economically downtrodden communities with highly addictive opioids. This has resulted in opioids becoming the leading cause of death for Americans under 50, and it’s also largely been what’s resulted in a decline in the average U.S. life expectancy rate, a phenomenon that’s probably otherwise unheard of in other wealthy nations in the 21st century.

In all, the U.S. healthcare system suffers from significant problems that will require more than tweaking around the edges to solve. Its system requires a major alteration, and the sooner that happens, the less health-based suffering among its people there can be.

Saving $1.5 Trillion Annually on Healthcare

Bringing the per capita costs of U.S. healthcare in line with other wealthy countries would save over a trillion dollars a year.

Austin Frakt and Aaron Carroll had an interesting Upshot piece in the NYT on why the U.S. spends twice as much per person as other wealthy countries for its health care. The piece cites research pointing out that people in the United States do not use more health care services than people in other countries. The reason that we pay more for health care is that actors in the industry, such as doctors, drug companies, insurers, and medical equipment manufacturers, get more money than their counterparts elsewhere.

The piece concludes by noting a couple of mechanisms for containing costs, but then argues:

“If attempted nationally, or even in a state, either of these would be met with resistance from all those who directly benefit from high prices, including physicians, hospitals, pharmaceutical companies — and pretty much every other provider of health care in the United States.

“Higher prices aren’t all bad for consumers. They probably lead to some increased innovation, which confers benefits to patients globally. Though it’s reasonable to push back on high health care prices, there may be a limit to how far we should.”

It’s striking to see economists reluctant to use mechanisms that would bring payments in the health care in line with payments in the rest of the world because they “would be met with resistance from all those who directly benefit from high prices.”

Efforts to reduce trade barriers that had the effect of destroying jobs and cutting pay for autoworkers, textile workers, and other manufacturing workers were also met with resistance. Economists not only supported these efforts, they treated them as an almost holy cause. They insisted on “free trade,” as the ultimate good.

For some reason, Frakt and Carroll believe that comparable efforts (we can also use trade in the health care sector to reduce costs) to reduce excess payments in the health care sector are a bad idea because the people who would see their pay and income reduced will be unhappy. In this context, it is probably worth mentioning that there is hugely more money at stake in bringing our health care costs in line with the rest of the world than with reducing trade barriers with items like steel and cars. The latter can save us at most a few tens of billions a year. If we paid the same amount per person for health care as people in Canada or Germany, the savings would be more than $1.5 trillion annually, more than $4,000 per person per year.

The Pay of Doctors in America

The article by the economist Dean Baker illustrates why doctors in the U.S. have such high incomes. Directly, it’s basically because limits are imposed on foreign and domestic competition by restricting professional medical practice to those who have completed U.S. residency programs that are too limited in providing opportunities.

It’s $100 billion ($700 per U.S. family) a year in added costs to pay doctors as much as the U.S. does, but in a more ideal world, in world history’s richest country, good doctors could be permitted to make that much money. If the U.S. cut costs in substantial ways — such as switching to single-payer, saving $500 billion from only that annually — I wouldn’t have an issue with doctors making over 200k annually. I’d want a subsidy that allows doctors to earn that much income, however, rather than them earning it through a rigged market structure. That’s my view of the article and possibly the only major point expressed in it that I seem to disagree with the economist on.

Rx-Rolls-Royce

The United States pays more than twice as much per person for health care as other wealthy countries. We tend to blame the high prices on things like drugs and medical equipment, in part because the price tag for many life-saving drugs is less than half the U.S. price in Canada or Europe.

But an unavoidable part of the high cost of U.S. health care is how much we pay doctors — twice as much on average as physicians in other wealthy countries. Because our doctors are paid, on average, more than $250,000 a year (even after malpractice insurance and other expenses), and more than 900,000 doctors in the country, that means we pay an extra $100 billion a year in doctor salaries. That works out to more than $700 per U.S. household per year. We can think of this as a kind of doctors’ tax.

