Contempo Magazine Blog

By Dr. Tony Magana

The Democratic House reform bill, The Affordable Health Choice Act, brings with it high income surtaxes, $10 trillion deficit, employee and employee mandates in the setting of a complex bureaucracy which will clearly handicap private insurance options as reported by a just released analysis of the Congressional Budget Office.

Currently there are three major working groups in the Congress formulating health care reform at the Committee level. The working draft of the version coming from the House of Representatives has begun to take shape this week. Key components include strong behests for employers to provide insurance and individuals to accept insurance with heavy penalties for failing to enroll.

Partial financing of the new health plan would be paid for by a progressive tax on wealthier Americans consisting of a surtax ranging from 1 percent to 5.4% which will raise the effective top tax rate to 45 percent if current rates remain. All employers except those with just a few employees not offering health care coverage will pay a penalty of 8% of the worker’s salary. To be exempt an employer would have to have an annual payroll of less than $250,000 per year. Employees who choose not to accept insurance from an employer will have to pay a sliding scale percentage of their gross income up to 2.5 percent to equal the cost of an average health care premium. Subsidies would be created for those between 133 percent and 400 percent of the federal poverty level beginning in 2013.

The surtax is not fixed or permanently capped. If savings goals are not reached by 2012 then the surtax will be doubled. The Heritage Foundation reports that President Obama intends to raise the top two marginal tax rates to 47% which could mean that by 2012 the average top tax rate could exceed 52 percent giving the United States a higher personal tax rate than all but three countries (Denmark is the highest at 60 percent).

Private insurance companies must proffer reasonable premiums to those with pre-existing conditions. No exceptions, denials, or exclusions of coverage will be allowed. The House version includes provisions for a government health plan which will compete with private insurance. Reimbursement to providers from the public plan will be set at Medicare plus five percent.

Even with the high taxes imposed the proposal being put forward by the House Democrats will still result in staggering deficits. The Congressional Budget Office (CBO) performed an evaluation of the Affordable Health Choice Act which has just be released in a letter to Congressman Rangel.

The legislation as it is currently written will “increase the federal budget deficit by $1,042 billion over the 2010-2019 period”. Enacting the proposed reform could reduce the number of uninsured non-elderly from to about 16 million says the CBO. Those below the 133 percent of the federal poverty level would be enrolled in Medicaid for whom which the government would pay 100% of their medical expenses.

The CBO estimates the government’s public plan would be about “ten percent cheaper than a typical private plan” which will be offered in exchanges of private insurance companies. They noted there was “an usually high degree of uncertainty” as to how many people will actually be enrolled in the public plan. However, the CBO report confirms that the many more people will be enrolled in government run health care programs either Medicaid or the new public plan then are currently. A significant price difference in premiums of ten percent between private plans and the public plan will, as many critics have noted, create a great disincentive to join private plans.

The CBO analysis hints that since physicians will not be required to take the public health plan, even if they participate in Medicare, there might be some increased physician choice incentives with the private versus the public plan but, then again they estimate that perhaps up to one third of those receiving federal subsidies to buy insurance will likely chose the public option. From an economic perspective it seems more than probable that most physicians will not be able to opt out of a public plan that covers such a large percentage of the population.

In the state of current economic recession, employers themselves will have no incentive to seek anything other than the public health plan. Albeit there is a tax credit for small employers, the overall increase in tax rates, the likely taxation of private health care plans, and the certainty that the public plan will be cheaper essentially will herald the death of private insurance.

Thanks for reading Contempo Magazine blog which discusses issues for McAllen, the Rio Grande Valley, and America from a conservative Hispanic point of view. Tony Magaña grew up in McAllen Texas, attended Texas A&M University, served as an officer in Army Reserve, and holds a doctorate from Harvard University. The co-founder of Contempo Magazine has participated in Valley business for over 20 years. He is a member of the National Association of Hispanic Journalists and also writes for the American Daily Review. Follow him on twitter http://twitter.com/contempomagazin

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Copyright 2009 Dr. Tony Magana

By Dr. Tony Magana

The national spotlight on the unsavory title of McAllen Texas as the most expensive place for the care of Medicare patients is now leading to an intense debate over the future of physician owned hospitals. One of the leading hospitals contributing to the high cost of health care by over utilization discussed in the New Yorker article by Harvard Medical School professor, Dr. Atul Gawande, was a physician owned hospital in McAllen. Recently the American Hospital Association and related interests met with the Obama administration and Congressional leaders to work out a deal where hospitals would give up millions in supplemental Medicare payments to help control health care costs in return for which competition from physician owned hospitals will be strictly curtailed if not totally eliminated. Obama has specifically referred to McAllen Texas as a situation that had to change. The Physicians Hospitals of America called the new agreement “devastating”. Doctor’s Hospital-Renaissance in the McAllen area said officials would not be available for comment for at least a week.

As a prelude to this agreement, in September 2008 the following organizations, the American Hospital Association, American Hospital Association, Association of American Medical Colleges, Catholic Health Association of the United States, Federation of American Hospitals, National Association of Children’s Hospitals, National Association of Public Hospitals and Health Systems, Premier, Inc., and VHA Inc. all sent a letter to Congress calling for the complete prohibition of “physician self-referral hospitals”. These politically powerful entities claimed that physician owned hospitals usually specialize in procedures which are profitable and allow them to be selective in caring for mostly well insured patients. This results they report in a shift of under insured and uninsured patients to community hospitals who provide a broader range of services essential to communities.

Opponents of physician owned hospitals say that self-referral leads to over utilization of services and unnecessary spending. They quote Congressional Budget Office studies and other government investigations which have shown that the cost of care at hospitals owned by doctors is more expensive than those in which physicians do not have a financial stake. Congressman Raul Hinojosa (D-TX), who is one of two Congressman representing the McAllen area, came to the defense of physician owned hospitals last year when another government study by the Inspector General of the United States found that some statements made by the American Hospital Association about the availability of emergency care at physician owned hospitals were incorrect.

In January, Congress put in similar strong language to the current proposal when the SCHIP child health insurance initiative was passed. Although the executive director for the national organization representing physician owned hospitals calls this an “anti-competitive issue” the momentum seems to be against them and growing.

Physician owned hospitals in the State of Texas have been in the midst of controversy not only from looking at possible restrictions from participation in Federal health programs like Medicare and Medicaid but also from in state licensing and regulation. However, in March of 2009 they won a victory in an important anti-trust case where Houston’s prominent Memorial Hermann Hospital had to pay the costs incurred by Town & Country, a physician owned general hospital, in defending itself against the actions of Memorial Hermann which was trying to force health insurers not to cover care at Town & Country. The ruling was based on the concept that competition in health care is protected and important.

Texas leads the nation in terms of the economic impact of physician owned hospitals. In January, a study by the Health Economics Consulting Group (HECG) found that such facilities in Texas payed $86 million in property taxes, payroll, and income taxes as reported in the Dallas Morning News. Unlike other states which require a Certificate of Need to demonstrate that another hospital is needed in a community, Texas does not and also places no restrictions on physician ownership apart from disclosure to patients.

The Texas Physicians Hospital Advocacy Group points out that the HECG study found the economic impact of their member facilities was positive and they stress that many of their hospitals are general hospitals serving the community not just specialty hospitals. In addition, Texas physician owned hospitals typically scored 15 to 20 points higher (80%+) in satisfaction surveys carried out by the Centers for Medicare & Medicaid Services above the national average of 63%.

The new Obama accord will essentially prevent any new physician owned hospitals from being built and effectively freezes existing hospitals which participate in Medicare, Medicaid, or presumably the new Federal government health plan at their current size. This week a joint statement given out following the agreement between those against physician owned hospitals and the Obama administration said they were pleased to see the restriction being put in place to address an “enormous” problem of physician self-referral. In the past powerful Congressional members have been able to get exemptions from legislation for hospitals in their district and its likely that such will occur again under the new health care reform but so far none has been given to any in the McAllen area.

Attempts at totally wiping out physician owned hospitals in the past have always met with stiff opposition from the American Medical Association but now the rift between medical specialists who do most of their work in hospitals and primary care physicians is creating a rift. Facilities in Texas have most recently been getting away from the trend of specialty hospitals and begun to include primary care providers opportunities in ownership. Most watchers of the health care debate expect that primary care providers will be big gainers in reimbursement while specialists will no doubt see some reductions.

There is much discussion in government policy circles about changing the way health care is paid for from a fee for service type of system to one where payments are made for disease management with incentives for performance. Additionally rather than paying each individual care provider separately payments would be made to one entity such as the hospital from which the providers involved would have to draw their share. This will result in a closer linkage of physicians to hospitals with the possible erosion of private practice for specialists who do most of their work in hospitals.

Experts point out that institutions like the Mayo Clinic in Minnesota and the Scott and White Clinic in Texas where physicians are employees of large not for profit entities associated with medical education programs often provide high quality care at a lower cost than is found in many private practice settings. One would hope that perhaps some of the current physician owned hospitals could eventually be turned into similar types of institutions rather force physicians to only have the option to sell out their interests to private corporations at a substantial loss which has happened in the past in other states.