Doctors and other highly paid professionals stand out in this respect. Our autoworkers and retail clerks do not in general earn more than their counterparts in other wealthy countries.

Most Americans are likely to be sympathetic to the idea that doctors should be well paid. After all, it takes many years of education and training, including long hours as an intern and resident, to become a doctor. And people generally respect and trust their doctors. But they likely don’t realize how out of line our doctors’ pay is with doctors in other wealthy countries.

However, as an economist, I look for structural explanations for pay disparities like this. And when economists like me look at medicine in America – whether we lean left or right politically – we see something that looks an awful lot like a cartel.

The word “cartel” has some bad connotations; most people’s thoughts probably jump to OPEC and the 1970s crisis caused by its reduction in the supply of oil. But a cartel is not necessarily completely negative. It means that the suppliers of a good or service have control over the supply. This control can be used to ensure quality, as is the case with many agricultural cartels around the world. However, controlling supply also lets the cartel exert some control over price.

In the United States, the supply of doctors is tightly controlled by the number of medical school slots, and more importantly, the number of medical residencies. Those are both set by the Accreditation Council for Graduate Medical Education, a body dominated by physicians’ organizations. The United States, unlike other countries, requires physicians to complete a U.S. residency program to practice. (Since 2011, graduates of Canadian programs have also been allowed to practice in the U.S., although there are still substantial obstacles.) This means that U.S. doctors get to legally limit their competition. As a result, U.S. doctors receive higher pay, and like anyone in a position to exploit a cartel, they also get patients to buy services (i.e., from specialists) that they don’t really need.

There are two parts to the high pay received by our doctors relative to doctors elsewhere, both connected to the same cause. The first is that our doctors get higher pay in every category of medical practice, including general practitioner. If we compare our cardiologists to cardiologists in Europe or Canada, our heart doctors earn a substantial premium. The same is true of our neurologists, surgeons, and every other category of medical specialization. Even family practitioners clock in as earning more than $200,000 a year, enough to put them at the edge of the top 1 percent of wage earners in the country.

The other reason that our physicians earn so much more is that roughly two-thirds are specialists. This contrasts with the situation in other countries, where roughly two-thirds of doctors are general practitioners. This means we are paying specialists’ wages for many tasks that elsewhere are performed by general practitioners. Since there is little evidence of systematically better outcomes in the United States, the increased use of specialists does not appear to be driven by medical necessity.

In recent years, the number of medical residents has become so restricted that even the American Medical Association is pushing to have the number of slots increased. The major obstacle at this point is funding. It costs a teaching hospital roughly $150,000 a year for a residency slot. Most of the money comes from Medicare, with a lesser amount from Medicaid and other government sources. The number of slots supported by Medicare has been frozen for two decades after Congress lowered it in 1997 at the request of the American Medical Association and other doctors’ organizations.

Furthermore, Medicare exerts little control over the fields of specialization in the residency slots it supports, largely leaving this up to the teaching hospitals, which have an incentive to offer residencies in specialties from which they can get the most revenue per resident. This means they are more likely to train someone in neurology or cardiology than as a family practitioner.

Policymakers have a number of tools to use to introduce more competition, weaken the doctors’ cartel and get their pay more in line with counterparts elsewhere. One would be simply to fund more residency slots. Medicare could also limit the slots for many areas of specialization and instead insist that more of its funding go to train people as family practitioners.

A second route would be to end the requirement that foreign doctors complete a U.S. residency program in order to practice medicine in the United States. This means setting up arrangements through which qualified foreign doctors could be licensed to practice in the United States after completing an equivalent residency program in another country. The admission of many more doctors would put downward pressure on the pay of doctors in the United States, as insurers would have a new pool of physicians to add to their networks who will accept somewhat lower compensation.

Another approach is to not only change the rules around who can practice, but to change the rules around what doctors do. There are many procedures now performed by doctors that can be performed by nurse practitioners and other lower-paid health professionals. For example, many states now allow nurse practitioners to prescribe medicine without the supervision of a doctor, and there is no evidence that this has resulted in worse outcomes for patients. (It does, however, reduce health care costs.) The scope of practice of nurse practitioners and other health professionals can be extended in this and other areas for which they are fully competent. This would both directly save money and further reduce the demand for doctors, putting more downward pressure on their pay.