Both Republicans and Democrats agree that any health care reform will have have to have some injection of performance and quality standards.  Ultimately this means that for the physician owned hospitals to survive they will have to show that their overall cost is equal to or below that of non-physician owned hospitals for services reimbursed by any government regulated or issued health plan while providing care that meets or exceeds performance and quality standards.

Thanks for reading Contempo Magazine blog which discusses issues for McAllen, the Rio Grande Valley, and America from a conservative Hispanic point of view. Tony Magaña grew up in McAllen Texas, attended Texas A&M University, served as an officer in Army Reserve, and holds a doctorate from Harvard University. The co-founder of Contempo Magazine has participated in Valley business for over 20 years. He is a member of the National Association of Hispanic Journalists and also writes for the American Daily Review. Follow him on twitter http://twitter.com/contempomagazin

Click here for copyright permissions!
Copyright 2009 Dr. Tony Magana

By Dr. Tony Magana

Obama’s meteoric rise to populist fervor by proclaiming all conservatism as sinful may be coming to an end just as it did for another in a famous Sinclair Lewis novel. On July 7^th as President Obama had just completed his sixth month in office his steadily falling popularity finally plummeted below 50% in the important swing state of Ohio according to a Quinnipiac University poll. The results are due it seems to growing dissatisfaction with how the President is handling the economy. Numerous polls have over the past few months shown that the American public is most concerned about the condition of the economy over health care, the environment, and other issues despite a constant liberal media barrage to brainwash them to the contrary.

This week Vice-President Joe Biden and the President had no choice but to admit that on the issue that matters most they got it wrong. Now after having spent or committed to spend almost $3 trillion in the stimulus package mixed in with new government spending and perhaps another $2 trillion more to go for the energy tax implementation and government health care, Americans find their mood has gone from hope to pessimism.

Obama promised the Democratic initiative of massive spending would bring in 1.5 million new jobs but instead the ranks of jobless Americans keep growing every month. Although the steepness of the loss may be less than at the onset they are still staggering numbers. Wall Street has regained about 50% of the value lost but overall the major economic sectors which should be the engine of job creation are only sputtering.

Obama has spent much of the time on of the country junkets trying to build coalitions by giving concessions to foreign nations on American sovereignty, promises of increasing foreign aid, and making America more of a global follower than leader. In return we received clear assurance that we can continue to mostly fight the war in Afghanistan alone, unilaterally disarm our outdated nuclear weapons defense systems to numbers even more inferior than the 3000+ superiority held by Russia, and a thank you for having our Congress taking up impossible climate change tax programs but no thank you its not for us from other countries.

Vanity Fair magazine recently ran a story by Michael Wolff about how the Obama White House is controlling the press and the message that gets to the American people. They describe that different Obama friendly media are used for different purposes such as “scoops” for the New York Times, partisan issues to the Huffington Post, and of course the pictures of Michelle and the kids for the celebrity publications.

For all his talk about being a transparent President who will listen to the people, the reality is that this President is the exact opposite. His town halls are staged events with special reporters invited to ask questions and stooged members of the public set up to be famous for five minutes asking a sentimental question. What this has created is the liberal media and Obama being heavily engaged in a closed conversation with each other that has totally ignored what is happening to the average American.

Night after night, MSNBC, CBS, and CNN reports spend literally hours talking about what is wrong with Sarah Palin and absolutely ignore that no one is getting a job. For members of MSNBC which is owned by General Electric, the company that is not only setting records for lobbying fees to politicians including Obama but also income from government contracts, it could be said that they honestly appear to have no idea about what is bothering the average family. They seem to believe that Americans cannot function until they know every detail of events that happened five or seven years past in a previous administration. Unlike Chris Matthews or Keith Olbermann who make millions a year ( some of it derived by GE’s bailout) Americans without work cannot sit around being pundits all day but instead have to try to survive.

One does not have to be a Harvard economist to understand that the most significant effect of the Obama administration to date has been the almost complete destruction of entrepreneurial spirit. The economy is so skewed now that the only thing that matters is where government will spend money. Obama cannot blame the media he controls or the capitalist system he has squashed. No one in any community is saying things will get better all they are saying is how much worse will it get.

One hopes for our country’s sake that Obama and the childish media will not wait, like the ill fated character in the novel, Elmer Gantry, to repent until the burning of the Tabernacle (America) to put away childish things and speak as men.

Thanks for reading Contempo Magazine blog which discusses issues for McAllen, the Rio Grande Valley, and America from a conservative Hispanic point of view. Tony Magaña grew up in McAllen Texas, attended Texas A&M University, served as an officer in Army Reserve, and holds a doctorate from Harvard University. The co-founder of Contempo Magazine has participated in Valley business for over 20 years. He is a member of the National Association of Hispanic Journalists and also writes for the American Daily Review. Follow him on twitter http://twitter.com/contempomagazin