Yet one more approach is being tested in Missouri: While a doctor can’t practice independently without completing a U.S. residency program, Missouri will now allow foreign-trained doctors to practice under the supervision of a U.S.-trained doctor. This should also help to increase the supply of doctors.

Research Finds Where the Earliest Signs of Alzheimer’s Occur in the Brain

This discovery has considerable potential for stopping the devastation Alzheimer’s often induces in those who develop the disease.

Researchers at Lund University in Sweden have for the first time convincingly shown where in the brain the earliest signs of Alzheimer’s occur. The discovery could potentially become significant to future Alzheimer’s research while contributing to improved diagnostics.

In Alzheimer’s, the initial changes in the brain occur through retention of the protein, ?-amyloid (beta-amyloid). The process begins 10-20 years before the first symptoms become noticeable in the patient.

In Nature Communications, a research team headed by Professor Oskar Hansson at Lund University has now presented results showing where in the brain the initial accumulation of ?-amyloid occurs. It is in the inner parts of the brain, within one of the brain’s most important functional networks — known as the default mode network.

“A big piece of the puzzle in Alzheimer’s research is now falling into place. We previously did not know where in the brain the earliest stages of the disease could be detected. We now know which parts of the brain are to be studied to eventually explain why the disease occurs,” says Sebastian Palmqvist, associate professor at Lund University and physician at Skåne University Hospital.

The default mode network is one of several networks, each of which has a different function in the brain. It is most active when we are in an awake quiescent state without interacting with the outside world, for example, when daydreaming. The network belongs to the more advanced part of the brain. Among other things, it processes and links information from lower systems.

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The difficulty of determining which individuals are at risk of developing dementia later in life, in order to subsequently monitor them in research studies, has been an obstacle in the research world. The research team at Lund University has therefore developed a unique method to identify, at an early stage, which individuals begin to accumulate ?-amyloid and are at risk.

The method combines cerebrospinal fluid test results with PET scan brain imaging. This provides valuable information about the brain’s tendency to accumulate ?-amyloid.

In addition to serving as a roadmap for future research studies of Alzheimer’s disease, the new results also have a clinical benefit:

“Now that we know where Alzheimer’s disease begins, we can improve the diagnostics by focusing more clearly on these parts of the brain, for example in medical imaging examinations with a PET camera,” says Oskar Hansson, professor at Lund University, and medical consultant at Skåne University Hospital.

Although the first symptoms of Alzheimer’s become noticeable to others much later, the current study shows that the brain’s communication activity changes in connection with the early retention of ?-amyloid. How, and with what consequences, will be examined by the research team in further studies.

England’s Chief Medical Officer: Antibiotic Resistance Could Spell End of Modern Medicine

It’s worth posting this warning about antibiotic resistance again. The suggestions I have are to invest in a massive international research effort against antibiotic resistance, seek an end to factory farming, and to convince medical doctors to stop prescribing too many antibiotics. There would also be benefit in trying to prevent people from becoming ill in the first place too.

England’s chief medical officer has repeated her warning of a “post-antibiotic apocalypse” as she urged world leaders to address the growing threat of antibiotic resistance.

Prof Dame Sally Davies said that if antibiotics lose their effectiveness it would spell “the end of modern medicine”. Without the drugs used to fight infections, common medical interventions such as caesarean sections, cancer treatments and hip replacements would become incredibly risky and transplant medicine would be a thing of the past, she said.

“We really are facing – if we don’t take action now – a dreadful post-antibiotic apocalypse. I don’t want to say to my children that I didn’t do my best to protect them and their children,” Davies said.

Health experts have previously said resistance to antimicrobial drugs could cause a bigger threat to mankind than cancer. In recent years, the UK has led a drive to raise global awareness of the threat posed to modern medicine by antimicrobial resistance (AMR).

Each year about 700,000 people around the world die due to drug-resistant infections including tuberculosis, HIV and malaria. If no action is taken, it has been estimated that drug-resistant infections will kill 10 million people a year by 2050.

The UK government and the Wellcome Trust, along with others, have organised a call to action meeting for health officials from around the world. At the meeting in Berlin, the government will announce a new project that will map the spread of death and disease caused by drug-resistant superbugs.

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“It does not really have a ‘face’ because most people who die of drug-resistant infections, their families just think they died of an uncontrolled infection. It will only get worse unless we take strong action everywhere across the globe. We need some real work on the ground to make a difference or we risk the end of modern medicine.”

She added: “Not to be able to effectively treat infections means that caesarean sections, hip replacements, modern surgery, is risky. Modern cancer treatment is risky and transplant medicine becomes a thing of the past.”

Davies said that if the global community did not act then the progress that had been made in Britain may be undermined.

She estimated that about one in three or one in four prescriptions in UK primary care were probably not needed. “But other countries use vastly more antibiotics in the community and they need to start doing as we are, which is reducing usage,” she said. “Our latest data shows that we have reduced human consumption by 4.3% in 2014-15 from the year before.”

Horrible Trumpcare Proposal Returns, Threatening Millions

The cruelty of the proposal to remove the health insurance coverage of millions — to receive a tax cut for the richest people in the country — is being seen again, unfortunately. Even business interests with some moral decency should support the vastly more efficient single-payer model instead.

The Trumpcare zombie has risen from the grave to terrorize the American public once more.

Progressive organizations, lawmakers, hospital groups, and healthcare specialists have issued a “red alert” as reporting over the weekend indicated that Senate Majority Leader Mitch McConnell (R-Ky.) is considering a vote by the end of this month on what Sen. Bernie Sanders (I-Vt.) called Sunday “yet another disastrous Republican proposal to throw millions of people off health insurance.”

In an email to supporters Sunday night, Ben Wikler, Washington director of MoveOn.org, warned that the Republican Party “is now a hair’s breadth away—closer than they’ve ever been—to passing a devastating healthcare repeal bill, shredding the Affordable Care Act  (ACA), and gutting Medicaid.”

“All we need is one more [vote],” Sen. Pat Roberts (R-Kan.) concluded.

The plan under consideration was authored by Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.). Summaries of the bill indicate that, if passed, it would be every bit as harmful as the Trumpcare proposals that failed to escape the Senate in July.

The Graham-Cassidy plan—”Trumpcare by another name“—has yet to be analyzed by the Congressional Budget Office (CBO), but McConnell has asked for the scoring process to be fast-tracked, the Washington Post reports.

But even without a CBO score, experts have said there is enough evidence to conclude the plan would impose devastating and deadly cuts to key safety net programs and disproportionately harm America’s most vulnerable communities.

In a recent analysis, the Center on Budget and Policy Priorities (CBPP) found that the Graham-Cassidy plan would “gut protections for people with pre-existing conditions,” impose “damaging cuts” to Medicaid, and “cause many millions of people to lose coverage.”

By 2027, the Graham-Cassidy plan “would be virtually identical to a repeal-without-replace bill,” the CBPP concluded. “CBO estimated that the repeal-without-replace approach would ultimately leave 32 million more peopleuninsured. The Cassidy-Graham bill would presumably result in even deeper coverage losses than that in the second decade.”

Andy Slavitt, who ran the Centers for Medicare and Medicaid Services during the presidency of Barack Obama, posted a bullet-point summary of the proposal on Twitter last week. The post has since garnered over 42,000 retweets—just one indication of the groundswell of opposition the legislation will likely provoke.

Horrible Trumpcare

As the Post‘s Elise Viebeck and David Weigel observe, the GOP is working with an imposing deadline: September 30 marks the last day the Republicans can ram through budgetary legislation with merely a simple majority. Beyond that date, the GOP will need 60 votes.

The Senate may vote without an adequate CBO score too.

CBO-Scoring-Sept-2017